UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 
 FORM
10-Q
 xQUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
  For
the quarterly period ended March 31,
2009
  Commission
File No.0-13295
  CATERPILLAR FINANCIAL
SERVICES CORPORATION
 (Exact name of Registrant as specified
in its charter)
 Delaware
                  37-1105865(State
      of incorporation)
                  (IRS
      Employer I.D. No.)2120
      West End Ave.
                    Nashville, Tennessee
                  37203-0001(Address
      of principal executive offices)
                  (Zip
      Code)
 Registrant's
telephone number, including area code:(615)
341-1000
  The
Registrant is a wholly owned subsidiary of Caterpillar Inc. and meets the
conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q, and
is therefore filing this form with the reduced disclosure format.
  Indicate
by a check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.     Yes [ X
]     No  [   ]
  Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
  Large
Accelerated
Filer  [   ]    Accelerated
Filer  [   ]    Non-Accelerated
Filer  [ X ]    Smaller reporting
company  [   ]
 
 Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act).                  Yes
[   ]      No  [ X
]
  As
of April 30, 2009, one share of common stock of the Registrant was outstanding,
which is owned by Caterpillar Inc.
  UNAUDITED
  PART
I. FINANCIAL INFORMATION
  ITEM
1.  CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 In
addition to the accompanying unaudited consolidated financial statements for
Caterpillar Financial Services Corporation (together with its subsidiaries, "Cat
Financial," "the Company," "we," "us" or "our"), we suggest that you read our
2008 Annual Report on Form 10-K.  The Company files electronically
with the Securities and Exchange Commission (SEC) required reports on Form 8-K,
Form 10-Q, Form 10-K, registration statements on Form S-3 and various other
forms and reports when necessary.  The public may read and copy any
materials the Company has filed with the SEC at the SEC’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549.  The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
(800) SEC-0330.  The SEC maintains an Internet site (www.sec.gov) that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC.  Copies of
our Annual Report on Form 10-K, quarterly reports on Form 10-Q and any
amendments to these reports filed or furnished with the SEC are available free
of charge through our Internet site (www.catfinancial.com) as soon as reasonably
practicable after filing with the SEC.  Copies may also be obtained
free of charge by writing to: Legal Dept., Caterpillar Financial Services
Corporation, 2120 West End Ave., Nashville, Tennessee 37203-0001.  In
addition, the public may obtain more detailed information about our parent
company, Caterpillar Inc. (together with its subsidiaries, "Caterpillar" or
"Cat") by visiting its Internet site (www.cat.com).  None of the
information contained at any time on either our Internet site or Caterpillar’s
Internet site is incorporated by reference into this document.
  2
 
 UNAUDITED
  Caterpillar
Financial Services Corporation
 CONSOLIDATED STATEMENTS OF
PROFIT
 (Unaudited)
 (Dollars
in Millions)
 
 Three
      Months EndedMarch
      31,2009
                    
                    
                    2008Revenues:Retail
      finance
                    
                    $
                    372
                    
                    
                    $
                    411Operating
      lease
                    
                    
                    220
                    
                    
                    
                    234Wholesale
      finance
                    
                    
                    89
                    
                    
                    
                    103Other,
      net
                    
                    
                    -
                    
                    
                    
                    38Total
      revenues
                    
                    
                    681
                    
                    
                    
                    786Expenses:Interest
                    
                    
                    282
                    
                    
                    
                    285Depreciation
      on equipment leased to others
                    
                    
                    173
                    
                    
                    
                    180General,
      operating and administrative
                    
                    
                    81
                    
                    
                    
                    89Provision
      for credit losses
                    
                    
                    38
                    
                    
                    
                    37Other
                    
                    
                    18
                    
                    
                    
                    5Total
      expenses
                    
                    
                    592
                    
                    
                    
                    596Other
      income (expense)
                    
                    
                    (18
                    )
                    
                    
                    (2
                    )Profit
      before income taxes
                    
                    
                    71
                    
                    
                    
                    188Provision
      for income taxes
                    
                    
                    16
                    
                    
                    
                    59Profit
      before noncontrolling interests
                    
                    
                    55
                    
                    
                    
                    129Less:  Profit
      attributable to noncontrolling interests
                    
                    
                    4
                    
                    
                    
                    5Profit1
                    
                    $
                    51
                    
                    
                    $
                    124
 See
Notes to Consolidated Financial Statements (unaudited).
 1 Profit
attributable to Caterpillar Financial Services Corporation.
  3
 
 UNAUDITED
  Caterpillar
Financial Services Corporation
 CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
 (Unaudited)
 (Dollars
in Millions, except share data)
 
 March
      31,
                        
                        
                        December
      31,2009
                        
                        
                        2008Assets:Cash
      and cash equivalents
                        
                        $
                        1,258
                        
                        
                        $
                        1,080Finance
      receivablesRetail
      notes receivable
                        
                        
                        8,199
                        
                        
                        
                        8,209Wholesale
      notes receivable
                        
                        
                        2,666
                        
                        
                        
                        3,483Notes
      receivable from Caterpillar
                        
                        
                        1,544
                        
                        
                        
                        81Finance
      leases and installment sale contracts - Retail
                        
                        
                        15,667
                        
                        
                        
                        16,912Finance
      leases and installment sale contracts - Wholesale
                        
                        
                        622
                        
                        
                        
                        61028,698
                        
                        
                        
                        29,295Less:
      Unearned income
                        
                        
                        (1,679
                        )
                        
                        
                        (1,817
                        )Less: Allowance for credit losses
                        
                        
                        (382
                        )
                        
                        
                        (395
                        )Total
      net finance receivables
                        
                        
                        26,637
                        
                        
                        
                        27,083Equipment
      on operating leases,less
      accumulated depreciation
                        
                        
                        2,935
                        
                        
                        
                        3,028Deferred
      and refundable income taxes
                        
                        
                        147
                        
                        
                        
                        127Other
      assets
                        
                        
                        1,482
                        
                        
                        
                        1,764Total
      assets
                        
                        $
                        32,459
                        
                        
                        $
                        33,082Liabilities
      and stockholder’s equity:Payable
      to dealers and others
                        
                        $
                        212
                        
                        
                        $
                        255Payable
      to Caterpillar – other
                        
                        
                        43
                        
                        
                        
                        60Accrued
      expenses
                        
                        
                        458
                        
                        
                        
                        476Income
      taxes payable
                        
                        
                        76
                        
                        
                        
                        36Payable
      to Caterpillar – borrowings
                        
                        
                        37
                        
                        
                        
                        435Short-term
      borrowings
                        
                        
                        4,897
                        
                        
                        
                        7,077Current
      maturities of long-term debt
                        
                        
                        4,895
                        
                        
                        
                        5,036Long-term
      debt
                        
                        
                        17,751
                        
                        
                        
                        15,598Deferred
      income taxes and other liabilities
                        
                        
                        553
                        
                        
                        
                        537Total
      liabilities
                        
                        
                        28,922
                        
                        
                        
                        29,510Commitments
      and contingent liabilities (Notes F & G)Common
      stock - $1 par valueAuthorized:  2,000
      shares; Issued andoutstanding:  one
      share (at paid-in amount)
                        
                        
                        745
                        
                        
                        
                        745Retained
      earnings
                        
                        
                        2,854
                        
                        
                        
                        2,803Accumulated
      other comprehensive loss
                        
                        
                        (126
                        )
                        
                        
                        (37
                        )Noncontrolling
      interests
                        
                        
                        64
                        
                        
                        
                        61Total
      stockholder’s equity
                        
                        
                        3,537
                        
                        
                        
                        3,572Total
      liabilities and stockholder’s equity
                        
                        $
                        32,459
                        
                        
                        $
                        33,082
 See
Notes to Consolidated Financial Statements (unaudited).
  4
 
 UNAUDITED
  Caterpillar
Financial Services Corporation
 CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDER'S EQUITY
 (Unaudited)
 (Dollars
in Millions)
 
 
 Three Months Ended March 31,
      2008
                        
                        Common
                          stock
                        
                        
                        Retained
                          earnings
                        
                        
                        Accumulated
                          other
                          comprehensive
                          income
      (loss)
                        
                        
                        Noncontrolling
                          interests
                        
                        
                        Total
                        
                        
                        Comprehensive
                          income
      (loss)Balance
      at December 31, 2007
                        
                        $
                        745
                        
                        
                        $
                        2,418
                        
                        
                        $
                        508
                        
                        
                        $
                        40
                        
                        
                        $
                        3,711Profit
                        
                        
                        
                        
                        
                        
                        124
                        
                        
                        
                        
                        
                        
                        
                        5
                        
                        
                        
                        129
                        
                        
                        $
                        129Foreign
      currency translation
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        69
                        
                        
                        
                        
                        
                        
                        
                        69
                        
                        
                        
                        69Derivative
      financial instrumentsGains/(losses)
      deferred, net of tax of $15
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (26
                        )
                        
                        
                        
                        
                        
                        
                        (26
                        )
                        
                        
                        (26
                        )(Gains)/losses
      reclassified to earnings, net
                          of tax
      of $1
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1
                        
                        
                        
                        
                        
                        
                        
                        1
                        
                        
                        
                        1Retained
      interestsGains/(losses)
      deferred, net of tax of $-
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        -
                        
                        
                        
                        -(Gains)/losses
      reclassified to earnings, net
                          of tax
      of $1
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (2
                        )
                        
                        
                        
                        
                        
                        
                        (2
                        )
                        
                        
                        (2
                        )Balance
      at March 31, 2008
                        
                        $
                        745
                        
                        
                        $
                        2,542
                        
                        
                        $
                        550
                        
                        
                        $
                        45
                        
                        
                        $
                        3,882
                        
                        
                        $
                        171Three Months Ended March 31,
      2009Balance
      at December 31, 2008
                        
                        $
                        745
                        
                        
                        $
                        2,803
                        
                        
                        $
                        (37
                        )
                        
                        $
                        61
                        
                        
                        $
                        3,572Profit
                        
                        
                        
                        
                        
                        
                        51
                        
                        
                        
                        
                        
                        
                        
                        4
                        
                        
                        
                        55
                        
                        
                        $
                        55Foreign
      currency translation, net of tax of $38
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (98
                        )
                        
                        
                        (1
                        )
                        
                        
                        (99
                        )
                        
                        
                        (99
                        )Derivative
      financial instrumentsGains/(losses)
      deferred, net of tax of  $4
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (9
                        )
                        
                        
                        
                        
                        
                        
                        (9
                        )
                        
                        
                        (9
                        )(Gains)/losses
      reclassified to earnings, net of
                          tax
      of  $7
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        13
                        
                        
                        
                        
                        
                        
                        
                        13
                        
                        
                        
                        13Retained
      interestsGains/(losses)
      deferred, net of tax of $5
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (9
                        )
                        
                        
                        
                        
                        
                        
                        (9
                        )
                        
                        
                        (9
                        )(Gains)/losses
      reclassified to earnings, net
                          of tax
      of $7
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        14
                        
                        
                        
                        
                        
                        
                        
                        14
                        
                        
                        
                        14Balance
      at March 31, 2009
                        
                        $
                        745
                        
                        
                        $
                        2,854
                        
                        
                        $
                        (126
                        )
                        
                        $
                        64
                        
                        
                        $
                        3,537
                        
                        
                        $
                        (35
                        )
 See
Notes to Consolidated Financial Statements (unaudited).
  5
 
 UNAUDITED
  Caterpillar
Financial Services Corporation
 CONSOLIDATED STATEMENTS OF
CASH FLOWS
 (Unaudited)
 (Dollars
in Millions)
 
 Three
      Months EndedMarch
      31,2009
                      
                      
                      2008Cash
      flows from operating activities:Profit
                      
                      $
                      51
                      
                      
                      $
                      124Adjustments
      for non-cash items:Depreciation
      and amortization
                      
                      
                      180
                      
                      
                      
                      188Amortization
      of receivables purchase discount
                      
                      
                      (47
                      )
                      
                      
                      (77
                      )Provision
      for credit losses
                      
                      
                      38
                      
                      
                      
                      37Gain
      on sales of receivables
                      
                      
                      (3
                      )
                      
                      
                      (5
                      )Other,
      net
                      
                      
                      (78
                      )
                      
                      
                      (21
                      )Changes
      in assets and liabilities:Receivables
      from others
                      
                      
                      114
                      
                      
                      
                      (15
                      )Other
      receivables/payables with Caterpillar
                      
                      
                      (30
                      )
                      
                      
                      50Payable
      to dealers and others
                      
                      
                      (38
                      )
                      
                      
                      (20
                      )Accrued
      interest payable
                      
                      
                      44
                      
                      
                      
                      27Accrued
      expenses and other liabilities, net
                      
                      
                      (88
                      )
                      
                      
                      (18
                      )Income
      taxes payable
                      
                      
                      63
                      
                      
                      
                      16Proceeds
      from liquidated interest rate swaps
                      
                      
                      187
                      
                      
                      
                      -Net
      cash provided by operating activities
                      
                      
                      393
                      
                      
                      
                      286Cash
      flows from investing activities:Expenditures
      for equipment on operating leases and for non-leased
    equipment
                      
                      
                      (222
                      )
                      
                      
                      (305
                      )Proceeds
      from disposals of equipment
                      
                      
                      184
                      
                      
                      
                      199Additions
      to finance receivables
                      
                      
                      (5,795
                      )
                      
                      
                      (8,846
                      )Collections
      of finance receivables
                      
                      
                      6,887
                      
                      
                      
                      7,664Proceeds
      from sales of receivables
                      
                      
                      420
                      
                      
                      
                      442Net
      change in Notes receivable from Caterpillar
                      
                      
                      (1,464
                      )
                      
                      
                      (2
                      )Other,
      net
                      
                      
                      (16
                      )
                      
                      
                      (35
                      )Net
      cash used in investing activities
                      
                      
                      (6
                      )
                      
                      
                      (883
                      )Cash
      flows from financing activities:Payable
      to Caterpillar – borrowings and other
                      
                      
                      (401
                      )
                      
                      
                      (190
                      )Proceeds
      from debt issued (original maturities greater than three
      months)
                      
                      
                      4,697
                      
                      
                      
                      3,858Payments
      on debt issued (original maturities greater than three
    months)
                      
                      
                      (3,116
                      )
                      
                      
                      (3,421
                      )Short-term
      borrowings, net (original maturities three months or less)
                      
                      
                      (1,386
                      )
                      
                      
                      390Net
      cash (used in) provided by financing activities
                      
                      
                      (206
                      )
                      
                      
                      637Effect
      of exchange rate changes on cash
                      
                      
                      (3
                      )
                      
                      
                      4Increase
      in cash and cash equivalents
                      
                      
                      178
                      
                      
                      
                      44Cash
      and cash equivalents at beginning of year
                      
                      
                      1,080
                      
                      
                      
                      185Cash
      and cash equivalents at end of period
                      
                      $
                      1,258
                      
                      
                      $
                      229
 See Notes to Consolidated Financial
Statements (unaudited).
  6
 
 UNAUDITED
  Notes to Consolidated
Financial Statements
 (Unaudited)
 A.
              Basis
      of Presentation
  In the
opinion of management, the accompanying consolidated financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of (a) the consolidated profit for the three
months ended March 31, 2009 and 2008, (b) the consolidated financial position as
of March 31, 2009 and December 31, 2008, (c) the consolidated changes in
stockholder's equity for the three months ended March 31, 2009 and 2008 and (d)
the consolidated cash flows for the three months ended March 31, 2009 and
2008.  The preparation of financial statements, in conformity with
accounting principles generally accepted in the United States of America and
pursuant to the rules and regulations of the SEC, requires management to make
estimates and assumptions that affect the reported amounts.  The most
significant estimates are the allowance for credit losses and residual values
for leased assets.  Actual results may differ from these
estimates.  Certain amounts for prior periods have been reclassified
to conform to the current period presentation.
  Interim
results are not necessarily indicative of results for a full
year.  The information included in this Form 10-Q should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations and the audited consolidated financial statements and
notes thereto included in our Annual Report on Form 10-K for the year ended
December 31, 2008.
  The
December 31, 2008 financial position data included herein was derived from the
audited consolidated financial statements included in our Annual Report on Form
10-K for the year ended December 31, 2008, but does not include all disclosures
required by accounting principles generally accepted in the United States of
America.
  B.
              New
      Accounting
Pronouncements
 SFAS 157
– In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 157 (SFAS 157), "Fair Value
Measurements."  SFAS 157 provides a common definition of fair value
and a framework for measuring assets and liabilities at fair values when a
particular standard prescribes it. In addition, the Statement expands
disclosures about fair value measurements.  In February 2008, the FASB
issued final Staff Positions that (1) deferred the effective date of this
Statement for one year for certain nonfinancial assets and nonfinancial
liabilities (see below) and (2) removed certain leasing transactions from the
scope of the Statement.  We applied this new accounting standard to
all other fair value measurements effective January 1, 2008.  The
application of SFAS 157 resulted in an increase to Other income (expense) in the
Consolidated Statements of Profit of $16 million for the three months ended
March 31, 2009, compared to a $6 million decrease to Other income (expense) for
the three months ended March 31, 2008.  See Note C for additional
information.
  FSP 157-2
– In February 2008, the FASB issued FASB Staff Position on Statement 157
"Effective Date of FASB Statement No. 157" (FSP 157-2).  FSP 157-2
delayed the effective date of SFAS 157 for nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed on a recurring basis,
to fiscal years beginning after November 15, 2008.  We adopted this
new accounting standard on January 1, 2009.  The adoption of FSP 157-2
did not have a material impact on our financial statements.
 
 FSP 157-3
– In October 2008, the FASB issued FASB Staff Position on Statement 157,
"Determining the Fair Value of a Financial Asset When the Market for That Asset
Is Not Active" (FSP 157-3).  FSP 157-3 clarifies how SFAS 157 should
be applied when valuing securities in markets that are not active by
illustrating key considerations in determining fair value.  It also
reaffirms the notion of fair value as the exit price as of the measurement
date.  FSP 157-3 was effective upon issuance, which included periods
for which financial statements have not yet been issued.  We adopted
this new accounting standard effective July 1, 2008.  The adoption of
FSP 157-3 did not have a material impact on our financial
statements.
  7
 
 UNAUDITED
  SFAS 158
– In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 158 (SFAS 158), "Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and
132R."  SFAS 158 requires recognition of the overfunded or underfunded
status of pension and other postretirement benefit plans on the balance
sheet.  Also, the measurement date – the date at which the benefit
obligation and plan assets are measured – is required to be the company’s fiscal
year-end.  Caterpillar adopted the balance sheet recognition
provisions at December 31, 2006, and adopted the year-end measurement date
effective January 1, 2008 using the "one measurement" approach.  Under
the one measurement approach, net periodic benefit cost for the period between
any early measurement date and the end of the fiscal year that the measurement
provisions are applied are allocated proportionately between amounts to be
recognized as an adjustment of retained earnings and net periodic benefit cost
for the fiscal year.  Previously, we used a November 30th
measurement date for our U.S. pension and other postretirement benefit plans and
September 30th for our
non-U.S. plans.  The adoption of SFAS 158 did not have a material
impact to our Statements of Financial Position since Cat Financial is considered
a participant in the Caterpillar retirement plan for which we are charged a
share of plan expenses, but are not required to record assets or liabilities of
the plan.
  SFAS 159
– In February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159 (SFAS 159), "The Fair Value Option for Financial Assets and Financial
Liabilities – including an amendment of SFAS No. 115."  SFAS 159
creates a fair value option under which an entity may irrevocably elect fair
value as the initial and subsequent measurement attribute for certain financial
assets and liabilities on a contract by contract basis, with changes in fair
values recognized in earnings as these changes occur.  We adopted this
new accounting standard on January 1, 2008.  We have not elected to
measure any financial assets or financial liabilities at fair value which were
not previously required to be measured at fair value.  Therefore, the
adoption of SFAS 159 did not have a material impact on our financial
statements.
  SFAS 141R
and SFAS 160 – In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141 (revised 2007) (SFAS 141R), "Business
Combinations," and No. 160 (SFAS 160), "Noncontrolling Interests in Consolidated
Financial Statements – an amendment of ARB No. 51."  SFAS 141R
requires the acquiring entity in a business combination to recognize the assets
acquired and liabilities assumed.  Further, SFAS 141R also changes the
accounting for acquired in-process research and development assets, contingent
consideration, partial acquisitions and transaction costs.  Under SFAS
160, all entities are required to report noncontrolling (minority) interests in
subsidiaries as equity in the consolidated financial statements.  In
addition, transactions between an entity and noncontrolling interests will be
treated as equity transactions.  We adopted these new accounting
standards on January 1, 2009.  The adoption of SFAS 141R and SFAS 160
did not have a material impact on our financial statements.
 
 SFAS 161
– In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging Activities
– an amendment of FASB Statement No. 133."  SFAS 161 expands
disclosures for derivative instruments by requiring entities to disclose the
fair value of derivative instruments and their gains or losses in tabular
format.  SFAS 161 also requires disclosure of information about credit
risk-related contingent features in derivative agreements, counterparty credit
risk and strategies and objectives for using derivative
instruments.  We adopted this new accounting standard on January 1,
2009.  The adoption of SFAS 161 did not have a material impact on our
financial statements.
 
 SFAS 162
– In May 2008, the FASB issued Statement of Financial Accounting Standards No.
162 (SFAS 162), "The Hierarchy of Generally Accepted Accounting
Principles."  SFAS 162 identifies the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with U.S. GAAP.  SFAS 162 was effective November 16,
2008.  This Statement did not result in a change in our current
practice.
  8
 
 UNAUDITED
  FSP FAS
140-4 and FIN 46R-8–
In December 2008, the FASB issued FASB Staff Position on Statement 140 and FIN
46R, "Disclosures by Public Entities (Enterprises) about Transfers of Financial
Assets and Interests in Variable Interest Entities" (FSP FAS 140-4 and FIN
46R-8).  This FSP expands the disclosure requirements in SFAS 140 and
FIN 46R by requiring additional information about companies’ involvement with
variable interest entities (VIEs) and their continuing involvement with
transferred financial assets.  This new accounting standard was
adopted for our financial statements ended December 31, 2008.  The
adoption of FSP FAS 140-4 and FIN 46R-8 did not have a material impact on our
financial statements.
 
 FSP EITF
99-20-1 –InJanuary 2009, the FASB
issued FASB Staff Position on EITF Issue No. 99-20, "Amendments to the
Impairment Guidance of EITF Issue No. 99-20" (FSP EITF 99-20-1).  FSP
EITF 99-20-1 aligns the impairment guidance in EITF Issue No. 99-20 with that in
Statement of Financial Accounting Standards No. 115 (SFAS 115), "Accounting for
Certain Investments in Debt and Equity Securities."  It changes how
companies determine whether an other-than-temporary impairment exists for
certain beneficial interests by allowing management to exercise more
judgment.  This new accounting standard was adopted for our financial
statements ended December 31, 2008.  The adoption of FSP EITF 99-20-1
did not have a material impact on our financial statements.
  FSP FAS
107-1 and APB 28-1 – In April 2009, the FASB issued FASB Staff Position on FAS
107-1 and APB 28-1, "Interim Disclosures about Fair Value of Financial
Instruments" (FSP FAS 107-1 and APB 28-1).  This FSP requires that the
fair value disclosures required by SFAS 107, "Disclosures about Fair Value of
Financial Instruments" be included for interim reporting periods.  We
will adopt this new accounting standard on April 1, 2009.  We do not
expect the adoption of FSP FAS 107-1 and APB 28-1 to have a material impact on
our financial statements.
 
 FSP FAS
115-2 and FAS 124-2 – In April 2009, the FASB issued FASB Staff Position on FAS
115-2 and FAS 124-2, "Recognition and Presentation of Other-Than-Temporary
Impairments" (FSP FAS 115-2 and FAS 124-2).  This FSP amends the
impairment guidance relating to certain debt securities and will require a
company to assess the likelihood of selling the security prior to recovering its
cost basis.  Additionally, when a company meets the criteria, the
impairment charges related to credit losses would be recognized in earnings,
while non-credit losses would be reflected in other comprehensive
income.  We will adopt this new accounting standard on April 1,
2009.  We do not expect the adoption of FSP FAS 115-2 and FAS 124-2 to
have a material impact on our financial statements.
 
 FSP FAS
157-4 – In April 2009, the FASB issued FASB Staff Position on FAS 157-4,
"Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly" (FSP FAS 157-04).  FSP FAS 157-4 provides guidance in
determining when the volume and activity for an asset or liability has
significantly decreased, and on measuring the fair value in inactive
markets.  We will adopt this new accounting standard on April 1,
2009.  We do not expect the adoption of FSP FAS 157-4 to have a
material impact on our financial statements.
  9
 
 UNAUDITED
  C.
              Fair
      Value Measurements
 
 We
adopted SFAS 157, "Fair Value Measurements" as of January 1,
2008.  See Note B for additional information.  SFAS 157
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.  SFAS 157 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
SFAS 157, 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.
 
 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 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.
 
 Fair
value measurements are classified according to the lowest level input or
value-driver that is significant to the valuation.  A measurement may
therefore be classified within Level 3 even though there may be significant
inputs that are readily observable.
 
 SFAS 157
expanded the definition of fair value to include the consideration of
nonperformance risk.  Nonperformance risk refers to the risk that an
obligation (either by a counterparty or us) will not be
fulfilled.  For financial assets traded in an active market (Level 1),
the nonperformance risk is included in the market price.  For certain
other financial assets and liabilities (Level 2 and 3), our fair value
calculations have been adjusted accordingly.  The impact of
incorporating the nonperformance risk in the fair value measurements resulted in
an increase to Other income (expense) in the Consolidated Statements of Profit
of $16 million for the three months ended March 31, 2009 compared to a $6
million decrease to Other income (expense) for the three months ended March 31,
2008.
 
 Derivative
financial instruments
 The fair
value of interest rate swap derivatives is primarily based on models that
utilize the appropriate market-based forward swap curves and zero-coupon
interest rates to determine the discounted cash flows.  The fair value
of foreign currency forward contracts is based on a valuation model that
discounts cash flows resulting from the differential between the contract price
and the market-based forward rate.
 
 Securitized
retained interests
 The fair
value of securitized retained interests is based upon a valuation model that
calculates the present value of future expected cash flows using key assumptions
for credit losses, prepayment rates and discount rates.  These
assumptions are based on our historical experience, market trends and
anticipated performance relative to the particular assets
securitized.
  10
 
 UNAUDITED
  Guarantees
 The fair
value of guarantees is based upon the premium we would require to issue the same
guarantee in a stand-alone arms-length transaction with an unrelated
party.  If quoted or observable market prices are not available, fair
value is based upon internally developed models that utilize current
market-based assumptions.
 
 Assets
and liabilities measured at fair value included in our Consolidated Statements
of Financial Position as of March 31, 2009 and December 31, 2008 are summarized
below:
 (Millions
      of dollars)
                                      
                                      March
      31, 2009Level
      1
                                      
                                      
                                      Level
      2
                                      
                                      
                                      Level
      3
                                      
                                      
                                      Total
      Assets/Liabilities,
                                        at
      Fair ValueAssetsDerivative
      financial instruments, net
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      111
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      111Securitized
      retained interests
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      44
                                      
                                      
                                      
                                      44Total
      Assets
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      111
                                      
                                      
                                      $
                                      44
                                      
                                      
                                      $
                                      155LiabilitiesGuarantees
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      3
                                      
                                      
                                      $
                                      3Total
      Liabilities
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      3
                                      
                                      
                                      $
                                      3
 
 (Millions
      of dollars)
                                    
                                    December
      31, 2008Level
      1
                                    
                                    
                                    Level
      2
                                    
                                    
                                    Level
      3
                                    
                                    
                                    Total
      Assets/Liabilities,
                                      at
      Fair ValueAssetsDerivative
      financial instruments, net
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    331
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    331Securitized
      retained interests
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    52
                                    
                                    
                                    
                                    52Total
      Assets
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    331
                                    
                                    
                                    $
                                    52
                                    
                                    
                                    $
                                    383LiabilitiesGuarantees
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    2
                                    
                                    
                                    $
                                    2Total
      Liabilities
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    2
                                    
                                    
                                    $
                                    2
  11
 
 UNAUDITED
  Below are
roll-forwards of assets and liabilities measured at fair value using Level 3
inputs for the three months ended March 31, 2009 and 2008.  These
instruments were valued using pricing models that, in management’s judgment,
reflect the assumptions a marketplace participant would use.
 
 (Millions
      of dollars)
                          
                          Securitized
      Retained Interests
                          
                          
                          GuaranteesBalance
      as of December 31, 2008
                          
                          $
                          52
                          
                          
                          $
                          2Gains
      or (losses) included in earnings (realized / unrealized)
                          
                          
                          (21
                          )
                          
                          
                          -Changes
      in Accumulated other comprehensive loss
                          
                          
                          7
                          
                          
                          
                          -Purchases,
      issuances and settlements
                          
                          
                          6
                          
                          
                          
                          1Balance
      as of March 31, 2009
                          
                          $
                          44
                          
                          
                          $
                          3
 
 (Millions
      of dollars)
                          
                          Securitized
      Retained Interests
                          
                          
                          GuaranteesBalance
      as of December 31, 2007
                          
                          $
                          49
                          
                          
                          $
                          8Gains
      or (losses) included in earnings (realized / unrealized)
                          
                          
                          2
                          
                          
                          
                          -Changes
      in Accumulated other comprehensive loss
                          
                          
                          (2
                          )
                          
                          
                          -Purchases,
      issuances and settlements
                          
                          
                          (1
                          )
                          
                          
                          -Balance
      as of March 31, 2008
                          
                          $
                          48
                          
                          
                          $
                          8
  The
amount of unrealized losses on securitized retained interests included in
earnings for the three months ended March 31, 2009 related to assets still held
at March 31, 2009 was $21 million.  The amount of unrealized gains on
securitized retained interests included in earnings for the three months ended
March 31, 2008 related to assets still held at March 31, 2008 was $1
million.  These gains or losses were reported in Other revenues, net,
in the Consolidated Statements of Profit.
 
 In
addition to the amounts above, we have impaired loans of $131 million and $108
million as of March 31, 2009 and December 31, 2008, respectively.  A
loan is considered impaired when management determines that collection of
contractual amounts due is not probable.  In these cases, an allowance
for loan losses is established based primarily on the fair value of associated
collateral.  As the collateral's fair value is based on observable
market prices and/or current appraised values, the impaired loans are classified
as Level 2 measurements.
  D.
              Segment
      Information
  Our
segment data is based on disclosure requirements of Statement of Financial
Accounting Standards No. 131,    "Disclosures about Segments
of an Enterprise and Related Information," 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.  Our four operating
segments offer primarily the same types of services within each of the
respective segments.  The four operating segments are as
follows:
  12
 
 UNAUDITED
  ·
              North
      America: We have offices in the United States and Canada that serve local
      dealers and customers.·
              Europe:
      We have five regions in Europe that serve dealers and customers in Europe,
      Africa, Middle East and the Confederation of Independent
      States.·
              Diversified
      Services: Included is our Marine Services Division, which primarily
      finances marine vessels with Caterpillar engines, for all countries; Cat
      Power Finance and our offices in Latin America that serve local dealers
      and customers.  Cat Power Finance primarily provides debt
      financing for Caterpillar electrical power generation, gas
      compressionand co-generation
      systems, as well as non-Caterpillar equipment that is powered by
      these systems, for all countries.·
              Asia-Pacific:
      We have offices in Australia, New Zealand, China, Japan, South Korea and
      Southeast Asia that serve local dealers and customers, as well as mining
      customers worldwide.  This segment also provides project
      financing in various countries.
  On
January 1, 2009, $1.195 billion of Inter-segment assets related to the Cat Power
Finance segment were consolidated within the Diversified Services
segment.  This consolidation of segments was made in order to maintain
alignment with management responsibility.  Prior year data has been
reclassified to conform to the new structure.
  Debt and
other expenses are allocated from the North America segment to other segments
based on their respective portfolios.  The related interest expense is
calculated based on the amount of allocated debt and the rates associated with
that debt.  The provision for credit losses included in each segment's
profit is based on each segment's share of the Company's allowance for credit
losses.  Inter-segment revenues result from lending activities between
segments, and are based on the amount of the respective Inter-segment loans and
the rates associated with those loans.
  As noted
above, the segment information is presented on a management reporting
basis.  Unlike financial reporting, there is no authoritative guidance
for management reporting equivalent to generally accepted accounting
principles.
  Supplemental
segment data for the three months ended March 31,
 
 (Millions
      of dollars)
                        
                        2009
                      
                      North
                        America
                      
                      
                      Europe
                      
                      
                      Diversified
                        Services
                      
                      
                      Asia-Pacific
                      
                      
                      TotalExternal
      revenue
                      
                      $
                      347
                      
                      
                      $
                      112
                      
                      
                      $
                      110
                      
                      
                      $
                      112
                      
                      
                      $
                      681Inter-segment
      revenue
                      
                      
                      13
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      13Profit
                      
                      
                      12
                      
                      
                      
                      12
                      
                      
                      
                      15
                      
                      
                      
                      12
                      
                      
                      
                      512008
                      
                      North
                        America
                      
                      
                      Europe
                      
                      
                      Diversified
                        Services
                      
                      
                      Asia-Pacific
                      
                      
                      TotalExternal
      revenue
                      
                      $
                      443
                      
                      
                      $
                      133
                      
                      
                      $
                      116
                      
                      
                      $
                      94
                      
                      
                      $
                      786Inter-segment
      revenue
                      
                      
                      25
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      25Profit
                      
                      
                      53
                      
                      
                      
                      20
                      
                      
                      
                      31
                      
                      
                      
                      20
                      
                      
                      
                      124
  13
 
 UNAUDITED
 
 (Millions
      of dollars)
                    
                    North
                      America
                    
                    
                    Europe
                    
                    
                    Diversified
                      Services
                    
                    
                    Asia-Pacific
                    
                    
                    TotalAssets
      as of March 31, 2009
                    
                    $
                    21,523
                    
                    
                    $
                    5,251
                    
                    
                    $
                    6,493
                    
                    
                    $
                    4,811
                    
                    
                    $
                    38,078Assets
      as of December 31, 2008
                    
                    $
                    21,272
                    
                    
                    $
                    5,877
                    
                    
                    $
                    6,608
                    
                    
                    $
                    5,106
                    
                    
                    $
                    38,863
 
 (Millions
      of dollars)
                            Reconciliation
      of assets:
                          
                          March 31, 2009
                          
                          
                          December 31, 2008Assets
      from segments
                          
                          $
                          38,078
                          
                          
                          $
                          38,863Less:
      Investment in subsidiaries
                          
                          
                          (1,027
                          )
                          
                          
                          (1,027
                          )Less:
      Inter-segment balances
                          
                          
                          (4,592
                          )
                          
                          
                          (4,754
                          )Total
                          
                          $
                          32,459
                          
                          
                          $
                          33,082
  E.
              Derivative
      Instruments and Hedging Activities
  Our
earnings and cash flow are subject to fluctuations due to changes in foreign
currency exchange rates and interest rates.  Our Risk Management
Policy (policy) allows for the use of derivative financial instruments to
prudently manage foreign currency exchange rate and interest rate
exposures.  Our policy specifies that derivatives are not to be used
for speculative purposes.  Derivatives that we use are primarily
foreign currency forward and option contracts and interest rate
swaps.  Our derivative activities are subject to the management,
direction and control of our senior financial officers.  Risk
management practices, including the use of financial derivative instruments, are
presented to the Audit Committee of the Caterpillar Inc. Board of Directors at
least annually.
  All
derivatives are recognized on the Consolidated Statements of Financial Position
at their fair value.  On the date the derivative contract is entered,
we designate the derivative as (1) a hedge of the fair value of a recognized
asset or liability (fair value hedge), (2) a hedge of a forecasted transaction
or the cash flow variability associated with variable rate debt (cash flow
hedge) or (3) an "undesignated" instrument.  Changes in the fair value
of a derivative that is qualified, designated and highly effective as a fair
value hedge, along with the gain or loss on the hedged liability that is
attributable to the hedged risk, are recorded in current
earnings.  Changes in the fair value of a derivative that is
qualified, designated and highly effective as a cash flow hedge are recorded in
Accumulated other comprehensive income (loss) (AOCI) until they are reclassified
to earnings in the same period or periods during which the hedge transaction
affects earnings.  Changes in the fair value of undesignated
derivative instruments and the ineffective portion of designated derivative
instruments are reported in current earnings.  Cash flows from
designated derivative financial instruments are classified within the same
category as the item being hedged on the Consolidated Statements of Cash
Flows.  Cash flows from undesignated derivative financial instruments
are generally included in the Investing category on the Consolidated Statements
of Cash Flows.
  We
formally document all relationships between hedging instruments and hedged
items, as well as the risk management objective and strategy for undertaking
various hedge transactions.  We also formally assess, both at the
hedge’s inception and on an ongoing basis, whether the designated derivatives
that are used in hedging transactions are highly effective in offsetting changes
in fair value or cash flow of hedged items.  When a derivative is
determined not to be highly effective as a hedge or the underlying hedged
transaction is no longer likely to occur, we discontinue hedge accounting
prospectively, in accordance with Statement of Financial Accounting Standards
No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging
Activities."
  14
 
 UNAUDITED
  We
adopted SFAS 161, "Disclosures about Derivative Instruments and Hedging
Activities – an amendment of FASB Statement No. 133" as of January 1,
2009.  See Note B for additional information.
  Foreign
Currency Exchange Rate Risk
 In
managing foreign currency risk, our objective is to minimize earnings volatility
resulting from conversion and the remeasurement of net foreign currency balance
sheet positions.  Our policy allows the use of foreign currency
forward and option contracts to offset the risk of currency mismatch between our
receivables and debt.  All such foreign currency forward and option
contracts are undesignated.
  Interest
Rate Risk
 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 practice is to use
interest rate swaps to manage our exposure to interest rate changes and, in some
cases, to lower the cost of borrowed funds.
  We have a
match-funding policy that addresses interest rate risk by aligning the interest
rate profile (fixed or floating rate) of our debt portfolio with the interest
rate profile of our receivables portfolio within predetermined ranges on an
ongoing basis.  In connection with that policy, we use interest rate
derivative instruments to modify the debt structure to match assets within the
receivables portfolio.  This match-funding reduces the volatility of
margins between interest-bearing assets and interest-bearing liabilities,
regardless of which direction interest rates move.
  Our
policy allows us to use fixed-to-floating, floating-to-fixed and
floating-to-floating interest rate swaps to meet the match-funding
objective.  We designate fixed-to-floating interest rate swaps as fair
value hedges to protect debt against changes in fair value due to changes in the
benchmark interest rate.  We designate most floating-to-fixed interest
rate swaps as cash flow hedges to protect against the variability of cash flows
due to changes in the benchmark interest rate.
  As of
March 31, 2009, $59 million of deferred net losses, net of tax, included in
equity, related to our floating-to-fixed interest rate swaps, are expected to be
reclassified to Interest expense over the next twelve months.
  We have,
at certain times, liquidated fixed-to-floating and floating-to-fixed interest
rate swaps.  During the first quarter of 2009, we liquidated
fixed-to-floating interest rate swaps that resulted in deferred gains of $187
million, which is included in long-term debt in the Statements of Financial
Position.  The deferred gains associated with these interest rate
swaps at the time of liquidation are amortized to earnings, specifically
Interest expense, over the remaining term of the underlying hedged
item.
  15
 
 UNAUDITED
  The
location and fair value of derivative instruments reported in the Statements of
Financial Position as of March 31, 2009 are as follows:
  (Millions
      of dollars)Statements
      of Financial Position Location
                    
                    Asset
      (Liability)
                      Fair
      ValueDesignated
      derivativesInterest
      rate contracts
                    Other
      assets
                    
                    $
                    241Interest
      rate contracts
                    Accrued
      expenses
                    
                    
                    (106
                    )$
                    135Undesignated
      derivativesForeign
      exchange contracts
                    Other
      assets
                    
                    $
                    60Foreign
      exchange contracts
                    Accrued
      expenses
                    
                    
                    (81
                    )Interest
      rate contracts
                    Other
      assets
                    
                    
                    10Interest
      rate contracts
                    Accrued
      expenses
                    
                    
                    (13
                    )$
                    (24
                    )
  The
effect of derivatives designated as hedging instruments on the Statements of
Profit is as follows:
  (Millions
      of dollars)Three
      Months Ended March 31, 2009Fair
      Value Hedges
                                
                                Classification
                                
                                Gains
      (Losses) on Derivatives
                                
                                Gains
      (Losses) on BorrowingsInterest
      rate contracts
                                
                                Other
      income (expense)
                                
                                $
                                (60)
                                
                                
                                $
                                79$
                                (60)
                                
                                
                                $
                                79
  (Millions
      of dollars)Three Months Ended March 31,
      2009Cash Flow Hedges
                                                                    
                                                                    Classification
                                                                    
                                                                    Recognized
                                                                      in
      AOCI
                                                                      (Effective
                                                                      Portion)
                                                                    
                                                                    Classification of
                                                                      Gains (Losses)
                                                                    
                                                                    Reclassified
                                                                      from
      AOCI
                                                                      to
      Earnings
                                                                      (Effective
                                                                      Portion)
                                                                    
                                                                    
                                                                    Recognized
      in
                                                                      Earnings
                                                                      (Ineffective
                                                                      Portion)Interest
      rate contracts
                                                                    
                                                                    AOCI
                                                                    
                                                                    $
                                                                    (13
                                                                    )
                                                                    Interest
      expense
                                                                    
                                                                    $
                                                                    (20
                                                                    )
                                                                    
                                                                    $
                                                                    1$
                                                                    (13
                                                                    )
                                                                    
                                                                    
                                                                    $
                                                                    (20
                                                                    )
                                                                    
                                                                    $
                                                                    1
                                                                    11
                                                                    The
      classification of the ineffective portion recognized in earnings is
      included in Other income (expense).
 16
 
 UNAUDITED
  The effect of
derivatives not designated as hedging instruments on the Statements of Profit is
as follows:
  (Millions
      of dollars)
                            
                            Derivatives not designated as hedging
      instruments
                          
                          Classification
      of Gains or (Losses)
                          
                          Three
      Months Ended
                            March
      31, 2009Foreign
      exchange contracts
                          
                          Other
      income (expense)
                          
                          $
                          15Interest
      rate contracts
                          
                          Other
      income (expense)
                          
                          
                          (3
                          )$
                          12
  F.
              Guarantees
  We provide
loan guarantees to third-party lenders for financing associated with machinery
purchased by customers.  These guarantees have varying terms and are
secured by the machinery.  In addition, we participate in standby
letters of credit issued to third parties on behalf of our
customers.  These standby letters of credit have varying terms and
beneficiaries and are secured by customer assets.
  We have
provided a limited indemnity to a third-party bank for $24 million as of March
31, 2009 resulting from the assignment of certain leases to that
bank.  The indemnity is for the possibility that the insurers of these
leases would become insolvent.  The indemnity expires December 15,
2012 and is unsecured.
  No loss
has been experienced or is anticipated under any of these guarantees noted
above.  The recorded liability for these guarantees was $3 million as
of March 31, 2009 and $2 million as of December 31, 2008.  The maximum
potential amount of future payments (undiscounted and without reduction for any
amount that may possibly be recovered under recourse or collateralized
provisions) we could be required to make under the guarantees and the limited
indemnity are as follows:
  (Millions
      of dollars)
                        
                        March
      31,
                          2009
                        
                        
                        December 31,
                          2008Guarantees
      with customers
                        
                        $
                        121
                        
                        
                        $
                        119Limited
      indemnity
                        
                        
                        24
                        
                        
                        
                        25Total
      guarantees
                        
                        $
                        145
                        
                        
                        $
                        144
  We
provide guarantees to repurchase certain loans of Caterpillar dealers from a
financial trust ("Trust") that qualifies as a variable interest entity under FIN
46R, "Consolidation
of Variable Interest Entities – An Interpretation of ARB No. 51 (Revised
2003)."The purpose of the Trust is to provide short-term working
capital loans.  This Trust issues commercial paper and uses the
proceeds to fund its loan program to Caterpillar dealers.  We have a
loan purchase agreement with the Trust that obligates us to purchase certain
loans that are not paid at maturity.  We receive a fee for providing
this guarantee, which provides a source of liquidity for the
Trust.  At December 31, 2008, we determined that we were the primary
beneficiary of the Trust as our guarantees would require us to absorb a majority
of the entity’s expected losses, and therefore consolidated the financial
position of the Trust in the Consolidated Statement of Financial
Position.  The Trust’s assets of $455 million are primarily comprised
of loans to dealers and the liabilities of $455 million are primarily comprised
of commercial paper.  No loss has been experienced or is anticipated
under this loan purchase agreement.  Our assets are not available to
pay creditors of the Trust, except to the extent we may be obligated to perform
under the guarantee, and assets of the Trust are not available to pay our
creditors.
  17
 
 UNAUDITED
  G.
              Contingencies
  We are
involved in unresolved legal actions that arise in the normal course of
business.  The majority of these unresolved actions involve claims to
recover collateral, claims pursuant to customer bankruptcies and the pursuit of
deficiency amounts.  Although it is not possible to predict with
certainty the outcome of our unresolved legal actions or the range of probable
loss, we believe that these unresolved legal actions will neither individually
nor in the aggregate have a material adverse effect on our consolidated
financial position, liquidity or results of operations.
  H.
              Sales
      and Servicing of Finance Receiables
  We sell
certain finance receivables relating to our retail installment sale contracts
and finance leases as part of our asset-backed securitization
program.  In addition, we have sold interests in wholesale receivables
to third-party commercial paper conduits.  These transactions provide
a source of liquidity and allow for better management of our balance sheet
capacity.  Included in our other managed assets are individual loans
and leases that have been sold to third parties to mitigate the concentration of
credit risk with certain customers.  None of the receivables that are
directly or indirectly sold to third parties in any of the foregoing
transactions are available to pay our creditors.
  Securitized
Retail Installment Sale Contracts and Finance Leases
 We
periodically sell certain finance receivables relating to our retail installment
sale contracts and finance leases to special purpose entities (SPEs) as part of
our asset-backed securitization program.  The SPEs have limited
purposes and generally are only permitted to purchase the finance receivables,
issue asset-backed securities and make payments on the
securities.  The SPEs only issue a single series of securities and
generally are dissolved when those securities have been paid in
full.  The SPEs, typically trusts, are considered to be qualifying
special-purpose entities (QSPEs) and thus, in accordance with SFAS 140,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities," (SFAS 140) are not consolidated.  The QSPEs issue
debt to pay for the finance receivables they acquire from us.  The
primary source for repayment of the debt is the cash flows generated from the
finance receivables owned by the QSPEs.  The assets of the QSPEs are
legally isolated and are not available to pay our creditors or any other of our
affiliates.  For bankruptcy analysis purposes, Cat Financial has sold
the finance receivables to the QSPEs in a true sale and the QSPEs are separate
legal entities.  The investors and the securitization trusts have no
recourse to any of our other assets for failure of debtors to pay when
due.
  We retain
interests in the retail finance receivables that are sold through our
asset-backed securitization program.  Retained interests include
subordinated certificates, an interest in future cash flows (excess) and reserve
accounts.  Retained interests in securitized assets are classified as
available-for-sale securities and are included in Other assets in our
Consolidated Statements of Financial Position at fair value in accordance with
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities."  We estimate fair value based on the present value of
future expected cash flows using key assumptions for credit losses, prepayment
rates and discount rates.  These assumptions are based on our
historical experience, market trends and anticipated performance relative to the
particular assets securitized.  We periodically review the key
assumptions and estimates used in determining the fair value of our retained
interests with unrealized gains and losses recorded in the Consolidated
Statements of Financial Position as part of Accumulated other comprehensive
income (loss).  If based on current information and events, it is
probable that there has been an adverse change in estimated cash flows, an
"other-than-temporary" impairment is recorded and included in profit to write
down the retained interest to estimated fair value.  We retain credit
risk in the retail finance receivables that are sold through our asset-backed
securitizations because our retained interests are subordinate to the investors’
interests.  Any credit losses in the pool of securitized assets would
be limited to our retained interests.
  18
 
 UNAUDITED
  The fair
value of the retained interests in all securitizations of retail finance
receivables outstanding totaled $44 million and $52 million as of March 31, 2009
and December 31, 2008, respectively.  Key assumptions used to
determine the fair value of the retained interests as of such dates
were:
  (Millions
      of dollars)
                                  
                                  March
      31,
                                    2009
                                  
                                  
                                  December 31,
                                    2008Cash
      flow weighted-average discount rates on retained interests
                                  
                                  13.8%
      to 21.2%
                                  
                                  
                                  16.7%
      to 23.3%Weighted-average
      maturity in months
                                  
                                  26
                                  
                                  
                                  28Expected
      prepayment rate
                                  
                                  19.0%
                                  
                                  
                                  19.0%Expected
      credit losses
                                  
                                  1.9%
      to 4.2%
                                  
                                  
                                  1.7%
      to 3.1%
  To
estimate the impact on income due to changes to the key economic assumptions
used to estimate the fair value of residual cash flows in retained interests
from retail finance receivable securitizations, we perform a sensitivity
analysis of the fair value of the retained interests by applying a 10 percent
and 20 percent adverse change to the individual assumptions.  This
estimate does not adjust for other variations that may occur should one of the
assumptions actually change.  Accordingly, no assurance can be given
that actual results would be consistent with the results of our
estimate.  The effect of a variation in a particular assumption on the
fair value of residual interest in securitization transactions was calculated
without changing any other assumptions and changes in one factor may result in
changes in another.  Our sensitivity analysis indicated that the
impact of a 20 percent adverse change in individual assumptions used to
calculate the fair value of all our retained interests as of March 31, 2009 and
December 31, 2008 would be $11 million or less and $8 million or less,
respectively.
  We also
retained servicing responsibilities and receive a servicing fee of approximately
one percent of the remaining value of the finance receivables for our servicing
responsibilities.  We generally do not record a servicing asset or
liability since the servicing fee is considered fair market
compensation.  Servicing income is included in Other revenues, net, on
our Consolidated Statements of Profit.
  During
the three months ended March 31, 2009, the assumptions used to determine the
fair value of our retained interests in the securitization transactions were
reviewed.  The most significant change was an increase in the credit
loss assumption due to the adverse economic conditions in the U.S.
economy.  This resulted in a $22 million impairment charge to the
retained interests for the three months ended March 31, 2009.  The
impairment charge was recorded in Other revenues, net, on our Consolidated
Statements of Profit.
  To
maintain competitiveness in the capital markets and to have effective and
efficient use of alternative funding sources, we may from time to time provide
additional reserve support to previously issued asset-backed
securitizations.
  Sale
of Interests in Wholesale Receivables
 We
purchase North American Caterpillar Dealer trade receivables (NACD Receivables)
at a discount.  The discount is an estimate of the amount of financing
revenue that would be earned at a market rate on the NACD Receivables over their
expected life.  We have sold interests in the NACD Receivables through
a revolving structure to third-party commercial paper conduits, asset-backed
commercial paper issuers that are SPEs of the sponsor bank and are not
consolidated by us. In accordance with SFAS 140, the transfers to the conduits
are accounted for as sales.  The gain, included in Other revenues,
net, on our Consolidated Statements of Profit, is principally the difference
between the unearned discount on the NACD Receivables sold to the third-party
commercial paper conduits less related costs incurred
over their remaining term.  Expected credit losses are assumed to be
zero because dealer receivables have historically had no losses and none are
expected in the future.  We receive an annual servicing fee of
approximately 0.5 percent of the average outstanding principal balance of the
interests in the NACD Receivables sold to the third-party commercial paper
conduits.  We generally do not record a servicing asset or liability
since the servicing fee is considered fair market
compensation.  During the three months ended March 31, 2009 and 2008,
we recognized a pre-tax gain on the sale of wholesale receivables of $2 million
and $4 million, respectively.  As of March 31, 2009 and December 31,
2008, the outstanding principal balance of the NACD Receivables sold to the
conduits was $240 million.
  19
 
 UNAUDITED
  The NACD
Receivables not sold to the third-party commercial paper conduits as of March
31, 2009 and December 31, 2008 of $990 million and $1.432 billion, respectively,
are included in Wholesale notes receivable in our Consolidated Statements of
Financial Position.  The discount on these NACD Receivables is
amortized on an effective yield basis over the life of the NACD Receivables and
recognized as Wholesale finance revenue.  Because the receivables are
short-term in nature, the carrying amount approximates the fair
value.
  The cash
collections from the NACD Receivables are first applied to satisfy any
obligations to the third-party commercial paper conduits.  The
third-party commercial paper conduits have no recourse to our assets, other than
the NACD Receivables that we continue to hold.
  Cash flows
from sale of interests in wholesale receivables
 (Millions
      of dollars)
                        
                        For
      Three Months Ended
                          March 31,2009
                        
                        
                        2008Cash
      proceeds from sales of receivables to the conduit
                        
                        $
                        393
                        
                        
                        $
                        396Cash
      flows received on the interests that continue to be held
                        
                        $
                        2,514
                        
                        
                        $
                        2,771
  In
addition to the NACD Receivables, we purchase other trade receivables from
Caterpillar entities at a discount. The discount is an estimate of the amount of
financing revenue that would be earned at a market rate on these trade
receivables over their expected life.  The discount is amortized into
revenue on an effective yield basis over the life of the receivables and
recognized as Wholesale finance revenue.  Amortized discounts for the
NACD and other trade receivables were $47 million and $77 million for the three
months ended March 31, 2009 and 2008, respectively.  In the
Consolidated Statements of Cash Flows, collection of the discount is included in
investing activities as the receivables are collected.
  Other
Managed Assets
 We also
sell individual leases and finance receivables to third parties with limited or
no recourse to us to either reduce our concentration of credit risk related to
certain customers or as an additional source of liquidity.  In
accordance with SFAS 140, the transfers to the third parties are accounted for
as sales.  We maintain servicing responsibilities for these
third-party assets, which totaled $603 million and $633 million as of March 31,
2009 and December 31, 2008, respectively.  Since we do not receive a
servicing fee for these assets, a servicing liability is recorded.  As
of March 31, 2009, this liability is not significant.
  I.
              Income
      Taxes
  The
provision for income taxes in the first quarter of 2009 generally reflects an
estimated annual income tax rate of 22 percent as compared to 32 percent for the
first quarter of 2008.  The decrease is primarily attributable to
expected changes in our geographic mix of pre-tax results.
  20
 
 UNAUDITED
  J.
              Employee
      Separation Charges
  During
first quarter 2009, we recognized employee separation charges of $10 million,
which is included in Other expenses in the Consolidated Statements of Profit,
related to various voluntary and involuntary separation
programs.  These programs, impacting 159 employees worldwide, were in
response to a sharp decline in new business due to the global
recession.
 
 The
various voluntary and involuntary separation programs initiated are as
follows:
 
 U.S. Voluntary Separation
      Program - During December 2008, Caterpillar Inc. announced a
      voluntary separation program for certain support and management employees
      based in the U.S.  Eligible employees had until January 12, 2009
      to sign-up for the program, and generally until January 31, 2009 to make a
      final decision.  Participating employees receive severance pay
      based on current salary level and years of service.  During the
      first quarter 2009, 71 of our employees accepted the program, the majority
      of which had separated by March 31, 2009.
                
                Other Separation Programs
      - During the first quarter of 2009, we initiated several other
      separation programs.  These programs, designed specific to the
      laws and regulations of the individual countries, represent voluntary and
      involuntary plans for support and management employees.  During
      the first quarter 2009, 59 non-U.S. and 29 U.S. employees were
      subject to the various programs.
 
 Our
accounting for separations is dependent upon how the particular program is
designed.  For voluntary programs, eligible separation costs are
recognized at the time of employee acceptance.  For involuntary
programs, eligible costs are recognized when management has approved the
program, the affected employees have been properly identified and the costs are
estimable.
 
 The
following table summarizes the separation charges:
 
 (Millions
      of dollars)Liability
      balance as of December 31, 2008
                      
                      $
                      -2009
      Separation charges
                      
                      
                      102009
      Benefit payments and other adjustments
                      
                      
                      (7
                      )Liability
      balance as of March 31, 2009
                      
                      $
                      3
  21
 
 UNAUDITED
  The
remaining balance as of March 31, 2009 represents costs for employees that have
either not yet separated from the Company or their full severance has not yet
been paid.  The majority of these remaining costs will be paid by the
end of 2009.
 
 The
following table summarizes the numbers of employees that accepted or were
subject to the programs:
 
 First Quarter 2009Impacted
      employees as of beginning of period
                      
                      
                      -Impacted
      employees during the period
                      
                      
                      159Employee
      separations during the period
                      
                      
                      (139
                      )Impacted
      employees remaining as of the end of the period
                      
                      
                      20
 
 The
majority of the employees that accepted or were subject to the programs, but
that were still employed as of March 31, 2009 will be separated by the end of
the second quarter 2009.
  22
 
 UNAUDITED
  ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  OVERVIEW:  FIRST
QUARTER 2009 VS. FIRST QUARTER2008
 We
reported first-quarter revenues of $681 million, a decrease of $105 million, or
13 percent, compared with the first quarter of 2008.  First-quarter
profit was $51 million, a $73 million, or 59 percent, decrease over the first
quarter of 2008.
  ·
              Of
      the decrease in revenues, $93 million resulted from a decrease due to the
      impact of lower interest rates on new and existing finance receivables,
      $22 million resulted from a write-down on retained interests related to
      the securitized asset portfolio and $14 million resulted from an
      unfavorable impact on returned or repossessed equipment.  This
      decrease was partially offset by a $26 million increase from the impact of
      continued growth of earning assets (finance receivables and operating
      leases at constant interest rates).
  ·
              Profit
      before income taxes was $71 million in the first quarter compared with
      $188 million in the first quarter of 2008, a decrease of $117 million or
      62 percent.  The decrease was principally due to a $67 million
      impact from decreased net yield on average earning assets, a $38 million
      impact from net currency exchange gains and losses, a $22 million
      write-down on retained interests related to the securitized asset
      portfolio due to worse than expected losses, a $14 million impact from
      returned or repossessed equipment and a $10 million impact from employee
      separation charges.  These decreases in profit before income
      taxes were partially offset by a $24 million favorable impact from
      mark-to-market adjustments on interest rate derivative contracts and a $10
      million favorable impact from higher average earning
    assets.
  ·
              New
      retail financing was $1.6 billion, a decrease of $1.9 billion, or 55
      percent from the first quarter of 2008.  The decrease was
      primarily related to our North America, Europe and Asia operating
      segments.
  ·
              Provision
      for income taxes decreased $43 million, or 73 percent, compared with the
      first quarter of 2008.  The decrease was primarily attributable
      to lower pre-tax results.
  ·
              At
      the end of first quarter 2009, past dues were 5.44 percent compared with
      3.88 percent at the end of 2008 and 2.81 percent at the end of first
      quarter 2008.  Past dues increased during the first quarter in
      all geographic areas, with the largest increases in Europe and Latin
      America.  Write-offs, net of recoveries, for the three months
      ended March 31, 2009, were $47 million (0.74 percent of average retail
      portfolio on an annualized basis) compared to $20 million (0.33 percent of
      average retail portfolio on an annualized basis) for the three months
      ended March 31, 2008.  This increase in write-offs was primarily
      driven by adverse economic conditions in North America.  The
      rate of write-offs in the first quarter of 2009 as a percentage of average
      retail portfolio of 0.74 percent is slightly higher in comparison to the
      rates measured during the most recent periods of economic weakness in 2001
      and 2002, which were 0.65 percent and 0.69 percent of average retail
      portfolio, respectively.
  ·
              Our
      allowance for credit losses totaled $382 million as of March 31, 2009
      compared to $374 million as of March 31, 2008, which is 1.50 percent of
      net finance receivables as of March 31, 2009, compared with 1.41 percent
      as of March 31, 2008.  The increase in allowance for credit
      losses resulted from a $23 million increase in the allowance rate
      partially offset by a $15 million decrease due to a reduction in the
      overall net finance receivable
portfolio.
  23
 
 UNAUDITED
  REVIEW OF CONSOLIDATED
STATEMENTS OF PROFIT
  THREE MONTHS ENDED MARCH 31,
2009 VS. THREE MONTHS ENDED MARCH 31, 2008
  REVENUES
 Retail
and wholesale revenue for the first quarter of 2009 was $461 million, a decrease
of $53 million from the same period last year.  The decrease was due
to a $74 million decrease from the impact of lower interest rates on new and
existing retail and wholesale receivables, partially offset by a $21 million
increase from the impact of continued growth of earning assets (finance
receivables at constant interest rates).  Yield was negatively
impacted by lower interest rates on finance receivables and a decrease in earned
discounts on certain North America purchased wholesale
receivables.  The annualized average yield on these assets was 6.82
percent for the first quarter of 2009 compared to 7.92 percent for the first
quarter of 2008.
  Operating
lease revenue for the first quarter of 2009 was $220 million, or $14 million
lower than the first quarter of 2008 primarily due to the impact of interest
rates.
  Other
revenue, net, for the first quarter of 2009 was $0, a decrease of $38 million
from the same period in 2008 primarily due to a $22 million write-down on
retained interests related to the securitized asset portfolio due to higher than
anticipated losses experienced as a result of the adverse economic conditions in
the U.S. economy and a $14 million impact from returned or repossessed
equipment.
  Other
revenue, net, items were as follows:
  (Millions
      of dollars)
                        
                        Three
      Months Ended
                          March 31,2009
                        
                        
                        2008Finance
      receivable and operating lease fees (including late
    charges)
                        
                        $
                        17
                        
                        
                        $
                        16Miscellaneous
      other revenue, net
                        
                        
                        6
                        
                        
                        
                        5Gain
      on sales of receivables
                        
                        
                        3
                        
                        
                        
                        5Service
      fee income on sold receivables
                        
                        
                        1
                        
                        
                        
                        2Partnership/dividend
      income
                        
                        
                        -
                        
                        
                        
                        1Net
      gain/(loss) on returned or repossessed equipment
                        
                        
                        (7
                        )
                        
                        
                        7Income/(loss)
      related to retained interests in securitized retail
      receivables
                        
                        
                        (20
                        )
                        
                        
                        2Total
      other revenues, net
                        
                        $
                        -
                        
                        
                        $
                        38
  24
 
 UNAUDITED
  EXPENSES
 Interest
expense for the first quarter of 2009 was $282 million, a decrease of $3 million
from the same period last year.  This decrease was primarily due to a
decrease of 47 basis points in the average cost of borrowing to 4.16 percent for
the first quarter of 2009, down from 4.63 percent for the first quarter of 2008,
partially offset by the impact of an increase of 11 percent in average
borrowings related to increased lending to Caterpillar and to provide a cash
position appropriate for current market conditions.
  Depreciation
expense on equipment leased to others was $173 million, down $7 million over the
first quarter of 2008 due to a decrease in the lease portfolio.
  General,
operating and administrative expenses were $81 million for the first quarter of
2009, compared to $89 million for the same period in 2008.  The
decrease resulted primarily from decreases in labor costs and other
taxes.  There were 1,611 full-time employees as of March 31, 2009,
compared to 1,714 as of December 31, 2008 and 1,636 as of March 31,
2008.
 
 The
provision for credit losses was $38 million for the first quarter of 2009, up $1
million from the first quarter of 2008.  The allowance for credit
losses as of March 31, 2009 was 1.50 percent of finance receivables (excluding
Notes receivable from Caterpillar), net of unearned income, compared to 1.41
percent as of March 31, 2008.  The first quarter rate of 1.50 percent
is slightly higher than the 2002 recessionary period average rate of 1.47
percent.
 
 Other
expenses were $18 million for the first quarter of 2009 compared to $5 million
for the same period in 2008.  The increase was primarily attributable
to employee separation charges.
  Other
income (expense) for the first quarter of 2009 was an expense of $18 million, an
increase of $16 million from the same period in 2008 due to a $38 million impact
from net currency exchange gains and losses, partially offset by a $24 million
favorable impact from mark-to-market adjustments on interest rate derivative
contracts.
  Other
income (expense) items were as follows:
  (Millions
      of dollars)
                        
                        Three
      Months Ended
                          March 31,2009
                        
                        
                        2008Currency
      exchange gain/(loss)
                        
                        $
                        (50
                        )
                        
                        $
                        90Net
      gain/(loss) on undesignated foreign exchange contracts (including forward
      points)
                        
                        
                        15
                        
                        
                        
                        (87
                        )Net
      gain/(loss) from interest rate derivatives
                        
                        
                        17
                        
                        
                        
                        (7
                        )Partnership/dividend
      income (gain on sale of affiliates)
                        
                        
                        -
                        
                        
                        
                        2Total
      other income (expense)
                        
                        $
                        (18
                        )
                        
                        $
                        (2
                        )
  Provision
for income taxes decreased $43 million, or 73 percent, compared with the first
quarter of 2008.  The decrease was primarily attributable to lower
pre-tax results.
  PROFIT
 As a
result of the performance discussed above, we had profit of $51 million for the
first quarter of 2009, down $73 million, or 59 percent, from the first quarter
of 2008.
  25
 
 UNAUDITED
  REVIEW OF CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
  ASSETS
 Total
assets were $32.46 billion as of March 31, 2009, a decrease of $623 million over
December 31, 2008, principally due to a decrease of $446 million in the net
finance receivable portfolio.
  During
the three months ended March 31, 2009, we financed new retail business of $1.579
billion, a decrease of $1.895 billion, or 55 percent, from the first quarter of
2008.  The decrease was primarily related to our North America, Europe
and Asia operating segments.
  TOTAL OFF-BALANCE SHEET
MANAGED ASSETS
 We manage
and service receivables and leases that have been transferred through
securitization or sale.  These transactions provide a source of
liquidity and allow us to mitigate the concentration of credit risk with certain
customers.  These receivables/leases are not available to pay our
creditors.
  Off-balance
sheet managed assets were as follows:
  (Millions of
      dollars)
                        
                        March
      31,
                        
                        
                        December
      31,2009
                        
                        
                        2008Securitized
      Retail Installment Sale Contracts and Finance LeasesInstallment
      sale contracts securitized
                        
                        $
                        739
                        
                        
                        $
                        877Finance
      leases securitized
                        
                        
                        27
                        
                        
                        
                        32Less:
      retained interests (included in Other assets)
                        
                        
                        (44
                        )
                        
                        
                        (52
                        )Off-balance
      sheet securitized retail receivables
                        
                        
                        722
                        
                        
                        
                        857Sales
      of Interests in Wholesale ReceivablesWholesale
      receivables
                        
                        
                        240
                        
                        
                        
                        240Other
      Managed AssetsRetail
      installment sale contracts
                        
                        
                        264
                        
                        
                        
                        283Retail
      finance leases
                        
                        
                        199
                        
                        
                        
                        198Operating
      leases
                        
                        
                        113
                        
                        
                        
                        122Retail
      notes receivable
                        
                        
                        27
                        
                        
                        
                        30Other
      managed receivables/leases
                        
                        
                        603
                        
                        
                        
                        633Total
      off-balance sheet managed assets
                        
                        $
                        1,565
                        
                        
                        $
                        1,730
  26
 
 UNAUDITED
  ALLOWANCE FOR CREDIT
LOSSES
 The
following table shows activity related to the Allowance for credit
losses:
  (Millions of
      dollars)
                        
                        Three
      Months Ended
                          March 31,2009
                        
                        
                        2008Balance
      at beginning of the period
                        
                        $
                        395
                        
                        
                        $
                        353Provision
      for credit losses
                        
                        
                        38
                        
                        
                        
                        37Receivables
      written off
                        
                        
                        (52
                        )
                        
                        
                        (24
                        )Recoveries
      on receivables previously written off
                        
                        
                        5
                        
                        
                        
                        4Foreign
      currency translation adjustment
                        
                        
                        (4
                        )
                        
                        
                        4Balance
      at end of the period
                        
                        $
                        382
                        
                        
                        $
                        374
  Bad debt
write-offs, net of recoveries, for the three months ended March 31, 2009, were
$47 million (0.74 percent of average retail portfolio on an annualized basis)
compared to $20 million (0.33 percent of average retail portfolio on an
annualized basis) for the three months ended March 31, 2008.  This
increase was primarily driven by adverse economic conditions in North
America.  The rate of write-offs in the first quarter 2009 as a
percentage of average retail portfolio of 0.74 percent is slightly higher in
comparison to the rates measured during the most recent periods of economic
weakness in 2001 and 2002, which were 0.65 percent and 0.69 percent of average
retail portfolio, respectively.
  Our
allowance for credit losses totaled $382 million as of March 31, 2009 compared
to $374 million as of March 31, 2008, which is 1.50 percent of net finance
receivables as of March 31, 2009, compared with 1.41 percent as of March 31,
2008.  The increase in allowance for credit losses resulted from a $23
million increase in the allowance rate partially offset by a $15 million
decrease due to a reduction in the overall net finance receivable
portfolio.  See Critical Accounting Policies – Allowance for Credit Losses
for more information on the allowance for credit losses.
  TOTAL PAST DUE FINANCE AND
RENTS RECEIVABLES
 Finance
receivables (excluding Notes receivable from Caterpillar) plus rents receivable
for operating leases (included in Other assets) that were past due over 30 days
were 5.44 percent of the aggregate total of these receivables as of March 31,
2009 compared with 3.88 percent at the end of 2008 and 2.81 percent at the end
of first quarter 2008.  Past dues increased during the first quarter
in all geographic areas, with the largest increases in Europe and Latin
America.
  CAPITAL RESOURCES AND
LIQUIDITY
  Capital
resources and liquidity provide us with the ability to meet our financial
obligations on a timely basis.  Maintaining and managing adequate
capital and liquidity resources includes management of funding sources and their
utilization based on current, future and contingent needs.  We do not
generate material funding through structured finance transactions.
  27
 
 UNAUDITED
  Throughout
the first quarter of 2009, we have continued to maintain access to liquidity,
although at higher credit spreads than what was seen in the first quarter 2008
on new term debt issuances.  During the first quarter of 2009, we
issued $3.0 billion in U.S. medium-term notes and an additional $0.5 billion in
U.S. retail notes.  These
issuances along with expected cash flow generated from the portfolio will meet
funding needs for 2009.
 
 During
the first quarter 2009, some non-U.S. credit markets were periodically closed to
us and similarly situated issuers as a result of the volatile credit market
conditions.  While we operated with lower than average commercial
paper balances in the first quarter of 2009, market access remained good in the
U.S., Canada and Europe with attractive pricing levels.  Commercial
paper access in Australia and Japan has been much more limited and at varying
price levels.  As the global liquidity situation evolves, we will
continue to monitor and adapt our funding approach accordingly.  We
continue to maintain higher levels of cash, which has increased our net cost of
funds.
 
 The
generally deteriorating economic conditions and the condition of credit markets
increase the risk that one or more of the credit rating agencies may decrease
their rating for us or our debt securities.  In the event that we, or
any of our debt securities, experience a credit rating downgrade, it would
likely result in an increase in our borrowing costs and make access to certain
credit markets more difficult.
  If global
conditions deteriorate so significantly that access to debt markets becomes
unavailable, we would rely on cash flow from our existing retail portfolio of
approximately $1 billion per month, utilization of existing cash balances ($1.26
billion as of March 31, 2009), access to our revolving credit facilities and
other credit line facilities held by us and potential borrowings from
Caterpillar.
  BORROWINGS
 Borrowings
consist primarily of medium-term notes, commercial paper, variable denomination
floating rate demand notes and bank borrowings, the combination of which is used
to manage interest rate risk and funding requirements.  We also
utilize additional funding sources including securitizations of retail
installment contracts and finance leases, and wholesale receivable commercial
paper conduits.
  Total
borrowings outstanding as of March 31, 2009 were $27.58 million, a decrease of
$565 million over December 31, 2008, due to lower funding
requirements.  Outstanding borrowings were as follows:
  (Millions
      of dollars)
                            
                            March 31,
                              2009
                            
                            
                            December 31,
                              2008Medium-term
      notes, net of unamortized discount
                            
                            $
                            21,666
                            
                            
                            $
                            19,647Commercial
      paper, net of unamortized discount
                            
                            
                            3,340
                            
                            
                            
                            5,717Bank
      borrowings – short-term
                            
                            
                            810
                            
                            
                            
                            817Bank
      borrowings – long-term
                            
                            
                            748
                            
                            
                            
                            755Variable
      denomination floating rate demand notes
                            
                            
                            747
                            
                            
                            
                            543Deposit
      obligation
                            
                            
                            232
                            
                            
                            
                            232Notes
      payable to Caterpillar
                            
                            
                            37
                            
                            
                            
                            435Total
      outstanding borrowings
                            
                            $
                            27,580
                            
                            
                            $
                            28,146
  Medium-term
notes
 We
regularly issue medium-term unsecured notes through securities dealers or
underwriters in the U.S., Canada, Europe, Australia and Japan to both retail and
institutional investors.  These notes are offered in several
currencies and with a variety of maturities.  These notes are senior
unsecured obligations of the Company.
  28
 
 UNAUDITED
  Commercial
paper
 We issue
unsecured commercial paper in the U.S., Europe and other international capital
markets.  These short-term promissory notes are issued on a discounted
basis and are payable at maturity.
  Revolving
credit facilities
 We have
three global credit facilities with a syndicate of banks totaling $6.85 billion
(Credit Facility 1) available in the aggregate to both Caterpillar and us to
support our commercial paper programs in the event the programs become
unavailable and for general liquidity purposes.  Based on management’s
allocation decision, which can be revised at any time, the portion of the
facility available to us was $5.85 billion as of March 31, 2009.
  ·
              The
      five-year facility of $1.62 billion expires in September
    2012.
  ·
              The
      five-year facility of $2.98 billion expires in September
    2011.
  ·
              The
      364-day facility of $2.25 billion expires in September
    2009.
  Additionally,
in March 2009, we entered into a 364-day revolving credit facility (Credit
Facility 2) with a syndicate of banks totaling $1.3 billion, which expires in
March 2010 and is jointly available to both Caterpillar and us.  This
facility was amended in April 2009 to include an additional $75
million.  Based on management's allocation decision, which can be
revised at any time, 100% was allocated to Caterpillar as of March 31,
2009.
  In March
2009, a 364-day facility totaling $300 million was terminated.
  At March
31, 2009, Caterpillar’s consolidated net worth of $6.34 billion was not less
than 75 percent of the consolidated net worth as of the end of its immediately
preceding fiscal year.  This is the minimum level required under
Credit Facility 1 and Credit Facility 2 ("the Credit Facilities").
 
 At March
31, 2009, our quarterly interest coverage ratio was 1.24 to 1.  This
is above the 1.15 to 1 minimum ratio of (1) earnings before interest expense and
income taxes to (2) interest expense for each fiscal quarter required by the
Credit Facilities.
 
 In
addition, at March 31, 2009, our leverage ratio was 7.70 to 1.  This
is below the maximum ratio of debt to net worth of 10.0 to 1, calculated (1)
monthly as the average leverage ratios over the preceding six calendar months
and (2) at each December 31 required by the Credit Facilities.
 
 In the
event either Caterpillar or we do not meet one or more of the respective
financial covenants under the Credit Facilities in the future (and are unable to
obtain a consent or waiver), the bank group may terminate the commitments
allocated to the non-compliant party or the commitments with respect to Credit
Facility 1 could be, depending on the circumstances, reallocated among
Caterpillar and/or us.  Additionally, in such event, certain of our
other lenders under other loan agreements where such financial covenants are
applicable, may, at their election, choose to pursue remedies under such loan
agreements, including accelerating outstanding borrowings.  At March
31, 2009, there were no borrowings under the Credit Facilities.
  29
 
 UNAUDITED
  Bank
borrowings
 Credit
lines with banks as of March 31, 2009 totaled $2.83 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 non-U.S. subsidiaries for local funding requirements.  The
remaining available credit commitments may be withdrawn any time at the lenders'
discretion.  As of March 31, 2009, we had $1.56 billion outstanding
against these credit lines compared to $1.57 billion as of December 31, 2008,
and were in compliance with all debt covenants under these credit
lines.
  Variable
denomination floating rate demand notes
 We obtain
funding from the sale of variable denomination floating rate demand notes, which
may be redeemed at any time at the option of the holder without any material
restriction.  We do not hold reserves to fund the payment of the
demand notes.  The notes are offered on a continuous basis by
prospectus only.
  Deposit
obligation
 A deposit
obligation of $232 million has a corresponding security deposit, which is
included in Other assets in the Consolidated Statements of Financial Position as
of March 31, 2009 and December 31, 2008.  This deposit obligation and
corresponding security deposit relates to a financing arrangement, which
provides us a return.  This arrangement requires that we commit to a
certain long-term obligation and provide a security deposit, which will fulfill
this obligation when it becomes due in 2009.
  Notes
receivable from/payable to Caterpillar
 Under our
variable amount lending agreements with Caterpillar, we may borrow up to $2.3
billion from Caterpillar, and Caterpillar may borrow up to $2.8 billion from
us.  The agreements are in effect for indefinite periods of time and
may be changed or terminated by either party with 30 days notice.  We
had notes payable of $37 million and notes receivable of $1.5 billion
outstanding as of March 31, 2009, compared to notes payable of $435 million and
notes receivable of $81 million as of December 31, 2008.
  OFF-BALANCE SHEET
ARRANGEMENTS
 We lease
all of our facilities.  In addition, we have guarantees with third
parties of $145 million as of March 31, 2009.
  CASH
FLOWS
 Operating
cash flow was $393 million in the first quarter of 2009, compared with $286
million for the same period a year ago.  The increase in operating
cash flow was primarily related to cash proceeds from liquidated interest rate
swaps, partially offset by lower profit.  Net cash used for investing
activities was $6 million for the first quarter of 2009, compared to $883
million for the same period in 2008.  The decreased use of cash was
the result of lower levels of new retail
financing, partially offset by increased lending to Caterpillar.  Net
cash used for financing activities was $206 million for the first quarter of
2009, compared to a source of cash of $637 million for the first quarter of
2008, primarily due to lower funding requirements.
  30
 
 UNAUDITED
  CRITICAL ACCOUNTING
POLICIES
  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 the residual values for leased
assets and for our allowance for credit losses.  Actual results may
differ from these estimates.
  Residual
values for leased assets
 Lease
residual values, which are based upon the estimated wholesale market value of
leased equipment at the time of the expiration of the lease, represent 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, residual values are 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, third-party residual guarantees and contractual
customer purchase options.  Many of these factors are gathered in an
application survey that is completed prior to quotation.  The lease
agreement also clearly defines applicable return conditions and remedies for
non-compliance, to ensure that the leased equipment will be in good operating
condition upon return.  Model changes and updates, as well as market
strength and product acceptance, are monitored and residual adjustments are made
to residual values 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 reflect a non-temporary impairment due to economic factors,
obsolescence or other adverse circumstances, the residuals are adjusted to the
lower estimated values by a charge to earnings.  For equipment on
operating leases, the charge is recognized through depreciation
expense.  For finance leases, it is recognized through a reduction of
finance revenue.
  Allowance
for credit losses
 Management’s
ongoing evaluation of the adequacy of the allowance for credit losses considers
both impaired and unimpaired finance receivables and takes into consideration
past loss experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower’s ability to repay, estimated value of
underlying collateral and current economic conditions.  In estimating
probable credit losses, we review accounts that are past due, non-performing, in
bankruptcy or otherwise identified as at-risk for potential credit
loss.  Accounts are identified as at-risk for potential credit loss
using information available about the customer, such as financial statements,
news reports and published credit ratings as well as general information
regarding industry trends and the general economic environment.
  The
allowance for credit losses attributable to specific accounts is based on the
most probable source of repayment, which is normally the liquidation of
collateral.  In determining collateral value, we estimate the current
fair market value of the collateral and factor in credit enhancements such as
additional collateral and third-party guarantees. The allowance for credit
losses attributable to the remaining accounts is a general allowance based upon
the risk in the portfolio primarily using probabilities of default and an
estimate of associated losses.  In addition, qualitative factors not
able to be fully captured in previous analysis including industry trends,
macroeconomic factors and model imprecision are considered in the evaluation of
the adequacy of the allowance for credit losses.  These qualitative
factors are subjective and require a degree of management judgment.
  31
 
 UNAUDITED
  While
management believes it has exercised prudent judgment and applied reasonable
assumptions, which have resulted in an allowance presented in accordance with
generally accepted accounting principles, there can be no assurance that in the
future, changes in economic conditions or other factors might cause changes in
the financial health of our customers, which could change the timing and level
of payments received, and thus result in losses greater than the estimated
losses or necessitate a change to our estimated losses.
  CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
  Certain
statements contained in this Quarterly Report on Form 10-Q may be considered
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
1934.  These statements may relate to future events or our future
financial performance, which may involve known and unknown risks and
uncertainties and other factors that may cause our actual results, levels of
activity, performance or achievement to be materially different from those
expressed or implied by any forward-looking statements.  In this
context, words such as "believes," "expects," "estimates," "anticipates,"
"will," "should" and similar words or phrases often identify forward-looking
statements made on behalf of Cat Financial.  These statements are only
predictions.  Actual events or results may differ materially due to
factors that affect international businesses, including changes in economic
conditions and ongoing significant challenges and disruptions in the global
financial and credit markets, and change in laws and regulations and political
stability, as well as factors specific to Cat Financial and the markets we
serve, including the market’s acceptance of the Company’s products and services,
the creditworthiness of customers, interest rate and currency rate fluctuations
and estimated residual values of leased equipment.  Those risk factors
may not be exhaustive.  We operate in a continually changing business
environment, and new risk factors emerge from time to time.  We cannot
predict these new risk factors, nor can we assess the impact, if any, of these
new risk factors on our businesses or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
projected in any forward-looking statements.  Accordingly,
forward-looking statements should not be relied upon as a prediction of actual
results.  Moreover, we do not assume responsibility for the accuracy
and completeness of those statements.  All of the forward-looking
statements are qualified in their entirety by reference to the factors discussed
under the captions "Risk Factors" and "Management’s Discussion and Analysis of
Financial Condition and Results of Operations" in our Form 10-K filed with the
Securities and Exchange Commission on February 20, 2009.  We do not
undertake to update our forward-looking statements.
  ITEM 4. CONTROLS AND
PROCEDURES
  Evaluation of Disclosure
Controls and Procedures
 An
evaluation was performed under the supervision and with the participation of our
management, including our Chief Executive Officer (CEO) and our Chief Financial
Officer (CFO), of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this
quarterly report.  Based on this evaluation, our management, including
the CEO and CFO, concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in reports
that we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in SEC
rules and forms.
  Changes in Internal Control
over Financial Reporting
 There
have been no changes in our internal control over financial reporting during the
three months ended March 31, 2009, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
  32
 
 UNAUDITED
  PART
II. OTHER INFORMATION
  ITEM 1.  LEGAL
PROCEEDINGS
  We are
involved in unresolved legal actions that arise in the normal course of
business.  The majority of these unresolved actions involve claims to
recover collateral, claims pursuant to customer bankruptcies and the pursuit of
deficiency amounts.  Although it is not possible to predict with
certainty the outcome of our unresolved legal actions or the range of probable
loss, we believe that these unresolved legal actions will neither individually
nor in the aggregate have a material adverse effect on our consolidated
financial position, liquidity or profit.
  ITEM 1A.  RISK
FACTORS
  See Part
I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended
December 31, 2008 for a discussion of the risks and uncertainties that may
affect our business.  There has been no material change in this
information.
  ITEM 5.  OTHER
INFORMATION
  None.
  ITEM
6.  EXHIBITS
  3.1
              Certificate
      of Incorporation of the Company, as amended (incorporated by reference
      from Exhibit 3.1 to the Company’s Form 10 for the year ended December 31,
      1984).3.2
              Bylaws
      of the Company, as amended (incorporated by reference from Exhibit 3.2 to
      the Company’s Quarterly Report on Form 10-Q, for the quarter ended June
      30, 2005).4.1
              Indenture,
      dated as of April 15, 1985, between the Company and Morgan Guaranty Trust
      Company of New York, as Trustee (incorporated by reference from Exhibit
      4.1 to the Company’s Registration Statement on Form S-3, Commission File
      No. 33-2246).4.2
              First
      Supplemental Indenture, dated as of May 22, 1986, amending the Indenture
      dated as of April 15, 1985, between the Company and Morgan Guaranty Trust
      Company of New York, as Trustee (incorporated by reference from Exhibit
      4.1 to the Company’s Quarterly Report on Form 10-Q, for the quarter ended
      June 20, 1986).4.3
              Second
      Supplemental Indenture, dated as of March 15, 1987, amending the Indenture
      dated as of April 15, 1985, between the Company and Morgan Guaranty Trust
      Company of New York, as Trustee (incorporated by reference from Exhibit
      4.3 to the Company’s Current Report on Form 8-K, dated April 24,
      1987).4.4
              Third
      Supplemental Indenture, dated as of October 2, 1989, amending the
      Indenture dated as of April 15, 1985, between the Company and Morgan
      Guaranty Trust Company of New York, as Trustee (incorporated by reference
      from Exhibit 4.3 to the Company’s Current Report on Form 8-K, dated
      October 16, 1989).4.5
              Fourth
      Supplemental Indenture, dated as of October 1, 1990, amending the
      Indenture dated April 15, 1985, between the Company and Morgan Guaranty
      Trust Company of New York, as Trustee (incorporated by reference from
      Exhibit 4.3 to the Company’s Current Report on Form 8-K, dated October 29,
      1990).4.6
              Indenture,
      dated as of July 15, 1991, between the Company and Continental Bank,
      National Association, as Trustee (incorporated by reference from Exhibit
      4.1 to the Company’s Current Report on Form 8-K, dated July 25,
      1991).4.7
              First
      Supplemental Indenture, dated as of October 1, 2005, amending the
      Indenture dated as of July 15, 1991, between the Company and U.S. Bank
      Trust National Association (as successor to the former
      Trustee)(incorporated by reference from Exhibit 4.3 to Amendment No. 5 to
      the Company’s Registration Statement on Form S-3 filed October 20, 2005,
      Commission File No. 333-114075).4.8
              Support
      Agreement, dated as of December 21, 1984, between the Company and
      Caterpillar (incorporated by reference from Exhibit 10.2 to the Company’s
      amended Form 10, for the year ended December 31, 1984).4.9
              First
      Amendment to the Support Agreement dated June 14, 1995, between the
      Company and Caterpillar (incorporated by reference from Exhibit 4 to the
      Company’s Current Report on Form 8-K, dated June 14,
  1995).
  33
 
 UNAUDITED
  
 10.1
              Tax
      Sharing Agreement, dated as of June 21, 1984, between the Company and
      Caterpillar (incorporated by reference from Exhibit 10.3 to the Company’s
      amended Form 10, for the year ended December 31, 1984).10.2
              Five-Year
      Credit Agreement, dated as of September 21, 2006 (2006 Five-Year Credit
      Agreement), among the Company, Caterpillar, Caterpillar International
      Finance plc, Caterpillar Finance Corporation, certain other financial
      institutions named therein and Citibank, N.A., The Bank of
      Tokyo-Mitsubishi UFJ, Ltd., Citibank International plc, ABN AMRO Bank
      N.V., Bank of America, N.A., Barclays Bank PLC, J.P. Morgan Securities,
      Inc., Société Générale and Citigroup Global Markets Inc. (incorporated by
      reference from Exhibit 99.1 to the Company’s Current Report on Form 8-K,
      filed September 27, 2006, Commission File No. 0-11241).10.3
              Japan
      Local Currency Addendum to the 2006 Five-Year Credit Agreement among the
      Company, Caterpillar, Caterpillar Finance Corporation, the Japan Local
      Currency Banks named therein, Citibank, N.A. and The Bank of
      Tokyo-Mitsubishi UFJ, Ltd. (incorporated by reference from Exhibit 99.2 to
      the Company’s Current Report on Form 8-K, filed September 27,
      2006).10.4
              Amendment
      No. 1 to Japan Local Currency Addendum to the 2006 Five-Year Credit
      Agreement among the Company, Caterpillar, Caterpillar Finance Corporation,
      the Japan Local Currency Banks named therein, Citibank, N.A. and The Bank
      of Tokyo-Mitsubishi UFJ, Ltd. (incorporated by reference from Exhibit 99.5
      to the Company’s Current Report on Form 8-K, filed January 26,
      2009).10.5
              Local
      Currency Addendum to the 2006 Five-Year Credit Agreement among the
      Company, Caterpillar International Finance p.l.c., the Local Currency
      Banks named therein, Citibank, N.A. and Citibank International plc
      (incorporated by reference from Exhibit 99.2 to the Company’s Current
      Report on Form 8-K, filed September 27, 2006).10.6
              Amendment
      No. 1 to Local Currency Addendum to the 2006 Five-Year Credit Agreement
      among the Company, Caterpillar International Finance p.l.c., the Local
      Currency Banks named therein, Citibank, N.A. and Citibank International
      plc (incorporated by reference from Exhibit 99.4 to the Company’s Current
      Report on Form 8-K, filed January 26, 2009).10.7
              Amendment
      No. 1 to the 2006 Five-Year Credit Agreement among the Company,
      Caterpillar, Caterpillar Finance Corporation and Caterpillar International
      Finance p.l.c., the Banks, Japan Local Currency Banks and Local Currency
      Banks named therein, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Citibank
      International plc and Citibank, N.A. (incorporated by reference from
      Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, filed October
      31, 2008).10.8
              Omnibus
      Amendment and Waiver Agreement (Amendment No. 2) to the 2006 Five-Year
      Credit Agreement among the Company, Caterpillar, Caterpillar Finance
      Corporation, Caterpillar International Finance p.l.c., the Banks and Local
      Currency Banks named therein, Citibank International plc and Citibank,
      N.A. (incorporated by reference from Exhibit 10.6 to the Company’s
      Quarterly Report on Form 10-Q, filed October 31, 2008).10.9
              Amendment
      No. 3 to the 2006 Five-Year Credit Agreement among the Company,
      Caterpillar, Caterpillar Finance Corporation and Caterpillar International
      Finance Limited (f/k/a Caterpillar International Finance p.l.c.), the
      Banks, Japan Local Currency Banks and Local Currency Banks named therein,
      The Bank of Tokyo-Mitsubishi UFJ, Ltd., Citibank International plc and
      Citibank, N.A. (incorporated by reference from Exhibit 99.4 to the
      Company’s Current Report on Form 8-K, filed September 23,
      2008).10.10
              Amendment
      No. 4 to the 2006 Five-Year Credit Agreement among the Company,
      Caterpillar, Caterpillar Finance Corporation and Caterpillar International
      Finance Limited (f/k/a Caterpillar International Finance p.l.c.), the
      Banks, Japan Local Currency Banks and Local Currency Banks named therein,
      The Bank of Tokyo-Mitsubishi UFJ, Ltd., Citibank International plc and
      Citibank, N.A. (incorporated by reference from Exhibit 99.3 to the
      Company’s Current Report on Form 8-K, filed January 26,
    2009).10.11
              Five-Year
      Credit Agreement, dated as of September 20, 2007 (2007 Five-Year Credit
      Agreement), among the Company, Caterpillar, Caterpillar Finance
      Corporation, certain financial institutions named therein, Citibank, N.A.,
      The Bank of Tokyo-Mitsubishi UFJ Ltd., ABN AMRO Bank N.V., Bank of
      America, N.A., Barclays Bank PLC, J.P. Morgan Securities, Inc., Société
      Générale and Citigroup Global Markets Inc. (incorporated by reference from
      Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed September
      26, 2007).10.12
              Japan
      Local Currency Addendum to the 2007 Five-Year Credit Agreement among the
      Company, Caterpillar Finance Corporation, the Japan Local Currency Banks
      named therein, Citibank, N.A. and The Bank of Tokyo-Mitsubishi UFJ, Ltd.
      (incorporated by reference from Exhibit 99.2 to the Company’s Current
      Report on Form 8-K, filed September 26, 2007).10.13
              Amendment
      No. 1 to Japan Local Currency Addendum to the 2007 Five-Year Credit
      Agreement among the Company, Caterpillar Finance Corporation, the Japan
      Local Currency Banks named therein, Citibank, N.A. and The Bank of
      Tokyo-Mitsubishi UFJ, Ltd. (incorporated by reference from Exhibit 99.6 to
      the Company’s Current Report on Form 8-K, filed January 26,
      2009).
  34
 
 UNAUDITED
 
 10.14
              Amendment
      No. 1 to the 2007 Five-Year Credit Agreement among the Company,
      Caterpillar and Caterpillar Finance Corporation, the Banks and Japan Local
      Currency Banks named therein, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and
      Citibank, N.A. (incorporated by reference from Exhibit 99.3 to the
      Company’s Current Report on Form 8-K, filed September 23,
      2008).10.15
              Amendment
      No. 2 to the 2007 Five-Year Credit Agreement among the Company,
      Caterpillar and Caterpillar Finance Corporation, the Banks and Japan Local
      Currency Banks named therein, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and
      Citibank, N.A. (incorporated by reference from Exhibit 99.2 to the
      Company’s Current Report on Form 8-K, filed January 26,
    2009).10.16
              364-Day
      Credit Agreement dated September 18, 2008 (2008 364-Day Credit Agreement)
      among the Company, Caterpillar, Caterpillar Finance Corporation, the Banks
      named therein,Citibank, N.A.,
      The Bank of Tokyo-Mitsubishi UFJ, Ltd.,ABN AMRO Bank N.V., Bank of America,
      N.A., Barclays Bank PLC, J.P. Morgan Securities, Inc., Société Générale
      and Citigroup Global Markets Inc. (incorporated by reference from Exhibit
      99.1 to the Company’s Current Report on Form 8-K, filed September 23,
      2008).10.17
              Amendment
      No. 1 to the 2008 364-Day Credit Agreement among the Company, Caterpillar,
      Caterpillar Finance Corporation, the Banks and Japan Local Currency Banks
      named therein, The Bank of Tokyo Mitsubishi UFJ, Ltd. (as Japan local
      currency agent and bank), and Citibank, N.A. (as agent) (incorporated by
      reference from Exhibit 99.1 to the Company’s Current Report on Form 8-K,
      filed January 26, 2009).10.18
              Japan
      Local Currency Addendum to the 2008 364-Day Credit Agreement among the
      Company, Caterpillar Finance Corporation, the Japan Local Currency Banks
      named therein, Citibank, N.A. and The Bank of Tokyo-Mitsubishi UFJ, Ltd.
      (incorporated by reference from Exhibit 99.2 to the Company’s Current
      Report on Form 8-K, filed September 23, 2008).10.19
              364-Day
      Credit Agreement dated March 31, 2009 (2009 364-Day Credit Agreement)
      Caterillar, the financial institutions named therein and Citibank, N.A.
      (as Administrative Agent) (incorporated by reference from Exhibit 99.1 to
      the Company's Current Report on Form 8-K, filed on April 6,
      2009).10.20
              Notice
      of Bank Addition and Assumption and Acceptance dated April 7, 2009, adding
      the Bank of Tokyo-Mitsubishi UFJ, Ltd. as a party to the 2009 364-Day
      Credit Agreement (incorporated by reference from Exhibit 99.2 to the
      Company's Amendment No. 1 to Current Report on Form 8-K/A, filed on April
      7, 2009).12
              Computation
      of Ratio of Profit to Fixed Charges.23
              Consent
      of Independent Registered Public Accounting Firm.31.1
              Certification
      of Kent M. Adams, President, Director and Chief Executive Officer of
      Caterpillar Financial Services Corporation, of Caterpillar Financial
      Services Corporation, as required pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
              Certification
      of James A. Duensing, Executive Vice President and Chief Financial Officer
      of Caterpillar Financial Services Corporation, as required pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.32
              Certifications
      of Kent M. Adams, President, Director and Chief Executive Officer of
      Caterpillar Financial Services Corporation, and James A. Duensing,
      Executive Vice President and Chief Financial Officer of Caterpillar
      Financial Services Corporation, as required pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.
  35
 
 UNAUDITED
  SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
  Caterpillar Financial Services
Corporation(Registrant)
 Date:May
      1, 2009
              By:/s/ Steven R.
      ElsesserSteven
      R. Elsesser, Controller
 
 Date:May
      1, 2009
              By:/s/  Kent M. AdamsKent
      M. Adams, President, Director and Chief Executive
  Officer
 
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