3rd Quarter & 9 Mths Results

Caterpillar Inc
22 October 2001


DOCUMENT DATED 16 OCTOBER 2001


                   CATERPILLAR REPORTS THIRD-QUARTER RESULTS

PEORIA, ILL. - Caterpillar Inc. (NYSE: CAT) today reported third-quarter sales 
and revenues of $5.06 billion and profit of $205 million or 59 cents per share. 
Sales and revenues were $277 million higher than third-quarter 2000, as a result
of a 6 percent increase in physical sales volume and a 9 percent increase in 
Financial Products revenues.

Company profit was $11 million or 5 percent lower than third-quarter 2000 which 
was favorably impacted by a nonrecurring $39 million tax adjustment at 
Caterpillar Brasil Ltda. Excluding this adjustment to third-quarter 2000 
results, profit increased $28 million primarily due to the higher sales volume. 
Profit was adversely impacted by cost inefficiencies caused by significant 
volume shifts at some manufacturing facilities and higher selling, general and 
administrative expenses (SG&A). SG&A increases were related to special projects 
for future growth and to improve long-term cost structure.

'Our financial performance in the third quarter continued to reflect the 
benefits of diversification, however several key industries we serve -- 
especially truck engines -- remained extremely weak,' said Chairman and CEO Glen
Barton. 'while continuing economic uncertainty following last month's terrorist 
attacks will impact fourth-quarter sales volume to some extent, we expect to 
deliver full-year results close to our initial outlook. We're on track to 
achieve first-year bottom line benefits from our global implementation of 6 
Sigma, a first for any company undertaking such an effort. Most importantly, our
commitment to improve shareholder value by achieving our long-term growth and 
cost reduction goals is unwavering.'

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                                  HIGHLIGHTS

THIRD-QUARTER 2001

* Sales and revenues of $5.06 billion were $277 million or 6 percent higher     
  compared to third-quarter 2000. Revenues from Financial Products increased 9  
  percent.

* Sales inside the United States were 49 percent of worldwide sales, the same as
  a year ago.

* Profit was $205 million or 59 cents per share, up 16 percent excluding the    
  nonrecurring tax adjustment to third-quarter 2000 results.

* Caterpillar Financial Services Corporation (Cat Financial), included in       
  Financial Products, separately reported record revenues and profit after tax  
  for third-quarter 2001.

* 218,000 shares were repurchased during the quarter. On September 30, 2001     
  there were 343.3 million shares outstanding.

* As previously announced, a quarterly dividend of 35 cents per share was       
  declared. This maintains the dividend from the previous quarter.

OUTLOOK

While we expect full-year 2001 sales and revenues to be about flat with 2000, 
the economic environment for the fourth quarter is more uncertain than 
considered in prior outlooks. Due to the economic uncertainty, our current 
estimate is that fourth-quarter sales and revenues will be down slightly from 
fourth-quarter 2000, with full-year profit now projected to be down 10 to 15 
percent.

Based on our preliminary outlook, worldwide sales and revenues are expected to 
be flat to up slightly in 2002. (Complete outlook begins on page 9.)

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                                 DETAILED ANALYSIS

                THIRD-QUARTER 2001 COMPARED WITH THIRD-QUARTER 2000

Sales and revenues for the third-quarter 2001 were $5,06 billion, 6 percent 
higher than third-quarter 2000. Sales and revenues were $277 million higher than
third-quarter 2000, as a result of a 6 percent increase in physical sales volume
and a 9 percent increase in Financial Products revenues. Sales were unfavorably 
impacted by the effect of the stronger U.S. dollar on sales denominated in 
currencies other than U.S. dollars (primarily the euro and the Australian 
dollar). Company profit of $205 million or 59 cents per share was $11 million or
5 percent lower than third-quarter 2000 which was favorably impacted by a 
nonrecurring $39 million tax adjustment at Caterpillar Brasil Ltda. Excluding 
this adjustment to third-quarter 2000 results, profit increased $28 million or 
16 percent primarily due to the higher sales volume. Profit was adversely 
impacted by cost inefficiencies caused by significant volume shifts at some 
manufacturing facilities and higher SG&A. SG&A increases were related to special
projects for future growth and to improve long-term cost structure.
   
MACHINERY AND ENGINES

Sales

(Millions of dollars)                   North                 Latin       Asia/
                           Total      America     EAME*     America     Pacific

Third-Quarter 2001
Machinery                 $2,979       $1,674      $778        $218        $309
Engines**                  1,720          888       452         174         206
                          $4,699       $2,562    $1,230        $392        $515

Third-Quarter 2000
Machinery                 $2,776       $1,511      $753        $210        $302
Engines**                  1,676          892       470         138         176
                          $4,452       $2,403    $1,223        $348        $478


 * Europe, Africa & Middle East and Commonwealth of Independent States
** Does not include internal engine transfers of $303 million in third-quarter  
   2001 and $331 million in third-quarter 2000. Internal engine transfers are   
    valued at prices comparable to those for unrelated parties.

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Machinery sales were $2.98 billion, an increase of $203 million or 7 percent 
from third-quarter 2000. Physical sales volume increased 7 percent from a year 
ago.

Sales increased in all regions. In North America, sales increased primarily due 
to higher retail demand. In EAME, sales were up due to improved retail demand 
which more than offset the impact of dealer inventory reduction. Sales in Latin 
America were higher due to modest increases in inventories during the quarter in
anticipation of higher fourth-quarter retail sales. Sales in Asia/Pacific 
increased due to higher retail demand.

Engine sales were $1.72 billion, an increase of $44 million or 3 percent from 
third-quarter 2000.  Physical sales volume increased 6 percent, partially offset
by unfavorable price realization, due in part to the impact of the stronger U.S.
dollar on sales denominated in currencies other than U.S. dollars.

The increase in physical sales volume resulted from continuing strong demand for
power generation products, particularly in North America, and significantly 
higher sales to oil and gas industries and marine applications. Sales of engines
to North American truck OEMs remained depressed.

                             Operating Profit

(Millions of dollars)

                                         Third-Quarter       Third-Quarter
                                               2001               2000

Machinery                                      $173               $143
Engines                                         133                151

                                               $306               $294

Caterpillar operations are highly integrated; therefore, the company uses a 
number of allocations to determine lines of business operating profit.

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Machinery operating profit increased $30 million, or 21 percent from third-
quarter 2000. The benefit from higher physical volume was partially offset by 
higher labor and energy-related costs.

Engine operating profit decreased $18 million, or 12 percent, from third-quarter
2000. The benefit of higher physical volume was more than offset by lower price
realization and manufacturing inefficiencies related to significant swings in 
production levels.

      Interest expense was favorable $2 million compared to a year ago.

Other income/expense reflects a net increase in expense of $22 million due to
several small unfavorable items.

FINANCIAL PRODUCTS

Revenues for the third quarter were $417 million, up $31 million or 8 percent 
compared with third-quarter 2000 (excluding transactions with Machinery and 
Engines, revenues increased $30 million or 9 percent). The increase resulted 
primarily from a larger receivables portfolio at Cat Financial.

Before tax profit increased $38 million or 51 percent from third-quarter 2000. 
The increase resulted primarily from the higher gains on sales of receivables 
and improved interest rate spreads on the receivables portfolio at Cat 
Financial.

INCOME TAXES

Third-quarter tax expense reflects an estimated annual tax rate of 32 percent 
for both 2001 and 2000. However, third-quarter 2000 income tax expense was 
favorably affected by the reversal of a valuation allowance of $39 million at 
Caterpillar Brasil Ltda.

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UNCONSOLIDATED AFFILIATED COMPANIES

The company's share of unconsolidated affiliated companies' results increased $8
million from third quarter a year ago, primarily due to stronger results at Shin
Caterpillar Mitsubishi Ltd.

SUPPLEMENTAL INFORMATION

Dealer Machine Sales to End Users and Deliveries to Dealer Rental Operations

Sales (including both sales to end users and deliveries to dealer rental 
operations) in North America were higher compared to third-quarter 2000 due to 
increased demand in both the United States and Canada. Sales were up sharply in 
mining due to continued strong demand from the coal mining industry. Sales into 
waste, agriculture and heavy construction also increased. Sales to quarry & 
aggregates, general construction, forestry and the industrial sectors declined 
from a year ago.

Sales increased in EAME as a result of higher demand throughout the region in 
mining, general construction, forestry, heavy construction, waste, agriculture 
and quarry & aggregates. Sales into industrial applications declined.

In Latin America, sales declined due to lower sales into mining, heavy 
construction and industrial sectors. Sales into general construction remained 
near year-earlier levels.

Sales in Asia/Pacific were higher. Sales increases in mining, heavy construction
and agriculture more than offset lower sales into forestry, industrial, general 
construction and quarry & aggregates.

Dealer Inventories of New Machines

Worldwide dealer new machine inventories at the end of the third quarter were 
lower than a year ago and, compared to current selling rates, declined in all 
regions.

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Engine Sales to End Users and OEMs

Sales in North America increased. Sharply higher sales of engines to oil and gas
industries, continued strong demand for power generation products and higher 
sales to marine commercial applications more than offset continued weakness in 
sales to North America on-highway truck OEMs and lower sales to industrial 
users.

EAME sales declined due to lower demand from industrial, oil and gas and marine 
applications. In Asia/Pacific, sales increased due to higher demand from oil and
gas industries and marine applications. In Latin America, sales were lower in 
all applications.

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CONDENSED CASH FLOW

Net free cash flow (profit after tax adjusted for depreciation, changes in 
working capital, capital expenditures, and dividends) for Machinery and Engines 
was $71 million through the third quarter of 2001, a decrease of $513 million 
from 2000. This decrease was primarily due to lower profit after tax, an 
increase in working capital and capital expenditures excluding equipment leased 
to others.

For the Nine Months Ended
(Millions
of dollars)        Consolidated           Machinery &             Financial 
                                          Engines*                Products
                 Sept. 30,   Sept. 30, Sept. 30,   Sept. 30, Sept. 30, Sept. 30,
                 2001        2000      2001        2000      2001      2000
Profit after
tax              $ 638       $ 789     $ 638       $ 789     $ 170     $ 124
Depreciation
and
amortization       872         798       636         616       236       182
Change in
working
capital
excluding
cash, debt and
dividends
payable           (833)       (449)     (182)         17      (523)     (375)
Capital
expenditures
excluding
equipment
leased to
others            (686)       (535)     (668)       (508)      (18)      (27) 
Expenditures
for equipment
leased to
others, net
of
disposals         (344)       (311)        1          15      (345)     (326)
Dividends
paid              (354)       (345)     (354)       (345)       (5)      (29)

Net Free
Cash Flow         (707)        (53)       71         584      (485)     (451)

Other
significant
cash flow
items:
Treasury
shares
purchased          (43)       (397)      (43)       (397)        -         -
Net (increase)
decrease in
long-term
finance
receivables        241        (396)        -           -       241      (396)
Net increase
(decrease)
in debt          1,095         858       208        (106)      798       959
Investments
and
acquisitions
(net of
cash
acquired)         (396)        (86)     (109)        (77)     (287)       (9)
Other             (292)        (76)     (230)       (125)     (266)     (132)

Change in
cash and
short-term
Investments      $(102)      $(150)    $(103)      $(121)       $1      $(29)

* Represents Caterpillar Inc. and its subsidiaries, except for Financial 
Products which is accounted for on the equity basis.

Note: Due to the acquisition of the remaining interests in companies previously 
accounted for on an equity basis, and the subsequent consolidation of these 
companies, certain amounts have been removed from 'Change in working capital - 
excluding cash, debt and dividends payable' (2001 and 2000) and 'Capital 
expenditures excluding equipment leased to others' (2000) and included in 
'Investments and acquisitions' or 'Other'.

Page 8

EMPLOYMENT

At the end of third-quarter 2001, Caterpillar's worldwide employment was 71,927 
compared with 67,510 one year ago. Most of the increase occurred outside of the 
United States as we expanded operations to meet long-term objectives for future 
growth, including acquisitions which added 2,094 employees.

OUTLOOK

Summary of Key Macroeconomic Assumptions

World growth slowed sharply in the first nine months of 2001. As a consequence 
of the September 11 terrorist attacks in the U.S., this slowing of economic 
activity has become sharper. Weak overall economic growth is now expected to 
continue into 2002. Short-term negative shocks to U.S. investor/consumer 
confidence and a retrenchment in overall spending are occurring. The growth 
recovery, previously expected to commence in the third quarter, is now expected 
to be delayed by several months. Absent further shocks, actions already taken 
and those expected to be taken by the U.S. Federal Reserve and Congress are 
projected to spark signs of a rebound in the U.S. economy by early 2002. 
Recovery is expected to be back on track by mid-year 2002, and is expected to 
gain momentum in the second half of the year, due to the extensive 
monetary/fiscal stimulus that has been put in place. Together with complementary
stimulus measures in Europe, the U.K. and Canada, this recovery in the U.S. is 
projected to set the stage for a broader global recovery in the second half of 
2002.

Update for 2001

The 2001 slowdown negatively impacted general construction machines, equipment 
services and further depressed demand for truck engines. Metal mining and 
forestry machine demand was already soft, and is expected to be down further in 
response to lower industrial commodity prices.  Demand for heavy construction 
equipment is expected to remain at good levels, driven by higher infrastructure 
spending in the U.S. Demand for energy commodities had been strong through the 
first eight months of 2001, but the extended industrial slowdown caused prices 
of oil & gas to decline sharply beginning in September, and prices are expected 
to be under downward pressure for the next several months.

Page 9

Company sales and revenues are estimated to be about flat in 2001, although the 
economic environment is more uncertain for the fourth quarter than considered in
previous outlooks. Slightly higher sales in Europe and Latin America will be 
offset by slightly lower sales in North America while sales should be flat in 
Asia/Pacific. Financial revenues are expected to be up moderately. Risks to the 
worldwide sales and revenue outlook remain high as a result of the impact of the
terrorist attacks, the worldwide response to those attacks and a sharper 
business slowdown. Due to the economic uncertainty, the current estimate is that
fourth-quarter 2001 sales and revenues will be down slightly compared with 
fourth-quarter 2000, resulting in full-year profit projected to be down 10 to 15
percent.

Preliminary 2002 Outlook for Sales and Revenues

Based on the key macroeconomic assumptions described above for 2002, we would 
expect worldwide industry sales to be flat to up slightly compared with 2001. In
this environment, we would expect company sales and revenues to perform at least
as well.

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                                   *     *    *

The information included in the Outlook section is forward looking and involves 
risks and uncertainties that could significantly affect expected results. A 
discussion of these risks and uncertainties is contained in Form 8-K filed with 
the Securities & Exchange Commission (SEC) on October 16, 2001. That filing is 
available from the SEC website at http://www.sec.gov/cgi-bin/srch-
edgar?0000018230

Caterpillar's latest financial results, current outlook and quarterly conference
call are also available via:

Telephone:
        [phone] (Inside the United States and Canada)
        [phone] (Outside the United States and Canada)

Internet:
        http://www.CAT.com/investor
        http://www.CAT.com/irwebcast (live broadcast/replays of quarterly       
        conference call)

Caterpillar contact:
        Marsha Hausser
        Corporate Public Affairs
        309-675-1307
        [e-mail]

Note:   Information contained on our website is not incorporated by reference 
into this release.


                        Financial Pages Follow

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                              CATERPILLAR INC.
                  CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
                         FOR THE THREE MONTHS ENDED
                  (Millions of dollars except per share data)

                   Consolidated        Machinery &           Financial Products
                                        Engines *
                 Sept. 30,  Sept. 30,  Sept. 30,  Sept. 30,  Sept. 30, Sept. 30,
                    2001       2000       2001      2000        2001     2000

Sales and revenues:
Sales of Machinery
& Engines          $4,699      $4,452     $4,699     $4,452    $     -   $    -
Revenues of
Financial Products    357         327          -          -        417      386

Total sales
and revenues        5,056       4,779      4,699      4,452        417      386

Operating costs:
Cost of goods sold  3,669       3,471      3,669      3,471          -        -
Selling, general, 
and administrative
expenses              638         590        557        526         92       74
Research
and development
expenses              167         161        167        161          -        -
Interest expense 
of Financial 
Products              161         186          -          -        167      202
Other
operating expenses     80          60          -          -         80       60

Total operating 
costs               4,715       4,468     4,393      4,158        339      336

Operating Profit      341          311       306        294         78       50

Interest expense
excluding Financial
Products               69           71        69         71          -        -
Other income(expense)  23           25       (54)       (32)        34       24

Consolidated profit
before taxes          295          265       183        191        112       74

Provision for income
taxes                  94           45        51         19         43       26

Profit of consolidated
companies             201          220       132        172         69       48

Enquiry in profit of
unconsolidated
affiliates              4           (4)        2         (5)         2        1

Equity in profit of
Financial Products
subsidiaries            -            -        71         49          -        -

Profit               $205         $216      $205       $216        $71      $49

EPS of common stock $0.60        $0.63

EPS of common stock
- assuming dilution $0.59        $0.62


Weighted average 
shares outstanding
(thousands)
   Basic          343,320       344,506
   Assuming 
     dilution     347,519       346,298


* Represents Caterpillar Inc. and its subsidiaries, except for Financial 
Products which is accounted for on the equity basis. Transactions between 
Machinery and Engines and Financial Products have been eliminated to arrive at 
the Consolidated data.

Page 12


                              CATERPILLAR INC.
                  CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
                         FOR THE THREE MONTHS ENDED
                  (Millions of dollars except per share data)

                   Consolidated        Machinery &           Financial Products
                                        Engines *
                 Sept. 30,  Sept. 30,  Sept. 30,  Sept. 30,  Sept. 30, Sept. 30,
                    2001       2000       2001      2000        2001     2000

Sales and revenues:
Sales of Machinery
& Engines           14,292    $14,133    $14,292    $14,133    $     -   $    -
Revenues of
Financial Products   1,062        928          -          -      1,230    1,075

Total sales
and revenues        15,354     15,061     14,292     14,133      1,230    1,075

Operating costs:
Cost of goods sold  11,086     10,869     11,086     10,869          -        -
Selling, general, 
and administrative
expenses             1,914      1,762      1,679      1,563         267    227
Research
and development
expenses               506        473        506        473           -      -
Interest expense 
of Financial 
Products               518        509          -          -         542    546
Other operating 
expenses               222        172          -          -         222    172

Total operating 
costs               14,246     13,785     13,271     12,905       1,031    945
 
Operating Profit     1,108      1,276      1,021      1,228         199    130

Interest expense
excluding Financial
Products               222        216        222        216           -       -
Other income(expense)   46         65       (130)       (74)         64      57

Consolidated profit
before taxes           932      1,125        669        938         263     187
 
Provision for income
taxes                  297        319        199        254          98      65

Profit of consolidated
companies              635        806        470        684         165     122

Equity in profit of
unconsolidated
affiliates               3        (17)        (2)       (19)          5       2

Equity in profit of
Financial Products
subsidiaries             -          -        170        124          -        -

Profit                $638       $789       $638       $789       $170     $124

EPS of common stock  $1.86      $2.27

EPS of common stock
- assuming dilution  $1.84      $2.25


Weighted average 
shares outstanding
(thousands)
   Basic           343,327    347,829
   Assuming 
     dilution      347,191    350,071


* Represents Caterpillar Inc. and its subsidiaries, except for Financial 
Products which is accounted for on the equity basis. Transactions between 
Machinery and Engines and Financial Products have been eliminated to arrive at 
the Consolidated data.

Page 13

                              CATERPILLAR INC.
                        CONDENSED FINANCIAL POSITION
                           (MILLIONS OF DOLLARS)
                                                     Consolidated
                                           (Caterpillar Inc. and Subsidiaries)
                                          Sept. 30,      Dec. 31,    Sept 30,
                                            2001           2000        2000
Assets
Current assets:
Cash and short-term investments                $232         $334        $398
Receivables - trade and other                 2,644        2,608       2,471
Receivables - finance                         6,187        5,471       5,620
Deferred income taxes                           322          397         436
Prepaid expenses                              1,128        1,019         871
Inventories                                   2,922        2,692       2,644

Total current assets                         13,435       12,521      12,440

Property, plant, and equipment - net          6,311        5,951       5,585
Long-term receivables - trade and other          88           76          71
Long-term receivables - finance               5,854        6,095       5,984
Investments in unconsolidated affiliated 
  companies                                     787          551         518
Deferred income taxes                           979          907         908
Intangible assets                             1,485        1,507       1,488
Other assets                                    964          856         846

Total Assets                                $29,903      $28,464     $27,840


Liabilities
Current liabilities:
Short-term borrowings:
  - Machinery & Engines                        $241         $369        $168
  - Financial Products                          988          602         442
Accounts payable                              2,171        2,339       2,263
Accrued expenses                              1,248        1,048       1,105
Accrued wages, salaries, and employee 
  benefits                                    1,396        1,274       1,124
Dividends payable                                 -          117           -
Deferred and current income taxes payable        62           57          99 
Long-term debt due within one year:          
  - Machinery & Engines                          62          204         204
  - Financial Products                        3,172        2,558       2,702

Total current liabilities                     9,340        8,568       8,107

Long-term debt due after one year:
  - Machinery & Engines                       3,332        2,854       2,839
  - Financial Products                        8,367        8,480       8,305
Liability for post-employment benefits        2,491        2,514       2,537
Deferred income taxes and other liabilities     496          448         507

Total Liabilities                            24,026       22,864      22,295

Stockholders' Equity
  Common stock                                1,044        1,048       1,049
  Profit employed in the business             7,606        7,205       7,175
  Accumulated other comprehensive income        (73)          23         (16)
  Treasury stock                             (2,700)      (2,676)     (2,663)

Total Stockholders' Equity                    5,877        5,600       5,545

Total Liabilities and Stockholders' Equity  $29,903      $28,464     $27,840


Certain amounts for prior periods have been reclassified to conform with current
financial statement presentation.

Caterpillar: Public Release


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