CATERPILLAR FINANCIALCATERPILLAR FINANCIAL

SERVICESSERVICES

Team CAN-IStacey Kemner, Russ Poush, Anthony Spencer

September 12, 2006

BackgroundBackground

CAT Financial offers financial

services to Dealers, Users,

and CATBUs and is a wholly

owned subsidiary of

Caterpillar Incorporated.

Caterpillar Incorporated

markets include: general,

heavy and compact

equipment construction,

engines, power generation, lift

trucks, asphalt paving, marine,

and forestry.

Mission & Vision

Statements

Malcolm Baldrige

National Quality Award

Profits

6 Sigma Results

Critical Success Factors

(CSFs)

Customer Service

Mission & Vision StatementMission & Vision Statement

Vision

Mission

Critical Success Factors

6 Sigma

Shared Values

Vision

We will be a significant reason

customers select Caterpillar worldwide.

We will leverage our intellectual

capital to deliver customer-driven

solutions and enhance shareholder

value.

We will grow on our strong foundation

as a caring and learning organization.

Mission

Helping Caterpillar and our customers

succeed through financial service

excellence.

Critical Success Factors

•Customer Satisfaction

• Growth

• Reliable Returns

• Employee Satisfaction

• Leadership

• World-Class Core Processes

Shared Values

We are a people of integrity who

respect and care for others in

our workplace and our world.

We are driven by the freedom

and responsibility to exceed

expectations of those we work

with and serve.

Caterpillar Financial Service Corporation, Summary, 2

Figure P-4 Business Excellence

Malcolm Baldrige National Quality AwardMalcolm Baldrige National Quality Award

• 1993 - Began using theBaldrige program as part ofthe Tennessee QualityAward process.

• 1999 - Won TennesseeQuality Excellence Awardwith Global ExcellenceCommendation

• 2003 - Won MalcolmBaldrige National QualityAward

6 Sigma Results6 Sigma Results

'00 '01 '02 '03 YTD '04 EST

$

Good

Figure 7.3-7, Caterpillar Financial Services Corporation Summary, 46

CFSC was able to fully recoup all 6 Sigma start-up costs in 2001, the first

year of deployment, and is yielding significant benefits, with 2002 after-tax

savings exceeding $9 million.

ProfitsProfits

Figure 7.3-3 Reliable Returns to

Caterpillar, Inc.

CF

SC

%

T

ota

l C

ate

rp

illa

r

Ea

rn

in

gs

• Since 1998, CFSC has

increased assets 34% and

profit 54% (industry

performance has declined

21% & 35%, respectively)

• CFSC’s contribution to

Caterpillar’s total earnings

increased from 5.6%

(1998) to over 17% (2002)

Good

Caterpillar Financial Service Corporation, Summary, 44-45

CSF IndicatorsCSF Indicators

• Reliable Returns - Portfolio

Health

– Product/Services Expansions

– Top 20 Users (na)

– Past Due Results

– Inactive Accounts

– Restructures (na)

– Repossessions

– Potential Losses >500k (na)

– Defaults

– Allowance for Credit Losses% Past Dues % Inactives Repo Units % Allowance

7.5-13 Portfolio Factors

2000 2001

2002 2003 YTD

Industry Benchmark

Good

Caterpillar Financial Services Corporation Summary,53

CSF IndicatorsCSF Indicators

• Employee

Satisfaction/Health

– Retention

– Compensation

Competitiveness

– Succession Planning

– Diversity

– Development

7.4-6 Employee Retention

1999 2000 2001 2002 2003 YTD

%

CSFC CFSC with Regional Offices

% Non Voluntary/Voluntary Industry/Top Quartile

7.4-4 Investment in Employee Recognition

1999 2000 2001 2002 2003 YTD

$

Eye On quality Cat Bucks 6 Sigma Rewards

Caterpillar Financial Services Corporation Summary, 48

CSF IndicatorsCSF Indicators

• Leadership Health

– Strategic Retreat

– ALC

– Shared Values

– Community Support

7.6-9 Community Support

2001 2002 National

Norm

Baldrige

Winner

%

Fa

vo

ra

ble

Caterpillar Financial Services Corporation Summary, 55

Good

Customer ServiceCustomer Service

• CAT Financial meets orexceeds customer’sexpectations

• Flexible financial lendingrequirements allow all but asmall percentage of loans to beapproved

• User/Dealer Focus Groups &Surveys re: staff performance,overall satisfaction, futureintentions, loyalty, competitivecompetition

• Email, Internet, Intranet,Extranet - Allow for quickresponse to customer needs

Caterpillar Financial Services Corporation Summary,53

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CATERPILLAR FINANCIALCATERPILLAR FINANCIAL

SERVICESSERVICES

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CATERPILLAR FINANCIALCATERPILLAR FINANCIAL

SERVICESSERVICES

CATERPILLAR FINANCIALCATERPILLAR FINANCIAL

SERVICESSERVICES