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Cooperative Associationof Tractor Dealers, Inc.A N N U A L R E P O R T 2 0 0 1
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Cooperat ive Associat ion of Tractor Dealers, Inc.
Annual Report 2001
Company Profiles
Cooperative Association of Tractor Dealers, Inc. (“CATD”) was incorporated in 1981, to provide Caterpillar Dealers withconsistent, low cost, short term financing. CATD is owned by 2 non-domestic and 58domestic Caterpillar Dealers. CATD issuescommercial paper (“CP”) under a dual series CP program and lends the money to its members.
Dealers Capital Access Trust, Inc. (“DCAT”)was organized in 1992 as a bankruptcy remotespecial purpose corporation. DCAT providesloans to CATD members who do not qualify forthe CATD loan program. DCAT is operated byCATD, under a management agreement.
Tuckahoe Funding Company (“Tuckahoe”)was organized in 1996 as a bankruptcy remotespecial purpose corporation. Tuckahoe providesthe backstop liquidity lines under a banksyndicate agented by Societé Generale, forCATD to issue its dual series CP.
While each of these companies enjoys separateownership and control, management believesthat more disclosure is provided by theirinclusion in CATD’s Annual Report.
Company Profiles ............................................................1
Chairman’s Letter to Shareholders ................................2
CATD Achieves Two Decades of Success........................4
CATD Shareholders .........................................................6
Officers and Directors.....................................................7
How It All Fits Together .................................................8
Glossary of Terms ............................................................9
Cooperative Association of Tractor Dealers, Inc.
Independent Auditor’s Report .....................................10
Balance Sheets ..............................................................11
Statements of Income and Accumulated Deficit .....................................................12
Statements of Cash Flows ............................................13
Notes to Financial Statements .....................................14
Dealers Capital Access Trust, Inc.
Independent Auditor’s Report .....................................20
Balance Sheets ..............................................................21
Statements of Income and Accumulated Deficit .....................................................22
Statements of Cash Flows ............................................23
Notes to Financial Statements .....................................24
Tuckahoe Funding Company
Independent Auditor’s Report .....................................26
Balance Sheets ..............................................................27
Statements of Income and Retained Earnings .................................................28
Statements of Cash Flows ............................................29
Notes to Financial Statements .....................................30
Table of Contents
2 Annual Report 2001
Cooperat ive Associat ion of Tractor Dealers, Inc.
April 12, 2001
To Shareholders of the Cooperative Association of Tractor Dealers, Inc.:
June 8, 2001 marks the completion of my final term as Chairman of the Board of Directorsof the Cooperative Association of Tractor Dealers, Inc. (“CATD”). It has been a rewardingexperience for me to serve in that capacity for the past three years, upon which I reflectwith many favorable memories.
During FY 2001 (ended March 31, 2001), the Co-op continued to achieve robust growth interms of total loans to Caterpillar Dealers. The CATD program ended the year with loans of $1,043 Million (up $199 Million over FY 2000). Dealers Capital Access Trust, Inc. (“DCAT”)finished the year with loans of $173 Million (down $4 Million). The combined portfolio of$1.216 Billion increased by 19%.
Over the past year, interest rates were on a roller coaster, rising during the first half andfalling during the second. In April of 2000, the six-month rate was higher than the overnightrate as usually anticipated; but by March 2001, the yield curve had become inverted with thesix-month rate being lower than the overnight rate. Nonetheless, many dealers still preferthe flexibility of borrowing on a daily basis; and the daily processing volume for CATD andDCAT combined is approximately $500 Million, or almost twice the same activity for theprevious fiscal year.
The CATD Board of Directors addressed many wide-ranging issues pertinent to ourshareholders’ interests and capital needs. Much attention was focused upon the possibilityof CATD’s providing access to long-term capital to Caterpillar Dealers in the form of arelatively new, hybrid, financial instrument known as Trust Preferred Securities. There hasbeen much study and collaboration with Caterpillar Inc. in trying to determine if the TrustPreferred offering is a viable and appropriate product for CATD’s shareholders, but there is still much work to be done. Because of the interest expressed by several shareholders inlong-term capital, the CATD Board of Directors will continue to work with Caterpillar Inc. in efforts to find a reliable source and to supply a suitable form of long-term capital to meet shareholders’ needs.
Caterpillar Inc.’s distribution channels have also been an important topic of discussion duringrecent meetings of CATD’s Board of Directors. As has been widely discussed within regionalCaterpillar Dealer meetings, Caterpillar is intently focused upon end-user, customer demandswithin an increasingly competitive environment, which are driving the factory’s considerationof new methods and channels of distribution. Obviously, CATD will always need to stay wellabreast of such developments in order to serve the capital needs of its shareholders. Therapid growth of Caterpillar Dealer rental services is a good case in point of a rapidly emerging,alternate distribution channel, which has demanded CATD attention and response.
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Cooperat ive Associat ion of Tractor Dealers, Inc.
Annual Report 2001
Within this annual report, please find the audited FY 2001 financial statements for theCATD, DCAT, and Tuckahoe Funding Company. Here are a few supplemental highlights:
■ After adjusting for nondeductible expenses, this year’s patronage dividend to CATDborrowers will be $532,862, which equates to 6 basis points (“bps”) on average loanvolume of $947 Million.
■ The average “all-in” loan rate for borrowers in the CATD portfolio was 6.86%. Afteradjusting for the 20 bps credit facility fee and the 6 bps patronage cash dividend, thedealers’ effective interest rate was 7.00%, 78 bps over the average 30-day LIBOR of6.22%, while the prime rate averaged 9.21%.
■ During the same period the effective interest rate paid by DCAT borrowers was 7.88%(166 bps over 30-day LIBOR).
In closing, I hope that you know how much your Board of Directors appreciates yourcontinued business. CATD and DCAT commercial paper have become highly respected,somewhat unique securities within the commercial paper market; and thereby, CATD andDCAT continue to be able to furnish a vital service to a wide range of Caterpillar Dealers,both large and small. Without your loyal patronage, none of the above-cited achievementswould have been possible. Thank you!
DeWitt C. Thompson, IVChairman of the Board of DirectorsCooperative Association of Tractor Dealers, Inc.
4 Annual Report 2001
Cooperat ive Associat ion of Tractor Dealers, Inc.
Cooperative Association of Tractor Dealers, Inc.
Year Ended March 31($ millions except dividends)
2001 2000 1999 1998 1997
Revenue $68 $56 $51 $44 $35
Patronage Dividends $532,862 $440,897 $421,957 $1,114,551 $232,403
Average Loan Portfolio $947 $886 $830 $667 $540
Loans Originated $87,800 $43,200 $35,600 $21,500 $19,400
Number of Loans Originated 5,798 3,724 3,207 2,287 2,021
Average Loan Size $15.1 $11.6 $11.1 $9.4 $9.6
Total Assets $1,051 $851 $929 $756 $621
Credit Lines $1,236 $1,075 $1,122 $881 $711
Dealers With Credit Facilities 41 43 45 41 40
Prime Rate 9.21% 8.23% 8.17% 8.50% 8.25%
30-Day LIBOR Rate 6.22% 5.39% 5.27% 5.70% 5.46%
30-Day All-In Loan Rate 6.88% 6.08% 5.96% 6.38% 6.29%
Portfolio All-In Loan Rate 6.86% 5.92% 5.92% 6.38% 6.25%
Dealer Effective Rate 7.00% 6.03% 6.02% 6.36% 6.36% (after credit facility fee and dividend)
Dividend 6 bps 5 bps 5 bps 17 bps 4 bps
Spread between Prime and Effective Rates 221 bps 220 bps 215 bps 214 bps 189 bps
Spread between 30-Day LIBOR 78 bps 64 bps 75 bps 66 bps 90 bps and Dealer Effective Rate
Dealers Capital Access Trust, Inc.
Year Ended March 31($ millions)
2001 2000 1999 1998 1997
Revenue $14 $11 $8 $9 $12
Average Loan Portfolio $180 $149 $104 $123 $165
Loans Originated $40,600 $31,500 $15,700 $15,100 $22,900
Number of Loans Originated 660 672 534 791 809
Average Loan Size $61.5 $46.9 $29.4 $19.1 $28.3
Total Assets $174 $178 $89 $112 $149
Credit Lines $183 $238 $132 $202 $244
Dealers with Credit Facilities 5 5 4 6 7
30-Day All-In Loan Rate 7.93% 7.18% 7.27% 7.62% 7.28%
Portfolio All-In Loan Rate 7.88% 6.97% 7.17% 7.54% 7.20%
Spread between Prime and Portfolio All-In Rates 133 bps 126 bps 100 bps 96 bps 105 bps
Spread between 30-Day LIBOR and Dealer Effective Rates 166 bps 158 bps 190 bps 184 bps 174 bps
DCAT is not organized as a cooperative and does not pay patronage dividends to its borrowers.
CATD achieves two decades of success in
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Cooperat ive Associat ion of Tractor Dealers, Inc.
Annual Report 2001
Yield Curves
CATD March 2001
CATD March 2000
DCAT March 2001
DCAT March 2000
Number of Days to Maturity
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
1809060301471
Basis Point Spread Between 30 Day LIBOR and Overnight CATD Rates
LIBOR Source: Bloomberg
-40
-20
0
20
40
60
80
100
Mar
01
Sep
00
Mar
00
Sep
99
Mar
99
Sep
98
Mar
98
Dec
00
Jun
00
Dec
99
Jun
99
Dec
98
Jun
98
CATD Portfolio Growth
Credit LinesAverage Portfolio
$711
$540
$881$830
$886$947
$667
$1,122$1,075
$1,236
$M
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
20012000199919981997
DCAT Portfolio Growth
$165
$244
$123$104
$149
$180
$202
$132
$238
$183
$M
$0
$50
$100
$150
$200
$250
$300 Credit LinesAverage Portfolio
20012000199919981997
Dealers with Credit Facilities
541
5
4
43
6
45
41
740
CATDDCAT
1997
1998
1999
2000
2001
Portfolio Allocation
Series A Series B DCAT
0%
20%
40%
60%
80%
100%
20012000199919981997
33% 29%
17% 14%
50% 57%
37%
9%
54%
32%30%
13%19%
51% 55%
serving its Caterpillar Dealer shareholders
6 Annual Report 2001
Cooperat ive Associat ion of Tractor Dealers, Inc.
Ringhaver Kelly
Ring Power
Carlton
YanceyBlanchard
CarolinaGregoryPoole
Walker
Alban
H.O. Penn
G&R
Foley
SyracuseMichigan
Altorfer
Patten
FABCOZiegler
Dean
Foley Equip.
Nebraska
Butler
Martin Tr.
E.A. Martin
J.A. Riggs
Mustang
Holt ofTexas
RustEmpire
WagnerWheeler
Wyoming
T&E
Western States
Cashman
NC Machy.
NC Machy.
Quinn
Shepherd
Hawthorne
Johnson
Peterson
HoltofCA
Pape’
Halton
WestTexas
Fabick Whayne
Stowers
Holtof
Ohio
ThompsonMachinery
ThompsonTractor
Puckett
Louisiana
MacA
llist
er
Southw
orth-M
ilton
Ohio
Western RegionCashman Equipment Company
Empire Southwest LLC
Hawthorne Machinery Co.
Holt of California
Johnson Machinery
Pape’ Brothers, Inc.
Peterson Tractor Co.
Quinn Company
Rust Tractor Co.
Shepherd Machinery Co.
The Halton Company
Tractor & Equipment Company
Wagner Equipment Company
Western States Equipment Co.
Wheeler Machinery Company
Wyoming Machinery Company
Plains RegionButler Machinery Company
Dean Machinery Co.
E.A. MartinMachinery Company
FABCO Equipment, Inc.
Foley Equipment Company
Holt Company of Texas
J.A. RiggsTractor Company
Martin TractorCompany, Inc.
Mustang Tractor & Equipment Co.
Nebraska Machinery Company
West TexasEquipment, L.P.
Ziegler Inc.
Ziegler Inc.(an Iowa Corporation)
Central RegionAltorfer Inc.
Holt Company of Ohio
John Fabick Tractor Company
Louisiana Machinery Co., Inc.
MacAllister Machinery Co., Inc.
Michigan CAT
Ohio Machinery Co.
Patten Industries, Inc.
Puckett Machinery Company
Stowers Machinery Corporation
Thompson Machinery Commerce Corporation
Thompson Tractor Co., Inc.
Whayne Supply Company
Eastern RegionAlban Tractor Co., Inc.
Blanchard Machinery Company
Carlton Company
Carolina Tractor
Cecil I. Walker Machinery Co.
Foley, Incorporated
Giles & Ransome, Inc.
Gregory Poole Equipment Co.
H.O. Penn Machinery Company, Inc.
Kelly Tractor Co.
Ringhaver Equipment Company
Ring Power Corporation
Southworth-Milton Inc.
Syracuse Supply Company
Yancey Bros. Co.
Mantrac
Unatrac
Non-DomesticMantrac
Unatrac International
CATD Shareholders
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Cooperat ive Associat ion of Tractor Dealers, Inc.
Annual Report 2001
Dolores M. CouttsPresident & CEO
Perry A. FinneyVice President
Leonard R. GrusAssistant Treasurer
Shellie G. McCainSecretary
Officers
Board of Directors
Seated (L to R): Christopher G. Milton, Treasurer, Southworth-Milton, Inc., DeWitt C. Thompson, IV,Chairman, Thompson Machinery Commerce Corporation, Tee Ness, Vice Chairman, Hawthorne Machinery Co.,John O. Whiteman, Empire Southwest LLC
Standing (L to R): Robert Campbell, Wheeler Machinery Company, Harry Craig, Jr., Martin Tractor Company, Inc.,Harry W. Stowers, Stowers Machinery Corporation, James Stephenson, Yancey Bros. Co., Brad Tucker,Mustang Tractor & Equipment Co., Jerry Jung, Michigan CAT
8 Annual Report 2001
Cooperat ive Associat ion of Tractor Dealers, Inc.
How It All Fits Together …
CATDIssues A1/F1 Commercial Paper
GuarantorsMBIA & Ambac
SocieteGenerale asAgent for
Liquidity Banks
Investors
Goldman Sachs & Merrill LynchBroker/Dealers
Bank One, NAIssuing and Paying Agent
TuckahoeFundingCompany
Cat Dealers
LoanPayment
Cash toDealer
CP Notes
Cash
Notes Cash
Notes Cash
Cash fordefaulted
loan
Cash advancefor defaulted loan
SuretyBond/Financial
GuarantyInsurance Policy
Defaultedloan sold toTuckahoe
LiquidityBond/FinancialGuarantyInsurance Policy
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Cooperat ive Associat ion of Tractor Dealers, Inc.
Annual Report 2001
Agent Bank – Bank responsible for various administrative tasks relating to Tuckahoe Funding Company’sliquidity facility, including: (1) disbursement of loan advances under provisions of a credit agreement; (2) collection and distribution of fees to participant banks; (3) coordination of changes in amounts of banklines; and (4) solicitation of banks, if necessary.
All-in Rate – The interest rate charged on a loan based on the effective cost of underlying commercial paperplus a percentage (the “add-on”) which covers the costs of operating the loan program.
Ambac – Ambac Assurance Corporation, a Wisconsin stock insurance company, which is credit enhancer ofSeries B loans for the CATD program.
Commitment Fee – Payment to banks for providing committed bank lines that support CATD CP. The fee isexpressed as basis points on the committed bank lines.
Commercial Paper (“CP”) – A short-term unsecured debt of a corporate borrower.
Credit Enhancement – When repayment of a debt has been guaranteed by an outside entity.
Credit Facility Fee – Payment from borrower to CATD for providing a credit facility to the borrower. Thecredit facility fee is expressed as basis points on the credit facility available to the borrower, and is payableregardless of credit facility utilization.
Financial Guaranty Insurance Policy – There are 2 types: (1) obligation of MBIA to CATD which guaranteesrepayment of loans made to a borrower, and (2) obligation of MBIA to a bank that guarantees repayment ofadvances made by the bank under the credit agreement.
Guarantor – An entity which guarantees repayment of loans.
Guaranty Premiums or Guarantee Fees – Fees paid to a credit enhancer for providing a guarantee of loan repayment to the lender. Guaranty premiums are expressed as basis points on outstanding CP.
Liquidity Bank – Bank providing bank lines to support the CP program in the event of dealer payment default.
Liquidity Bond – Obligation of Ambac that guarantees repayment of advances made by a bank under thecredit agreement.
MBIA – MBIA Insurance Corporation, a New York corporation that assumed the rights and obligations ofCapital Markets Assurance Corporation on August 12, 1998, and which is credit enhancer of Series A loans for the CATD program.
Patronage Dividends – CATD’s distribution of earnings proportionate to loan interest income obtained fromshareholders during the fiscal year.
Societé Generale – The agent bank for Tuckahoe Funding Company’s liquidity facility.
Surety Bond – Obligation of Ambac to CATD which guarantees repayment of loans made to a borrower.
Glossary of Terms
10 Annual Report 2001
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7 3 1 5 W i s c o n s i n Av e n u e
S u i t e 4 0 2 E a s t
B e t h e s d a , M D 2 0 8 1 4
P h o n e : 3 0 1 / 6 5 6 - 6 4 7 4
F a x : 3 0 1 / 6 5 7 - 3 6 4 4
We b s i t e : w w w. c a t d l o a n s . c o m
Cooperative Association of Tractor Dealers, Inc.
Dealers Capital Access Trust, Inc.
Tuckahoe Funding Company
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