cooperative association of tractor dealers, inc.cooperative association of tractor dealers, inc....

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.


Balance Sheets ..............................................................21

Statements of Income and Accumulated Deficit .....................................................22



Tuckahoe Funding Company


Balance Sheets ..............................................................27

Statements of Income and Retained Earnings .................................................28



Table of Contents

2 Annual Report 2001


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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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.




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


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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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



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

7


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



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

9


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


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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




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