PROSPECTUS SUPPLEMENT
(To Prospectus dated August 4, 1999)
$364,791,551
UACSC 1999-C Owner Trust
Automobile Receivable Backed Notes
UAC Securitization Corporation,
as seller
Union Acceptance Corporation,
as servicer
We are offering the following classes of automobile receivable backed
notes:
<TABLE>
<CAPTION>
Price Underwriting
Class of Initial Aggregate Interest Final to Public Discount
Notes Principal Balance Rate Maturity Date per Note per Note
------ ----------------- -------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
A-1 $72,500,000 5.473% August 8, 2000 100.00000% 0.13%
A-2 $94,500,000 6.19% December 9, 2002 99.99110% 0.21%
A-3 $88,000,000 6.61% May 10, 2004 99.98507% 0.24%
A-4 $95,200,000 6.82% January 9, 2006 99.99348% 0.27%
B $14,591,551 7.05% October 8, 2007 99.98219% 0.30%
</TABLE>
The total price to the public is $364,761,196.30. The total
underwriting discount is $804,714.65. The total proceeds to the trust are
$363,956,481.65.
You should carefully consider the factors set forth under "Risk
Factors" beginning on page S-9 of this prospectus supplement and on page 10 in
the prospectus.
The notes represent obligations of the UACSC 1999-C Owner Trust only
and do not represent obligations of or interests in UAC Securitization
Corporation, Union Acceptance Corporation, any of their affiliates or any
governmental agency.
This prospectus supplement may be used to offer and sell the notes only
if accompanied by the prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
Underwriters
Bear, Stearns & Co. Inc. Banc of America Securities LLC
The date of this prospectus supplement is August 4, 1999.
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We tell you about the notes in the following documents:
(1) this prospectus supplement, which describes the specific terms
of your notes; and
(2) the accompanying prospectus, which provides general
information, some of which may not apply to the notes.
If the description of the notes varies between this prospectus
supplement and the prospectus, you should rely on the information in this
prospectus supplement.
We include cross-references in this prospectus supplement and in the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus provide the pages on which
these captions are located.
In this prospectus supplement and the accompanying prospectus, "we"
refers to the seller of the notes, UAC Securitization Corporation, and "you"
refers to any prospective investor in the notes.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF TERMS................................................... S-4
Issuer........................................................ S-4
Seller........................................................ S-4
Servicer...................................................... S-4
Indenture Trustee............................................. S-4
Owner Trustee................................................. S-4
Closing Date.................................................. S-4
The Notes..................................................... S-4
Payment Date.................................................. S-4
Interest on the Notes......................................... S-4
Note Principal................................................ S-5
The Certificate............................................... S-5
The Trust Assets.............................................. S-5
Spread Account;
Rights of the Certificateholder........................... S-6
The Policy.................................................... S-7
Policy Amount................................................. S-7
Insurer....................................................... S-7
Indenture Default; Control by the
Insurer and Noteholders................................... S-7
Legal Investment.............................................. S-8
Optional Redemption........................................... S-8
Increase of the Class A-4 Interest Rate
and the Class B Interest Rate............................. S-8
Tax Status.................................................... S-8
Ratings....................................................... S-8
ERISA Considerations.......................................... S-8
RISK FACTORS....................................................... S-9
You May Not be Able
to Resell the Notes....................................... S-9
The Notes Are Obligations
of the Trust Only and
are Not Guaranteed by
any Other Party........................................... S-9
The Amount in the Spread Account
May Not be Sufficient to Assure
Payment of Principal
and Interest............................................. S-9
You May Incur a Loss if there is a
Default Under the Policy.................................. S-9
Some Notes are More at Risk
than Others if there are
Losses on the Receivables................................. S-10
Some Payments on the Notes
are Subordinate to
Other Payments on the Notes............................... S-10
Noteholders Have a Limited Right to
Declare Indenture Defaults or
Remedies.................................................. S-11
A Change in the Note Ratings
May Adversely Affect the Notes........................... S-11
FORMATION OF THE TRUST............................................. S-12
THE RECEIVABLES POOL............................................... S-13
Composition of the Receivables by
Financed Vehicle Type as of
July 31, 1999............................................. S-13
Distribution of the Receivables by
Remaining Term as of
July 31, 1999............................................. S-14
Geographic Distribution of the
Receivables as of July 31, 1999.......................... S-14
Distribution of the Receivables
by Financed Vehicle Model
Year as of July 31, 1999.................................. S-15
Distribution of the Receivables by
Contract Rate as of July 31, 1999......................... S-15
Delinquencies and Net Losses.................................. S-16
Delinquency and Credit
Loss Experience........................................... S-17
WEIGHTED AVERAGE LIFE OF
THE NOTES..................................................... S-18
Percent of Initial Note Balance at
Various ABS Percentages.................................. S-20
YIELD AND PREPAYMENT
CONSIDERATIONS................................................ S-23
THE NOTES.......................................................... S-23
Sale and Assignment of Receivables............................ S-23
Accounts...................................................... S-23
Advances...................................................... S-24
Payments on the Notes......................................... S-24
Distributions on the Certificate.............................. S-29
The Policy.................................................... S-29
Default under the Indenture................................... S-30
Rights of the Insurer upon Servicer
Default, Amendment or Waiver............................. S-31
<PAGE>
THE SELLER AND UAC................................................. S-31
THE INSURER........................................................ S-31
MBIA.......................................................... S-31
MBIA Financial Information.................................... S-31
Where You Can Obtain Additional
Information About MBIA.................................... S-32
Year 2000 Readiness Disclosure................................ S-32
Financial Strength Ratings of MBIA............................ S-33
REPORTS TO NOTEHOLDERS............................................. S-33
FEDERAL INCOME TAX
CONSEQUENCES.................................................. S-33
General....................................................... S-33
Discount and Premium.......................................... S-34
Gain or Loss on Disposition................................... S-34
Backup Withholding and
Information Reporting..................................... S-34
New Withholding Regulations................................... S-35
ERISA CONSIDERATIONS............................................... S-35
UNDERWRITING....................................................... S-36
LEGAL OPINIONS..................................................... S-37
EXPERTS .......................................................... S-37
INDEX OF PRINCIPAL TERMS........................................... S-37
<PAGE>
SUMMARY OF TERMS
o This summary highlights selected information from this prospectus
supplement and does not contain all of the information that you should
consider in making your investment decision. To understand all of the
terms of this offering, read the entire prospectus supplement and
accompanying prospectus.
o The definitions of or references to capitalized terms used in this
prospectus supplement can be found on the pages indicated in the "Index
of Principal Terms" on page S-37 in this prospectus supplement or on
page 53 of the accompanying prospectus.
Issuer
The UACSC 1999-C Owner Trust, a Delaware business trust, will issue the notes
offered in this prospectus supplement.
Seller
UAC Securitization Corporation is the seller and the depositor of the trust. The
seller will transfer the automobile receivables and related property to the
trust. See "The Seller and UAC" in this prospectus supplement.
Servicer
Union Acceptance Corporation ("UAC") will act as the servicer of the trust. The
servicer will receive and apply payments on the automobile receivables, service
the collection of the receivables and direct the trustees to make the
appropriate payments to the noteholders and the certificateholder. The servicer
will receive a monthly servicing fee as compensation for its services. See "The
Seller and UAC" in this prospectus supplement.
Indenture Trustee
Harris Trust and Savings Bank will serve as the indenture trustee under the
terms of an indenture between the trust and the indenture trustee.
Owner Trustee
First Union Trust Company, National Association will serve as the owner trustee
under the terms of a trust and servicing agreement between the seller, the
servicer and the owner trustee.
Closing Date
The closing date will be on or about August 11, 1999.
The Notes
On the closing date, the trust will issue the class A-1 notes, the class A-2
notes, the class A-3 notes, the class A-4 notes and the class B notes, as
described below, under an indenture between the trust and the indenture trustee.
We are offering the notes for sale in this prospectus supplement. The notes are
non-recourse obligations of the trust and are secured by certain assets of the
trust. The interest rates and initial principal balances of the notes are as
follows:
Interest Rate Initial Aggregate
(per annum) Principal Balance
class A-1 notes 5.473% $72,500,000
class A-2 notes 6.19% $94,500,000
class A-3 notes 6.61% $88,000,000
class A-4 notes 6.82% $95,200,000
class B notes 7.05% $14,591,551
See "The Notes" in this prospectus supplement.
Payment Date
The trust will pay interest and principal on the notes on the eighth calendar
day of each month or, if such day is not a business day, on the next business
day. The payments will begin on September 8, 1999 and will be made to holders of
record of the notes as of the record date, which will be the day before the
payment date. However, if definitive notes are issued, the record date will be
the last day of the collection period related to the payment date. The
collection period with respect to any payment date is the calendar month
immediately preceding the calendar month in which such payment date occurs. See
"The Notes -- Payments on the Notes" in this prospectus supplement and
"Description of the Securities -- Definitive Securities" in the accompanying
prospectus.
Interest on the Notes
Interest on the class A-1 notes will be calculated on the basis of a 360-day
year and the actual number of days from the previous payment date through the
day before the related payment date. Interest on all other classes of notes will
be calculated on the basis of a 360-day year consisting of twelve 30-day months.
See "Yield and Prepayment Considerations" and "The Notes -- Payments on the
Notes" in this prospectus supplement.
Class A-1 Monthly Interest. Generally, the amount of monthly interest
distributable to the class A-1 noteholders on each payment date is the product
of:
(1) 1/360th of the interest rate for the class A-1 notes;
(2) the actual number of days from the previous payment date
through the day before the related payment date; and
(3) the aggregate outstanding principal balance of the class A-1
notes on the preceding payment date (after giving effect to
all payments to noteholders on such date).
<PAGE>
Monthly Interest for Other Notes. Generally, the amount of monthly interest
distributable to each class of noteholders (other than the class A-1
noteholders) on each payment date is the product of:
(1) one-twelfth of the interest rate applicable to such class of
notes; and
(2) the aggregate outstanding principal balance of such class on
the preceding payment date (after giving effect to all
payments to noteholders on such date).
The amount of interest distributable on the first payment date of September 8,
1999 will be based upon the initial aggregate principal balance of the
applicable class of notes and will accrue from the closing date until the day
before the first payment date (and in the case of all of the notes other than
the class A-1 notes, assuming that the month of the closing date has 30 days).
Note Principal
The trust will distribute principal on each payment date to the noteholders of
record as of the record date. Generally, the amount of monthly principal the
trust will pay is equal to the decrease in the outstanding principal balance of
the receivables pool during the preceding calendar month. Additional amounts of
available cash flow from the receivables will be used to make accelerated
payments of principal to reduce the aggregate outstanding principal balances of
the notes below the receivables pool balance, until the principal balance of the
receivables pool exceeds such aggregate note balances by 2.5% of the initial
aggregate principal balance of the notes or $9,119,788.78. See "The Notes --
Payments on the Notes" in this prospectus supplement.
Generally, principal will be distributed to the noteholders in the order of the
alpha-numeric designation of each class of the notes, starting with the class
A-1 notes and ending with the class B notes. For example, no principal will be
distributed to the class A-2 noteholders until the outstanding principal balance
of the class A-1 notes has been reduced to zero. No principal will be
distributed to the class B noteholders until the principal of all of the class A
notes has been paid in full. See "Risk Factors -- Some Notes are More at Risk
than Others if there are Losses on the Receivables" in this prospectus
supplement.
The trust must pay the outstanding principal balance of each class of notes, to
the extent not previously paid, by the final maturity date for such class of
notes as follows:
Final Maturity Date
-------------------
class A-1 notes August 8, 2000
class A-2 notes December 9, 2002
class A-3 notes May 10, 2004
class A-4 notes January 9, 2006
class B notes October 8, 2007
Since the rate of payment of principal of each class of notes depends greatly
upon the rate of payment of principal on the receivables (including voluntary
prepayments and principal paid in respect of defaulted receivables and purchased
receivables), the final payment in respect of each class of notes could occur
significantly earlier than the respective final maturity dates. See "Risk
Factors -- You May Incur a Loss if there is a Default Under the Policy" and "The
Notes -- Payments on the Notes" in this prospectus supplement.
The Certificate
In addition to the notes, the trust will issue an automobile receivable backed
certificate pursuant to the trust and servicing agreement. The certificate
represents an undivided beneficial ownership interest in the trust and will be
retained by the seller.
We are not offering the certificate for sale in this offering.
The Trust Assets
The trust will pledge its assets to the indenture trustee as collateral for the
repayment of the notes. The trust assets will include:
o a pool of simple and precomputed interest installment sale and
installment loan contracts originated in various states in the United
States of America, secured by new and used automobiles, light trucks
and vans;
o certain monies (including accrued interest) due in respect of the
receivables as of and after July 31, 1999, but excluding accrued
interest paid before the closing date;
o security interests in the related vehicles financed through the
receivables;
o funds on deposit in a collection account and a spread account;
o any proceeds from claims on certain insurance policies relating to the
financed vehicles or the related obligors;
o any lender's single interest insurance policy;
o an unconditional and irrevocable insurance policy issued by MBIA
Insurance Corporation guaranteeing payments of principal and interest
on the notes; and
o certain rights under the agreements by which the receivables are sold
from UAC to the seller and from the seller to the trust.
The trust will acquire its assets from the seller pursuant to the trust and
servicing agreement. See "Formation of the Trust" in this prospectus supplement.
<PAGE>
Spread Account; Rights of the Certificateholder
The trust will establish a spread account on the closing date for the benefit of
the noteholders and the insurer. On the closing date we will deposit $911,978.88
(which is 0.25% of the original principal balance of the receivables pool) into
the spread account. The spread account will hold the excess, if any, of the
collections on the receivables over the amounts which the trust is required to
pay to the noteholders, the servicer and the insurer. The amount of funds
available for payment to noteholders on any payment date will consist of funds
from the following sources:
(1) payments received from obligors in respect of the receivables (net of
any amount required to be deposited to the payahead account in respect
of precomputed receivables);
(2) any net withdrawal from the payahead account in respect of precomputed
receivables;
(3) interest earned on funds on deposit in the collection account;
(4) liquidation proceeds received in respect of receivables;
(5) advances received from the servicer in respect of interest on certain
delinquent receivables; and
(6) amounts received in respect of required repurchases or purchases of
receivables by UAC or the servicer.
The indenture trustee will withdraw funds from the spread account (up to the
amount on deposit in the account) and then draw on the policy, if the amount of
available funds for any payment date is not sufficient to pay:
(1) the amounts owed to the servicer (including the monthly servicing fee
and reimbursement for advances made by the servicer to the trust); and
(2) the required payments of interest and principal to the noteholders.
If the amount on deposit in the spread account is zero, after any withdrawals
for the benefit of the noteholders, and there is a default under the policy, any
remaining losses on the receivables will be borne directly by the class B
noteholders (up to the full class B note balance at the time a loss is incurred)
and then by the class A noteholders pro rata (to the extent of the outstanding
class or classes of class A notes at such time). See "Risk Factors -- You May
Incur a Loss if there is a Default Under the Policy," "-- Some Notes are More at
Risk than Others if there are Losses on the Receivables," "The Notes --
Accounts" and "--Payments on the Notes" in this prospectus supplement.
The trust will be required to maintain a specified amount on deposit in the
spread account through the deposit of excess collections, if any, on the
receivables. The required spread amount with respect to any payment date will
equal $2,735,936.64 (which is 0.75% of the original principal balance of the
receivables pool).
In no event will the amount on deposit in the spread account exceed the
aggregate outstanding principal balance of the notes.
Any amount on deposit in the spread account on any payment date in excess of the
required spread amount (after all other required deposits to and withdrawals
from the spread account have been made) will be distributed to the
certificateholder. Any such distribution to the certificateholder will no longer
be an asset of the trust.
We intend for the amount on deposit in the spread account to grow over time to
the required spread amount through the deposit of the excess collections, if
any, on the receivables. However, we cannot assure you that the amount on
deposit in the spread account will actually grow to the required spread amount.
If net losses on the receivables pool exceed the levels set forth in the
insurance and reimbursement agreement among the seller, the trust, Union
Acceptance Funding Corporation ("UAFC"), UAC, in its individual capacity and as
servicer, and the insurer, the required spread amount will be increased to 1.25%
of the original principal balance of the receivables pool. The required spread
amount may be increased:
(1) if the servicer defaults, fails to perform its obligations, or breaches
a material representation under the trust and servicing agreement, the
indenture or the insurance agreement; or
(2) upon the occurrence of certain other events described in the insurance
agreement generally involving the amount of losses on the receivables.
See "The Notes -- Accounts" and " -- The Policy" in this prospectus supplement.
The Policy
The seller will obtain an unconditional and irrevocable insurance policy.
Subject to the terms of the policy, the insurer will guarantee the payment of
monthly interest and monthly principal on the notes (exclusive of any
accelerated payments of principal) up to the policy amount.
In addition, the policy will cover any amount paid or required to be paid by the
trust to the noteholders, which amount is sought to be recovered as a voidable
preference by a trustee in bankruptcy of UAC, the seller or UAFC under the
United States Bankruptcy Code in accordance with a final nonappealable order of
a court having competent jurisdiction.
See "The Notes -- The Policy" in this prospectus supplement.
<PAGE>
Policy Amount
The policy amount with respect to any payment date will be:
(a) the sum of:
(1) the monthly servicing fee;
(2) monthly interest;
(3) the lesser of (a) the outstanding aggregate principal balance of all
classes of notes on such payment date (after giving effect to any
distributions of available funds and any funds withdrawn from the
spread account to pay monthly principal on such payment date) and (b)
the initial aggregate principal balances of the notes minus all amounts
withdrawn from the spread account or drawn on the policy with respect
to principal;
less:
(b) all amounts on deposit in the spread account on such payment date (after
giving effect to any amounts withdrawn from the spread account on such
date).
Insurer
MBIA Insurance Corporation is the insurer and will guarantee the payment of
monthly interest and monthly principal (exclusive of any accelerated payments of
principal) under the terms of the policy. See "The Insurer" in this prospectus
supplement.
Indenture Default; Control by the Insurer and Noteholders
Certain events will cause events of default under the indenture. If an indenture
default occurs and the insurer is not in default under the policy, the insurer
may declare the indenture default and control the remedy for such default. If an
indenture default occurs and the insurer is in default under the policy, the
noteholders holding notes evidencing at least two-thirds of the outstanding
principal balances of the notes may declare the indenture default and control
the remedy.
The party that controls the remedy may give notice of acceleration and declare
the principal of the notes to be immediately due and payable. The rights and
remedies of the insurer and the noteholders upon the occurrence of an indenture
default may include the right to direct the indenture trustee to liquidate the
property of the trust. The rights and remedies are further described under "The
Indenture -- Default Under the Indenture" in the accompanying prospectus. See
also "Risk Factors -- Noteholders Have a Limited Right to Declare Indenture
Defaults or Remedies" in this prospectus supplement.
Legal Investment
The class A-1 notes will be eligible for purchase by money market funds under
Rule 2a-7 of the Investment Company Act of 1940, as amended.
Optional Redemption
The servicer has the right to purchase all of the receivables as of the last day
of any collection period on which the aggregate principal balance of all classes
of the notes on the related payment date (after the payment of all amounts to be
paid on such payment date) will be equal to or less than 10% of the initial
aggregate principal balance of all classes of notes. We will redeem the notes as
a result of such a purchase of the receivables.
The purchase price for the receivables will be equal to the fair market value of
the receivables; provided that such amount may not be less than the sum of:
(1) 100% of the outstanding aggregate principal balance of all classes of
notes,
(2) accrued and unpaid interest on the outstanding principal balances of
all outstanding classes of notes at the weighted average interest rate
of such notes, and
(3) any amounts due the insurer.
Increase of the Class A-4 Interest Rate and the Class B Interest Rate
If the servicer does not exercise its rights with respect to the optional
redemption on the first payment date that the optional redemption is permitted,
each of the class A-4 interest rate and the class B interest rate will be
increased by 0.50% after such date.
Tax Status
In the opinion of special tax counsel to the seller, for federal income tax
purposes:
o the class A notes will be characterized as debt,
o the class B notes should also be characterized as debt, and
o the trust will not be treated as an association taxable as a
corporation or as a "publicly traded partnership" taxable as a
corporation.
<PAGE>
The owner trustee, the noteholders and the certificateholder will agree to treat
the notes as indebtedness for federal income tax purposes. See "Federal Income
Tax Consequences" in this prospectus supplement and in the accompanying
prospectus.
Ratings
On the closing date, each class of notes will be issued only if such class
receives ratings from Moody's Investors Service, Inc. and Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. as follows:
Rating
Class Moody's S&P
----- ------- ---
A-1 P-1 A-1+
A-2 Aaa AAA
A-3 Aaa AAA
A-4 Aaa AAA
B Aaa AAA
A rating is not a recommendation to buy, sell or hold the notes and may be
subject to revision or withdrawal at any time by the assigning rating agency.
See "Risk Factors -- A Change in the Note Ratings May Adversely Affect the
Notes" in this prospectus supplement.
ERISA Considerations
The class A notes may be eligible for purchase by employee benefit plans subject
to Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Any benefit plan fiduciary considering the purchase of notes should,
among other things, consult with experienced legal counsel in determining
whether all required conditions for such purchase have been satisfied. Neither
an employee benefit plan subject to ERISA or Section 4975 of the Code nor an
individual retirement account may purchase class B notes. See "ERISA
Considerations" in this prospectus supplement and in the accompanying
prospectus.
<PAGE>
RISK FACTORS
You should carefully consider the risk factors set forth below and in
the accompanying prospectus as well as the other investment considerations
described in such documents as you decide whether to purchase the notes.
You May Not be Able to Resell
the Notes There is currently no secondary market
for the notes. The underwriters
currently intend to make a market to
enable resale of the notes, but are
under no obligation to do so. As such,
we cannot assure you that a secondary
market will develop for your notes or,
if one does develop, that such market
will provide you with liquidity of
investment or that it will continue for
the life of your notes.
The Notes Are Obligations
of the Trust Only and are Not
Guaranteed by any Other Party The notes are obligations of the trust
only and do not represent an interest in
or obligation of the seller, UAC, any of
their affiliates or any other party or
governmental body. Except for the
policy, the notes have not been insured
or guaranteed by any party or
governmental body. See "The Notes --
Payments on the Notes" and "--The
Policy" and "The Insurer" in this
prospectus supplement.
The Amount in the Spread Account
May Not be Sufficient to Assure
Payment of Principal and Interest
If the amount of available funds on any
payment date is not sufficient to pay
monthly interest and monthly principal
(after payment of the monthly servicing
fee and exclusive of any accelerated
principal payments) to you, the
indenture trustee will withdraw funds
from the spread account, up to the full
balance of the funds on deposit in such
account.
The amount on deposit in the spread
account may increase over time to an
amount equal to the required spread
amount. We cannot assure you that such
growth will occur or that the balance in
the spread account will always be
sufficient to assure payment in full of
monthly interest and monthly principal.
If the amount on deposit in the spread
account is reduced to zero (after giving
effect to all deposits and withdrawals
from the spread account), the indenture
trustee will then draw on the policy, up
to the policy amount, in an amount equal
to any remaining shortfall in respect of
monthly interest and monthly principal
(exclusive of any accelerated principal
payments).
<PAGE>
You May Incur a Loss if there
is a Default Under the Policy If the spread account is reduced to zero
and the insurer defaults under the
policy, the trust will depend solely on
payments on and proceeds from the
receivables to make payments on the
notes. The insurer will default under
the policy if it fails to pay any
required amount to the trust when due,
for any reason, including the insolvency
of the insurer.
If the trust does not have sufficient
funds to fully make the required
payments to noteholders on a payment
date during a default by the insurer,
payments on the notes on such payment
date will generally be reduced in the
following order:
1. class B monthly principal,
2. class A monthly principal, pro rata,
3. class B monthly interest, and
4. class A monthly interest, pro rata.
However, if the payment date is the
final maturity date for a class of class
A notes, payments of monthly principal
in respect of such class A notes will be
paid before class B monthly interest.
See "The Receivables Pool --
Delinquencies and Net Losses" and "--
Delinquency and Credit Loss Experience"
and "The Notes -- Accounts," " --
Payments on the Notes" and "-- The
Policy" in this prospectus supplement.
Some Notes are More at Risk than
Others if there are Losses on
the Receivables Principal will be paid on the notes in
alpha-numeric order, beginning with the
class A-1 notes and ending with the
class B notes, with certain exceptions
noted in this prospectus supplement if
an indenture default occurs. Because
payments of principal will be applied
first to the class A-1 notes, second to
the class A-2 notes, third to the class
A-3 notes, fourth to the class A-4
notes, and finally to the class B notes,
in the event the insurer defaults under
the policy after the class A-1 notes
have been fully or partially repaid and
before the other classes of notes have
been fully repaid, delinquencies,
defaults and losses experienced on the
receivables will have a
disproportionately greater effect on the
classes of notes which pay principal to
noteholders later.
Some Payments on the Notes are
Subordinate to Other Payments on
the Notes Interest due on the class B notes is
subordinate in priority of payment to
interest due on the class A notes, and,
on the final maturity date for a class
of class A notes, interest due on the
class B notes is subordinated to
principal due on such class A notes.
Principal due on the class B notes is
subordinated to principal and interest
due on the class A notes. Consequently,
the class B noteholders will not receive
any interest on a payment date until the
full amount of interest on the class A
notes due on such payment date has been
paid, and, if such payment date is on or
after the final maturity date for a
class of class A notes, the class B
noteholders will not receive any
interest until all principal on such
class A notes has been paid in full. No
principal will be paid on the class B
notes until each class of class A notes
has been paid in full.
In the event of a default by the
insurer, the class B notes will be more
at risk than the class A notes due to
delinquencies, defaults and losses
experienced on the receivables. See "The
Notes -- Payments on the Notes" in this
prospectus supplement.
<PAGE>
Noteholders Have a Limited Right
to Declare Indenture Defaults
or Remedies The insurer is the only party that has
the right to declare an indenture
default and control the remedy for such
default, unless the insurer is in
default under the policy, in which case
the noteholders will have such right
subject to applicable voting
requirements.
If an indenture default occurs, the
insurer or, in certain limited
circumstances, the noteholders, will
have the right to accelerate the payment
of principal of the notes and, possibly,
to direct the indenture trustee to
liquidate the trust property.
Following an indenture default, the
indenture trustee and the owner trustee
will continue to submit claims under the
policy to enable the trust to make
payments to you each month. However,
following an indenture default, the
insurer may elect to prepay all or any
portion of the outstanding notes, plus
accrued interest.
A Change in the Note Ratings May
Adversely Affect the Notes Moody's Investors Service and Standard &
Poor's Ratings Services are the rating
agencies rating the notes. The rating
for any class of notes will reflect only
the view of the relevant rating agency.
We cannot assure you that any such
rating will continue for any period of
time or that any rating will not be
revised or withdrawn entirely by such
rating agency if, in its judgment,
circumstances so warrant. A revision or
withdrawal of such rating may have an
adverse effect on the liquidity and
market price of your notes. A rating is
not a recommendation to buy, sell or
hold the notes.
<PAGE>
FORMATION OF THE TRUST
The trust is a business trust formed under the laws of the State of
Delaware under a trust and servicing agreement between the seller, the servicer
and the owner trustee. The trust was formed solely for the purpose of
accomplishing the transactions described in this prospectus supplement. Upon
formation, the trust will not engage in any business activity other than:
o acquiring, managing and holding the receivables and related
interests described in this prospectus supplement;
o issuing the notes and the certificate;
o making payments and distributions on the notes and the
certificate; and
o engaging in those activities, including entering into
agreements, that are necessary, suitable or convenient to
accomplish the above listed activities or are incidental to
those activities.
Pursuant to an indenture between the trust and the indenture trustee,
the trust will grant a security interest in the trust assets in favor of the
indenture trustee on behalf of and for the benefit of the noteholders and the
insurer. The seller will transfer the trust assets to the owner trustee in
exchange for the certificate and the cash proceeds of the notes. The seller will
retain the certificate. UAC will service the receivables pursuant to the trust
and servicing agreement and will receive compensation for acting as the
servicer. To facilitate servicing and to minimize administrative burden and
expense, the servicer will serve as custodian of the receivables for the owner
trustee. However, the servicer will not stamp the receivables to reflect the
sale and assignment of the receivables to the trust or the indenture trustee or
make any notation of the indenture trustee's lien on the certificates of title
of the financed vehicles. In the absence of such notation on the certificates of
title, the trust or the indenture trustee may not have perfected security
interests in the financed vehicles securing the receivables. Under the terms of
the trust and servicing agreement, UAC may delegate its duties as servicer and
custodian; however, any such delegation will not relieve UAC of its liability
and responsibility with respect to such duties. See "Description of the Transfer
and Servicing Agreements -- Servicing Compensation and Payment of Expenses" and
Certain Legal Aspects of the Receivables" in the accompanying prospectus.
The trust will establish a spread account for the benefit of the
noteholders and the insurer and will obtain the policy. The indenture trustee
will draw on the policy, up to the policy amount, if available funds and the
amount on deposit in the spread account (after paying amounts owed to the
servicer) are not sufficient to fully distribute monthly interest and monthly
principal (exclusive of any accelerated principal payments). If the spread
account is reduced to zero and there is a default under the policy, the trust
will look only to the obligors on the receivables and the proceeds from the
repossession and sale of financed vehicles that secure defaulted receivables for
payments of interest and principal on the notes. In such event, certain factors,
such as the indenture trustee not having perfected security interests in some of
the financed vehicles, may affect the trust's ability to realize on the
collateral securing the receivables, and thus may reduce the proceeds to be
distributed to the noteholders. See "The Notes -- Accounts," "--Payments on the
Notes" and "--The Policy" in this prospectus supplement and "Certain Legal
Aspects of the Receivables" in the accompanying prospectus.
THE RECEIVABLES POOL
The receivables were selected from the portfolio of UAFC for purchase
by the seller according to several criteria, including that each receivable:
o has an original number of payments of not more than 84
payments and not less than twelve payments (except that
approximately 0.07% of the aggregate principal balance of the
receivables as of July 31, 1999 consist of receivables which
have been amended or modified after origination to provide
that the number of payments from the time of origination to
maturity may exceed 84 payments);
o has a remaining maturity of not more than 84 months and not
less than three months;
o provides for level monthly payments that fully amortize the
amount financed over the original term; and
o has a contract rate of interest (exclusive of prepaid finance
charges) of not less than 6.00%.
The weighted average remaining maturity of the receivables is
approximately 71 months as of July 31, 1999.
Approximately 99.28% of the aggregate principal balance of the
receivables as of July 31, 1999 are simple interest contracts which provide for
equal monthly payments. Approximately 0.72% of the aggregate principal balance
of the receivables as of July 31, 1999 are precomputed receivables originated in
the State of California. All of such precomputed receivables are rule of 78's
receivables. Approximately 26.87% of the aggregate principal balance of the
receivables as of July 31, 1999 represent financing of new vehicles; the
remainder of the receivables represent financing of used vehicles.
Receivables representing more than 10% of the aggregate principal
balance of the receivables as of July 31, 1999 were originated in the States of
North Carolina and Texas. The performance of the receivables in the aggregate
could be adversely affected in particular by the development of adverse economic
conditions in such states.
<PAGE>
Composition of the Receivables by Financed Vehicle Type as of July 31, 1999
<TABLE>
<CAPTION>
Weighted
Aggregate Original Average
Number of Principal Principal Contract
Receivables Balance Balance Rate
----------- ------- ------- ----
<S> <C> <C> <C> <C>
New Automobiles and Light-Duty Trucks............ 4,833 $89,881,937.49 $ 98,361,522.07 12.25%
Used Automobiles and Light-Duty Trucks........... 17,722 243,078,864.49 262,987,679.95 13.71
New Vans (1)..................................... 363 8,133,598.47 8,785,742.96 11.87
Used Vans (1).................................... 1,676 23,697,151.54 25,902,432.77 13.68
------ --------------- --------------- -----
All Receivables.................................. 24,594 $364,791,551.99 $396,037,377.75 13.31%
====== =============== =============== =====
</TABLE>
<TABLE>
<CAPTION>
Weighted Weighted Percent
Average Average of Aggregate
Remaining Original Principal
Term(2) Term(2) Balance(3)
------- ------- ----------
<S> <C> <C> <C>
New Automobiles and Light-Duty Trucks.......... 74.6 mos. 78.0 mos. 24.64%
Used Automobiles and Light-Duty Trucks......... 69.8 72.6 66.64
New Vans (1)................................... 75.9 79.0 2.23
Used Vans (1).................................. 69.4 72.5 6.50
---- ---- ------
All Receivables................................ 71.1 mos. 74.1 mos. 100.00%
==== ==== ======
</TABLE>
(1) References to vans include minivans and van conversions.
(2) Based on scheduled maturity and assuming no prepayments of the receivables.
(3) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Remaining Term as of July 31, 1999
<TABLE>
<CAPTION>
Percent Percent
of Total Aggregate of Aggregate
Remaining Number of Number of Principal Principal
Term Range Receivables Receivables (1) Balance Balance(1)
---------- ----------- --------------- ------- ----------
<S> <C> <C> <C> <C>
1 to 12 months........... 820 3.33% $ 1,857,092.66 0.51%
13 to 24 months........... 2,030 8.25 10,419,928.67 2.86
25 to 36 months........... 632 2.57 4,256,944.66 1.17
37 to 48 months........... 1,209 4.92 11,447,313.38 3.14
49 to 60 months........... 3,343 13.59 43,550,301.60 11.94
61 to 72 months........... 6,856 27.88 109,438,457.43 30.00
73 to 84 months........... 9,704 39.46 183,821,513.59 50.39
------ ------ --------------- ------
Total........... 24,594 100.00% $364,791,551.99 100.00%
====== ====== =============== ======
</TABLE>
(1) Sum may not equal 100% due to rounding.
<PAGE>
Geographic Distribution of the Receivables as of July 31, 1999
<TABLE>
<CAPTION>
Percent Percent
of Total Aggregate of Aggregate
Number of Number of Principal Principal
State (1) (2) Receivables Receivables (3) Balance Balance (3)
------------- ----------- --------------- ------- -----------
<S> <C> <C> <C> <C>
Arizona...................... 629 2.56% $ 8,743,275.88 2.40%
California................... 2,038 8.29 33,041,664.54 9.06
Colorado..................... 449 1.83 6,291,567.43 1.72
Connecticut.................. 73 0.30 1,197,678.70 0.33
Delaware..................... 95 0.39 1,590,602.92 0.44
Florida...................... 1,733 7.05 25,276,671.75 6.93
Georgia...................... 1,106 4.50 17,289,473.60 4.74
Idaho........................ 62 0.25 978,912.81 0.27
Illinois..................... 2,067 8.40 29,799,241.58 8.17
Indiana...................... 906 3.68 12,610,337.07 3.46
Iowa ........................ 500 2.03 7,261,557.41 1.99
Kansas....................... 246 1.00 3,692,253.46 1.01
Kentucky..................... 152 0.62 2,281,197.56 0.63
Maryland..................... 199 0.81 3,117,096.98 0.85
Massachusetts................ 512 2.08 8,036,554.67 2.20
Michigan..................... 604 2.46 10,002,701.46 2.74
Minnesota.................... 386 1.57 5,666,041.81 1.55
Missouri..................... 600 2.44 8,793,489.08 2.41
Nebraska..................... 114 0.46 1,641,094.48 0.45
Nevada....................... 162 0.66 2,456,788.24 0.67
New Jersey................... 122 0.50 2,034,865.74 0.56
New Mexico................... 125 0.51 1,502,737.17 0.41
North Carolina............... 2,965 12.06 43,316,909.02 11.87
Ohio ........................ 1,282 5.21 16,422,933.07 4.50
Oklahoma..................... 795 3.23 9,883,847.79 2.71
Oregon....................... 81 0.33 1,312,485.54 0.36
Pennsylvania................. 570 2.32 8,626,719.80 2.36
South Carolina............... 803 3.27 12,446,905.93 3.41
South Dakota................. 18 0.07 263,648.02 0.07
Tennessee.................... 699 2.84 12,072,616.01 3.31
Texas........................ 2,629 10.69 39,878,735.19 10.93
Utah ........................ 171 0.70 2,775,669.45 0.76
Virginia..................... 1,135 4.61 15,780,662.89 4.33
Washington................... 178 0.72 3,237,661.83 0.89
Wisconsin.................... 388 1.58 5,466,953.11 1.50
------ ------ --------------- ------
Total............... 24,594 100.00% $364,791,551.99 100.00%
====== ====== =============== ======
</TABLE>
(1) Based on address of the dealer selling the related financed vehicle.
(2) Receivables originated in Ohio were solicited by dealers for direct
financing by UAC or its predecessor. All other receivables were originated
by dealers and purchased from such dealers by UAC or its predecessor.
(3) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Financed Vehicle Model
Year as of July 31, 1999
<TABLE>
<CAPTION>
Percent Percent
of Total Aggregate of Aggregate
Model Number of Number of Principal Principal
Year Receivables Receivables(1) Balance Balance(1)
---- ----------- -------------- ------- ----------
<S> <C> <C> <C> <C>
1990 and earlier............ 719 2.92% $ 3,519,421.90 0.96%
1991........................ 704 2.86 3,871,995.98 1.06
1992........................ 1,184 4.81 8,219,524.19 2.25
1993........................ 1,701 6.92 14,946,957.69 4.10
1994........................ 2,571 10.45 26,519,549.78 7.27
1995........................ 3,366 13.69 43,799,788.55 12.01
1996........................ 3,338 13.57 53,251,760.98 14.60
1997........................ 3,569 14.51 62,107,895.36 17.03
1998........................ 2,687 10.93 48,208,038.35 13.22
1999........................ 4,494 18.27 94,761,890.89 25.98
2000........................ 261 1.06 5,584,728.32 1.53
------ ------ --------------- ------
Total........ 24,594 100.00% $364,791,551.99 100.00%
====== ====== =============== ======
</TABLE>
(1) Sum may not equal 100% due to rounding.
<PAGE>
Distribution of the Receivables by Contract Rate as of July 31, 1999
<TABLE>
<CAPTION>
Percent Percent
of Total Aggregate of Aggregate
Number of Number of Principal Principal
Contract Rate Range Receivables Receivables(1) Balance Balance(1)
- ------------------- ----------- -------------- ------- ----------
<S> <C> <C> <C> <C>
Less than 7.000%...................... 64 0.26% $ 992,270.58 0.27%
7.000 to 7.999%...................... 159 0.65 2,783,602.72 0.76
8.000 to 8.999%...................... 397 1.61 6,876,780.17 1.89
9.000 to 9.999%...................... 1,012 4.11 17,187,930.72 4.71
10.000 to 10.999%...................... 1,899 7.72 31,308,254.34 8.58
11.000 to 11.999%...................... 3,011 12.24 47,118,038.09 12.92
12.000 to 12.999%...................... 4,348 17.68 65,225,071.06 17.88
13.000 to 13.999%...................... 4,403 17.90 62,876,713.89 17.24
14.000 to 14.999%...................... 4,016 16.33 57,420,746.33 15.74
15.000 to 15.999%...................... 2,447 9.95 35,166,161.83 9.64
16.000 to 16.999%...................... 1,265 5.14 17,519,803.34 4.80
17.000 to 17.999%...................... 778 3.16 10,411,703.12 2.85
18.000 to 18.999%...................... 690 2.81 8,842,162.94 2.42
19.000 to 19.999%...................... 44 0.18 498,024.65 0.14
20.000 to 20.999%...................... 38 0.15 389,428.73 0.11
21.000 to 21.999%...................... 21 0.09 158,228.66 0.04
22.000 to 22.999%...................... 1 0.00 11,223.32 0.00
25.000 to 25.999%...................... 1 0.00 5,407.50 0.00
------ ------ --------------- ------
Total...................... 24,594 100.00% $364,791,551.99 100.00%
====== ====== =============== ======
</TABLE>
(1) Sum may not equal 100% due to rounding.
<PAGE>
Delinquencies and Net Losses
We have set forth below certain information about the experience of UAC
relating to delinquencies and net losses on the prime fixed rate retail
automobile, light truck and van receivables serviced by UAC. We cannot assure
you that the delinquency and net loss experience of the receivables will be
comparable to that set forth in the following tables.
Delinquency Experience (1)
<TABLE>
<CAPTION>
At June 30,
----------------------------------------------------------------------------------
1997 1998 1999
------------------------ ------------------------ ----------------------
(Dollars in thousands)
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Servicing portfolio......... 173,693 $1,860,272 184,003 $1,978,920 213,746 $2,464,371
Delinquencies
30-59 days............... 2,487 $ 27,373 3,179 $ 32,967 3,962 $ 41,475
60-89 days............... 1,646 18,931 1,907 20,819 1,614 16,654
90 days or more.......... 723 8,826 657 6,993 670 6,754
Total delinquencies......... 4,856 $ 55,130 5,743 $ 60,779 6,246 $ 64,883
Total delinquencies as a
percent of servicing
portfolio................ 2.80% 2.96% 3.12% 3.07% 2.92% 2.63%
</TABLE>
Credit Loss Experience (1)
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------------------------------------------
1997 1998 1999
------------------------ ------------------------ ----------------------
(Dollars in thousands)
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Avg. servicing portfolio(2).. 164,858 $1,759,666 179,822 $1,922,977 202,187 $2,269,177
------- ---------- ------- ---------- ------- ----------
Gross charge-offs............ 6,280 $ 70,830 7,909 $ 87,325 7,752 $ 82,437
Recoveries (3)............... 28,511 33,546 32,526
Net losses................... $ 42,319 $ 53,779 $ 49,911
========== ========== ==========
Gross charge-offs as a % of
average servicing
portfolio(4).............. 3.81% 4.03% 4.40% 4.54% 3.83% 3.63%
Recoveries as a % of gross
charge-offs............... 40.25% 38.41% 39.45%
Net losses as a % of average
servicing portfolio(4).... 2.40% 2.80% 2.20%
</TABLE>
(1) There is generally no recourse to dealers under any of the receivables
in the portfolio serviced by UAC, except to the extent of
representations and warranties made by dealers in connection with such
receivables.
(2) Equals the monthly arithmetic average, and includes receivables sold in
prior securitization transactions.
(3) Recoveries include recoveries on receivables previously charged off,
cash recoveries and unsold repossessed assets carried at fair market
value.
(4) Variation in the size of the portfolio serviced by UAC will affect the
percentages in "Gross charge-offs as a percentage of average servicing
portfolio" and "Net losses as a percentage of average servicing
portfolio."
<PAGE>
Delinquency and Credit Loss Experience
As indicated in the foregoing delinquency experience table, delinquency
rates for UAC's prime automobile portfolio based upon outstanding balances of
receivables 30 days past due and over decreased to 2.63% at June 30, 1999
compared to 3.07% and 2.96% at June 30, 1998 and 1997, respectively.
As indicated in the foregoing credit loss experience table, net credit
losses on UAC's prime automobile portfolio totaled approximately $49.9 million
for the year ended June 30, 1999, or 2.20% of the average servicing portfolio,
compared to $53.8 million, or 2.80% and $42.3 million, or 2.40% for the years
ended June 30, 1998 and 1997, respectively.
As of June 30, 1999, UAC had experienced seven consecutive fiscal
quarters of stabilizing or improving delinquency and credit loss performance.
UAC attributes the improvement to strategic changes in its origination and
collection departments. The efforts in the origination department include:
o implementing tighter credit standards in March 1997;
o developing quality control procedures that rank a prospective
obligor by credit score and by predetermined debt and income
ratios;
o growing the portfolio with quality obligors through dealer
development and dealer expansion;
o increasing the staff in the origination department; and
o expanding the origination department's hours of service.
The collection department's efforts to improve delinquency and credit loss
performance include:
o restructuring the collectors to form specialized
sub-departments of collectors for auxiliary functions such as
skip tracing and high risk accounts;
o initiating collection calls earlier in the delinquency process
through the use of a power dialer;
o targeting higher risk obligors through the use of quarterly
updated credit scores; and
o increasing collection efforts on charged-off accounts.
Recoveries as a percentage of gross charge-offs improved slightly to
39.45% for the year ended June 30, 1999, compared to 38.41% for the year ended
June 30, 1998. Recoveries as a percentage of gross charge-offs for the year
ended June 30, 1997 were 40.25%. In an effort to improve recovery rates, UAC
opened a franchised new car dealership in Indianapolis in July 1998 and is
retailing a portion of its repossessed automobiles through the dealership. UAC
expects to continue this method of disposing of repossessions and strictly
monitor the rest of its repossession and resale process. UAC believes that these
efforts should improve the recovery rate. Although the overall recovery
percentage remains below UAC's expectations, recovery rates for repossessed
automobiles sold by UAC's retail operations have been significantly higher than
recovery rates on vehicles sold at auction. However, only approximately 10% of
all repossessed automobiles sold by UAC during the last twelve months were sold
through its new retail operation.
UAC's expectations with respect to delinquency and credit loss trends
constitute forward-looking statements and are subject to important factors that
could cause actual results to differ materially from those projected by UAC.
Such factors include, but are not limited to, general economic factors affecting
obligors' abilities to make timely payments on their indebtedness such as
employment status, rates of consumer bankruptcy, consumer debt levels generally
and the interest rates applicable thereto. In addition, credit losses are
affected by UAC's ability to realize on recoveries of repossessed vehicles,
including, but not limited to, the market for used cars at any given time.
WEIGHTED AVERAGE LIFE OF THE NOTES
Information regarding certain maturity and prepayment considerations
about the notes is described under "Weighted Average Life of the Securities" in
the accompanying prospectus. Because the rate of payment on principal of the
notes depends primarily on the rate of payment of the receivables (including
voluntary prepayments, principal in respect of receivables as to which there has
been a default, principal in respect of required repurchases or purchases of
receivables by UAC or the servicer, and the application of excess Available
Funds to pay principal on the notes), final payment on each class of notes could
occur much earlier than the applicable final maturity date. You will bear the
risk of being able to reinvest early principal payments on the notes at yields
at least equal to the yield on your notes.
<PAGE>
Prepayments on retail installment sale contracts, such as the
receivables, can be measured relative to a prepayment standard or model. The
model used in this prospectus supplement is the Absolute Prepayment Model
("ABS"). The ABS model represents an assumed rate of prepayment each month
relative to the original number of receivables in a pool. The ABS model further
assumes that all of the receivables are the same size, amortize at the same rate
and that each receivable will be paid as scheduled or will be prepaid in full.
For example, in a pool of receivables originally containing 100 receivables, a
1% ABS rate means that one receivable prepays in full each month. The ABS model,
like any prepayment model, does not claim to be either a historical description
of prepayment experience or a prediction of the anticipated rate of prepayment.
The tables on pages S-21 to S-23 have been prepared on the basis of
certain assumptions, including that:
o all payments on the receivables are made on the last day of
each month and include a full month of interest;
o payments on the notes are paid in cash on each payment date
commencing September 8, 1999 and on the eighth calendar day of
each subsequent month in accordance with the description set
forth under "The Notes -- Payments on the Notes;"
o the closing date will be August 11, 1999;
o the first collection period will be August 1, 1999 through
August 31, 1999;
o the interest rates for the notes are as follows:
class A-1 notes 5.473%
class A-2 notes 6.19%
class A-3 notes 6.61%
class A-4 notes 6.82%
class B notes 7.05%
o the insurance premium is paid from cash flows from the
receivables as required under the policy;
o the spread account will not earn interest;
o no defaults or delinquencies in the payment of any of the
receivables occur;
o no receivables are repurchased due to a breach of any
representation or warranty or for any other reason; and
o the servicer exercises its rights with respect to the optional
purchase of the receivables on the first payment date that it
is entitled to exercise such rights.
The tables indicate the projected weighted average life of each class of notes
and sets forth the percentage of the initial aggregate principal balance of each
class of notes that is projected to be outstanding after each of the payment
dates shown at specified ABS percentages. The tables also assume that the
receivables have been aggregated into six hypothetical pools with all of the
receivables within each such pool having the characteristics described below:
<TABLE>
<CAPTION>
Weighted Average Weighted Average
Cutoff Date Weighted Average Original Term to Remaining Term to
Pool Principal Balance Note Rate Maturity (in Months) Maturity (in Months)
---- ----------------- --------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
1 $ 11,668,309.23 13.192% 70 17
2 12,830,274.40 13.462 48 40
3 33,171,553.29 13.230 58 57
4 92,811,036.30 13.001 69 68
5 172,790,576.10 13.457 80 78
6 41,519,802.67 13.395 84 84
-----------------
Total $ 364,791,551.99
=================
</TABLE>
<PAGE>
The information included in the following tables consists of
forward-looking statements and involves risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. The actual characteristics and performance of the receivables will
differ from the assumptions used in constructing the tables on pages S-20 to
S-22. We have provided these hypothetical illustrations using the assumptions
listed above to give you a general illustration of how the aggregate principal
balance of the notes may decline. However, it is highly unlikely that the
receivables will prepay at a constant ABS until maturity or that all of the
receivables will prepay at the same ABS. In addition, the diverse terms of
receivables within each of the six hypothetical pools could produce slower or
faster rates of principal payments than indicated in the table at the various
specified ABS rates. Any difference between such hypothetical assumptions and
the actual characteristics, performance and prepayment experience of the
receivables will cause the actual percentages of the initial principal balances
of the notes outstanding over time and the weighted average lives of the notes
to vary from what is illustrated in the tables below.
Important notice regarding calculation of the weighted average life and the
assumptions upon which the tables on pages S-20 to S-22 are based
- --------------------------------------------------------------------------------
The weighted average life of a note is determined by: (a)
multiplying the amount of each principal payment on the applicable note
by the number of years from the assumed closing date to the related
payment date, (b) adding the results, and (c) dividing the sum by the
related initial principal amount of such note.
The tables on pages S-20 to S-22 have been prepared based on
(and should be read in conjunction with) the assumptions described on
pages S-18 and S-19 (including the assumptions regarding the
characteristics and performance of the receivables, which will differ
from the actual characteristics and performance of the receivables).
- --------------------------------------------------------------------------------
<PAGE>
Percent of Initial Note Balance at Various ABS Percentages (1)
<TABLE>
<CAPTION>
Class A-1 Notes Class A-2 Notes
Payment Date 1.0% 1.4% 1.6% 1.8% 2.5% 1.0% 1.4% 1.6% 1.8% 2.5%
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date..............100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
1 September, 1999....... 86.6% 84.1% 82.3% 77.0% 64.1% 100.0% 100.0% 100.0% 100.0% 100.0%
2 October, 1999......... 73.7% 68.8% 65.3% 55.1% 44.8% 100.0% 100.0% 100.0% 100.0% 100.0%
3 November, 1999........ 60.8% 53.6% 48.6% 36.5% 25.9% 100.0% 100.0% 100.0% 100.0% 100.0%
4 December, 1999........ 48.1% 38.7% 32.2% 21.2% 7.2% 100.0% 100.0% 100.0% 100.0% 100.0%
5 January, 2000......... 35.5% 24.0% 16.3% 6.0% 0.0% 100.0% 100.0% 100.0% 100.0% 91.4%
6 February, 2000........ 24.6% 11.0% 1.9% 0.0% 0.0% 100.0% 100.0% 100.0% 94.0% 78.0%
7 March, 2000........... 14.4% 0.0% 0.0% 0.0% 0.0% 100.0% 99.1% 91.3% 84.2% 65.8%
8 April, 2000........... 4.3% 0.0% 0.0% 0.0% 0.0% 100.0% 90.0% 81.4% 74.5% 53.7%
9 May, 2000............. 0.0% 0.0% 0.0% 0.0% 0.0% 95.6% 81.0% 71.7% 64.9% 41.8%
10. June, 2000........... 0.0% 0.0% 0.0% 0.0% 0.0% 87.9% 72.1% 62.6% 55.5% 30.1%
11. July, 2000........... 0.0% 0.0% 0.0% 0.0% 0.0% 80.3% 63.4% 53.9% 46.1% 18.5%
12. August, 2000......... 0.0% 0.0% 0.0% 0.0% 0.0% 72.8% 54.9% 45.2% 36.9% 7.1%
13. September, 2000...... 0.0% 0.0% 0.0% 0.0% 0.0% 65.4% 46.5% 36.7% 27.7% 0.0%
14. October, 2000........ 0.0% 0.0% 0.0% 0.0% 0.0% 58.0% 38.3% 28.2% 18.7% 0.0%
15. November, 2000....... 0.0% 0.0% 0.0% 0.0% 0.0% 50.7% 30.2% 19.9% 9.8% 0.0%
16. December, 2000....... 0.0% 0.0% 0.0% 0.0% 0.0% 43.5% 22.3% 11.7% 1.1% 0.0%
17. January, 2001........ 0.0% 0.0% 0.0% 0.0% 0.0% 36.4% 14.5% 3.5% 0.0% 0.0%
18. February, 2001....... 0.0% 0.0% 0.0% 0.0% 0.0% 29.8% 7.0% 0.0% 0.0% 0.0%
19. March, 2001.......... 0.0% 0.0% 0.0% 0.0% 0.0% 23.2% 0.0% 0.0% 0.0% 0.0%
20. April, 2001.......... 0.0% 0.0% 0.0% 0.0% 0.0% 16.8% 0.0% 0.0% 0.0% 0.0%
21. May, 2001............ 0.0% 0.0% 0.0% 0.0% 0.0% 10.3% 0.0% 0.0% 0.0% 0.0%
22. June, 2001........... 0.0% 0.0% 0.0% 0.0% 0.0% 4.0% 0.0% 0.0% 0.0% 0.0%
23. July, 2001........... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
24. August, 2001......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
25. September, 2001...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
26. October, 2001........ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
27. November, 2001....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
28. December, 2001....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
29. January, 2002........ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
30. February, 2002....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
31. March, 2002.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
32. April, 2002.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
33. May, 2002............ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
34. June, 2002........... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
35. July, 2002........... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
36. August, 2002......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
37. September, 2002...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
38. October, 2002........ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
39. November, 2002....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
40. December, 2002....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
41. January, 2003........ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
42. February, 2003....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
43. March, 2003.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
44. April, 2003.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
45. May, 2003............ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
46. June, 2003........... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
47. July, 2003........... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
48. August, 2003......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
49. September, 2003...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
50. October, 2003........ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
51. November, 2003....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
52. December, 2003....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
53. January, 2004........ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
54. February, 2004....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
55. March, 2004.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
56. April, 2004.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Weighted Avg.
Life (years)........ 0.36 0.31 0.28 0.24 0.19 1.30 1.09 1.00 0.92 0.73
</TABLE>
(1) See the important notice on page S-19 of this prospectus supplement
regarding calculation of the weighted average life and the assumptions upon
which these tables are based.
<PAGE>
Percent of Initial Note Balance at Various ABS Percentages (1)
<TABLE>
<CAPTION>
Class A-3 Notes Class A-4 Notes
Payment Date 1.0% 1.4% 1.6% 1.8% 2.5% 1.0% 1.4% 1.6% 1.8% 2.5%
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date..............100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
1 September, 1999.......100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
2 October, 1999.........100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
3 November, 1999........100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
4 December, 1999........100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
5 January, 2000.........100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
6 February, 2000........100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
7 March, 2000...........100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
8 April, 2000...........100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
9 May, 2000.............100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
10. June, 2000...........100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
11. July, 2000...........100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
12. August, 2000.........100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
13. September, 2000......100.0% 100.0% 100.0% 100.0% 95.6% 100.0% 100.0% 100.0% 100.0% 100.0%
14. October, 2000........100.0% 100.0% 100.0% 100.0% 83.8% 100.0% 100.0% 100.0% 100.0% 100.0%
15. November, 2000.......100.0% 100.0% 100.0% 100.0% 72.2% 100.0% 100.0% 100.0% 100.0% 100.0%
16. December, 2000.......100.0% 100.0% 100.0% 100.0% 60.7% 100.0% 100.0% 100.0% 100.0% 100.0%
17. January, 2001........100.0% 100.0% 100.0% 91.9% 49.5% 100.0% 100.0% 100.0% 100.0% 100.0%
18. February, 2001.......100.0% 100.0% 95.2% 82.7% 38.5% 100.0% 100.0% 100.0% 100.0% 100.0%
19. March, 2001..........100.0% 99.5% 86.6% 73.7% 27.7% 100.0% 100.0% 100.0% 100.0% 100.0%
20. April, 2001..........100.0% 91.6% 78.2% 64.8% 17.1% 100.0% 100.0% 100.0% 100.0% 100.0%
21. May, 2001............100.0% 83.8% 70.0% 56.1% 6.7% 100.0% 100.0% 100.0% 100.0% 100.0%
22. June, 2001...........100.0% 76.1% 61.8% 47.5% 0.0% 100.0% 100.0% 100.0% 100.0% 96.8%
23. July, 2001........... 97.4% 68.4% 53.8% 39.0% 0.0% 100.0% 100.0% 100.0% 100.0% 87.6%
24. August, 2001......... 90.7% 60.9% 45.9% 30.8% 0.0% 100.0% 100.0% 100.0% 100.0% 78.7%
25. September, 2001...... 84.0% 53.5% 38.1% 22.6% 0.0% 100.0% 100.0% 100.0% 100.0% 70.0%
26. October, 2001........ 77.4% 46.2% 30.5% 14.6% 0.0% 100.0% 100.0% 100.0% 100.0% 61.4%
27. November, 2001....... 70.8% 39.0% 23.0% 6.8% 0.0% 100.0% 100.0% 100.0% 100.0% 53.2%
28. December, 2001....... 64.4% 31.9% 15.6% 0.0% 0.0% 100.0% 100.0% 100.0% 99.2% 45.1%
29. January, 2002........ 57.9% 25.0% 8.3% 0.0% 0.0% 100.0% 100.0% 100.0% 92.2% 37.3%
30. February, 2002....... 51.6% 18.1% 1.3% 0.0% 0.0% 100.0% 100.0% 100.0% 85.5% 29.7%
31. March, 2002.......... 45.2% 11.4% 0.0% 0.0% 0.0% 100.0% 100.0% 94.7% 78.8% 0.0%
32. April, 2002.......... 39.0% 4.8% 0.0% 0.0% 0.0% 100.0% 100.0% 88.4% 72.4% 0.0%
33. May, 2002............ 32.9% 0.0% 0.0% 0.0% 0.0% 100.0% 98.4% 82.3% 66.0% 0.0%
34. June, 2002........... 26.8% 0.0% 0.0% 0.0% 0.0% 100.0% 92.5% 76.3% 59.9% 0.0%
35. July, 2002........... 20.7% 0.0% 0.0% 0.0% 0.0% 100.0% 86.7% 70.4% 53.9% 0.0%
36. August, 2002......... 14.8% 0.0% 0.0% 0.0% 0.0% 100.0% 81.1% 64.6% 48.1% 0.0%
37. September, 2002...... 8.9% 0.0% 0.0% 0.0% 0.0% 100.0% 75.6% 59.1% 42.5% 0.0%
38. October, 2002........ 3.1% 0.0% 0.0% 0.0% 0.0% 100.0% 70.1% 53.6% 37.0% 0.0%
39. November, 2002....... 0.0% 0.0% 0.0% 0.0% 0.0% 97.6% 64.9% 48.3% 31.7% 0.0%
40. December, 2002....... 0.0% 0.0% 0.0% 0.0% 0.0% 92.4% 59.7% 43.2% 26.6% 0.0%
41. January, 2003........ 0.0% 0.0% 0.0% 0.0% 0.0% 87.5% 54.8% 38.3% 0.0% 0.0%
42. February, 2003....... 0.0% 0.0% 0.0% 0.0% 0.0% 82.6% 50.0% 33.6% 0.0% 0.0%
43. March, 2003.......... 0.0% 0.0% 0.0% 0.0% 0.0% 77.8% 45.4% 29.0% 0.0% 0.0%
44. April, 2003.......... 0.0% 0.0% 0.0% 0.0% 0.0% 73.2% 40.9% 24.6% 0.0% 0.0%
45. May, 2003............ 0.0% 0.0% 0.0% 0.0% 0.0% 68.5% 36.5% 0.0% 0.0% 0.0%
46. June, 2003........... 0.0% 0.0% 0.0% 0.0% 0.0% 64.0% 32.2% 0.0% 0.0% 0.0%
47. July, 2003........... 0.0% 0.0% 0.0% 0.0% 0.0% 59.5% 28.1% 0.0% 0.0% 0.0%
48. August, 2003......... 0.0% 0.0% 0.0% 0.0% 0.0% 55.1% 24.1% 0.0% 0.0% 0.0%
49. September, 2003...... 0.0% 0.0% 0.0% 0.0% 0.0% 50.8% 0.0% 0.0% 0.0% 0.0%
50. October, 2003........ 0.0% 0.0% 0.0% 0.0% 0.0% 46.6% 0.0% 0.0% 0.0% 0.0%
51. November, 2003....... 0.0% 0.0% 0.0% 0.0% 0.0% 42.4% 0.0% 0.0% 0.0% 0.0%
52. December, 2003....... 0.0% 0.0% 0.0% 0.0% 0.0% 38.3% 0.0% 0.0% 0.0% 0.0%
53. January, 2004........ 0.0% 0.0% 0.0% 0.0% 0.0% 34.3% 0.0% 0.0% 0.0% 0.0%
54. February, 2004....... 0.0% 0.0% 0.0% 0.0% 0.0% 30.5% 0.0% 0.0% 0.0% 0.0%
55. March, 2004.......... 0.0% 0.0% 0.0% 0.0% 0.0% 26.6% 0.0% 0.0% 0.0% 0.0%
56. April, 2004.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Weighted Avg.
Life (years)......... 2.56 2.17 2.00 1.85 1.45 4.10 3.53 3.25 2.99 2.29
</TABLE>
(1) See the important notice on page S-19 of this prospectus supplement
regarding calculation of the weighted average life and the assumptions upon
which these tables are based.
<PAGE>
Percent of Initial Note Balance at Various ABS Percentages (1)
<TABLE>
<CAPTION>
Class B Notes
Payment Date 1.0% 1.4% 1.6% 1.8% 2.5%
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Closing Date........................ 100.0% 100.0% 100.0% 100.0% 100.0%
1 September, 1999................ 100.0% 100.0% 100.0% 100.0% 100.0%
2 October, 1999.................. 100.0% 100.0% 100.0% 100.0% 100.0%
3 November, 1999................. 100.0% 100.0% 100.0% 100.0% 100.0%
4 December, 1999................. 100.0% 100.0% 100.0% 100.0% 100.0%
5 January, 2000.................. 100.0% 100.0% 100.0% 100.0% 100.0%
6 February, 2000................. 100.0% 100.0% 100.0% 100.0% 100.0%
7 March, 2000.................... 100.0% 100.0% 100.0% 100.0% 100.0%
8 April, 2000.................... 100.0% 100.0% 100.0% 100.0% 100.0%
9 May, 2000...................... 100.0% 100.0% 100.0% 100.0% 100.0%
10 June, 2000..................... 100.0% 100.0% 100.0% 100.0% 100.0%
11 July, 2000..................... 100.0% 100.0% 100.0% 100.0% 100.0%
12 August, 2000................... 100.0% 100.0% 100.0% 100.0% 100.0%
13 September, 2000................ 100.0% 100.0% 100.0% 100.0% 100.0%
14 October, 2000.................. 100.0% 100.0% 100.0% 100.0% 100.0%
15 November, 2000................. 100.0% 100.0% 100.0% 100.0% 100.0%
16 December, 2000................. 100.0% 100.0% 100.0% 100.0% 100.0%
17 January, 2001.................. 100.0% 100.0% 100.0% 100.0% 100.0%
18 February, 2001................. 100.0% 100.0% 100.0% 100.0% 100.0%
19 March, 2001.................... 100.0% 100.0% 100.0% 100.0% 100.0%
20 April, 2001.................... 100.0% 100.0% 100.0% 100.0% 100.0%
21 May, 2001...................... 100.0% 100.0% 100.0% 100.0% 100.0%
22 June, 2001..................... 100.0% 100.0% 100.0% 100.0% 100.0%
23 July, 2001..................... 100.0% 100.0% 100.0% 100.0% 100.0%
24 August, 2001................... 100.0% 100.0% 100.0% 100.0% 100.0%
25 September, 2001................ 100.0% 100.0% 100.0% 100.0% 100.0%
26 October, 2001.................. 100.0% 100.0% 100.0% 100.0% 100.0%
27 November, 2001................. 100.0% 100.0% 100.0% 100.0% 100.0%
28 December, 2001................. 100.0% 100.0% 100.0% 100.0% 100.0%
29 January, 2002.................. 100.0% 100.0% 100.0% 100.0% 100.0%
30 February, 2002................. 100.0% 100.0% 100.0% 100.0% 100.0%
31 March, 2002.................... 100.0% 100.0% 100.0% 100.0% 0.0%
32 April, 2002.................... 100.0% 100.0% 100.0% 100.0% 0.0%
33 May, 2002...................... 100.0% 100.0% 100.0% 100.0% 0.0%
34 June, 2002..................... 100.0% 100.0% 100.0% 100.0% 0.0%
35 July, 2002..................... 100.0% 100.0% 100.0% 100.0% 0.0%
36 August, 2002................... 100.0% 100.0% 100.0% 100.0% 0.0%
37 September, 2002................ 100.0% 100.0% 100.0% 100.0% 0.0%
38 October, 2002.................. 100.0% 100.0% 100.0% 100.0% 0.0%
39 November, 2002................. 100.0% 100.0% 100.0% 100.0% 0.0%
40 December, 2002................. 100.0% 100.0% 100.0% 100.0% 0.0%
41 January, 2003.................. 100.0% 100.0% 100.0% 0.0% 0.0%
42 February, 2003................. 100.0% 100.0% 100.0% 0.0% 0.0%
43 March, 2003.................... 100.0% 100.0% 100.0% 0.0% 0.0%
44 April, 2003.................... 100.0% 100.0% 100.0% 0.0% 0.0%
45 May, 2003...................... 100.0% 100.0% 0.0% 0.0% 0.0%
46 June, 2003..................... 100.0% 100.0% 0.0% 0.0% 0.0%
47 July, 2003..................... 100.0% 100.0% 0.0% 0.0% 0.0%
48 August, 2003................... 100.0% 100.0% 0.0% 0.0% 0.0%
49 September, 2003................ 100.0% 0.0% 0.0% 0.0% 0.0%
50 October, 2003.................. 100.0% 0.0% 0.0% 0.0% 0.0%
51 November, 2003................. 100.0% 0.0% 0.0% 0.0% 0.0%
52 December, 2003................. 100.0% 0.0% 0.0% 0.0% 0.0%
53 January, 2004.................. 100.0% 0.0% 0.0% 0.0% 0.0%
54 February, 2004................. 100.0% 0.0% 0.0% 0.0% 0.0%
55 March, 2004.................... 100.0% 0.0% 0.0% 0.0% 0.0%
56 April, 2004.................... 0.0% 0.0% 0.0% 0.0% 0.0%
Weighted Avg. Life (years).......... 4.66 4.08 3.74 3.41 2.58
</TABLE>
(1) See the important notice on page S-19 of this prospectus supplement
regarding calculation of the weighted average life and the assumptions
upon which these tables are based.
<PAGE>
YIELD AND PREPAYMENT CONSIDERATIONS
Monthly Interest will be distributed to noteholders on each payment
date to the extent of the interest rate applicable to each class of notes
applied to the aggregate principal balance for each class of notes, as of the
preceding payment date or the closing date, as applicable (after giving effect
to payments of principal on such preceding payment date). See "The Notes --
Payments on the Notes" in this prospectus supplement.
Upon a full or partial prepayment on a receivable, noteholders should
receive interest for the full month of such prepayment either:
(1) through the distribution of interest paid on the receivables;
(2) from a withdrawal from the spread account;
(3) by an advance from the servicer; or
(4) by a draw on the policy.
The receivables will have different contract rates. The contract rate
on a small percentage of the receivables will not exceed the sum of:
(1) the weighted average of the interest rates on the notes;
(2) the per annum rate used to calculate the insurance premium
paid to the insurer; and
(3) the per annum rate used to calculate the monthly servicing
fee.
Disproportionate rates of prepayments between receivables with higher
and lower contract rates could affect the ability of the trust to pay Monthly
Interest to you.
THE NOTES
The notes will be issued by the trust pursuant to the indenture, and
the certificate will be issued pursuant to the trust and servicing agreement.
You may request a copy of these agreements (without exhibits) by contacting the
servicer at the address set forth under "Reports to Noteholders" in this
prospectus supplement. We do not claim that the following summary is complete.
For a more detailed description of the agreements, you should read the indenture
and the trust and servicing agreement.
Sale and Assignment of Receivables
We have described the conveyance of the receivables (1) from UAFC to
the seller pursuant to a purchase agreement among UAFC, UAC and the seller, and
(2) from the seller to the trust pursuant to the trust and servicing agreement
and the grant of a security interest in the receivables from the trust to the
indenture trustee pursuant to the indenture in the accompanying prospectus under
the heading "Description of the Transfer and Servicing Agreements -- Sale and
Assignment of Receivables."
Accounts
In addition to the collection account, the property of the trust will
include the spread account and the payahead account.
Spread Account. On the closing date, the indenture trustee will
establish the spread account for the benefit of the noteholders and the insurer.
The amount held in the spread account will increase up to the required spread
amount by the deposit of payments on the receivables not used to make payments
to the noteholders, the insurer and the servicer for the monthly servicing fee
and any permitted reimbursements of outstanding advances on any payment date.
Although we intend for the amount on deposit in the spread account to grow over
time to equal the required spread amount through monthly deposits of any excess
collections on the receivables, we cannot assure you that such growth will
actually occur. On each payment date, any amounts on deposit in the spread
account after the payment of any amounts owed to the noteholders and the insurer
in excess of the required spread amount will be distributed to the
certificateholder.
Under the terms of the indenture, the indenture trustee will withdraw
funds from the spread account, up to the amount on deposit in such account, and
transfer such funds to the collection account for any deficiency of the monthly
servicing fee, Monthly Interest or Monthly Principal, as further described below
under "-- Payments on the Notes," prior to making any draw on the policy.
In the event that the balance of the spread account is reduced to zero
and there is a default under the policy on any payment date, the trust will
depend solely on current distributions on the receivables to make payments of
principal and interest on the notes. In addition, because the market value of
motor vehicles generally declines with age and because of difficulties that may
be encountered in enforcing motor vehicle contracts as described in the
accompanying prospectus under "Certain Legal Aspects of the Receivables," the
servicer may not recover the entire amount due on such receivables in the event
of a repossession and resale of a financed vehicle securing a receivable in
default. In such event, the class B noteholders may suffer a corresponding loss
up to the extent of the outstanding principal balance of the class B notes at
such time. Any remaining losses will be borne pro rata by the class A
noteholders (based upon the then relative outstanding principal balance of each
class of class A notes).
Payahead Account. The servicer will establish a payahead account in the
name of the indenture trustee on behalf of obligors on the receivables and the
noteholders. The payahead account will initially be maintained with the
indenture trustee. To the extent required by the trust and servicing agreement,
early payments by or on behalf of obligors on precomputed receivables will be
deposited in the payahead account until such time as the payment becomes due.
Until such time as payments are transferred from the payahead account to the
collection account, they will not constitute collected interest or collected
principal and will not be available for payment to noteholders. We will pay the
interest earned on the balance in the payahead account to the servicer each
month. We will apply collections received on a precomputed receivable during a
collection period first to any overdue scheduled payment on such receivable,
then to the scheduled payment on such receivable due in such collection period.
If the amount collected on a precomputed receivable exceeds the amount required
for any overdue scheduled payment or scheduled payment, but is insufficient to
prepay the precomputed receivable in full, then generally such excess
collections will be transferred to and kept in the payahead account until such
amount may be applied either to a later scheduled payment or to prepay such
receivable in full.
<PAGE>
Advances
With respect to each receivable delinquent more than 30 days at the end
of a collection period, the servicer will make an advance in an amount equal to
30 days of interest but only if the servicer, in its sole discretion, expects to
recover the advance from subsequent collections on the receivable. The servicer
will deposit the advance in the collection account on or before the second
business day before the payment date. The servicer will recover its advance from
subsequent payments by or on behalf of the respective obligor, from insurance
proceeds or, upon the servicer's determination that reimbursement from the
preceding sources is unlikely, will recover its advance from any collections
made on other receivables.
Payments on the Notes
Available Funds. The servicer will deposit in the collection account
the aggregate principal payments, including full and partial prepayments (except
certain prepayments in respect of precomputed receivables as described above
under "--Accounts") received on all receivables with respect to the preceding
collection period. The funds available for distribution on the next payment date
("Available Funds") will consist of:
o all payments on the simple interest receivables received during the
related collection period; o the scheduled payments received from
obligors on precomputed receivables; o interest earned on funds on
deposit in the collection account;
o the net amount to be transferred from the payahead account to
the collection account for the related payment date;
o all advances for such collection period; and
o the purchase amount for all receivables that were purchased or
repurchased by UAC or the servicer during the preceding
collection period.
As an administrative convenience, the servicer will be permitted to
make the deposit of collections and aggregate advances and purchase amounts for
or with respect to the collection period net of distributions to be made to the
servicer with respect to the collection period (as described below). The
servicer, however, will account to the indenture trustee and to the noteholders
as if all deposits and distributions were made individually.
The servicer will determine the amount of funds necessary to make
payments of Monthly Principal and Monthly Interest to the holders of the notes
and to pay the monthly servicing fee to the servicer. If there is a deficiency
with respect to Monthly Interest or Monthly Principal on any payment date, after
giving effect to payments of the monthly servicing fee and permitted
reimbursements of outstanding advances to the servicer on such payment date, or
if there is a deficiency with respect to the monthly servicing fee, the servicer
will direct the indenture trustee to withdraw amounts from the spread account,
up to the amount on deposit in such account. If there remains a deficiency of
Monthly Interest or Monthly Principal or the monthly servicing fee after such a
withdrawal, the servicer will notify the indenture trustee of the remaining
deficiency, and the indenture trustee will draw on the policy, up to the Policy
Amount, to pay Monthly Interest, Monthly Principal, and the monthly servicing
fee. Additionally, if the Available Funds for a payment date are not sufficient
to pay current and past due insurance premiums and other amounts owed to the
insurer pursuant to the insurance agreement, plus accrued interest thereon, the
servicer will notify the indenture trustee and the owner trustee of such
deficiency. The amount, if any, then on deposit in the spread account (after
giving effect to any withdrawal to satisfy a deficiency described in this and
the preceding sentences) will be available to cover such deficiency.
Payments. On each payment date, the indenture trustee will use the
Available Funds (plus any amounts withdrawn from the spread account or drawn on
the policy, as applicable) to make the following payments in the following
priority:
(a) without duplication, an amount equal to the sum of (1) the
amount of outstanding advances in respect of receivables that
became defaulted receivables during the prior collection
period plus (2) the amount of outstanding advances in respect
of receivables that the servicer determines to be
unrecoverable, to the servicer;
(b) the monthly servicing fee, including any overdue monthly
servicing fee, to the servicer, to the extent not previously
distributed to the servicer;
(c) Class A Monthly Interest (including any overdue amounts) to
the class A noteholders;
(d) Class B Monthly Interest (including any overdue amounts) to
the class B noteholders; provided that if the payment date is
the final maturity date for a class of class A notes, payments
of Class B Monthly Interest to the class B noteholders will be
subordinated to payments of Monthly Principal to the holders
of such class A notes;
(e) Monthly Principal (including any overdue amounts) to the class
A noteholders, in accordance with the Principal Payment
Sequence;
<PAGE>
(f) Monthly Principal (including any overdue amounts) to the class
B noteholders, in accordance with the Principal Payment
Sequence;
(g) the insurance premium including any overdue insurance premium
plus any accrued interest to the insurer;
(h) the amount of recoveries of advances (to the extent such
recoveries have not previously been reimbursed to the servicer
pursuant to clause (a) above), to the servicer;
(i) the aggregate amount of any unreimbursed draws on the policy
payable to the insurer under the insurance agreement, for
Monthly Interest, Monthly Principal and any other amounts
owing to the insurer under the insurance agreement plus
accrued interest thereon;
(j) the amount, if any, which is necessary to increase the amount
on deposit in the spread account to the lesser of $911,978.88
or the aggregate outstanding principal balance of the notes,
into the spread account;
(k) to the extent of remaining Available Funds, the unpaid amount,
if any, of the Accelerated Principal Payment in respect of
principal on the notes to the noteholders in accordance with
the Principal Payment Sequence; and
(l) the balance into the spread account.
After all payments and deposits have been made for each payment date,
the servicer will determine the amount of funds remaining in the spread account
on such date. If the funds in the spread account exceed the required spread
amount, the indenture trustee will distribute any such excess to the owner
trustee for distribution to the certificateholder or will distribute such excess
directly to the certificateholder. Any amounts so distributed to the
certificateholder will no longer be property of the trust and will not be
available to make payments to you.
Accelerated Payments Following Indenture Default. If the notes are
accelerated following an indenture default, amounts collected will be applied in
the following priority:
(a) first, to pay any unpaid monthly servicing fee and outstanding
advances to the servicer;
(b) second, to pay any accrued and unpaid fees of the indenture
trustee and the owner trustee without preference or priority
of any kind;
(c) third, to pay accrued interest on each class of class A notes
on a pro rata basis based on the interest accrued (including
interest accrued on past due interest) on each class of class
A notes;
(d) fourth, to pay accrued interest on the class B notes
(including accrued interest on past due interest);
(e) fifth, to pay principal on each class of class A notes, on a
pro rata basis based on the aggregate principal balance of
each class of class A notes, until the aggregate principal
balance of each class of class A notes is reduced to zero;
(f) sixth, to pay principal on the class B notes until the
aggregate principal balance of the class B notes is reduced to
zero;
(g) seventh, to pay amounts owing the insurer under the insurance
agreement; and
(h) eighth, to the spread account, to be applied in accordance
with the indenture.
Definitions. The following defined terms are used in this "Payments on
the Notes" section.
"Monthly Principal" for any payment date will equal the sum of the
following:
1. the amount by which the aggregate principal balance of the
receivables pool declined during the related collection
period; and
2. the additional amount, if any, which is necessary to reduce
the principal balance of a class of notes to zero on its final
maturity date.
<PAGE>
If there is a shortfall in Available Funds on any payment
date, the amount of Monthly Principal otherwise payable to noteholders
will be reduced by the lesser of: (1) the amount of such shortfall or
(2) the amount, if any, by which the aggregate outstanding principal
balance of the notes as of the preceding payment date (after giving
effect to all payments of principal on such date) was less than the
aggregate principal balance of the receivables pool as of the end of
the related collection period. For the purpose of determining Monthly
Principal, the unpaid principal balance of a defaulted receivable or a
receivable required to be purchased or repurchased by UAC or the
servicer will be zero as of the end of the collection period in which
such receivable became a defaulted receivable or a purchased
receivable. In no event will Monthly Principal exceed the aggregate
outstanding principal balance of the notes.
A defaulted receivable for any collection period is a receivable as to
which the earliest to occur of any of the following has occurred: (1) any
payment, or part thereof, in excess of $10 is 120 days or more delinquent as of
the last day of such collection period; (2) the financed vehicle that secures
the receivable has been repossessed; or (3) the receivable has been determined
to be uncollectable in accordance with the servicer's customary practices on or
prior to the last day of such collection period; provided, however, that any
receivable which the seller or the servicer is obligated to repurchase or
purchase pursuant to the trust and servicing agreement shall be deemed not to be
a defaulted receivable.
"Accelerated Principal Payment" means, for any payment date, after
giving effect to all payments of interest and principal to the noteholders
(other than any Accelerated Principal Payment), an amount equal to the amount
necessary to reduce the aggregate principal balances of the notes below the
aggregate principal balance of the receivables pool as of the end of the related
collection period until the aggregate principal balance of the receivables pool
exceeds the aggregate principal balance of the notes by 2.5% of the initial
aggregate principal balance of notes or $9,119,788.78.
"Monthly Interest" for any payment date will equal the sum of Class A
Monthly Interest and Class B Monthly Interest for such payment date and the
related collection period.
"Class A Monthly Interest" means the sum of Class A-1 Monthly Interest,
Class A-2 Monthly Interest, Class A-3 Monthly Interest and Class A-4 Monthly
Interest.
"Class A-1 Monthly Interest" means:
(1) for the first payment date, the product of the following:
(a) one-three hundred sixtieth (1/360th) of the class A-1
interest rate,
(b) the actual number of days from the closing date
through the day before the first payment date, and
(c) the aggregate principal balance of the class A-1
notes on the closing date; and
(2) for any subsequent payment date, the product of the following:
(a) one-three hundred sixtieth (1/360th) of the class A-1
interest rate,
(b) the actual number of days from the previous payment
date through the day before the related payment date,
and
(c) the aggregate principal balance of the class A-1
notes as of the immediately preceding payment date
(after giving effect to any distribution of principal
made on such payment date).
"Class A-2 Monthly Interest" means:
(1) for the first payment date, the product of the following:
(a) one-twelfth of the class A-2 interest rate,
(b) the number of days from the closing date (assuming
the month of the closing date has 30 days) through
the day before the first payment date, divided by 30,
and
(c) the aggregate principal balance of the class A-2
notes on the closing date; and
(2) for any subsequent payment date, the product of the following:
(a) one-twelfth of the class A-2 interest rate, and
(b) the aggregate principal balance of the class A-2
notes as of the immediately preceding payment date
(after giving effect to any distribution of principal
made on such payment date).
<PAGE>
"Class A-3 Monthly Interest" means:
(1) for the first payment date, the product of the following:
(a) one-twelfth of the class A-3 interest rate,
(b) the number of days from the closing date (assuming
the month of the closing date has 30 days) through
the day before the first payment date, divided by 30,
and
(c) the aggregate principal balance of the class A-3
notes on the closing date; and
(2) for any subsequent payment date, the product of the following:
(a) one-twelfth of the class A-3 interest rate, and
(b) the aggregate principal balance of the class A-3
notes as of the immediately preceding payment date
(after giving effect to any distribution of principal
made on such payment date).
"Class A-4 Monthly Interest" means:
(1) for the first payment date, the product of the following:
(a) one-twelfth of the class A-4 interest rate,
(b) the number of days from the closing date (assuming
the month of the closing date has 30 days) through
the day before the first payment date, divided by 30,
and
(c) the aggregate principal balance of the class A-4
notes on the closing date; and
(2) for any subsequent payment date, the product of the following:
(a) one-twelfth of the class A-4 interest rate, and
(b) the aggregate principal balance of the class A-4
notes as of the immediately preceding payment date
(after giving effect to any distribution of principal
made on such payment date).
"Class B Monthly Interest" means:
(1) for the first payment date, the product of the following:
(a) one-twelfth of the class B interest rate,
(b) the number of days from the closing date (assuming
the month of the closing date has 30 days) through
the day before the first payment date, divided by 30,
and
(c) the aggregate principal balance of the class B notes
on the closing date; and
(2) for any subsequent payment date, the product of the following:
(a) one-twelfth of the class B interest rate, and
(b) the aggregate principal balance of the class B notes
as of the immediately preceding payment date (after
giving effect to any distribution of principal made
on such payment date).
"Principal Payment Sequence" means the order in which Monthly Principal
and the Accelerated Principal Payment will be distributed among the noteholders.
The order of distribution of Monthly Principal and the Accelerated Principal
Payment is:
(1) to the class A-1 noteholders until the aggregate principal
balance of the class A-1 notes has been reduced to zero;
(2) to the class A-2 noteholders until the aggregate principal
balance of the class A-2 notes has been reduced to zero;
(3) to the class A-3 noteholders until the aggregate principal
balance of the class A-3 notes has been reduced to zero;
(4) to the class A-4 noteholders until the aggregate principal
balance of the class A-4 notes has been reduced to zero; and
(5) to the class B noteholders until the aggregate principal
balance of the class B notes has been reduced to zero.
<PAGE>
However, if the amount of Available Funds (together with amounts withdrawn from
the spread account and/or the policy) are not sufficient to pay the required
payment of Monthly Principal to class A noteholders in full on any payment date,
the amount of such funds available to pay Class A Monthly Principal to class A
noteholders will be distributed pro rata to the class A noteholders based upon
the relative aggregate principal balance of each class of class A notes.
Example of Payment Date Activities. The following chart sets forth an
example of the application of the foregoing provisions to the payment date on
October 8, 1999:
September 1 - September 30, 1999........Collection Period. The collection period
for each payment date is the calendar
month preceding the payment date. The
servicer receives monthly payments,
prepayments, and other proceeds in
respect of the receivables and deposits
them in the collection account. The
servicer may deduct the monthly
servicing fee from such deposits.
October 6, 1999.........................Determination Date. The determination
date is the second business day before
the payment date. On or before this
date, the servicer delivers the
servicer's certificate setting forth the
amounts to be distributed on the payment
date and the amounts of any
deficiencies. If necessary, the
indenture trustee notifies the insurer
of any draws in respect of the policy.
October 7, 1999.........................Record Date. The record date is the day
before the payment date. Payments on the
payment date are made to noteholders of
record at the close of business on this
date.
October 8, 1999.........................Payment Date. The payment date is the
eighth calendar day of the month, or if
such day is not a business day, the
first business day thereafter. The
indenture trustee withdraws funds from
the collection account and, as
necessary, from the spread account and
then draws on the policy, if necessary,
to pay Monthly Interest, Monthly
Principal and, if applicable, the
Accelerated Principal Payment, to the
noteholders as described in this
prospectus supplement. The indenture
trustee distributes Monthly Interest,
Monthly Principal, and, if applicable,
the Accelerated Principal Payment, to
the noteholders, pays the monthly
servicing fee to the extent not
previously paid, pays the insurance
premium and all other amounts owing to
the insurer.
Distributions on the Certificate
The certificate will be in the form of a trust certificate initially issued
to the seller and will entitle the seller to receive all funds held in the
spread account in excess of the required spread amount on each payment date
after payment of all amounts owed to the noteholders, the servicer and the
insurer. On or after the termination of the trust, the certificateholder is
entitled to receive any amounts remaining in the spread account (only after all
required payments to the insurer are made) after the payment of expenses and
payments to the noteholders. See "-- Accounts" and "-- Payments on the Notes"
above.
The Policy
On or before the closing date, the seller, the trust, UAFC, UAC, in its
individual capacity and as servicer, and the insurer will enter into the
insurance and reimbursement agreement pursuant to which the insurer will issue
an unconditional and irrevocable insurance policy. Subject to the terms of the
policy, the insurer will guarantee the payment of Monthly Interest and Monthly
Principal up to the Policy Amount. Under the terms of the indenture, after
withdrawal of any amounts in the spread account with respect to a payment date
to pay a deficiency in Monthly Interest or Monthly Principal, the indenture
trustee will be authorized to draw on the policy for the benefit of the
noteholders and credit the collection account for such draws as described above
under "--Payments on the Notes."
<PAGE>
The maximum amount that may be drawn under the policy on any payment
date is limited to the policy amount for such payment date. The policy amount
with respect to any payment date will equal:
(a) the sum of:
(1) the monthly servicing fee;
(2) monthly interest;
(3) the lesser of (a) the outstanding aggregate principal balance
of all classes of notes on such payment date (after giving
effect to any distributions of available funds and any funds
withdrawn from the spread account to pay monthly principal on
such payment date) and (b) the initial aggregate principal
balances of the notes minus all amounts withdrawn from the
spread account or drawn on the policy with respect to
principal;
less:
(b) all amounts on deposit in the spread account on such payment date
(after giving effect to any amounts withdrawn from the spread
account on such date).
The policy will also cover any amount paid or required to be paid by
the trust to noteholders that is sought to be recovered as a voidable preference
by a trustee in bankruptcy of UAC, the seller or UAFC pursuant to the United
States Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance
with a final nonappealable order of a court having competent jurisdiction.
The insurer will be entitled to receive the insurance premium and
certain other amounts on each payment date as described under "--Payments on the
Notes" and to receive certain amounts on deposit in the spread account as
described above under "--Accounts." Generally, the insurance premium for a
payment date will be the product of one three hundred sixteenth (1/360th) of the
policy per annum fee rate (as set forth in the insurance and reimbursement
agreement), the actual days elapsed and the aggregate principal balances of the
notes as of the preceding payment date (after giving effect to all payments of
principal on such date). The insurer will not be entitled to reimbursement of
any amounts from the noteholders. The insurer's obligation under the policy is
irrevocable and unconditional. The insurer will have no obligation to the
noteholders or the indenture trustee other than its obligations under the
policy.
If the balance in the spread account is reduced to zero and there has
been a default under the policy, the trust will depend solely on current
collections on the receivables to make payments of principal and interest on the
notes. In addition, because the market value of motor vehicles generally
declines with age and because of difficulties that may be encountered in
enforcing motor vehicle contracts as described in the accompanying prospectus
under "Certain Legal Aspects of the Receivables," the servicer may not recover
the entire amount due on such receivables in the event of a repossession and
resale of a financed vehicle securing a receivable in default. In such event,
first, the class B noteholders and second, the class A noteholders may suffer a
corresponding loss. Any such losses of the class A noteholders will be borne pro
rata based upon the relative principal balances of the outstanding classes of
class A notes. See " -- Payments on the Notes" above.
Default under the Indenture
If one of the events of default under the indenture described in the
accompanying prospectus occurs, either the insurer or in certain limited
circumstances, the noteholders may declare an indenture default. The insurer
will control the remedy for an indenture default, unless the insurer is in
default under the policy, in which case the noteholders will control the remedy.
The party who declares the indenture default may give notice and accelerate the
payment of principal in respect of the notes, declaring the principal on the
notes immediately due and payable. The rights and remedies of the insurer and
the noteholders may include the right to direct the indenture trustee to
liquidate the property of the trust. See "Risk Factors -- Noteholders Have a
Limited Right to Declare Indenture Defaults or Remedies" in this prospectus
supplement and "The Indenture -- Default under the Indenture" in the
accompanying prospectus.
Rights of the Insurer upon Servicer Default, Amendment or Waiver
Upon the occurrence of an event of default by the servicer under the
trust and servicing agreement, the insurer, or the owner trustee upon the
consent of the insurer, will be entitled to appoint a successor servicer. In
addition to the events constituting a servicer default as described in the
accompanying prospectus, the trust and servicing agreement will also permit the
insurer to appoint a successor servicer and to redirect payments made under the
receivables to the indenture trustee upon the occurrence of certain additional
events involving a failure of performance by the servicer or a material
misrepresentation made by the servicer under the insurance agreement.
The trust and servicing agreement cannot be amended or any provisions
thereof waived without the consent of the insurer if such amendment or waiver
would have a materially adverse effect upon the rights of the insurer.
<PAGE>
THE SELLER AND UAC
UAC currently acquires receivables from over 4,200 manufacturer
franchised automobile dealerships in 35 states. UAC is an Indiana corporation,
formed in December 1993 by UAC's predecessor, Union Federal Savings Bank of
Indianapolis, to succeed to the predecessor's indirect automobile finance
business, which the predecessor had operated since 1986. UAC began purchasing
and originating receivables in April 1994. For the fiscal years ended June 30,
1996, 1997, 1998, and 1999, UAC and/or its predecessor acquired prime
receivables aggregating $995 million, $1.1 billion, $945 million and $1.4
billion, respectively, representing an annual increase of 8%, an annual decrease
of 12%, and an annual increase of 52.9%, respectively. Of the approximately $2.5
billion of receivables in the servicing portfolio of UAC (consisting of the
principal balance of receivables held for sale and securitized receivables) at
June 30, 1999, approximately 74.43% represented receivables on used cars and
approximately 25.57% represented receivables on new cars. The seller is a
wholly-owned bankruptcy remote subsidiary of UAC.
THE INSURER
MBIA
MBIA Insurance Corporation ("MBIA"), the insurer, is the principal
operating subsidiary of MBIA Inc., a New York Stock Exchange listed company (the
"Company"). The Company is not obligated to pay the debts of or claims against
MBIA. MBIA is domiciled in the State of New York and licensed to do business in
and subject to regulation under the laws of all 50 states, the District of
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern
Mariana Islands, the Virgin Islands of the United States and the Territory of
Guam. MBIA has two European branches, one in the Republic of France and the
other in the Kingdom of Spain. New York has laws prescribing minimum capital
requirements, limiting classes and concentrations of investments and requiring
the approval of policy rates and forms. State laws also regulate the amount of
both the aggregate and individual risks that may be insured, the payment of
dividends by MBIA, changes in control and transactions among affiliates.
Additionally, MBIA is required to maintain contingency reserves on its
liabilities in certain amounts and for certain periods of time.
MBIA does not accept any responsibility for the accuracy or
completeness of this prospectus supplement or any information or disclosure
contained in, or omitted from, this prospectus supplement, other than with
respect to the accuracy of the information regarding the note insurance policy
and MBIA set forth under the heading "The Insurer." Additionally, MBIA makes no
representation regarding the notes or the advisability of investing in the
notes.
The policy issued by MBIA as insurer is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
MBIA Financial Information
The consolidated financial statements of MBIA, a wholly owned
subsidiary of the Company, and its subsidiaries as of December 31, 1998 and
December 31, 1997 and for each of the three years in the period ended December
31, 1998, prepared in accordance with generally accepted accounting principles
("GAAP"), included in the Annual Report on Form 10-K of the Company for the year
ended December 31, 1998, and the consolidated financial statements of MBIA and
its subsidiaries as of March 31, 1999 and for the three month periods ended
March 31, 1999 and March 31, 1998 included in the Quarterly Report on Form 10-Q
of the Company for the period ended March 31, 1999 are hereby incorporated by
reference into this prospectus supplement and shall be deemed to be a part of
this prospectus supplement. Any statement contained in a document incorporated
by reference in this prospectus supplement shall be modified or superseded for
purposes of this prospectus supplement to the extent that a statement contained
in this prospectus supplement or in any other subsequently filed document which
also is incorporated by reference in this prospectus supplement modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus supplement.
All financial statements of MBIA and its subsidiaries included in
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, subsequent to the date of this
prospectus supplement and prior to the termination of the offering of the notes
shall be deemed to be incorporated by reference into this prospectus supplement
and to be a part of this prospectus supplement from the respective dates of
filing such documents.
<PAGE>
The tables below present selected financial information of MBIA
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities ("SAP") and GAAP:
SAP
-----------------------------------------
December 31, March 31,
1998 1999
----------- ----------
(Audited) (Unaudited)
(in millions)
Admitted Assets $6,521 $6,742
Liabilities 4,231 4,412
Capital and Surplus 2,290 2,330
GAAP
-----------------------------------------
December 31, March 31,
1998 1999
----------- ----------
(Audited) (Unaudited)
(in millions)
Assets $7,488 $7,625
Liabilities 3,211 3,370
Shareholder's Equity 4,277 4,255
Where You Can Obtain Additional Information About MBIA
Copies of the financial statements of MBIA incorporated by reference in
this prospectus supplement and copies of MBIA's 1998 year-end audited financial
statements prepared in accordance with SAP are available, without charge, from
MBIA. The address of MBIA is 113 King Street, Armonk, New York 10504. The
telephone number of MBIA is (914) 273-4545.
Year 2000 Readiness Disclosure
The Company is actively managing a high-priority Year 2000 ("Y2K")
program. The Company has established an independent Y2K testing lab in its
Armonk headquarters, with a committee of business unit managers overseeing the
project. The Company has a budget of $1.13 million for its 1998-2000 Y2K
efforts. Expenditures are proceeding as anticipated, and the Company does not
expect the project budget to materially exceed this amount. The Company has
initiated a comprehensive Y2K plan that includes assessment, remediation,
testing and contingency planning. This plan covers "mission critical" internally
developed systems, vendor software, hardware and certain third-party entities
through which the Company conducts its business. Testing to date indicates that
functions critical to the financial guarantee business, both domestic and
international, were Y2K-ready as of December 31, 1998. Additional testing will
continue throughout 1999.
Financial Strength Ratings of MBIA
Moody's Investors Service, Inc. rates the financial strength of MBIA
"Aaa."
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. rates the financial strength of MBIA "AAA."
Fitch IBCA, Inc. (formerly known as Fitch Investors Service, L.P.)
rates the financial strength of MBIA "AAA."
Each rating of MBIA should be evaluated independently. The ratings
reflect the respective rating agency's current assessment of the
creditworthiness of MBIA and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the above ratings
may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the
notes, and such ratings may be subject to revision or withdrawal at any time by
the rating agencies. Any downward revision or withdrawal of any of the above
ratings may have an adverse effect on the market price of the notes. MBIA does
not guaranty the market price of the notes nor does it guaranty that the ratings
on the notes will not be revised or withdrawn.
REPORTS TO NOTEHOLDERS
Unless and until definitive notes are issued (which will occur only
under the limited circumstances described in the accompanying prospectus),
Harris Trust and Savings Bank, as indenture trustee, will provide monthly and
annual statements concerning the trust and the notes to Cede & Co., the nominee
of The Depository Trust Company, as registered holder of the notes. Such
statements will not constitute financial statements prepared in accordance with
generally accepted accounting principles. A copy of the most recent monthly or
annual statement concerning the trust and the notes may be obtained by
contacting the servicer at Union Acceptance Corporation, 250 North Shadeland
Avenue, Indianapolis, Indiana 46219 (telephone (317) 231-2717).
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
General
Set forth below is a summary of certain United States federal income
tax considerations relevant to the beneficial owner of a note that holds the
note as a capital asset and, unless otherwise indicated below, is a U.S. Person
(as defined in the accompanying prospectus). This summary does not address
special tax rules which may apply to certain types of investors, and investors
that hold notes as part of an integrated investment. This summary supplements
the discussion contained in the accompanying prospectus under the heading
"Federal Income Tax Consequences," and supersedes that discussion to the extent
that the two discussions are not consistent. The authorities on which we based
this discussion are subject to change or differing interpretations, and any such
change or interpretation could apply retroactively. This discussion reflects the
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), as well as regulations promulgated by the U.S. Department of Treasury.
You should consult your own tax advisors in determining the federal, state,
local and any other tax consequences of the purchase, ownership and disposition
of the Notes.
Characterization of the Notes. There are no regulations, published
rulings or judicial decisions addressing the characterization for federal income
tax purposes of securities with terms that are substantially the same as those
of the notes. A basic premise of United States federal income tax law is that
the economic substance of a transaction generally will determine the federal
income tax consequences of such transaction. The determination of whether the
economic substance of a loan secured by an interest in property is instead a
sale of a beneficial ownership interest in such property has been made by the
Internal Revenue Service (the "IRS") and the courts on the basis of numerous
factors designed to determine whether the trust has relinquished (and the
investor has obtained) substantial incidents of ownership in such property.
Among those factors, the primary factors examined are whether the investor has
the opportunity to gain if the property increases in value, and has the risk of
loss if the property decreases in value. Based on an assessment of these
factors, in the opinion of Cadwalader, Wickersham & Taft, special tax counsel to
the seller, the class A notes will be treated as indebtedness and the class B
notes should also be characterized as indebtedness for federal income tax
purposes and not as an ownership interest in the receivables or an equity
interest in the trust. See "Federal Income Tax Consequences" in the accompanying
prospectus.
Classification of the Trust. In the opinion of Cadwalader, Wickersham &
Taft, special tax counsel to the seller, the trust will not be treated as an
association taxable as a corporation or a publicly traded partnership taxable as
a corporation for federal income tax purposes, but rather will be ignored and
treated as a mere security device when there is a single beneficial owner of the
trust, or will be treated as a domestic partnership when there are two or more
beneficial owners of the trust.
Discount and Premium
For federal income tax reporting purposes, it is anticipated that the
notes will not be treated as having been issued with original issue discount.
The prepayment assumption that will be used in determining the rate of accrual
of original issue discount and of market discount and premium, if any, for
federal income tax purposes will be based on the assumption that subsequent to
the date of any determination the receivables will prepay at 1.6% ABS, and there
will be no extensions of maturity for any receivable. However, no representation
is made as to the rate, if any, at which the receivables will prepay.
The IRS has issued regulations under Sections 1271 and 1275 of the Code
generally addressing the treatment of debt instruments issued with original
issue discount. The original issue discount regulations and Section 1272(a)(6)
of the Code do not adequately address certain issues relevant to, or are not
applicable to, securities such as the notes. Prospective purchasers of the notes
are advised to consult with their tax advisors concerning the tax treatment of
such notes.
Certain classes of the notes may be treated for federal income tax
purposes as having been issued at a premium. Whether any holder of such a class
of notes will be treated as holding notes with amortizable bond premium will
depend on such noteholder's purchase price and the payments remaining to be made
on such note at the time of its acquisition by such noteholder. You should
consult your own tax advisors regarding the possibility of making an election to
amortize such premium on such classes of notes.
Gain or Loss on Disposition
If you sell a note, you must recognize gain or loss equal to the
difference between the amount realized from the sale and your adjusted basis in
such note. The adjusted basis generally will equal your cost of such note,
increased by any original issue discount included in your ordinary gross income
with respect to the note and reduced (but not below zero) by any payments on the
note previously received or accrued by you (other than qualified stated interest
payments) and any amortizable premium. Similarly, when you receive a principal
payment with respect to a note, you will recognize gain or loss equal to the
difference between the amount of the payment and the allocable portion of your
adjusted basis in the note. Such gain or loss will generally be a long-term
capital gain or loss if you held the note for more than one year.
Backup Withholding and Information Reporting
Payments of interest and principal, as well as payments of proceeds
from the sale of notes, may be subject to the "backup withholding tax" under
Section 3406 of the Code at a rate of 31% if you fail to furnish to the trust
certain information, including your taxpayer identification number, or otherwise
fail to establish an exemption from such tax. Any amounts deducted and withheld
from a payment should be allowed as a credit against your federal income tax.
Furthermore, certain penalties may be imposed by the IRS on a recipient of
payments that is required to supply information but that does not do so in the
proper manner.
<PAGE>
We will report to noteholders and to the IRS for each calendar year the
amount of any "reportable payments" during such year and the amount of tax
withheld, if any, with respect to payments on the notes.
New Withholding Regulations
On October 6, 1997, the Treasury Department issued new regulations
which make certain modifications to the withholding rules for investors who are
Non-U.S. Persons and the backup withholding and information reporting rules
described above. The new regulations attempt to unify certification requirements
and modify reliance standards. Such regulations will generally be effective for
payments made after December 31, 2000, subject to certain transition rules. You
are urged to consult your tax advisors regarding the new regulations.
ERISA CONSIDERATIONS
Subject to the considerations set forth below and under "ERISA
Considerations" in the accompanying prospectus, the class A notes may be
purchased by an employee benefit plan or an individual retirement account (a
"Benefit Plan") subject to ERISA or Section 4975 of the Code. A fiduciary of a
Benefit Plan must determine that the purchase of a note is consistent with its
fiduciary duties under ERISA and does not result in a nonexempt prohibited
transaction as defined in Section 406 of ERISA or Section 4975 of the Code.
Section 406 of ERISA prohibits parties in interest or disqualified persons
("Parties in Interest") with respect to a Benefit Plan from engaging in certain
transactions (including loans) involving a Benefit Plan and its assets unless a
statutory or administrative exemption applies to the transaction. Section 4975
of the Code imposes certain excise taxes (or, in some cases, a civil penalty may
be assessed pursuant to section 502(i) of ERISA) on Parties in Interest which
engage in non-exempt prohibited transactions.
The United States Department of Labor has issued a regulation (29 CFR
Section 2510.3-101) concerning the definition of what constitutes the assets of
a Benefit Plan. This regulation provides that, as a general rule, the underlying
assets and properties of corporations, partnerships, trusts and certain other
entities in which a Benefit Plan purchases an "equity interest" will be deemed
for purposes of ERISA to be assets of the investing Benefit Plan unless certain
exceptions apply. This regulation defines an "equity interest" as any interest
in an entity other than an instrument that is treated as indebtedness under
applicable local law and which has no substantial equity features. Although the
issue is not free from doubt, we believe that the class A notes should not be
treated as "equity interests" for purposes of the regulation. Accordingly, the
acquisition of the class A notes by benefit plan investors should not cause the
assets of the trust to be treated as Benefit Plan assets for purposes of Title I
of ERISA. However, the class A notes may not be purchased with the assets of a
Benefit Plan if the seller, the servicer, the indenture trustee, the owner
trustee or any of their affiliates:
(1) has investment or administrative discretion with respect to such
Benefit Plan assets;
(2) has authority or responsibility to give, or regularly gives,
investment advice with respect to such Benefit Plan assets, for a fee and
pursuant to an agreement or understanding that such advice (a) will serve as a
primary basis for investment decisions with respect to such Benefit Plan assets
and (b) will be based on the particular investment needs for such Benefit Plan;
or
(3) is an employer maintaining or contributing to such Benefit
Plan.
Certain affiliates of the trust or the servicer might be considered or
might become Parties in Interest with respect to a Benefit Plan. In either case,
the acquisition or holding of class A notes by or on behalf of such a Benefit
Plan could be considered to give rise to an indirect prohibited transaction
within the meaning of ERISA and the Code, unless it is subject to one or more
exemptions such as one of the following Prohibited Transaction Class Exemptions
("PTCE"):
o PTCE 84-14, which exempts certain transactions effected on
behalf of a Benefit Plan by a "qualified professional asset
manager,"
o PTCE 90-1, which exempts certain transactions involving
insurance company pooled separate accounts,
o PTCE 91-38, which exempts certain transactions involving bank
collective investment funds,
o PTCE 95-60, which exempts certain transactions involving
insurance company general accounts, or
o PTCE 96-23, which exempts certain transactions effected on
behalf of a Benefit Plan by certain "in-house asset managers."
Each purchaser or transferee of a class A note that is a Benefit Plan
shall be deemed to have represented that the relevant conditions for exemptive
relief under at least one of the foregoing exemptions (or other applicable
exemption providing substantially similar relief) have been satisfied.
<PAGE>
Because the class B notes may be considered to have "substantial equity
features," you must not purchase class B notes if you are a Benefit Plan or any
person using the assets of a Benefit Plan. Each purchaser or transferee of a
class B note shall be deemed to have represented that it is not, and it is not
purchasing the note with assets of, a Benefit Plan.
For additional information regarding treatment of the notes under
ERISA, see "ERISA Considerations" in the accompanying prospectus.
UNDERWRITING
Under the terms and subject to the conditions set forth in the
underwriting agreement for the sale of the notes, dated August 4, 1999, the
seller has agreed to sell and each of the underwriters named below has severally
agreed to purchase the principal amount of the notes set forth below its name
below:
<TABLE>
<CAPTION>
Bear, Banc of America
Stearns & Co. Inc. Securities LLC Total
------------------ -------------- -----
<S> <C> <C> <C>
Principal amount
of class A-1 notes......... $36,250,000.00 $36,250,000.00 $72,500,000.00
Principal amount
of class A-2 notes......... $47,250,000.00 $47,250,000.00 $94,500,000.00
Principal amount
of class A-3 notes......... $44,000,000.00 $44,000,000.00 $88,000,000.00
Principal amount
of class A-4 notes......... $47,600,000.00 $47,600,000.00 $95,200,000.00
Principal amount
of class B notes........... $ 7,295,775.50 $ 7,295,775.50 $14,591,551.00
</TABLE>
In the underwriting agreement, the underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all the notes.
The underwriters propose to offer part of the notes directly to you at
the prices set forth on the cover page of this prospectus supplement and part to
certain dealers at a price that represents a concession not in excess of 0.080%
of the denominations of the class A-1 notes, 0.130% of the denominations of the
class A-2 notes, 0.145% of the denominations of the class A-3 notes, 0.165% of
the denominations of the class A-4 notes, or 0.180% of the denominations of the
class B notes. The underwriters may allow and such dealers may reallow a
concession not in excess of 0.060% of the denominations of the class A-1 notes,
0.100% of the denominations of the class A-2 notes, 0.100% of the denominations
of the class A-3 notes, 0.125% of the denominations of the class A-4 notes, or
0.125% of the denominations of the class B notes.
The seller and UAC have agreed to indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
The underwriters tell us that they intend to make a market in the
notes, as permitted by applicable laws and regulations. However, the
underwriters are not obligated to make a market in the notes and any such
market-making may be discontinued at any time at the sole discretion of the
underwriters. Accordingly, we give no assurances regarding the liquidity of, or
trading markets for, the notes.
In connection with this offering, the underwriters may over-allot or
effect transactions which stabilize or maintain the market price of the notes at
a level above that which might otherwise prevail in the open market. Such
stabilizing, if commenced, may be discontinued at any time.
In the ordinary course of their businesses, the underwriters and their
affiliates have engaged and may in the future engage in investment banking,
commercial banking and other advisory or commercial relationships with the
seller, UAC and their affiliates.
We will receive proceeds of $363,956,481.65 from the sale of the notes,
before deducting our net expenses estimated to be $480,000.
LEGAL OPINIONS
Certain legal matters relating to the notes will be passed upon for the
seller and the trust by Barnes & Thornburg, Indianapolis, Indiana, and for the
underwriters by Cadwalader, Wickersham & Taft. Certain federal income tax
consequences with respect to the notes will be passed upon for the trust by
Cadwalader, Wickersham & Taft.
<PAGE>
EXPERTS
The consolidated balance sheets of MBIA Insurance Corporation and
Subsidiaries as of December 31, 1998 and December 31, 1997 and the related
consolidated statements of income, changes in shareholder's equity, and cash
flows for each of the three years in the period ended December 31, 1998,
incorporated by reference in this prospectus supplement, have been incorporated
into this prospectus supplement in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
INDEX OF PRINCIPAL TERMS
We have listed below the terms used in this prospectus supplement and
the pages where definitions of the terms can be found.
ABS...................................................................... S-18
Accelerated Principal Payment............................................ S-27
Available Funds.......................................................... S-24
Benefit Plan............................................................. S-35
Class A Monthly Interest................................................. S-27
Class A-1 Monthly Interest............................................... S-27
Class A-2 Monthly Interest............................................... S-27
Class A-3 Monthly Interest............................................... S-27
Class A-4 Monthly Interest............................................... S-28
Class B Monthly Interest................................................. S-28
Code..................................................................... S-33
Company.................................................................. S-31
ERISA.................................................................... S-8
GAAP..................................................................... S-31
IRS...................................................................... S-34
MBIA..................................................................... S-31
Monthly Interest......................................................... S-27
Monthly Principal........................................................ S-27
Parties in Interest...................................................... S-35
Principal Payment Sequence............................................... S-28
PTCE..................................................................... S-35
SAP...................................................................... S-32
UAC...................................................................... S-4
UAFC..................................................................... S-7
Y2K...................................................................... S-32
