SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 3, 1999
UACSC AUTO TRUSTS
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation)
333-77535 35-1937340
(Registration Number) (IRS Employer Identification No.)
9240 Bonita Beach Road
Suite 1109-A
Bonita Springs, Florida 34135
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 948-1850
<PAGE>
Item 5. Other Events.
Computational Materials
-----------------------
On August 3, 1999, Computational Materials were distributed to
potential investors in connection with a proposed offering of
asset-backed notes under Reg. No. 333-77535. Under the proposed trust
and servicing agreement and the proposed indenture (the "Proposed
Agreements"), UAC Securitization Corporation ("UACSC") will act as the
proposed seller and establish the UACSC 1999-C Owner Trust (the
"Proposed Trust") by selling and assigning the proposed trust property
to the trustee in exchange for the proceeds fo the notes, each of
which is secured by the assets of the Proposed Trust. Pursuant to the
Proposed Agreements, Union Acceptance Corporation will act as
servicer. Such Computational Materials are filed with this Current
Report on Form 8-K on the basis of the position of the Division of
Corporation Finance set forth in Kidder, Peabody Acceptance
Corporation I (available May 20, 1994), Public Securities Association
(available May 27, 1994), Public Securities Association (available
February 17, 1995) and subsequent related no-action letters.
Item 7. Financial Statements and Exhibits.
Exhibit
Number Description
------ -----------
99 Computational Materials
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized in the City of Bonita Springs, State of
Florida, on August 3, 1999.
UAC SECURITIZATION CORPORATION
as Seller (Registrant)
/s/ Leeanne Graziani
----------------------------------------
Leeanne Graziani
President, Treasurer and
Assistant Secretary
Computational Materials
UACSC 1999-C Owner Trust
$72,500,000 Class A-1 Automobile Receivable Backed Notes
$94,500,000 Class A-2 Automobile Receivable Backed Notes
$88,000,000 Class A-3 Automobile Receivable Backed Notes
$95,200,000 Class A-4 Automobile Receivable Backed Notes
$14,591,551 Class B Automobile Receivable Backed Notes
UAC Securitization Corporation
Seller
Union Acceptance Corporation
Servicer
COMPUTATIONAL
MATERIALS
The information contained in the attached computational materials is
preliminary and will be replaced by the prospectus supplement and accompanying
prospectus applicable to the UACSC 1999-C Owner Trust and any other information
subsequently filed with the Securities and Exchange Commission. You should make
your investment decision with respect to the securities described in the
computational materials based solely upon the information contained in the
prospectus supplement and accompanying prospectus.
These computational materials do not constitute an offer to sell or the
solicitation of an offer to buy and we will not sell the securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such jurisdiction.
The securities may not be sold and no offer to buy will be accepted prior to the
delivery of the prospectus supplement and accompanying prospectus relating to
the securities.
The information in the attached computational materials is preliminary,
limited in nature and subject to completion or amendment. We do not claim that
the securities will actually perform as described in any scenario presented.
<PAGE>
The information in the computational materials has been prepared by the
seller. The underwriters, Bear, Stearns & Co. Inc. ("Bear Stearns"), Banc of
America Securities LLC ("Banc of America") or any of their affiliates do not
make any representation as to the accuracy or completeness of the information in
the computational materials.
The information in the computational materials addresses only certain
aspects of the characteristics of the securities and does not provide a complete
assessment of the securities. As such, the information may not reflect the
impact of all structural characteristics of the securities. The assumptions
underlying the information, including structure, trust property and collateral,
may be changed from time to time to reflect changed circumstances.
The data supporting the information in the computational materials has
been obtained from sources that the underwriters believe to be reliable, but the
underwriters do not guarantee the accuracy of or computations based on such
data. The underwriters and their affiliates may engage in transactions with the
seller or its affiliates while the information is circulating. The underwriters
may act as principal in transactions with you, and accordingly, you must
determine the appropriateness for you of such transactions and address any
legal, tax, or accounting considerations applicable to you. The underwriters
shall not be a fiduciary or advisor, unless they have agreed in writing to
receive compensation specifically to act in such capacities. If you are subject
to ERISA, the information in the computational materials is being furnished on
the condition that it will not form a primary basis for any investment decision.
Although a registration statement (including a form of prospectus)
relating to the securities described in the information in the computational
materials has been filed with the Securities and Exchange Commission and is
effective, the prospectus supplement and accompanying prospectus relating to the
securities described in the information in the computational materials have not
been filed with the Securities and Exchange Commission. You must refer to the
prospectus supplement and accompanying prospectus for definitive information on
any matter described in the computational materials. Your investment decision
should be based only on the data in the prospectus supplement and accompanying
prospectus. The prospectus supplement and accompanying prospectus contain data
that is current as of the applicable publication dates and after publication may
no longer be complete or current. The prospectus supplement and accompanying
prospectus may be updated by information subsequently filed with the Securities
and Exchange Commission.
You may obtain the prospectus supplement and accompanying prospectus by
contacting the Bear Stearns Syndicate Desk at (212) 272-4955 or the Banc of
America Syndicate Desk at (704) 386-9690.
<PAGE>
UACSC 1999-C Owner Trust
Computational Materials
Subject to Revision
Dated as of August 3, 1999
SUMMARY OF TERMS
The definitions or references to capitalized terms used in these
materials can be found on the pages indicated in the "Index
of Terms" on page 24 of these materials.
Issuer
The UACSC 1999-C Owner Trust, a Delaware business trust, will issue the notes
offered in these materials.
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.
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.
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.
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 _____% $72,500,000
class A-2 notes _____% $94,500,000
class A-3 notes _____% $88,000,000
class A-4 notes _____% $95,200,000
class B notes _____% $14,591,551
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.
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" in these materials.
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).
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).
<PAGE>
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.
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 these materials.
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" in these
materials.
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 these materials.
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.
<PAGE>
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" and "-- Some Notes are More
at Risk than Others if there are Losses on the Receivables" in these materials.
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.
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.
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 these materials.
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. See "Risk Factors -- Noteholders Have a Limited Right to
Declare Indenture Defaults or Remedies" in these materials.
<PAGE>
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.
The owner trustee, the noteholders and the certificateholder will agree to treat
the notes as indebtedness for federal income tax purposes.
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 these materials.
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.
<PAGE>
RISK FACTORS
You should carefully consider the risk factors set forth below as well
as the other investment considerations described in these materials 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 Insurer" in
these materials.
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).
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"
in these materials.
<PAGE>
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
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.
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 these materials. 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 these materials;
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.
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.
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.
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%
====== =============== =============== =====
Weighted Weighted Percent
Average Average of Aggregate
Remaining Original Principal
Term(2) Term(2) Balance(3)
------- ------- ----------
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.
<PAGE>
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.
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.
<PAGE>
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.
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
----------------------- ------------------------ ----------------------
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
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.
Prepayments on retail installment sale contracts, such as the
receivables, can be measured relative to a prepayment standard or model. The
model used in these materials 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 19 to 21 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;
o the closing date will be August 11, 1999;
<PAGE>
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 5.468%
class A-2 notes 6.19%
class A-3 notes 6.60%
class A-4 notes 6.80%
class B notes 6.98%
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>
1 $ 11,668,309.23 13.19% 70 17
2 12,830,274.40 13.46 48 40
3 33,171,553.29 13.23 58 57
4 92,811,036.30 13.00 69 68
5 172,790,576.10 13.46 80 78
6 41,519,802.67 13.40 84 84
-----------------
Total $ 364,791,551.99
=================
</TABLE>
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 19 to 21.
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 19 to 21 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 19 to 21 have been prepared based on (and
should be read in conjunction with) the assumptions described on pages
17 and 18 (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% 68.7% 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% 36.4% 25.9% 100.0% 100.0% 100.0% 100.0% 100.0%
4 December, 1999....... 48.1% 38.7% 32.2% 21.1% 7.2% 100.0% 100.0% 100.0% 100.0% 100.0%
5 January, 2000........ 35.4% 24.0% 16.2% 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 18 of these materials 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 18 of these materials regarding
calculation of the weighted average life and the assumptions upon which
these tables are based.
<PAGE>
<TABLE>
<CAPTION>
Percent of Initial Note Balance at Various ABS Percentages (1)
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 18 of these materials 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).
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 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 these materials or any information or disclosure contained in,
or omitted from, these materials, 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 these materials and shall be deemed to be a part of these
materials. Any statement contained in a document incorporated by reference in
these materials shall be modified or superseded for purposes of these materials
to the extent that a statement contained in these materials or in any other
subsequently filed document which also is incorporated by reference in these
materials 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 these materials.
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 these
materials and prior to the termination of the offering of the notes shall be
deemed to be incorporated by reference into these materials and to be a part of
these materials from the respective dates of filing such documents.
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
<PAGE>
Where You Can Obtain Additional Information About MBIA
Copies of the financial statements of MBIA incorporated by reference in
these materials 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.
INDEX OF TERMS
We have listed below the terms used in these materials and the pages
where definitions of the terms can be found.
ABS................................................................... 17
Banc of America....................................................... 2
Bear Stearns.......................................................... 2
Company............................................................... 22
ERISA................................................................. 7
GAAP.................................................................. 22
MBIA.................................................................. 22
SAP................................................................... 23
UAC................................................................... 3
UAFC.................................................................. 6
Y2K................................................................... 23
