Prospectus Supplement to Prospectus dated February 11, 1999
$320,545,134.82
UACSC 1999-A Auto Trust
UAC Securitization Corporation
Depositor
[LOGO]
Union Acceptance Corporation
Servicer
The Trust will issue and the Depositor will sell the following classes of
Certificates:
<TABLE>
<CAPTION>
==============================================================================================================================
Class A-1 Class Class Class Class Class I
Money Market A-2 A-3 A-4 A-5 Interest Only
Certificates Certificates Certificates Certificates Certificates Certificates
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Certificate $61,200,000.00 $67,525,000.00 $96,050,000.00 $39,950,000.00 $55,820,134.82 $256,316,037.87
Balance (Notional)
- ------------------------------------------------------------------------------------------------------------------------------
Pass-Through
Rate (per annum) 4.98% 5.43% 5.57% 5.70% 5.87% 0.80%
- ------------------------------------------------------------------------------------------------------------------------------
Final Scheduled
Distribution March 8, January 8, September 8, June 8, September 8, September 8,
Date 2000 2002 2003 2004 2006 2006
- ------------------------------------------------------------------------------------------------------------------------------
Price to Public 1 100.000000% 99.990410% 99.987320% 99.992480% 99.984640% 1.110601%
- ------------------------------------------------------------------------------------------------------------------------------
Underwriting
Discount 2 0.125% 0.210% 0.235% 0.270% 0.280% 0.375%
- ------------------------------------------------------------------------------------------------------------------------------
Proceeds to
Depositor 3 99.875000% 99.780410% 99.752320% 99.722480% 99.704640% 1.106436%
==============================================================================================================================
</TABLE>
1 Plus accrued interest, if any, after the Closing Date. Total price to
public (excluding such interest) = $323,361,550.30.
2 Total underwriting discount = $718,856.31. The underwriting discount and
proceeds to Depositor for the Class I Certificates are based upon the price
to public figure, which is a percentage of the Original Notional Principal
Amount.
3 Total proceeds to the Depositor = $322,642,693.99.
<PAGE>
Credit Enhancement for the Offered Certificates
o The Trust will obtain an insurance policy issued by MBIA Insurance
Corporation guaranteeing payments of interest and principal on the Offered
Certificates.
o A spread account will serve as additional credit enhancement for the
Offered Certificates. Over time, it is expected that the amount on deposit
in the spread account will grow to 1.50% of the initial Pool Balance.
================================================================================
Consider carefully the risk factors beginning on page S-11 in this prospectus
supplement and on page 9 in the prospectus. The Offered Certificates
represent interests in the UACSC 1999-A Auto Trust only and do not represent
obligations of or interests in UAC Securitization Corporation, Union
Acceptance Corporation or any of their affiliates. This prospectus supplement
may be used to offer and sell the Offered Certificates only if accompanied by
the prospectus.
================================================================================
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined that this
prospectus supplement or the accompanying prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
Underwriters of the Class A Certificates
NationsBanc Montgomery Securities LLC Bear, Stearns & Co. Inc.
Underwriters of the Class I Certificates
NationsBanc Montgomery Securities LLC
The date of this Prospectus Supplement is February 11, 1999
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We tell you about the Offered Certificates in the following documents:
(1) this prospectus supplement, which describes the specific terms of your
Offered Certificates; and (2) the accompanying prospectus, which provides
general information, some of which may not apply to the Offered Certificates.
If the description of the Offered Certificates 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.
You can find a listing of the pages where capitalized terms used in
this prospectus supplement are defined under the caption "Index of Principal
Terms" beginning on page S-39 in this prospectus supplement and under the
caption "Index of Principal Terms" beginning on page 44 in the accompanying
prospectus.
In this prospectus supplement and the accompanying prospectus, "we"
refers to the depositor, UAC Securitization Corporation, and "you" refers to any
prospective investor in the Certificates.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF TERMS....................................................... S-4
Issuer.............................................................. S-4
Depositor........................................................... S-4
Servicer............................................................ S-4
Trustee............................................................. S-4
The Certificates.................................................... S-4
The Class A Certificates............................................ S-5
Interest on the Class A Certificates................................ S-5
Principal........................................................... S-6
The Class I Certificates............................................ S-7
Class I Notional Principal Amount................................... S-7
Spread Account; Rights of Class IC
Certificateholder................................................... S-8
The Policy.......................................................... S-9
Policy Amount....................................................... S-9
Insurer............................................................. S-10
Legal Investment.................................................... S-10
Optional Sale....................................................... S-10
Increase of the Class A-5
Pass-Through Rate................................................. S-10
Tax Status.......................................................... S-10
Ratings............................................................. S-10
ERISA Considerations................................................ S-10
RISK FACTORS........................................................... S-11
Limited Resale of the Certificates.................................. S-11
The Certificates Are
Obligations of the Trust Only..................................... S-11
Prepayments May Reduce the Yield
on the Class I Certificates....................................... S-11
Spread Account Limitations.......................................... S-11
You will Bear the Risk of Loss if there
is a Default Under the Policy..................................... S-12
The Limitations of the
Certificate Ratings............................................... S-12
FORMATION OF THE TRUST................................................. S-13
THE RECEIVABLES POOL................................................... S-13
Composition of the Receivables
as of the Cutoff Date............................................. S-14
Distribution of the Receivables by
Remaining Term as of the
Cutoff Date....................................................... S-14
Geographic Distribution
of the Receivables as of
the Cutoff Date................................................... S-15
Distribution of the Receivables by
Financed Vehicle Model Year
as of the Cutoff Date............................................. S-16
Distribution of the Receivables
by Contract Rate as of the
Cutoff Date....................................................... S-16
Delinquencies and Net Losses........................................ S-17
Delinquency and Credit
Loss Experience................................................... S-18
WEIGHTED AVERAGE LIFE OF
THE CLASS A CERTIFICATES............................................ S-19
Percent of Initial Certificate Balance
at Various ABS Percentages........................................ S-21
<PAGE>
YIELD AND PREPAYMENT
CONSIDERATIONS...................................................... S-24
General............................................................. S-24
The Class I Certificates............................................ S-24
THE OFFERED CERTIFICATES............................................... S-24
Sale and Assignment of Receivables.................................. S-25
Accounts............................................................ S-25
Advances............................................................ S-25
Distributions on the
Offered Certificates.............................................. S-26
The Class I Certificates -- Calculation
of Notional Principal Amount...................................... S-30
Planned Notional Principal
Amount Schedule................................................... S-31
Class I Yield Considerations........................................ S-31
Distributions on the
Class IC Certificate.............................................. S-33
The Policy.......................................................... S-33
Rights of the Insurer upon
Events of Default, Amendment
or Waiver......................................................... S-34
THE DEPOSITOR AND UAC.................................................. S-34
THE INSURER............................................................ S-35
REPORTS TO
CERTIFICATEHOLDERS.................................................. S-36
ERISA CONSIDERATIONS................................................... S-36
UNDERWRITING........................................................... S-37
LEGAL OPINIONS......................................................... S-38
EXPERTS................................................................ S-38
INDEX OF PRINCIPAL TERMS............................................... S-39
<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 the
accompanying prospectus.
o The definitions of capitalized terms used in this prospectus supplement
can be found on the pages indicated in the "Index of Principal Terms"
beginning on page S-39 in this prospectus supplement or beginning on
page 44 of the accompanying prospectus.
Issuer
The UACSC 1999-A Auto Trust (the "Trust") will issue the Certificates offered in
this prospectus supplement.
Depositor
UAC Securitization Corporation (the "Depositor") is the depositor of the Trust.
In this capacity, the Depositor will transfer the automobile receivables and
related property to the Trust.
Servicer
Union Acceptance Corporation will act as the servicer of the Trust (in its
capacity as servicer, the "Servicer," otherwise "UAC"). In its role as Servicer,
UAC will receive and apply payments on the automobile receivables, service the
collection of the receivables and direct the trustee to make the appropriate
distributions to the certificateholders. The Servicer will receive a monthly
servicing fee as compensation for its services (the "Monthly Servicing Fee").
Trustee
Harris Trust and Savings Bank
The Certificates
The Trust will issue automobile receivable backed certificates on or about
February 19, 1999 (the "Closing Date") under the terms of a pooling and
servicing agreement among the Depositor, the Servicer and the Trustee (the
"Pooling and Servicing Agreement"). The "Certificates" will consist of the
following:
o 4.98% Class A-1 Money Market Automobile Receivable Backed Certificates
in the aggregate principal amount of $61,200,000.00 (the "Class A-1
Certificates");
o 5.43% Class A-2 Automobile Receivable Backed Certificates in the
aggregate principal amount of $67,525,000.00 (the "Class A-2
Certificates");
o 5.57% Class A-3 Automobile Receivable Backed Certificates in the
aggregate principal amount of $96,050,000.00 (the "Class A-3
Certificates");
<PAGE>
o 5.70% Class A-4 Automobile Receivable Backed Certificates in the
aggregate principal amount of $39,950,000.00 (the "Class A-4
Certificates");
o 5.87% Class A-5 Automobile Receivable Backed Certificates in the
aggregate principal amount of $55,820,134.82 (the "Class A-5
Certificates");
o Class I Interest Only Automobile Receivable Backed Certificates in the
Original Notional Principal Amount of $256,316,037.87 (the "Class I
Certificates"); and
o the Class IC Automobile Receivable Backed Certificate (the "Class IC
Certificate").
The Class IC Certificate will be issued to the Depositor and is not offered for
sale in this offering.
We are offering the Certificates, other than the Class IC Certificate, for sale
in this prospectus supplement and we refer to these certificates offered for
sale as the "Offered Certificates."
Each of the Certificates will represent a fractional and undivided interest in
the Trust. 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 (the "Receivables");
o certain monies due in respect of the Receivables as of and after
January 31, 1999 (the "Cutoff Date");
o security interests in the related vehicles financed through the
Receivables (the "Financed Vehicles");
o funds on deposit in a certificate 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 Offered Certificates (the "Policy"); and
o certain rights under the Pooling and Servicing Agreement.
The Class A Certificates
The term "Class A Certificates" includes the Class A-1 Certificates, the Class
A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates and the
Class A-5 Certificates. We refer to the owners of the Class A Certificates in
this prospectus supplement as the "Class A Certificateholders," and this term
includes the "Class A-1 Certificateholders," the "Class A-2 Certificateholders,"
the "Class A-3 Certificateholders," the "Class A-4 Certificateholders" and the
"Class A-5 Certificateholders."
<PAGE>
Interest on the Class A Certificates
The Trust will distribute interest on the eighth calendar day of each month or,
if such day is not a business day, on the next business day (each, a
"Distribution Date"), beginning March 8, 1999, to holders of record of the Class
A Certificates as of the day before the Distribution Date (the "Record Date").
However, if Definitive Certificates are issued, the Record Date will be the last
day of the calendar month immediately preceding the calendar month in which such
Distribution Date occurs.
The applicable pass-through rates for the Class A Certificates are:
o 4.98% for the Class A-1 Certificates (the "Class A-1 Pass-Through
Rate");
o 5.43% for the Class A-2 Certificates (the "Class A-2 Pass-Through
Rate");
o 5.57% for the Class A-3 Certificates (the "Class A-3 Pass-Through
Rate");
o 5.70% for the Class A-4 Certificates (the "Class A-4 Pass-Through
Rate"); and
o 5.87% for the Class A-5 Certificates (the "Class A-5 Pass-Through
Rate").
The Class A-5 Pass-Through Rate will be increased by 0.50% per annum after the
Clean-Up Call Date (as described under "--Increase of the Class A-5 Pass-Through
Rate").
Interest on the Class A-1 Certificates will be calculated on the basis of a
360-day year and the actual number of days from the previous Distribution Date
through the day before the related Distribution Date. Interest on all other
classes of Class A Certificates will be calculated on the basis of a 360-day
year consisting of twelve 30-day months. See "Yield and Prepayment
Considerations" and "The Offered Certificates -- Distributions on the Offered
Certificates" in this prospectus supplement.
Class A-1 Monthly Interest. Generally, the amount of interest distributable to
the Class A-1 Certificateholders on each Distribution Date is the product of:
(1) 1/360th of the pass-through rate for the Class A-1 Certificates;
(2) the number of days from the previous Distribution Date through the day
before the related Distribution Date; and
(3) the aggregate outstanding principal balance of the Class A-1
Certificates on the preceding Distribution Date (after giving effect
to all distributions to Class A Certificateholders on such date).
Monthly Interest for Other Class A Certificates. Generally, the amount of
interest distributable to each class of Class A Certificateholders (other than
the Class A-1 Certificateholders) on each Distribution Date is the product of:
(1) one-twelfth of the pass-through rate applicable to such class; and
(2) the aggregate outstanding principal balance of such class as of the
preceding Distribution Date (after giving effect to all distributions
to Class A Certificateholders on such date).
<PAGE>
The amount of interest distributable on the first Distribution Date of March 8,
1999 will be based upon the original principal balance of the applicable class
and will accrue from the Closing Date until the day before the first
Distribution Date (and in the case of all of the Class A Certificates other than
the Class A-1 Certificates, assuming that the month of the Closing Date has 30
days).
The amount of interest distributable to the Class A Certificateholders and the
Class I Certificateholders on any Distribution Date constitutes "Monthly
Interest." See "The Offered Certificates -- Distributions on the Offered
Certificates" in this prospectus supplement.
Principal
The Trust will distribute principal on each Distribution Date to the Class A
Certificateholders of record as of the Record Date. Generally, the amount of
principal which will be distributed ("Monthly Principal") is equal to the
difference between the aggregate Certificate Balance as of the previous
Distribution Date (after giving effect to any distributions of principal made on
such Distribution Date) and the outstanding balance of the Receivables (the
"Pool Balance") on the last day of the preceding calendar month.
The aggregate outstanding principal balance of the Class A Certificates as of
the Closing Date is as follows:
o $61,200,000.00 for the Class A-1 Certificates (the "Class A-1
Certificate Balance");
o $67,525,000.00 for the Class A-2 Certificates (the "Class A-2
Certificate Balance");
o $96,050,000.00 for the Class A-3 Certificates (the "Class A-3
Certificate Balance");
o $39,950,000.00 for the Class A-4 Certificates (the "Class A-4
Certificate Balance"); and
o $55,820,134.82 for the Class A-5 Certificates (the "Class A-5
Certificate Balance").
The sum of the Class A-1 Certificate Balance, the Class A-2 Certificate Balance,
the Class A-3 Certificate Balance, the Class A-4 Certificate Balance and the
Class A-5 Certificate Balance will equal the "Certificate Balance."
The outstanding principal amount of any class of Class A Certificates will be
payable in full on the final scheduled Distribution Date applicable to that
class. The final scheduled Distribution Dates of the Class A Certificates are as
follows:
o March 8, 2000, for the Class A-1 Certificates (the "Class A-1 Final
Scheduled Distribution Date");
o January 8, 2002, for the Class A-2 Certificates (the "Class A-2 Final
Scheduled Distribution Date");
o September 8, 2003, for the Class A-3 Certificates (the "Class A-3
Final Scheduled Distribution Date");
o June 8, 2004, for the Class A-4 Certificates (the "Class A-4 Final
Scheduled Distribution Date"); and
o September 8, 2006, for the Class A-5 Certificates (the "Class A-5
Final Scheduled Distribution Date").
<PAGE>
Generally, principal will be distributed to the Class A Certificateholders in
the order of the numerical designation of each class of the Class A
Certificates, starting with the Class A-1 Certificates and ending with the Class
A-5 Certificates. For example, no principal will be distributed to the Class A-2
Certificateholders until the Class A-1 Certificate Balance has been reduced to
zero.
Since the rate of payment of principal of each class of Class A Certificates
depends upon the rate of payment of principal on the Receivables (including
voluntary prepayments and principal in respect of Defaulted Receivables and
Purchased Receivables), the final distribution in respect of each class of Class
A Certificates could occur significantly earlier than the respective final
scheduled distribution dates. See "Risk Factors -- You Will Bear the Risk of
Loss if there is a Default Under the Policy" and "The Offered Certificates --
Distributions on the Offered Certificates" in this prospectus supplement.
The Class I Certificates
The Class I Certificates are interest only certificates which will not receive
any principal distributions. The pass-through rate for the Class I Certificates
is 0.80% per annum (the "Class I Pass-Through Rate"). Interest on the Class I
Certificates will accrue on the Notional Principal Amount (defined below) of the
Class I Certificates at the Class I Pass-Through Rate. The Notional Principal
Amount represents a designated notional principal component of the Receivables
(the "Notional Principal Amount"). The Notional Principal Amount is
$256,316,037.87 as of the Closing Date (the "Original Notional Principal
Amount") and shall be reduced on each Distribution Date as the Certificate
Balance is reduced as described below.
Interest on the Class I Certificates will be calculated on the basis of a
360-day year consisting of twelve 30-day months. Generally, the amount of
interest distributable to holders of Class I Certificates (the "Class I
Certificateholders") on each Distribution Date is the product of one-twelfth of
the Class I Pass-Through Rate and the Notional Principal Amount as of the
preceding Distribution Date (after giving effect to any reduction of the
Notional Principal Amount on such Distribution Date). The amount of interest
distributable on the first Distribution Date of March 8, 1999 will be based on
the Original Notional Principal Amount and will accrue from the Closing Date
until the day before the first Distribution Date. Such amount will also be
determined by assuming that the month of the Closing Date has 30 days. Class I
Certificateholders will not be entitled to any distributions after the Notional
Principal Amount has been reduced to zero.
Class I Notional Principal Amount
The Class I Certificates are interest-only certificates based upon a planned
amortization of the Notional Principal Amount of the Class I Certificates. We
intend this amortization feature to reduce the uncertainty to Class I
Certificateholders caused by prepayments on the Receivables. We base the
reduction in the Notional Principal Amount on a principal paydown schedule
rather than on the reduction in the actual principal balances of the
Receivables. We expect the interest payments on the Class I Certificates to come
from the excess of interest earned on the Receivables over Class A Monthly
Interest and the Monthly Servicing Fee. We divided the Certificate Balance into
two notional principal components, the "PAC Component" and the "Companion
Component," for purposes of calculating the Notional Principal Amount. The sum
of the PAC Component and the Companion Component at any time will equal the then
aggregate unpaid Certificate Balance at such time. The Notional Principal Amount
of the Class I Certificates will equal the principal balance of the PAC
Component at all times as such amount is calculated using the allocations of
principal payments described below.
<PAGE>
The Pooling and Servicing Agreement establishes the planned schedule for the
amortization of the Notional Principal Amount (the "Planned Notional Principal
Amount Schedule") and we provide the schedule to you in this prospectus
supplement under "The Offered Certificates--The Class I Certificates-Calculation
of Notional Principal Amount."
On each Distribution Date, the amount of Monthly Principal allocated to Class A
Certificateholders will determine the reduction in the Notional Principal Amount
as follows:
(1) to the PAC Component in an amount up to the amount necessary to reduce
the amount thereof to the amount specified in the Planned Notional
Principal Amount Schedule (the "Planned Notional Principal Amount")
for such Distribution Date;
(2) to the Companion Component, until the outstanding amount is reduced to
zero; and
(3) to the PAC Component, without regard to the Planned Notional Principal
Amount.
The Notional Principal Amount of the Class I Certificates will be the same
amount as the outstanding amount of the PAC Component and will decline as the
PAC Component declines.
The Planned Notional Principal Amount Schedule is based on the assumption that
the Receivables prepay at a constant prepayment rate between 1.60% and 2.50% ABS
(which is an assumed constant rate of prepayments used in the ABS prepayment
model set forth in this prospectus supplement). The yield to maturity of the
Class I Certificates will be sensitive to the rate and timing of principal
payments (including prepayments) on the Receivables and may fluctuate
significantly during the actual term of the Class I Certificates. If the
Receivables prepay at a constant rate within the range of 1.60% to 2.50% ABS,
the PAC Component (and the Notional Principal Amount of the Class I
Certificates) will decline according to the Planned Notional Principal Amount
Schedule. If the Receivables prepay at a constant rate higher than 2.50% ABS,
the yield on the Class I Certificates will be reduced because (1) the amount of
the Companion Component will be reduced to zero more quickly than scheduled, and
(2) the amount of the PAC Component (and the Notional Principal Amount) will
decline more quickly than provided in the Planned Notional Principal Amount
Schedule. A rapid rate of principal prepayments (including liquidations due to
losses, repurchases and other dispositions) will have a material negative effect
on the yield to maturity of the Class I Certificates.
The Planned Notional Principal Amount Schedule has been prepared on the basis of
certain assumptions, which are described in this prospectus supplement under
"The Offered Certificates -- Class I Yield Considerations." You should fully
consider the risks associated with owning Class I Certificates, including the
risk that a rapid rate of prepayments could prevent you from recovering your
initial investment in the Class I Certificates. See "Risk Factors -- Prepayments
May Reduce the Yield on the Class I Certificates" and "Yield and Prepayment
Considerations --The Class I Certificates" in this prospectus supplement.
Spread Account; Rights of Class IC Certificateholder
The Depositor will establish an account (the "Spread Account") on the Closing
Date for the benefit of the Class A Certificateholders, the Class I
Certificateholders and the Insurer. The Spread Account will hold the excess, if
any, of the collections on the Receivables over the amounts which the Trust is
required to distribute to the Class A Certificateholders, the Class I
Certificateholders, the Servicer and the Insurer. The amount of funds available
for distribution to Certificateholders on any Distribution Date ("Available
Funds") 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);
<PAGE>
(2) any net withdrawal from the Payahead Account in respect of Precomputed
Receivables;
(3) interest earned on funds on deposit in the Certificate 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 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 Distribution 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:
o Monthly Interest to the Class A Certificateholders and the Class
I Certificateholders, and
o Monthly Principal to the Class A Certificateholders.
If the amount on deposit in the Spread Account is zero, after any withdrawals
for the benefit of the Class A Certificateholders and the Class I
Certificateholders, and there is a default under the Policy, any remaining
losses on the Receivables will be borne directly pro rata by the Class A
Certificateholders (to the extent of the class or classes of Class A
Certificates which are outstanding at such time) and the Class I
Certificateholders. See "Risk Factors -- You Will Bear the Risk of Loss if there
is a Default Under the Policy," "The Offered Certificates -- Accounts" and "--
Distributions on the Offered Certificates" in this prospectus supplement.
Any amount on deposit in the Spread Account on any Distribution 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
holder of the Class IC Certificate (the "Class IC Certificateholder"). Any such
distribution to the Class IC 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.
The "Required Spread Amount" with respect to any Distribution Date will equal
the lesser of:
(1) 1.50% of the initial Pool Balance, or
(2) the Certificate Balance as of the previous Distribution Date (after
giving effect to all distributions of principal to Class A
Certificateholders on such date).
If the average aggregate yield of the Receivables in excess of losses falls
below the levels set forth in the Insurance and Reimbursement Agreement, entered
into on the Closing Date among the Depositor, Union Acceptance Funding
Corporation ("UAFC"), UAC, in its individual capacity and as Servicer, and the
Insurer (the "Insurance Agreement"), the Required Spread Amount will be
increased to 4.50% of the Pool Balance. During an Event of Default or upon the
occurrence of certain other events described in the Insurance Agreement
generally involving the amount of losses on the Receivables, a failure of
performance by the Servicer or a material misrepresentation made by the Servicer
under the Pooling and Servicing Agreement or the Insurance Agreement, the
Required Spread Amount may be increased. See "The Offered Certificates --
Accounts" and "-- The Policy" in this prospectus supplement.
<PAGE>
The Policy
The Depositor will obtain an irrevocable insurance policy (the "Policy") issued
by MBIA Insurance Corporation for the benefit of the Class A Certificateholders
and the Class I Certificateholders. Subject to the terms of the Policy, the
Insurer will unconditionally and irrevocably guarantee the payment of Monthly
Interest and Monthly Principal up to the Policy Amount. The 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.
In addition, the Policy will cover any amount distributed or required to be
distributed by the Trust to Class A Certificateholders and Class I
Certificateholders that is sought to be recovered as a voidable preference by a
trustee in bankruptcy of UAC, the Depositor or UAFC pursuant to the United
States Bankruptcy Code (11 U.S.C.), as amended, in accordance with a final
nonappealable order of a court having competent jurisdiction. See "The Offered
Certificates -- Accounts" and "-- The Policy" in this prospectus supplement.
Policy Amount
The term "Policy Amount" means with respect to any Distribution Date:
(1) the sum of:
(A) the lesser of: (i) the Certificate Balance (after giving effect to
any distribution of Available Funds and any funds withdrawn from
the Spread Account to pay Monthly Principal on such Distribution
Date) and (ii) the Net Principal Policy Amount, plus
(B) Monthly Interest, plus
(C) the Monthly Servicing Fee;
less
(2) all amounts on deposit in the Spread Account on such Distribution Date
(after giving effect to any funds withdrawn from the Spread Account to
pay Monthly Principal on such Distribution Date).
"Net Principal Policy Amount" means the initial Certificate Balance minus all
amounts previously drawn on the Policy or withdrawn from the Spread Account with
respect to Monthly Principal.
Insurer
MBIA Insurance Corporation is the "Insurer" and will guarantee the payment of
Monthly Interest and Monthly Principal under the terms of the Policy.
Legal Investment
The Class A-1 Certificates will be eligible securities for purchase by money
market funds under Rule 2a-7 of the Investment Company Act of 1940, as amended.
Optional Sale
The Class IC Certificateholder has the right to purchase all of the Receivables
as of the last day of any Collection Period on which (1) the Pool Balance is
equal to or less than 10% of the initial Certificate Balance and (2) the
Notional Principal Amount of the Class I Certificates is zero (or will be
reduced to zero on or before the related Distribution Date) (the "Optional
Sale"). The purchase price applicable to the Optional Sale will be equal to the
fair market value of the Receivables; provided that such amount is equal to or
greater than the sum of:
<PAGE>
(1) 100% of the outstanding Certificate Balance,
(2) accrued and unpaid interest on the outstanding Certificate Balance at
the weighted average note rates of the Receivables less any payments
received but not applied to interest or principal, and
(3) any amounts due the Insurer.
Increase of the Class A-5 Pass-Through Rate
If the Class IC Certificateholder does not exercise its rights with respect to
the Optional Sale on the first Distribution Date that the Optional Sale is
permitted (the "Clean-Up Call Date"), the Class A-5 Pass-Through Rate will be
increased by 0.50% after the Clean-Up Call Date.
Tax Status
In the opinion of special tax counsel to the Depositor, the Trust will not be
treated as an association taxable as a corporation or as a "publicly traded
partnership" taxable as a corporation. The Trustee and the Certificateholders
will agree to treat the Trust as a partnership for federal income tax purposes.
As a partnership, the Trust will not be subject to federal income tax and the
Certificateholders will be required to report their respective shares of the
Trust's taxable income, deductions and other tax attributes. See "Certain
Federal Income Tax Consequences" in the accompanying prospectus.
Ratings
On the Closing Date, each class of Offered Certificates must be rated in the
highest applicable category by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. (each a
"Rating Agency" and collectively, the "Rating Agencies"). A security rating is
not a recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time by the assigning rating agency. See "Risk
Factors -- The Limitations of the Certificate Ratings" in this prospectus
supplement.
ERISA Considerations
The Offered Certificates 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
Offered Certificates should, among other things, consult with experienced legal
counsel in determining whether all required conditions for such purchase have
been satisfied. 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 Offered
Certificates.
Limited Resale of the Certificates There is currently no secondary market
for the Offered Certificates. The
Underwriters currently intend to make a
market to enable resale of the Offered
Certificates, but are under no
obligation to do so. As such, we cannot
assure you that a secondary market will
develop for your Offered Certificates
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 Offered
Certificates.
The Certificates Are Obligations
of the Trust Only The Offered Certificates are interests
in the Trust only and do not represent
an interest in or obligation of the
Depositor, UAC or any other party or
governmental body. Except for the
Policy, the Offered Certificates have
not been insured or guaranteed by any
party or governmental body. See "The
Offered Certificates-- Distributions on
the Offered Certificates" and "--The
Policy" and "The Insurer" in this
prospectus supplement.
Prepayments May Reduce the
Yield on the Class I Certificates If the Receivables prepay at a constant
rate within the range of 1.60% to 2.50%
ABS assumed in preparing the Planned
Notional Principal Amount Schedule, the
Notional Principal Amount will be
reduced in accordance with the Planned
Notional Principal Amount Schedule. If
the Receivables prepay at a constant
rate higher than 2.50% ABS, the Notional
Principal Amount will be reduced more
quickly than provided in the Planned
Notional Principal Amount Schedule and
will reduce the yield of the Class I
Certificates. A rapid rate of principal
prepayments will have a material
negative effect on the yield to maturity
of the Class I Certificates. You should
fully consider the risks associated with
owning Class I Certificates, including
the risk that a rapid rate of
prepayments could prevent you from
recovering your initial investment in
the Class I Certificates. See "Yield and
Prepayment Considerations -- The Class I
Certificates" in this prospectus
supplement.
<PAGE>
Spread Account Limitations The Trustee will withdraw funds from the
Spread Account, up to the full balance
of the funds on deposit in such account,
if the amount of Available Funds on any
Distribution Date is not sufficient to
distribute Monthly Interest and Monthly
Principal (after payment of the Monthly
Servicing Fee) to you. 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. The
Trustee will withdraw funds from the
Spread Account if the amount of
Available Funds (after paying amounts
owed to the Servicer) is not sufficient
to fully distribute Monthly Interest and
Monthly Principal on any Distribution
Date. 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 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.
You Will Bear the Risk of 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 distributions on the
Offered Certificates. 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 distribute the required
distributions of Monthly Interest and
Monthly Principal during a default by
the Insurer, distributions on the
Offered Certificates will be made pro
rata based on the amounts to which Class
A Certificateholders of each class and
the Class I Certificateholders are
entitled. In such event, you would incur
a loss which you may not recover from
subsequent collections on the
Receivables or from the Insurer. See
"The Receivables Pool -- Delinquencies
and Net Losses" and "-- Delinquency and
Credit Loss Experience" and "The Offered
Certificates -- Accounts," "--
Distributions on the Offered
Certificates" and "-- The Policy" in
this prospectus supplement.
<PAGE>
The Limitations of the
Certificate Ratings On the Closing Date, each class of
Offered Certificates must be rated in
the highest applicable category by the
Rating Agencies. Such ratings will
reflect only the views 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 Offered
Certificates. A security rating is not a
recommendation to buy, sell or hold
securities.
<PAGE>
FORMATION OF THE TRUST
The Depositor will establish the Trust by assigning the Trust assets to
the Trustee in exchange for the Certificates. The Depositor will sell the
Offered Certificates and retain the Class IC Certificate. UAC will be
responsible for servicing the Receivables pursuant to the Pooling and Servicing
Agreement and will be compensated for acting as the Servicer. To facilitate
servicing and to minimize administrative burden and expense, the Servicer will
be appointed custodian of the Receivables by the Trustee. However, the Servicer
will not stamp the Receivables to reflect the sale and assignment of the
Receivables to the Trust or make any notation of the Trust's lien on the
certificates of title of the Financed Vehicles. In the absence of such notation
on the certificates of title, the Trustee may not have perfected security
interests in the Financed Vehicles securing the Receivables. Under the terms of
the Pooling 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 Depositor will establish the Spread Account for the benefit of the
Class A Certificateholders, the Class I Certificateholders and the Insurer and
will obtain the Policy. The 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. 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
distributions of interest and principal on the Class A Certificates and
distributions of interest on the Class I Certificates. In such event, certain
factors, such as the Trustee's 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 Class A Certificateholders and the Class I
Certificateholders. See "The Offered Certificates -- Accounts" 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 Depositor 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
0.99% of the aggregate principal balance of the Receivables as of
the Cutoff Date consist of Modified 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 4.95%.
<PAGE>
The weighted average remaining maturity of the Receivables is
approximately 71 months as of the Cutoff Date.
Approximately 0.93% of the aggregate principal balance of the
Receivables as of the Cutoff Date were selected from the "non-prime" or "Tier
II" portfolio of UAFC (the "Tier II Receivables").
See "-- Delinquency and Credit Loss Experience."
Approximately 98.83% of the aggregate principal balance of the
Receivables as of the Cutoff Date are simple interest contracts which provide
for equal monthly payments. Approximately 1.17% of the aggregate principal
balance of the Receivables as of the Cutoff Date are Precomputed Receivables
originated in the State of California. All of such Precomputed Receivables are
rule of 78's receivables. Approximately 27.05% of the aggregate principal
balance of the Receivables as of the Cutoff Date 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 the Cutoff Date 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 as of the Cutoff Date
<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............ 3,879 $ 80,855,146.88 $ 82,494,699.00 12.03%
Used Automobiles and Light-Duty Trucks........... 14,824 214,138,411.15 217,938,222.84 13.36%
New Vans (1)..................................... 249 5,860,098.83 6,021,264.37 11.71%
Used Vans (1).................................... 1,311 19,691,477.96 20,146,692.91 13.28%
------ --------------- --------------- -----
All Receivables.................................. 20,263 $320,545,134.82 $326,600,879.12 12.99%
====== =============== =============== =====
</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.......... 76.1 mos. 78.0 mos. 25.22%
Used Automobiles and Light-Duty Trucks......... 69.7 71.4 66.80
New Vans (1)................................... 76.9 79.4 1.83
Used Vans (1).................................. 70.5 72.5 6.14
---- ---- ------
All Receivables................................ 71.5 mos. 73.3 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 the Cutoff Date
<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........... 68 0.34% $ 170,571.31 0.05%
13 to 24 months........... 240 1.18 1,133,685.87 0.35
25 to 36 months........... 568 2.80 3,716,625.13 1.16
37 to 48 months........... 1,313 6.48 12,402,325.26 3.87
49 to 60 months........... 3,633 17.93 47,853,483.90 14.93
61 to 72 months........... 6,627 32.70 105,498,306.11 32.91
73 to 84 months........... 7,814 38.56 149,770,137.24 46.72
------ ------ --------------- ------
Total........... 20,263 100.00% $320,545,134.82 100.00%
====== ====== =============== ======
</TABLE>
(1) Sum may not equal 100% due to rounding.
Geographic Distribution of the Receivables as of the Cutoff Date
<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...................... 773 3.81% $ 12,561,302.86 3.92%
California................... 1,570 7.75 24,882,237.10 7.76
Colorado..................... 381 1.88 5,748,739.36 1.79
Florida...................... 1,503 7.42 23,070,001.17 7.20
Georgia...................... 1,036 5.11 17,203,765.67 5.37
Idaho........................ 50 0.25 707,933.63 0.22
Illinois..................... 1,554 7.67 23,302,590.42 7.27
Indiana...................... 574 2.83 8,440,385.37 2.63
Iowa ........................ 615 3.04 9,377,819.45 2.93
Kansas....................... 213 1.05 3,346,976.29 1.04
Kentucky..................... 155 0.76 2,242,328.42 0.70
Maryland..................... 272 1.34 4,340,334.11 1.35
Massachusetts................ 542 2.67 8,588,713.54 2.68
Michigan..................... 463 2.28 7,309,583.87 2.28
Minnesota.................... 395 1.95 5,884,936.81 1.84
Missouri..................... 401 1.98 5,972,463.43 1.86
Nebraska..................... 177 0.87 2,421,762.18 0.76
Nevada....................... 108 0.53 1,881,952.31 0.59
New Mexico................... 53 0.26 900,538.03 0.28
North Carolina............... 2,400 11.84 39,008,903.54 12.17
Ohio ........................ 977 4.82 13,651,443.80 4.26
Oklahoma..................... 662 3.27 9,935,256.38 3.10
Oregon....................... 46 0.23 753,384.45 0.24
Pennsylvania................. 85 0.42 1,235,839.59 0.39
South Carolina............... 791 3.90 12,693,200.23 3.96
South Dakota................. 9 0.04 114,644.81 0.04
Tennessee.................... 631 3.11 10,512,933.43 3.28
Texas........................ 2,291 11.31 40,947,991.64 12.77
Utah ........................ 118 0.58 2,034,708.31 0.63
Virginia..................... 1,008 4.97 15,416,401.58 4.81
Washington................... 88 0.43 1,651,700.52 0.52
Wisconsin.................... 322 1.59 4,404,362.52 1.37
------ ------ --------------- ------
Total............... 20,263 100.00% $320,545,134.82 100.00%
====== ====== =============== ======
</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 the Predecessor. All other Receivables were originated
by Dealers and purchased from such Dealers by UAC or the Predecessor.
(3) Sum may not equal 100% due to rounding.
<PAGE>
Distribution of the Receivables by Financed Vehicle Model
Year as of the Cutoff Date
<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>
1985 and earlier..................... 7 0.03% $ 41,159.46 0.01%
1986................................. 14 0.07 54,732.06 0.02
1987................................. 14 0.07 59,784.39 0.02
1988................................. 28 0.14 136,008.22 0.04
1989................................. 115 0.57 694,456.38 0.22
1990................................. 379 1.87 2,707,417.96 0.84
1991................................. 547 2.70 4,353,163.83 1.36
1992................................. 876 4.32 8,301,993.24 2.59
1993................................. 1,513 7.47 16,179,232.33 5.05
1994................................. 2,156 10.64 27,177,992.78 8.48
1995................................. 3,136 15.48 45,994,183.34 14.35
1996................................. 2,834 13.99 45,994,368.56 14.35
1997................................. 2,682 13.24 46,625,770.41 14.55
1998................................. 3,335 16.46 64,698,897.92 20.18
1999................................. 2,627 12.96 57,525,973.94 17.95
------ ------ ---------------- ------
Total................. 20,263 100.00% $ 320,545,134.82 100.00%
====== ====== ================ ======
</TABLE>
(1) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Contract Rate as of the Cutoff Date
<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%...................... 53 0.26% $ 814,471.31 0.25%
7.000 to 7.999%...................... 130 0.64 2,104,458.49 0.66
8.000 to 8.999%...................... 322 1.59 5,528,168.58 1.72
9.000 to 9.999%...................... 854 4.21 14,599,253.30 4.55
10.000 to 10.999%...................... 1,800 8.88 30,699,645.35 9.58
11.000 to 11.999%...................... 3,028 14.94 51,465,535.13 16.06
12.000 to 12.999%...................... 4,227 20.86 69,730,143.40 21.75
13.000 to 13.999%...................... 3,792 18.71 59,255,245.91 18.49
14.000 to 14.999%...................... 2,612 12.89 38,192,185.54 11.91
15.000 to 15.999%...................... 1,559 7.69 21,926,414.80 6.84
16.000 to 16.999%...................... 856 4.22 12,252,234.96 3.82
17.000 to 17.999%...................... 419 2.07 5,900,872.83 1.84
18.000 to 18.999%...................... 522 2.58 7,196,870.14 2.25
19.000 to 19.999%...................... 42 0.21 452,650.66 0.14
20.000 to 20.999%...................... 28 0.14 271,164.68 0.08
21.000 to 21.999%...................... 14 0.07 126,307.35 0.04
22.000 to 22.999%...................... 3 0.01 14,424.96 0.00
23.000 to 23.999%...................... 1 0.00 6,161.67 0.00
24.000 to 24.999%...................... 1 0.00 8,925.76 0.00
------ ------ --------------- ------
Total...................... 20,263 100.00% $320,545,134.82 100.00%
====== ====== =============== ======
</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
and its Predecessor 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.
<TABLE>
<CAPTION>
Delinquency Experience (1) (2)
At June 30, At December 31,
---------------------------------------------- -----------------------
1996 1997 1997
---------------------- -------------------- -----------------------
(Dollars in thousands)
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Servicing portfolio........ 147,722 $1,548,538 173,693 $1,860,272 179,962 $1,920,930
------- ---------- ------- ---------- ------- ----------
Delinquencies
30-59 days.............. 1,602 $ 17,030 2,487 $ 27,373 3,954 $ 41,778
60-89 days.............. 694 7,629 1,646 18,931 2,274 25,933
90 days or more......... 333 3,811 723 8,826 688 8,048
------- ---------- ------- ---------- ------- ----------
Total delinquencies........ 2,629 $ 28,470 4,856 $ 55,130 6,916 $ 75,759
======= ========== ======= ========== ======= ==========
Total delinquencies as a
percent of servicing
portfolio............... 1.78% 1.84% 2.80% 2.96% 3.84% 3.94%
</TABLE>
At June 30, At December 31,
1998 1998
---------------------- -----------------------
Number of Number of
Receivables Amount Receivables Amount
----------- ------ ----------- ------
Servicing portfolio........ 184,003 $1,978,920 202,890 $2,277,112
------- ---------- ------- ----------
Delinquencies
30-59 days.............. 3,179 $ 32,967 4,379 $ 44,626
60-89 days.............. 1,907 20,819 1,682 17,475
90 days or more......... 657 6,993 694 7,161
------- ---------- ------- ----------
Total delinquencies........ 5,743 $ 60,779 6,755 $ 69,262
======= ========== ======= ==========
Total delinquencies as a
percent of servicing
portfolio............... 3.12% 3.07% 3.33% 3.04%
<PAGE>
<TABLE>
<CAPTION>
Credit Loss Experience (1) (2)
Year ended June 30,
----------------------------------------------- Six Months Ended
1996 1997 December 31, 1997 (6)
-------------------- ----------------------- ----------------------
(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(3)...... 132,363 $1,343,770 164,858 $1,759,666 177,627 $1,899,190
------- ---------- ------- ---------- ------- ----------
Gross charge-offs................ 3,663 $ 40,815 6,280 $ 70,830 4,031 $ 45,429
Recoveries (4)................... 19,543 28,511 16,661
---------- ---------- ----------
Net losses....................... $ 21,272 $ 42,319 $ 28,768
========== ========== ==========
Gross charge-offs as a % of
avg. servicing
portfolio(5).................. 2.77% 3.04% 3.81% 4.03% 4.54% 4.78%
Recoveries as a % of gross
charge-offs................... 47.88% 40.25% 36.68%
Net losses as a % of avg.
servicing portfolio(5)........ 1.58% 2.40% 3.03%
</TABLE>
<TABLE>
<CAPTION>
Year Ended Six Months Ended
June 30, 1998 December 31, 1998 (6)
----------------------- -----------------------
Number of Number of
Receivables Amount Receivables Amount
----------- ------ ----------- ------
<S> <C> <C> <C> <C>
Avg. servicing portfolio(3)...... 179,822 $1,922,977 195,521 $2,161,458
------- ---------- ------- ----------
Gross charge-offs................ 7,909 $ 87,325 4,082 $ 42,990
Recoveries (4)................... 33,546 16,455
---------- ----------
Net losses....................... $ 53,779 $ 26,535
========== ==========
Gross charge-offs as a % of
avg. servicing
portfolio(5).................. 4.40% 4.54% 4.18% 3.98%
Recoveries as a % of gross
charge-offs................... 38.41% 38.28%
Net losses as a % of avg.
servicing portfolio(5)........ 2.80% 2.46%
</TABLE>
(1) There is generally no recourse to Dealers under any of the receivables in
the portfolio serviced by UAC or the Predecessor, except to the extent of
representations and warranties made by Dealers in connection with such
receivables.
(2) The delinquency experience and credit loss experience of the Tier II
Receivables are not included herein but are described under "-Delinquency
and Credit Loss Experience."
(3) Equals the monthly arithmetic average, and includes receivables sold in
prior securitization transactions.
(4) Recoveries include recoveries on receivables previously charged off, cash
recoveries and unsold repossessed assets carried at fair market value.
(5) 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."
(6) Percentages are annualized in "Gross charge-offs as a percentage of average
servicing portfolio" and "Net losses as a percentage of average servicing
portfolio" for partial years.
<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 3.04% at December 31, 1998
compared to 3.07% and 3.94% at June 30, 1998 and December 31, 1997,
respectively.
As indicated in the foregoing credit loss experience table, net credit
losses on UAC's prime automobile portfolio totaled approximately $26.5 million
for the six months ended December 31, 1998, or 2.46% (annualized) of the average
servicing portfolio, compared to $28.8 million, or 3.03% (annualized) for the
six months ended December 31, 1997. For the year ended June 30, 1998, net credit
losses on UAC's prime automobile portfolio totaled approximately $53.8 million
or 2.80% of the average servicing portfolio.
From September 30, 1997 through December 31, 1998, UAC has experienced
steady improvement in its 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 since September 30, 1997 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.
<PAGE>
Recoveries as a percentage of gross charge-offs decreased slightly to
38.28% for the six months ended December 31, 1998, compared to 38.41% for the
year ended June 30, 1998. On a year to year comparison, recovery rates improved
to 38.28% for the six months ended December 31, 1998, compared to 36.68% for the
six months ended December 31, 1997. 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 15% of all repossessed
automobiles sold by UAC during the last six months were sold through its new
retail operation.
UAC's non-prime lending began in 1994 and was replaced by UAC's "Tier
II" lending on March 1, 1998. The majority of the Tier II Receivables were
originated under UAC's Tier II lending from applications that did not qualify
for credit under UAC's "Tier I" lending. Although it is too early to determine
actual trends with respect to delinquency and credit losses of the Tier II
Receivables, UAC believes that the rate of delinquency and credit loss
associated with the Tier II Receivables will more closely follow the experience
of UAC's non-prime portfolio rather than the prime or Tier I portfolio which is
set forth on the preceding page. At December 31, 1998, UAC's non-prime servicing
portfolio consisted of approximately $66.4 million in receivables and had a
delinquency rate based upon outstanding balances of receivables 30 days past due
and over of 9.66% compared to 8.14% and 8.29% at September 30, 1998 and June 30,
1998, respectively. For the six months ended December 31, 1998, the credit
losses on the non-prime portfolio were 7.32% (annualized) of the average
non-prime servicing portfolio, compared to 8.18% (annualized) for the quarter
ended September 30, 1998 and 7.67% for the year ended June 30, 1998. As the Tier
II Receivables account for approximately 0.93% of the Receivables as of the
Cutoff Date, UAC believes that the credit quality of the Tier II Receivables
will not affect the credit quality of the Receivables as a whole in a materially
adverse manner. UAC ceased originating Tier II Receivables in January, 1999.
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 CLASS A CERTIFICATES
Information regarding certain maturity and prepayment considerations
about the Class A Certificates is described under "Weighted Average Life of the
Certificates" in the accompanying prospectus. Because the rate of payment on
principal of the Class A Certificates depends primarily on the rate of payment
(including voluntary prepayments and principal in respect of Defaulted
Receivables and Purchased Receivables) of the principal balance of the
Receivables, final payment on each class of Class A Certificates could occur
much earlier than the applicable final scheduled Distribution Date. You will
bear the risk of being able to reinvest early principal payments on the Class A
Certificates at yields at least equal to the yield on your Class A Certificates.
<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 the Receivables prepay in full at the specified monthly ABS;
o each scheduled payment on the Receivables is made on the last
day of each Collection Period and includes a full month of
interest;
o distributions on the Class A Certificates are paid in cash on
each Distribution Date commencing March 8, 1999 and on the
eighth calendar day of each subsequent month in accordance
with the description set forth under "The Offered Certificates
-- Distributions on the Offered Certificates;"
o the Closing Date occurs on February 23, 1999;
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 Class IC Certificateholder exercises its rights with
respect to the Optional Sale on the first possible
Distribution Date.
The tables indicate the projected weighted average life of each class of Class A
Certificates and sets forth the percentage of the initial Certificate Balance of
each class of Class A Certificates that is projected to be outstanding after
each of the Distribution Dates shown at specified ABS percentages. The tables
also assume that the Receivables have been aggregated into four 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 $ 15,139,074.32 12.962% 43 42
2 44,292,334.47 12.811 59 58
3 100,818,544.82 12.923 70 69
4 160,295,181.21 13.076 82 80
----------------- ------
Total $ 320,545,134.82 12.986%
================= ======
</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-21 to
S-23. We have provided these hypothetical illustrations using the assumptions
listed above to give you a general illustration of how the principal balances of
the Class A Certificates 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 four hypothetical pools could produce slower or
faster rates of principal distributions than indicated in the table at the
various specified ABS rates. Any difference between such hypothetical
assumptions, the actual characteristics, performance and prepayment experience
of the Receivables will affect the percentages of initial Certificate Balances
outstanding over time and the weighted average lives of the Class A
Certificates.
================================================================================
Important notice regarding calculation of the
weighted average life and the assumptions upon which
the tables on pages S-21 to S-23 are based
The weighted average life of a Class A Certificate is determined by:
(a) multiplying the amount of each principal payment on the applicable
Class A Certificate by the number of years from the assumed Closing Date to
the related Distribution Date, (b) adding the results, and (c) dividing the
sum by the related initial Certificate Balance of such Class A Certificate.
The tables on pages S-21 to S-23 have been prepared based on (and
should be read in conjunction with) the assumptions described on pages S-19
and S-20 (including the assumptions regarding the characteristics and
performance of the Receivables, which will differ from the actual
characteristics and performance of the Receivables).
================================================================================
<PAGE>
<TABLE>
<CAPTION>
Percent of Initial Certificate Balance at Various ABS Percentages (1)
Class A-1 Certificates Class A-2 Certificates
----------------------------------------- -----------------------------------------
Distribution 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 March, 1999......... 89.7% 87.5% 86.4% 85.3% 81.5% 100.0% 100.0% 100.0% 100.0% 100.0%
2 April, 1999......... 79.4% 75.1% 73.0% 70.8% 63.1% 100.0% 100.0% 100.0% 100.0% 100.0%
3 May, 1999........... 69.2% 62.8% 59.6% 56.4% 45.0% 100.0% 100.0% 100.0% 100.0% 100.0%
4 June, 1999.......... 59.0% 50.6% 46.4% 42.2% 27.1% 100.0% 100.0% 100.0% 100.0% 100.0%
5 July, 1999.......... 48.8% 38.5% 33.3% 28.1% 9.4% 100.0% 100.0% 100.0% 100.0% 100.0%
6 August, 1999........ 38.8% 26.5% 20.3% 14.1% 0.0% 100.0% 100.0% 100.0% 100.0% 92.7%
7 September, 1999..... 28.7% 14.6% 7.5% 0.3% 0.0% 100.0% 100.0% 100.0% 100.0% 77.1%
8 October, 1999....... 18.8% 2.8% 0.0% 0.0% 0.0% 100.0% 100.0% 95.2% 87.9% 61.7%
9 November, 1999...... 8.9% 0.0% 0.0% 0.0% 0.0% 100.0% 91.9% 83.8% 75.6% 46.6%
10 December, 1999...... 0.0% 0.0% 0.0% 0.0% 0.0% 99.1% 81.4% 72.5% 63.5% 31.6%
11 January, 2000....... 0.0% 0.0% 0.0% 0.0% 0.0% 90.2% 71.0% 61.3% 51.5% 16.9%
12 February, 2000...... 0.0% 0.0% 0.0% 0.0% 0.0% 81.4% 60.7% 50.2% 39.7% 2.3%
13 March, 2000......... 0.0% 0.0% 0.0% 0.0% 0.0% 72.7% 50.5% 39.3% 28.0% 0.0%
14 April, 2000......... 0.0% 0.0% 0.0% 0.0% 0.0% 64.0% 40.4% 28.5% 16.5% 0.0%
15 May, 2000........... 0.0% 0.0% 0.0% 0.0% 0.0% 55.3% 30.4% 17.8% 5.2% 0.0%
16 June, 2000.......... 0.0% 0.0% 0.0% 0.0% 0.0% 46.7% 20.5% 7.3% 0.0% 0.0%
17 July, 2000.......... 0.0% 0.0% 0.0% 0.0% 0.0% 38.2% 10.7% 0.0% 0.0% 0.0%
18 August, 2000........ 0.0% 0.0% 0.0% 0.0% 0.0% 29.7% 1.1% 0.0% 0.0% 0.0%
19 September, 2000..... 0.0% 0.0% 0.0% 0.0% 0.0% 21.3% 0.0% 0.0% 0.0% 0.0%
20 October, 2000....... 0.0% 0.0% 0.0% 0.0% 0.0% 13.0% 0.0% 0.0% 0.0% 0.0%
21 November, 2000...... 0.0% 0.0% 0.0% 0.0% 0.0% 4.7% 0.0% 0.0% 0.0% 0.0%
22 December, 2000...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
23 January, 2001....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
24 February, 2001...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
25 March, 2001......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
26 April, 2001......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
27 May, 2001........... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
28 June, 2001.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
29 July, 2001.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
30 August, 2001........ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
31 September, 2001..... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
32 October, 2001....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
33 November, 2001...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
34 December, 2001...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
35 January, 2002....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
36 February, 2002...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
37 March, 2002......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
38 April, 2002......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
39 May, 2002........... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
40 June, 2002.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
41 July, 2002.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
42 August, 2002........ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
43 September, 2002..... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
44 October, 2002....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
45 November, 2002...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
46 December, 2002...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
47 January, 2003....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
48 February, 2003...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
49 March, 2003......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
50 April, 2003......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
51 May, 2003........... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
52 June, 2003.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
53 July, 2003.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
54 August, 2003........ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
55 September, 2003..... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
56 October, 2003....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
57 November, 2003...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
58 December, 2003...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
59 January, 2004....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Weighted Average Life
(in years) ..... 0.41 0.34 0.31 0.29 0.23 1.31 1.09 1.00 0.93 0.73
(1) See the important notice on page S-20 of this prospectus supplement
regarding calculation of the weighted average life and the assumptions upon
which these tables are based.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percent of Initial Certificate Balance at Various ABS Percentages (1)
Class A-3 Certificates Class A-4 Certificates
----------------------------------------- -----------------------------------------
Distribution 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 March, 1999......... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
2 April, 1999......... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
3 May, 1999........... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
4 June, 1999.......... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
5 July, 1999.......... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
6 August, 1999........ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
7 September, 1999..... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
8 October, 1999....... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
9 November, 1999...... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
10 December, 1999...... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
11 January, 2000....... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
12 February, 2000...... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
13 March, 2000......... 100.0% 100.0% 100.0% 100.0% 91.6% 100.0% 100.0% 100.0% 100.0% 100.0%
14 April, 2000......... 100.0% 100.0% 100.0% 100.0% 81.7% 100.0% 100.0% 100.0% 100.0% 100.0%
15 May, 2000........... 100.0% 100.0% 100.0% 100.0% 72.0% 100.0% 100.0% 100.0% 100.0% 100.0%
16 June, 2000.......... 100.0% 100.0% 100.0% 95.7% 62.5% 100.0% 100.0% 100.0% 100.0% 100.0%
17 July, 2000.......... 100.0% 100.0% 97.8% 88.0% 53.1% 100.0% 100.0% 100.0% 100.0% 100.0%
18 August, 2000........ 100.0% 100.0% 90.6% 80.3% 43.9% 100.0% 100.0% 100.0% 100.0% 100.0%
19 September, 2000..... 100.0% 94.0% 83.4% 72.8% 34.9% 100.0% 100.0% 100.0% 100.0% 100.0%
20 October, 2000....... 100.0% 87.4% 76.4% 65.4% 26.1% 100.0% 100.0% 100.0% 100.0% 100.0%
21 November, 2000...... 100.0% 80.8% 69.5% 58.1% 17.5% 100.0% 100.0% 100.0% 100.0% 100.0%
22 December, 2000...... 97.6% 74.4% 62.7% 50.9% 9.0% 100.0% 100.0% 100.0% 100.0% 100.0%
23 January, 2001....... 91.9% 68.0% 55.9% 43.8% 0.8% 100.0% 100.0% 100.0% 100.0% 100.0%
24 February, 2001...... 86.2% 61.7% 49.3% 36.9% 0.0% 100.0% 100.0% 100.0% 100.0% 82.5%
25 March, 2001......... 80.6% 55.5% 42.8% 30.1% 0.0% 100.0% 100.0% 100.0% 100.0% 63.6%
26 April, 2001......... 75.0% 49.4% 36.4% 23.4% 0.0% 100.0% 100.0% 100.0% 100.0% 45.2%
27 May, 2001........... 69.5% 43.4% 30.2% 16.9% 0.0% 100.0% 100.0% 100.0% 100.0% 27.2%
28 June, 2001.......... 64.0% 37.4% 24.0% 10.5% 0.0% 100.0% 100.0% 100.0% 100.0% 9.8%
29 July, 2001.......... 58.6% 31.6% 18.0% 4.2% 0.0% 100.0% 100.0% 100.0% 100.0% 0.0%
30 August, 2001........ 53.3% 25.9% 12.0% 0.0% 0.0% 100.0% 100.0% 100.0% 95.4% 0.0%
31 September, 2001..... 48.0% 20.2% 6.2% 0.0% 0.0% 100.0% 100.0% 100.0% 81.1% 0.0%
32 October, 2001....... 42.8% 14.7% 0.5% 0.0% 0.0% 100.0% 100.0% 100.0% 67.0% 0.0%
33 November, 2001...... 37.6% 9.3% 0.0% 0.0% 0.0% 100.0% 100.0% 88.0% 53.4% 0.0%
34 December, 2001...... 32.5% 4.0% 0.0% 0.0% 0.0% 100.0% 100.0% 74.9% 40.1% 0.0%
35 January, 2002....... 27.4% 0.0% 0.0% 0.0% 0.0% 100.0% 97.0% 62.2% 27.1% 0.0%
36 February, 2002...... 22.4% 0.0% 0.0% 0.0% 0.0% 100.0% 84.7% 49.7% 14.5% 0.0%
37 March, 2002......... 17.5% 0.0% 0.0% 0.0% 0.0% 100.0% 72.7% 37.6% 2.3% 0.0%
38 April, 2002......... 12.7% 0.0% 0.0% 0.0% 0.0% 100.0% 60.9% 25.8% 0.0% 0.0%
39 May, 2002........... 7.9% 0.0% 0.0% 0.0% 0.0% 100.0% 49.5% 14.4% 0.0% 0.0%
40 June, 2002.......... 3.1% 0.0% 0.0% 0.0% 0.0% 100.0% 38.3% 3.3% 0.0% 0.0%
41 July, 2002.......... 0.0% 0.0% 0.0% 0.0% 0.0% 96.3% 27.4% 0.0% 0.0% 0.0%
42 August, 2002........ 0.0% 0.0% 0.0% 0.0% 0.0% 85.3% 16.7% 0.0% 0.0% 0.0%
43 September, 2002..... 0.0% 0.0% 0.0% 0.0% 0.0% 75.1% 6.9% 0.0% 0.0% 0.0%
44 October, 2002....... 0.0% 0.0% 0.0% 0.0% 0.0% 65.0% 0.0% 0.0% 0.0% 0.0%
45 November, 2002...... 0.0% 0.0% 0.0% 0.0% 0.0% 55.1% 0.0% 0.0% 0.0% 0.0%
46 December, 2002...... 0.0% 0.0% 0.0% 0.0% 0.0% 45.4% 0.0% 0.0% 0.0% 0.0%
47 January, 2003....... 0.0% 0.0% 0.0% 0.0% 0.0% 35.8% 0.0% 0.0% 0.0% 0.0%
48 February, 2003...... 0.0% 0.0% 0.0% 0.0% 0.0% 26.4% 0.0% 0.0% 0.0% 0.0%
49 March, 2003......... 0.0% 0.0% 0.0% 0.0% 0.0% 17.2% 0.0% 0.0% 0.0% 0.0%
50 April, 2003......... 0.0% 0.0% 0.0% 0.0% 0.0% 8.1% 0.0% 0.0% 0.0% 0.0%
51 May, 2003........... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
52 June, 2003.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
53 July, 2003.......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
54 August, 2003........ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
55 September, 2003..... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
56 October, 2003....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
57 November, 2003...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
58 December, 2003...... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
59 January, 2004....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Weighted Average Life
(in years).......... 2.57 2.17 2.00 1.86 1.45 3.80 3.25 3.00 2.78 2.15
</TABLE>
(1) See the important notice on page S-20 of this prospectus supplement
regarding calculation of the weighted average life and the assumptions upon
which these tables are based.
<PAGE>
Percent of Initial Certificate Balance at Various ABS Percentages (1)
<TABLE>
<CAPTION>
Class A-5 Certificates
-----------------------------------------------------------
Distribution 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 March, 1999.................... 100.0% 100.0% 100.0% 100.0% 100.0%
2 April, 1999.................... 100.0% 100.0% 100.0% 100.0% 100.0%
3 May, 1999...................... 100.0% 100.0% 100.0% 100.0% 100.0%
4 June, 1999..................... 100.0% 100.0% 100.0% 100.0% 100.0%
5 July, 1999..................... 100.0% 100.0% 100.0% 100.0% 100.0%
6 August, 1999................... 100.0% 100.0% 100.0% 100.0% 100.0%
7 September, 1999................ 100.0% 100.0% 100.0% 100.0% 100.0%
8 October, 1999.................. 100.0% 100.0% 100.0% 100.0% 100.0%
9 November, 1999................. 100.0% 100.0% 100.0% 100.0% 100.0%
10 December, 1999................. 100.0% 100.0% 100.0% 100.0% 100.0%
11 January, 2000.................. 100.0% 100.0% 100.0% 100.0% 100.0%
12 February, 2000................. 100.0% 100.0% 100.0% 100.0% 100.0%
13 March, 2000.................... 100.0% 100.0% 100.0% 100.0% 100.0%
14 April, 2000.................... 100.0% 100.0% 100.0% 100.0% 100.0%
15 May, 2000...................... 100.0% 100.0% 100.0% 100.0% 100.0%
16 June, 2000..................... 100.0% 100.0% 100.0% 100.0% 100.0%
17 July, 2000..................... 100.0% 100.0% 100.0% 100.0% 100.0%
18 August, 2000................... 100.0% 100.0% 100.0% 100.0% 100.0%
19 September, 2000................ 100.0% 100.0% 100.0% 100.0% 100.0%
20 October, 2000.................. 100.0% 100.0% 100.0% 100.0% 100.0%
21 November, 2000................. 100.0% 100.0% 100.0% 100.0% 100.0%
22 December, 2000................. 100.0% 100.0% 100.0% 100.0% 100.0%
23 January, 2001.................. 100.0% 100.0% 100.0% 100.0% 100.0%
24 February, 2001................. 100.0% 100.0% 100.0% 100.0% 100.0%
25 March, 2001.................... 100.0% 100.0% 100.0% 100.0% 100.0%
26 April, 2001.................... 100.0% 100.0% 100.0% 100.0% 100.0%
27 May, 2001...................... 100.0% 100.0% 100.0% 100.0% 100.0%
28 June, 2001..................... 100.0% 100.0% 100.0% 100.0% 100.0%
29 July, 2001..................... 100.0% 100.0% 100.0% 100.0% 94.9%
30 August, 2001................... 100.0% 100.0% 100.0% 100.0% 83.2%
31 September, 2001................ 100.0% 100.0% 100.0% 100.0% 71.8%
32 October, 2001.................. 100.0% 100.0% 100.0% 100.0% 60.9%
33 November, 2001................. 100.0% 100.0% 100.0% 100.0% 50.3%
34 December, 2001................. 100.0% 100.0% 100.0% 100.0% 40.1%
35 January, 2002.................. 100.0% 100.0% 100.0% 100.0% 30.3%
36 February, 2002................. 100.0% 100.0% 100.0% 100.0% 20.9%
37 March, 2002.................... 100.0% 100.0% 100.0% 100.0% 12.0%
38 April, 2002.................... 100.0% 100.0% 100.0% 93.2% 3.4%
39 May, 2002...................... 100.0% 100.0% 100.0% 85.0% 0.0%
40 June, 2002..................... 100.0% 100.0% 100.0% 77.2% 0.0%
41 July, 2002..................... 100.0% 100.0% 94.7% 69.6% 0.0%
42 August, 2002................... 100.0% 100.0% 87.2% 62.3% 0.0%
43 September, 2002................ 100.0% 100.0% 80.2% 0.0% 0.0%
44 October, 2002.................. 100.0% 98.0% 73.5% 0.0% 0.0%
45 November, 2002................. 100.0% 91.3% 67.1% 0.0% 0.0%
46 December, 2002................. 100.0% 84.9% 60.8% 0.0% 0.0%
47 January, 2003.................. 100.0% 78.6% 0.0% 0.0% 0.0%
48 February, 2003................. 100.0% 72.5% 0.0% 0.0% 0.0%
49 March, 2003.................... 100.0% 66.7% 0.0% 0.0% 0.0%
50 April, 2003.................... 100.0% 61.0% 0.0% 0.0% 0.0%
51 May, 2003...................... 99.4% 0.0% 0.0% 0.0% 0.0%
52 June, 2003..................... 93.2% 0.0% 0.0% 0.0% 0.0%
53 July, 2003..................... 87.1% 0.0% 0.0% 0.0% 0.0%
54 August, 2003................... 81.2% 0.0% 0.0% 0.0% 0.0%
55 September, 2003................ 75.4% 0.0% 0.0% 0.0% 0.0%
56 October, 2003.................. 69.7% 0.0% 0.0% 0.0% 0.0%
57 November, 2003................. 64.2% 0.0% 0.0% 0.0% 0.0%
58 December, 2003................. 58.8% 0.0% 0.0% 0.0% 0.0%
59 January, 2004.................. 0.0% 0.0% 0.0% 0.0% 0.0%
Weighted Average Life
(in years) ................ 4.73 4.09 3.76 3.45 2.76
</TABLE>
(1) See the important notice on page S-20 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
General
Monthly Interest will be distributed to Class A Certificateholders and
Class I Certificateholders on each Distribution Date to the extent of the
pass-through rate applied to the applicable Certificate Balance or Notional
Principal Amount, as applicable, as of the preceding Distribution Date or the
Closing Date, as applicable (after giving effect to distributions of principal
on such preceding Distribution Date). See "The Offered Certificates --
Distributions on the Offered Certificates" in this prospectus supplement.
Upon a full or partial prepayment on a Receivable, Class A
Certificateholders and Class I Certificateholders will 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.
Although the Receivables will have different contract rates, the
contract rate of each Receivable generally will exceed the sum of:
(1) the weighted average of the Class A-1 Pass-Through Rate, the
Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate,
the Class A-4 Pass-Through Rate and the Class A-5 Pass-Through
Rate;
(2) the Class I Pass-Through Rate;
(3) the per annum rate used to calculate the Insurance Premium;
and
(4) the per annum rate used to calculate the Monthly Servicing
Fee.
However, the contract rate on a small percentage of the Receivables,
will be less than the foregoing sum. Disproportionate rates of prepayments
between Receivables with higher and lower contract rates could affect the
ability of the Trust to distribute Monthly Interest to you.
The Class I Certificates
The Class I Certificates are interest-only certificates. We intend the
planned amortization feature of the Notional Principal Amount of the Class I
Certificates to reduce the effect that prepayments will have on the Class I
Certificates. However the Notional Principal Amount of the Class I Certificates
may be reduced more quickly than provided in the Planned Notional Principal
Amount Schedule if the Receivables prepay more quickly than 2.50% ABS. Such
prepayments in excess of the rate assumed in the Planned Notional Principal
Amount Schedule will reduce the yield of the Class I Certificates. As such, the
yield to maturity on the Class I Certificates will be very sensitive to the rate
of prepayments, including voluntary prepayments and prepayments due to
liquidations and repurchases. See "Risk Factors -- Prepayments May Reduce the
Yield on the Class I Certificates" and "The Offered Certificates -- The Class I
Certificates -- Calculation of Notional Principal Amount" and "-- Class I Yield
Considerations" in this prospectus supplement.
<PAGE>
THE OFFERED CERTIFICATES
The Offered Certificates will be issued pursuant to the Pooling and
Servicing Agreement. You may request a copy of the Pooling and Servicing
Agreement (without exhibits) by contacting the Servicer at the address set forth
under "Reports to Certificateholders" in this prospectus supplement. References
to the relevant sections of the Pooling and Servicing Agreement appear below in
parentheses. We do not claim that the following summary is complete and this
summary is subject to and qualified in its entirety by reference to the Pooling
and Servicing Agreement.
Sale and Assignment of Receivables
We have described the conveyance of the Receivables (1) from UAFC to
the Depositor pursuant to the Purchase Agreement dated as of February 1, 1999,
among UAFC, UAC and the Depositor and (2) from the Depositor to the Trust
pursuant to the Pooling and Servicing Agreement in the accompanying prospectus
under the heading "Description of the Transfer and Servicing Agreements -- Sale
and Assignment of Receivables."
Accounts
In addition to the Certificate Account, the property of the Trust will
include the Spread Account and the Payahead Account.
Spread Account. On the Closing Date, the Trustee will establish the
Spread Account. The Spread Account will be established for the benefit of the
Class A Certificateholders, the Class I Certificateholders, 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
Class A Certificateholders, the Class I Certificateholders, the Insurer and the
Servicer for the Monthly Servicing Fee and any permitted reimbursements of
outstanding advances on any Distribution 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 Distribution
Date, any amounts on deposit in the Spread Account after the payment of any
amounts owed to the Class A Certificateholders, the Class I Certificateholders,
and the Insurer in excess of the Required Spread Amount will be distributed to
the Class IC Certificateholder.
Under the terms of the Pooling and Servicing Agreement, the Trustee
will withdraw funds from the Spread Account and transfer such funds to the
Certificate Account for any deficiency of Monthly Interest or Monthly Principal
as further described below under "-- Distributions on the Offered Certificates,"
to the extent available, 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 Distribution Date, the Trust will
depend solely on current distributions on the Receivables to make distributions
of principal and interest on the Certificates. 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, you may suffer a corresponding loss which will be borne
pro rata by you and the other Class A Certificateholders and Class I
Certificateholders.
<PAGE>
Payahead Account. The Servicer will establish an additional account
(the "Payahead Account"), in the name of the Trustee on behalf of obligors on
the Receivables and the Certificateholders. The Payahead Account will initially
be maintained with the Trustee. To the extent required by the Pooling 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 Certificate Account, they will not constitute collected
interest or collected principal and will not be available for distribution to
Certificateholders. Interest earned on the balance in the Payahead Account will
be remitted to the Servicer monthly. Collections on a Precomputed Receivable
made during a Collection Period will be applied first to any overdue scheduled
payment on such Receivable, then to the scheduled payment on such Receivable due
in such Collection Period. If any collections remaining after the scheduled
payment is made are insufficient to prepay the Precomputed Receivable in full,
then generally such remaining 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.
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 Certificate Account on or before the
Determination 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. (Section 9.05.)
Distributions on the Offered Certificates
The Servicer will deposit in the Certificate 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 Distribution
Date ("Available Funds") will consist of:
o all payments on the Simple Interest Receivables;
o the scheduled payments received from obligors on Precomputed
Receivables;
o interest earned on funds on deposit in the Certificate
Account;
o the net amount to be transferred from the Payahead Account to
the Certificate Account for the related Distribution Date;
o all advances for such Collection Period; and
o the Purchase Amount for all Receivables that became Purchased
Receivables during the preceding Collection Period.
<PAGE>
The Servicer will determine the amount of funds necessary to make
distributions of Monthly Principal and Monthly Interest to the holders of the
Offered Certificates 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 Distribution Date, after giving effect to payments of the Monthly Servicing
Fee and permitted reimbursements of outstanding advances to the Servicer on such
Distribution Date, the Servicer will withdraw amounts, up to the amount on
deposit in such account. If there remains a deficiency of Monthly Interest or
Monthly Principal after such a withdrawal, the Servicer will notify the Trustee
of the remaining deficiency, and the Trustee will draw on the Policy, up to the
Policy Amount, to pay Monthly Interest and Monthly Principal. Additionally, if
the Available Funds for a Distribution 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 Trustee of such deficiency and 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.
On each Distribution Date, the Trustee will apply or cause to be
applied 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 the amount
of outstanding advances in respect of Receivables (1) that
became Defaulted Receivables during the prior Collection
Period plus (2) 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) (1) Monthly Principal, in accordance with the Principal
Distribution Sequence (described below), and Class A Monthly
Interest, including any overdue Class A Monthly Interest, to
the Class A Certificateholders and (2) Class I Monthly
Interest, including any overdue Class I Monthly Interest, to
the Class I Certificateholders;
(d) the Insurance Premium including any overdue Insurance Premium
plus any accrued interest to the Insurer;
(e) 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;
(f) 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; and
(g) the balance into the Spread Account.
<PAGE>
After all distributions pursuant to clauses (a) through (g) above have
been made for each Distribution Date, the amount of funds remaining in the
Spread Account on such date, if any, in excess of the Required Spread Amount,
will be distributed by the Trustee to the Class IC Certificateholder. Any
amounts so distributed to the Class IC Certificateholder will no longer be
property of the Trust and will not be available to make payments to you.
If on any Distribution Date there are not sufficient Available Funds
(together with amounts withdrawn from the Spread Account and/or the Policy) to
pay the distribution required by (c) above, the Available Funds distributable
thereunder will be distributed proportionately on the basis of the ratio of the
required distribution due the Class A Certificateholders and Class I
Certificateholders to the sum of the distributions required by (c) to the Class
A Certificateholders and Class I Certificateholders. The amount so distributed
to the Class A Certificateholders hereunder shall be allocated first to Monthly
Interest, and second to Monthly Principal. Such amount of Monthly Principal
shall be paid to Class A Certificateholders pro rata based upon the relative
Certificate Balance of each class of Class A Certificates.
"Class A Monthly Interest" for any Distribution Date will equal the sum
of Class A-1 Monthly Interest, Class A-2 Monthly Interest, Class A-3 Monthly
Interest, Class A-4 Monthly Interest and Class A-5 Monthly Interest.
"Class A-1 Monthly Interest" means:
(1) for the first Distribution Date, the product of the following:
(a) one-three hundred sixtieth (1/360th) of the Class A-1
Pass-Through Rate,
(b) the actual number of days from the Closing Date
through the day before the first Distribution Date,
and
(c) the Class A-1 Certificate Balance on the Closing
Date; and
(2) for any subsequent Distribution Date, the product of the
following:
(a) one-three hundred sixtieth (1/360th) of the Class A-1
Pass-Through Rate,
(b) the actual number of days from the previous
Distribution Date through the day before the related
Distribution Date, and
(c) the Class A-1 Certificate Balance as of the
immediately preceding Distribution Date (after giving
effect to any distribution of Monthly Principal made
on such Distribution Date).
<PAGE>
"Class A-2 Monthly Interest" means:
(1) for the first Distribution Date, the product of the following:
(a) one-twelfth of the Class A-2 Pass-Through 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 Distribution Date, divided
by 30, and
(c) the Class A-2 Certificate Balance on the Closing
Date; and
(2) for any subsequent Distribution Date, the product of the
following:
(a) one-twelfth of the Class A-2 Pass-Through Rate, and
(b) the Class A-2 Certificate Balance as of the
immediately preceding Distribution Date (after giving
effect to any distribution of Monthly Principal made
on such Distribution Date).
"Class A-3 Monthly Interest" means:
(1) for the first Distribution Date, the product of the following:
(a) one-twelfth of the Class A-3 Pass-Through 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 Distribution Date, divided
by 30, and
(c) the Class A-3 Certificate Balance on the Closing
Date; and
(2) for any subsequent Distribution Date, the product of the
following:
(a) one-twelfth of the Class A-3 Pass-Through Rate, and
(b) the Class A-3 Certificate Balance as of the
immediately preceding Distribution Date (after giving
effect to any distribution of Monthly Principal made
on such Distribution Date).
"Class A-4 Monthly Interest" means:
(1) for the first Distribution Date, the product of the following:
(a) one-twelfth of the Class A-4 Pass-Through 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 Distribution Date, divided
by 30, and
(c) the Class A-4 Certificate Balance on the Closing
Date; and
<PAGE>
(2) for any subsequent Distribution Date, the product of the
following:
(a) one-twelfth of the Class A-4 Pass-Through Rate, and
(b) the Class A-4 Certificate Balance as of the
immediately preceding Distribution Date (after giving
effect to any distribution of Monthly Principal made
on such Distribution Date).
"Class A-5 Monthly Interest" means:
(1) for the first Distribution Date, the product of the following:
(a) one-twelfth of the Class A-5 Pass-Through 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 Distribution Date, divided
by 30, and
(c) the Class A-5 Certificate Balance on the Closing
Date; and
(2) for any subsequent Distribution Date, the product of the
following:
(a) one-twelfth of the Class A-5 Pass-Through Rate, and
(b) the Class A-5 Certificate Balance as of the
immediately preceding Distribution Date (after giving
effect to any distribution of Monthly Principal made
on such Distribution Date).
"Class I Monthly Interest" means:
(1) for the first Distribution Date, the product of the following:
(a) one-twelfth of the Class I Pass-Through 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 Distribution Date divided by
30, and
(c) the Notional Principal Amount of the Class I
Certificates on the Closing Date; and
(2) for any subsequent Distribution Date, the product of the
following:
(a) one-twelfth of the Class I Pass-Through Rate, and
(b) the Notional Principal Amount of the Class I
Certificates as of the immediately preceding
Distribution Date (after giving effect to any
distribution of Monthly Principal made on such
Distribution Date);
provided, however, that after the Class A-5 Final Scheduled Distribution Date,
the Class I Monthly Interest shall be zero.
<PAGE>
"Defaulted Receivable" will mean, for any Collection Period, a
Receivable as to which 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 Depositor or the Servicer is obligated to repurchase or
purchase pursuant to the Pooling and Servicing Agreement shall be deemed not to
be a Defaulted Receivable.
"Insurance Premium" for any Distribution Date will equal one-twelfth of
the product of the Policy per annum fee rate set forth in the Insurance
Agreement and the Certificate Balance calculated as of the last day of the
Collection Period to which such Distribution Date relates and payable monthly in
arrears.
"Monthly Interest" for any Distribution Date will equal the sum of
Class A Monthly Interest and Class I Monthly Interest.
"Monthly Principal" for any Distribution Date will equal the amount
necessary to reduce the Certificate Balance as of the prior Distribution Date
(after giving effect to the distribution of Monthly Principal on such date) (or
as of the Closing Date in the case of the first Distribution Date) to the
aggregate unpaid principal balance of the Receivables on the last day of the
related Collection Period; provided, however, that Monthly Principal on the
final scheduled Distribution Date for each class of Class A Certificates will be
increased by the amount, if any, which is necessary to reduce the Certificate
Balance of such class to zero on such date. For the purpose of determining
Monthly Principal, the unpaid principal balance of a Defaulted Receivable or a
Purchased Receivable is deemed to be zero on and after the last day of the
Collection Period in which such Receivable became a Defaulted Receivable or a
Purchased Receivable.
"Principal Distribution Sequence" means the order in which Monthly
Principal shall be distributed among the Class A Certificateholders. The order
of distribution of Monthly Principal is:
(1) to the Class A-1 Certificateholders until the Class A-1
Certificate Balance has been reduced to zero;
(2) to the Class A-2 Certificateholders until the Class A-2
Certificate Balance has been reduced to zero;
(3) to the Class A-3 Certificateholders until the Class A-3
Certificate Balance has been reduced to zero;
(4) to the Class A-4 Certificateholders until the Class A-4
Certificate Balance has been reduced to zero; and
(5) to the Class A-5 Certificateholders until the Class A-5
Certificate Balance has been reduced to zero.
However, if the amount of Available Funds (together with amounts withdrawn from
the Spread Account and/or the Policy) are not sufficient on any Distribution
Date to pay Monthly Principal in full, the amount of such funds available to pay
Monthly Principal will be distributed pro rata to the Class A Certificateholders
based upon the relative Certificate Balance of each class of Class A
Certificates.
<PAGE>
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. The Servicer, however, will
account to the Trustee and to the Certificateholders as if all deposits and
distributions were made individually. (Section 9.06.)
The following chart sets forth an example of the application of the
foregoing provisions to the first Distribution Date on March 8, 1999:
February 1-28 ..........................Collection Period. The Servicer receives
monthly payments, prepayments, and other
proceeds in respect of the Receivables
and deposits them in the Certificate
Account. The Servicer may deduct the
Monthly Servicing Fee from such
deposits.
March 4, 1999..........................."Determination Date" (second business
day before the Distribution Date). On or
before this date, the Servicer delivers
the Servicer's Certificate setting forth
the amounts to be distributed on the
Distribution Date and of any
deficiencies. If necessary, the Trustee
notifies the Insurer of any draws in
respect of the Policy.
March 5, 1999 ..........................Record Date. Distributions on the
Distribution Date are made to Class A
Certificateholders of record at the
close of business on this date.
March 8, 1999..........................."Distribution Date" (eighth calendar day
of the month, or if such day is not a
business day, the first business day
thereafter). The Trustee withdraws funds
from the Spread Account and/or draws on
the Policy, if necessary, to pay Monthly
Principal and Monthly Interest to Class
A Certificateholders and Class I
Certificateholders as described in this
prospectus supplement. The Trustee
distributes to Class A
Certificateholders and Class I
Certificateholders amounts payable in
respect of the Offered Certificates,
pays the Monthly Servicing Fee to the
extent not previously paid, pays the
Insurance Premium and all other amounts
owing to the Insurer.
<PAGE>
The Class I Certificates -- Calculation of Notional Principal Amount
The Class I Certificates are entitled to receive interest at the Class
I Pass-Through Rate on the Notional Principal Amount of the Class I
Certificates. Solely for the purpose of calculating the amount payable to the
Class I Certificateholders, the Certificate Balance will be divided into two
notional principal components, the "PAC Component" and the "Companion
Component." The Notional Principal Amount will be the same amount as the PAC
Component, originally $256,316,037.87. The sum of the PAC Component and the
Companion Component at any time will equal the then aggregate unpaid Certificate
Balance at such time.
The Pooling and Servicing Agreement establishes the Planned Notional
Principal Amount Schedule under which principal will be allocated to the PAC
Component and the Companion Component. On each Distribution Date, the amount of
Monthly Principal allocated to Class A Certificateholders will determine the
reduction in the Notional Principal Amount as follows:
(1) to the PAC Component up to the amount necessary to reduce the
PAC Component to the amount specified in the Planned Notional
Principal Amount Schedule for such Distribution Date;
(2) to the Companion Component until the balance thereof is
reduced to zero; and
(3) to the PAC Component, without regard to the Planned Notional
Principal Amount for such Distribution Date.
As the PAC Component is reduced, the Notional Principal Amount and
payments to the Class I Certificateholders will also be reduced. The Class I
Certificates are not entitled to receive any principal payments.
<PAGE>
Planned Notional Principal Amount Schedule
Planned Notional
Distribution Date in Principal Amount
-------------------- ----------------
Initial........................................... $256,316,037.87
March 1999........................................ 248,011,123.96
April 1999........................................ 239,775,307.57
May 1999.......................................... 231,609,890.00
June 1999......................................... 223,516,192.61
July 1999......................................... 215,495,557.11
August 1999....................................... 207,549,345.80
September 1999.................................... 199,678,941.95
October 1999...................................... 191,885,749.99
November 1999..................................... 184,171,195.88
December 1999..................................... 176,536,727.37
January 2000...................................... 168,983,814.35
February 2000..................................... 161,513,949.08
March 2000........................................ 154,128,646.60
April 2000........................................ 146,829,444.98
May 2000.......................................... 139,617,905.65
June 2000......................................... 132,495,613.75
July 2000......................................... 125,464,178.45
August 2000....................................... 118,525,233.26
September 2000.................................... 111,680,436.40
October 2000...................................... 104,931,471.15
November 2000..................................... 98,280,046.14
December 2000..................................... 91,727,895.78
January 2001...................................... 85,276,780.56
February 2001..................................... 78,928,487.42
March 2001........................................ 72,684,830.15
April 2001........................................ 66,547,649.73
May 2001.......................................... 60,518,814.70
June 2001......................................... 54,600,221.57
July 2001......................................... 48,793,795.19
August 2001....................................... 43,101,489.13
September 2001.................................... 37,525,286.10
October 2001...................................... 32,067,198.34
November 2001..................................... 26,729,268.01
December 2001..................................... 21,513,567.64
January 2002...................................... 16,422,200.52
February 2002..................................... 11,457,301.11
March 2002........................................ 6,621,035.52
April 2002........................................ 1,915,601.88
May 2002.......................................... 0.00
The Class I Certificates will not be entitled to any distributions after the
Notional Principal Amount has been reduced to zero.
Class I Yield Considerations
We intend the planned amortization feature of the Class I Certificates
to reduce the uncertainty caused by prepayments of the Receivables and the
effect of prepayments to the Class I Certificates. However, the yield to
maturity of the Class I Certificates will still be very sensitive to the
prepayment experience of the Receivables, including voluntary prepayments and
prepayments due to liquidations and repurchases. You should note that you will
not be entitled to any distributions on your Class I Certificates after the
Notional Principal Amount of the Class I Certificates has been reduced to zero
and that Receivables may be repurchased due to breaches of representations. See
"Risk Factors -- Prepayments May Reduce the Yield on the Class I Certificates"
in this prospectus supplement.
<PAGE>
The following tables illustrate the significant effect that prepayments
on the Receivables have upon the yield to maturity of the Class I Certificates.
The first table assumes that the Receivables have been aggregated into four
hypothetical pools having the characteristics described therein and that the
level scheduled monthly payment for each of the four pools (which is based on
its principal balance, weighted average contract rate, weighted average
remaining term as of the Cutoff Date and its weighted average original term)
will be such that such pool will be fully amortized by the end of its weighted
average remaining term. Based on such hypothetical pools, the second table shows
the approximate hypothetical pre-tax yields to maturity of the Class I
Certificates, stated on a corporate bond equivalent basis, under five different
prepayment assumptions based on the assumed purchase price and the ABS
prepayment model 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 $ 15,139,074.32 12.962% 43 42
2 44,292,334.47 12.811 59 58
3 100,818,544.82 12.923 70 69
4 160,295,181.21 13.076 82 80
----------------- ------
Total $ 320,545,134.82 12.986%
================= ======
</TABLE>
For purposes of the table, it is also assumed that:
(1) the purchase price of the Class I Certificates is as set forth
below;
(2) the Receivables prepay monthly at the specified percentages of
ABS as set forth in the table below;
(3) prepayments representing prepayments in full of individual
Receivables are received on the last day of the month and
include a full month's interest;
(4) the Closing Date for the Offered Certificates is February 23,
1999;
(5) distributions on the Offered Certificates are made, in cash,
commencing on March 8, 1999, and on the eighth day of each
month thereafter;
(6) no defaults or delinquencies in the payment of the Receivables
are experienced; and
(7) no Receivable is repurchased for any breach of representation
or warranty or for any other reason.
<PAGE>
Sensitivity of the Yield on the Class I Certificates to Prepayments
1.0% 1.6% 1.8% 2.5% 3.0%
Price(1) ABS ABS ABS ABS ABS
--------- ------- ------ ------ ------ --------
1.102231% 26.092% 5.110% 5.110% 5.110% - 4.788%
- -------
(1) Expressed as a percentage of the Original Notional Principal Amount.
Based on the assumptions described above and assuming a purchase price
of 1.102231% at approximately 2.806% ABS, the pre-tax yield to maturity of the
Class I Certificates would be approximately 0%.
We do not expect that the Receivables will prepay at a constant rate
until maturity or that the Receivables will prepay at the same rate. The
foregoing table assumes that each Receivable bears interest at its specified
contract rate, has the same remaining amortization term, and prepays at the same
rate. In fact, the Receivables will prepay at different rates and have different
terms.
The yields set forth in the preceding table were calculated by
determining the monthly discount rates which, when applied to the assumed stream
of cash flows to be paid on the Class I Certificates, would cause the discounted
present value of such assumed cash flows to equal the assumed purchase price of
such Class I Certificates. Then we convert such monthly rates to corporate bond
equivalent rates. Our calculations do not take into account variations that may
occur in the interest rates at which you may be able to reinvest funds received
as distributions on the Class I Certificates and we do not purport to reflect
the return on any investment in the Class I Certificates when such reinvestment
rates are considered.
The Receivables will not necessarily have the characteristics assumed
above and we cannot assure you that:
(1) the Receivables will prepay at any of the rates shown in the
table or at any other particular rate or will prepay
proportionately;
(2) the pre-tax yield on the Class I Certificates will correspond
to any of the pre-tax yields shown above; or
(3) the aggregate purchase price of the Class I Certificates will
be equal to the assumed purchase price.
Because the Receivables will include Receivables that have remaining
terms to stated maturity shorter or longer than those assumed and contract rates
higher or lower than those assumed, the pre-tax yield on the Class I
Certificates will differ from those set forth above, even if all of the
Receivables prepay at the indicated constant prepayment rates.
The ABS prepayment model was used in the preceding table to model the
rate of prepayment each month on the Receivables. For a description of the ABS
model, see "Weighted Average Life of the Class A Certificates" in this
prospectus supplement.
<PAGE>
Distributions on the Class IC Certificate
The Class IC Certificate will be initially issued to the Depositor and
will entitle it to receive all funds held in the Spread Account in excess of the
Required Spread Amount on each Distribution Date after payment of all amounts
owed to the Class A Certificateholders, the Class I Certificateholders and the
Insurer. On or after the termination of the Trust, the Class IC
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 distributions to the Class A Certificateholders and the
Class I Certificateholders. See "-- Accounts" above.
The Policy
On or before the Closing Date, the Depositor, 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
the Policy. Subject to the terms of the Policy, the Insurer will unconditionally
and irrevocably guarantee the payment of Monthly Interest and Monthly Principal
up to the Policy Amount. Under the terms of the Pooling and Servicing Agreement,
after withdrawal of any amounts in the Spread Account with respect to a
Distribution Date to pay a deficiency in Monthly Interest or Monthly Principal,
the Trustee will be authorized to draw on the Policy for the benefit of the
Class A Certificateholders and the Class I Certificateholders and credit the
Certificate Account for such draws as described above under "--Distributions on
the Offered Certificates." The maximum amount that may be drawn under the Policy
on any Distribution Date is limited to the Policy Amount for such Distribution
Date. The "Policy Amount," with respect to any Distribution Date, will equal:
(1) the sum of:
(A) the lesser of: (i) the Certificate Balance (after giving
effect to any distribution of Available Funds and any
funds withdrawn from the Spread Account to pay Monthly
Principal on such Distribution Date) and (ii) the Net
Principal Policy Amount, plus
(B) Monthly Interest, plus
(C) the Monthly Servicing Fee;
less
(2) all amounts on deposit in the Spread Account on such
Distribution Date (after giving effect to any funds withdrawn
from the Spread Account to pay Monthly Principal on such
Distribution Date).
"Net Principal Policy Amount" means the initial Certificate Balance minus all
amounts previously drawn on the Policy or withdrawn from the Spread Account with
respect to Monthly Principal.
The Policy will also cover any amount distributed or required to be
distributed by the Trust to Class A Certificateholders and Class I
Certificateholders that is sought to be recovered as a voidable preference by a
trustee in bankruptcy of UAC, the Depositor 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.
<PAGE>
The Insurer will be entitled to receive the Insurance Premium and
certain other amounts on each Distribution Date as described under
"--Distributions on the Offered Certificates" and to receive amounts on deposit
in the Spread Account as described above under "--Accounts." The Insurer will
not be entitled to reimbursement of any amounts from the Certificateholders. The
Insurer's obligation under the Policy is irrevocable and unconditional. The
Insurer will have no obligation other than its obligations under the Policy to
the Class A Certificateholders, the Class I Certificateholders or the Trustee.
In the event that 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 distributions of principal and
interest on the Class A Certificates and interest on the Class I Certificates.
Any reduction in the principal balance of the Receivables due to losses on
Receivables may also result in a reduction of the Notional Principal Amount. 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 A
Certificateholders and the Class I Certificateholders may suffer a corresponding
loss. Any such losses would be borne pro rata by the Class A Certificateholders
and the Class I Certificateholders. See " -- Distributions on the Offered
Certificates."
Rights of the Insurer upon Events of Default, Amendment or Waiver
Upon the occurrence of an Event of Default, the Insurer, or the Trustee
upon the consent of the Insurer, will be entitled to appoint a successor
Servicer. In addition to the events constituting an Event of Default as
described in the accompanying prospectus, the Pooling and Servicing Agreement
will also permit the Insurer to appoint a successor Servicer and to redirect
payments made under the Receivables to the 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 Pooling 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.
THE DEPOSITOR AND UAC
UAC currently acquires receivables from over 3,700 manufacturer
franchised automobile dealerships in 32 states. UAC is an Indiana corporation,
formed in December 1993 by UAC's predecessor, Union Federal Savings Bank of
Indianapolis (the "Predecessor"), 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, 1995, 1996, 1997, and 1998, UAC and/or the Predecessor acquired
prime receivables aggregating $767 million, $995 million, $1,076 million and
$945 million, respectively, representing annual increases of 30%, 8% and an
annual decrease of 12%, respectively. Of the $2.0 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, 1998, approximately 76%
represented receivables on used cars and approximately 24% represented
receivables on new cars.
<PAGE>
THE INSURER
MBIA Insurance Corporation (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
the Insurer. The Insurer 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. The Insurer 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 the Insurer, changes in control and transactions among
affiliates. Additionally, the Insurer is required to maintain contingency
reserves on its liabilities in certain amounts and for certain periods of time.
Effective February 17, 1998, the Company acquired all of the
outstanding stock of Capital Markets Assurance Corporation ("CMAC") through a
merger with its parent CapMAC Holdings Inc. Pursuant to a reinsurance agreement,
CMAC has ceded all of its net insured risks (including any amounts due but
unpaid from third party reinsurers), as well as its unearned premiums and
contingency reserves, to the Insurer. The Company is not obligated to pay the
debts of or claims against CMAC.
The consolidated financial statements of the Insurer, a wholly owned
subsidiary of the Company, and its subsidiaries as of December 31, 1997 and
December 31, 1996 and for each of the three years in the period ended December
31, 1997, 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, 1997 and the consolidated financial statements of the Insurer
and its subsidiaries as of September 30, 1998 and for the nine month periods
ending September 30, 1998 and September 30, 1997 included in the Quarterly
Report on Form 10-Q of the Company for the period ending September 30, 1998, are
hereby incorporated by reference into this prospectus supplement and shall be
deemed to be a part hereof. Any statement contained in a document incorporated
by reference herein shall be modified or superseded for purposes of this
prospectus supplement to the extent that a statement contained herein or in any
other subsequently filed document which also is incorporated by reference herein
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 the Insurer 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
Offered Certificates shall be deemed to be incorporated by reference into this
prospectus supplement and to be a part hereof from the respective dates of
filing such documents.
<PAGE>
The tables below present selected financial information of the Insurer
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities ("SAP") as well as GAAP:
SAP
-------------------------------------------
December 31, September 30,
1997 1998
------------ -------------
(Audited) (Unaudited)
(in millions)
Admitted Assets $5,256 $6,318
Liabilities 3,496 4,114
Capital and Surplus 1,760 2,204
GAAP
-------------------------------------------
December 31, September 30,
1997 1998
------------ -------------
(Audited) (Unaudited)
(in millions)
Assets $5,988 $7,439
Liabilities 2,624 3,268
Shareholder's Equity 3,364 4,171
Copies of the financial statements of the Insurer incorporated by reference
herein and copies of the Insurer's 1997 year-end audited financial statements
prepared in accordance with SAP are available, without charge, from the Insurer.
The address of the Insurer is 113 King Street, Armonk, New York 10504. The
telephone number of the Insurer is (914) 273-4545.
The Insurer does not accept any responsibility for the accuracy or
completeness of this prospectus supplement or any information or disclosure
contained herein, or omitted herefrom, other than with respect to the accuracy
of the information regarding the Insurer set forth under the heading "The
Insurer." Additionally, the Insurer makes no representation regarding the Class
A Certificates or the advisability of investing in the Offered Certificates.
THE POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY
FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
Moody's Investors Service, Inc. rates the claims paying ability of the
Insurer "Aaa."
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. rates the claims paying ability of the Insurer "AAA."
Fitch IBCA, Inc. (formerly known as Fitch Investors Service, L.P.)
rates the claims paying ability of the Insurer "AAA."
Each rating of the Insurer should be evaluated independently. The
ratings reflect the respective rating agency's current assessment of the
creditworthiness of the Insurer 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.
<PAGE>
The above ratings are not recommendations to buy, sell or hold the
Offered Certificates, 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
Offered Certificates. The Insurer does not guaranty the market price of the
Offered Certificates nor does it guaranty that the ratings on the Offered
Certificates will not be revised or withdrawn.
REPORTS TO CERTIFICATEHOLDERS
Unless and until definitive certificates are issued (which will occur
only under the limited circumstances described herein), Harris Trust and Savings
Bank, as Trustee, will provide monthly and annual statements concerning the
Trust and the Offered Certificates to Cede & Co., the nominee of The Depository
Trust Company, as registered holder of the Offered Certificates. 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 Offered Certificates may be obtained by
contacting the Servicer at Union Acceptance Corporation, 250 North Shadeland
Avenue, Indianapolis, Indiana 46219 (telephone (317) 231-2717).
ERISA CONSIDERATIONS
Subject to the considerations set forth under "ERISA Considerations" in
the accompanying prospectus, the Offered Certificates may be eligible for
purchase by an employee benefit plan or an individual retirement account (a
"Plan") subject to Title I of ERISA or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"). A fiduciary of a Plan must determine that the
purchase of an Offered Certificate 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. For additional information
regarding treatment of the Offered Certificates 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 Offered Certificates, dated February
11, 1999, the Depositor has agreed to sell and each of the underwriters named
below (the "Underwriters") severally agreed to purchase the principal amount of
the Offered Certificates set forth below its name below:
<TABLE>
<CAPTION>
NationsBanc Montgomery Bear,
Securities LLC Stearns & Co. Inc. Total
-------------- ------------------ -----
<S> <C> <C> <C>
Principal Amount
of Class A-1 Certificates........ $30,600,000.00 $30,600,000.00 $61,200,000.00
Principal Amount
of Class A-2 Certificates........ $33,762,500.00 $33,762,500.00 $67,525,000.00
Principal Amount
of Class A-3 Certificates........ $48,025,000.00 $48,025,000.00 $96,050,000.00
Principal Amount
of Class A-4 Certificates........ $19,975,000.00 $19,975,000.00 $39,950,000.00
Principal Amount
of Class A-5 Certificates........ $27,910,067.41 $27,910,067.41 $55,820,134.82
Notional Principal Amount
of Class I Certificates.......... $256,316,037.87 $0.00 $256,316,037.87
</TABLE>
<PAGE>
In the underwriting agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all the Offered
Certificates offered by the Depositor.
The Underwriters propose to offer part of the Offered Certificates
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 0.075% of the denominations of the Class A-1 Certificates,
0.125% of the denominations of the Class A-2 Certificates, 0.150% of the
denominations of the Class A-3 Certificates, 0.175% of the denominations of the
Class A-4 Certificates, 0.175% of the denominations of the Class A-5
Certificates or 0.225% of the gross proceeds of the Class I Certificates. The
Underwriters may allow and such dealers may reallow a concession not in excess
of 0.050% of the denominations of the Class A-1 Certificates, 0.075% of the
denominations of the Class A-2 Certificates, 0.100% of the denominations of the
Class A-3 Certificates, 0.125% of the denominations of the Class A-4
Certificates, 0.125% of the denominations of the Class A-5 Certificates or
0.175% of the gross proceeds of the Class I Certificates.
The Depositor 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
Offered Certificates, as permitted by applicable laws and regulations. However,
the Underwriters are not obligated to make a market in the Offered Certificates
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 Offered Certificates.
In connection with this offering, the Underwriters may over-allot or
effect transactions which stabilize or maintain the market price of the Offered
Certificates 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
Depositor, UAC and their affiliates.
The Depositor will receive proceeds of $319,806,720.44 from the sale of
the Class A Certificates (representing approximately 99.769638% of the principal
amount of the Class A Certificates) and $2,835,973.55 from the sale of the Class
I Certificates (representing approximately 1.106436% of the Notional Principal
Amount of the Class I Certificates) after paying the underwriting discount of
$718,856.31 (representing approximately 0.2243% of the principal amount of the
Class A Certificates). Additional offering expenses are estimated to be
$470,000.
LEGAL OPINIONS
Certain legal matters relating to the Offered Certificates will be
passed upon for the Depositor by Barnes & Thornburg, Indianapolis, Indiana, and
for the Underwriters by Cadwalader, Wickersham & Taft. Certain federal income
tax consequences with respect to the Offered Certificates will be passed upon
for the Depositor by Cadwalader, Wickersham & Taft.
<PAGE>
EXPERTS
The consolidated balance sheets of MBIA Insurance Corporation and
Subsidiaries as of December 31, 1997 and December 31, 1996 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, 1997,
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.
<PAGE>
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-19
Available Funds................................................... S-8, S-26
Certificates...................................................... S-4
Certificate Balance............................................... S-6
Class A Certificateholders........................................ S-5
Class A Certificates.............................................. S-5
Class A Monthly Interest.......................................... S-27
Class A-1 Certificate Balance..................................... S-6
Class A-1 Certificateholders...................................... S-5
Class A-1 Certificates............................................ S-4
Class A-1 Final Scheduled Distribution Date....................... S-6
Class A-1 Monthly Interest........................................ S-27
Class A-1 Pass-Through Rate....................................... S-5
Class A-2 Certificate Balance..................................... S-6
Class A-2 Certificateholders...................................... S-5
Class A-2 Certificates............................................ S-4
Class A-2 Final Scheduled Distribution Date....................... S-6
Class A-2 Monthly Interest........................................ S-27
Class A-2 Pass-Through Rate....................................... S-5
Class A-3 Certificate Balance..................................... S-6
Class A-3 Certificateholders...................................... S-5
Class A-3 Certificates............................................ S-4
Class A-3 Final Scheduled Distribution Date....................... S-6
Class A-3 Monthly Interest........................................ S-28
Class A-3 Pass-Through Rate....................................... S-5
Class A-4 Certificate Balance..................................... S-6
Class A-4 Certificateholders...................................... S-5
Class A-4 Certificates............................................ S-4
Class A-4 Final Scheduled Distribution Date....................... S-6
Class A-4 Monthly Interest........................................ S-28
Class A-4 Pass-Through Rate....................................... S-5
Class A-5 Certificate Balance..................................... S-6
Class A-5 Certificateholders...................................... S-5
Class A-5 Certificates............................................ S-4
Class A-5 Final Scheduled Distribution Date....................... S-6
Class A-5 Monthly Interest........................................ S-28
Class A-5 Pass-Through Rate....................................... S-5
Class I Certificateholders........................................ S-7
Class I Certificates.............................................. S-4
Class I Monthly Interest.......................................... S-28
Class I Pass-Through Rate......................................... S-7
Class IC Certificate.............................................. S-4
Class IC Certificateholder........................................ S-9
Clean-Up Call Date................................................ S-10
Closing Date...................................................... S-4
CMAC.............................................................. S-35
Code.............................................................. S-36
Companion Component............................................... S-7, S-30
Company........................................................... S-35
<PAGE>
Cutoff Date....................................................... S-5
Defaulted Receivable.............................................. S-29
Depositor......................................................... S-4
Determination Date................................................ S-30
Distribution Date................................................. S-5, S-30
ERISA............................................................. S-10
Financed Vehicles................................................. S-5
GAAP.............................................................. S-35
Insurance Premium................................................. S-29
Insurance Agreement............................................... S-9
Insurer........................................................... S-10, S-35
Monthly Interest.................................................. S-6, S-29
Monthly Principal................................................. S-6, S-29
Monthly Servicing Fee............................................. S-4
Net Principal Policy Amount....................................... S-10, S-34
Notional Principal Amount......................................... S-7
Offered Certificates.............................................. S-4
Optional Sale..................................................... S-10
Original Notional Principal Amount................................ S-7
PAC Component..................................................... S-7, S-30
Payahead Account.................................................. S-25
Plan.............................................................. S-36
Planned Notional Principal Amount................................. S-7
Planned Notional Principal Amount Schedule........................ S-7
Policy............................................................ S-5, S-9
Policy Amount..................................................... S-9, S-33
Pool Balance...................................................... S-6
Pooling and Servicing Agreement................................... S-4
Predecessor....................................................... S-34
Principal Distribution Sequence................................... S-29
Rating Agency or Rating Agencies.................................. S-10
Receivables....................................................... S-4
Record Date....................................................... S-5
Required Spread Amount............................................ S-9
SAP............................................................... S-35
Servicer.......................................................... S-4
Spread Account.................................................... S-8
Tier II Receivables............................................... S-13
Trust ......................................................... S-4
Trustee........................................................... S-4
UAC............................................................... S-4
UAFC.............................................................. S-9
Underwriters .................................................... S-37
<PAGE>
$320,545,134.82
UACSC 1999-A AUTO TRUST
UAC Securitization Corporation
Depositor
[LOGO]
Union Acceptance Corporation
Servicer
$61,200,000.00 Class A-1 Money Market Automobile Receivable Backed Certificates
$67,525,000.00 Class A-2 Automobile Receivable Backed Certificates
$96,050,000.00 Class A-3 Automobile Receivable Backed Certificates
$39,950,000.00 Class A-4 Automobile Receivable Backed Certificates
$55,820,134.82 Class A-5 Automobile Receivable Backed Certificates
Class I Interest Only Automobile Receivable Backed Certificates
----------
PROSPECTUS SUPPLEMENT
----------
NationsBanc Montgomery
Securities LLC
Bear, Stearns & Co. Inc.
----------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with different or additional information.
We are not offering the Offered Certificates in any state where the
offer is not permitted.
Dealers will deliver this prospectus supplement and prospectus when
acting as underwriters of the Offered Certificates with respect to their unsold
allotments or subscriptions. In addition, all dealers selling the Offered
Certificates will deliver this prospectus supplement and prospectus until May
13, 1999.
