<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998 Commission File No. 33-80055
Volkswagen Credit Auto Receivables Corporation
on behalf of
Volkswagen Credit Auto Master Trust
(Issuer of the Volkswagen Credit Auto Master Trust Floating Rate Dealer Loan
Backed Certificates, Series 1996-1 (the "Certificates"))
(Exact name of registrant as specified in its charter)
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<S> <C>
State of Delaware 38-2748796
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3800 Hamlin Road 48326
Auburn Hills, Michigan (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (248) 340-4938
</TABLE>
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Form 8-A was filed with the Securities and Exchange Commission (the
"Commission") registering the Series of Certificates pursuant to Section 12(g)
of the Securities Exchange Act of 1934 (the "Act").
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Act") during the preceding 12 months (or for such period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES x * NO
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State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked price of
such stock, as of a specific date within 60 days prior to the date of filing.
(See definition of affiliate in Rule 405, 17 C.F.R. 230.405):
NOT APPLICABLE
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* On May 9, 1997, the registrant was issued a no-action letter (the "No-
Action Letter") by the commission with respect to certain of the registrant's
reporting requirements pursuant to Section 13 or 15(d) of the Act. This Form
10-K has been prepared in accordance with the terms of such No-Action Letter.
<PAGE>
FORM 10-K (Pursuant to No-Action Letter)
PART 1
Item 1. Business.
The Volkswagen Credit Auto Master Trust (the "Trust") was created
pursuant to the Pooling and Servicing Agreement (the "Pooling Agreement")
dated February 29, 1996 among Volkswagen Credit Auto Receivables
Corporation (the (Company") as seller, VW Credit, Inc., as servicer, and
Citibank, N.A., as trustee (the "Trustee"). The Trust assets include
wholesale receivables ( the "Receivables") generated from time to time in a
portfolio of revolving financing arrangements with automobile dealers to
finance their automobile inventory and collections on the Receivables. Such
property was obtained by the Company pursuant to the Receivables Purchase
Agreement dated as of February 26, 1999 between the Company, as purchaser,
and VW Credit, Inc. as seller.
The Company has registered with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and sold to the general
public the Series 1996-1, Floating Rate Auto Loan Asset Backed Certificates
in the initial principal amount of $375,000,000. The Monthly Certificates
contain information relating to the Receivables and the accounts from which
the Receivables arise (the "Accounts") and are prepared by the Servicer and
delivered to the Trustee pursuant to Section 3.04 of the Pooling Agreement.
The report issued by PricewaterhouseCoopers L.L.P. in connection with the
servicing activities of the Servicer is attached hereto as Exhibit 99.2.
The Monthly Certificates containing information relating to the Receivables
and the Accounts for the Collection Periods from and including January 1998
through December 1998 are incorporated by reference from the registrant's
Current Reports on Form 8-K filed with the Commission on February 27, 1998,
March 25, 1998, April 29, 1998, May 21, 1998, June 24, 1998, July 22, 1998,
August 20, 1998, September 23, 1998, October 23, 1998, November 18, 1998,
December 22, 1998, January 19, 1999, respectively.
Item 2. Properties.
For information regarding the property of the Trust, see the
Pooling and Servicing Agreement and the Current Reports on Form 8-K
incorporated by reference herein. For additional information regarding the
Certificates, see Exhibit 99.
Item 3. Legal Proceedings.
Nothing to Report.
Item 4. Submission of Matters To A Vote Of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
(a) To the best knowledge of the registrant, there is no
established public trading market for the Certificates.
(b) The Certificates are represented by one or more certificates
registered in the name of Cede & Co. ("Cede"), the nominee
of The Depository Trust Company ("DTC").
(c) Omitted pursuant to the No-Action Letter.
Item 6. Selected Financial Data.
Omitted pursuant to the No-Action Letter.
<PAGE>
Item 7. Management's Discussion And Analysis Of Financial Condition And
Results Of Operation.
Omitted pursuant to the No-Action Letter.
Item 8. Financial Statements and Supplementary Data.
Omitted pursuant to the No-Action Letter.
Item 9. Changes in and Disagreements On Accounting And Financial Disclosure.
None.
PART III
Item 12. Security Ownership Of Certain Beneficial Owners And Management.
(a) The Certificates are represented by one or more certificates
registered in the name of Cede, the nominee of DTC. An investor holding an
interest in the Trust is not entitled to receive a certificate representing
such interest except in limited circumstances set forth in the Pooling
Agreement. Accordingly, Cede is the sole holder of record of Certificates
which it holds on behalf of brokers, dealers, bank, and other direct
participants in the DTC system. Such direct participants may hold
Certificates for their own accounts or for the accounts of their customers.
The name and address of Cede is Cede & Co., c/o The Depository Trust
Company, Seven Hanover Square, New York, NY 10004.
Item 13. Certain Relationships And Related Transactions.
Nothing to Report.
PART IV
Item 14. Exhibits, Financial Statement Schedules, And Reports On Form 8-K.
(a) Omitted pursuant to the No-Action Letter.
(b) The registrant has filed Current Reports on Form 8-K
containing certain financial information with regard to the Trust, the
Receivables and the Accounts, in accordance with the No-Action Letter,
on February 27, 1998, March 25, 1998, April 29, 1998, May 21, 1998,
June 24, 1998, July 22, 1998, August 20, 1998, September 23, 1998,
October 23, 1998, November 18, 1998, December 22, 1998, January 19,
1999.
(c) 3.1 The Articles of Incorporation and By-Laws of the
registrant are incorporated by reference from Exhibits
3.1 and 3.2, respectively, of the registrant's
Registration Statement on Form S-3 (File No. 33-80055).
4.1 The Pooling Agreement and the Series 1996-1 Supplement
thereto are incorporated by reference from Exhibits 2.2
and 2.3, respectively, of the registrant's Form 8A
filed with the Commission on September 13, 1996.
5.1 The opinion of Cravath, Swaine & Moore with respect to
certain matters involving the Certificates is
incorporated by reference from Exhibit 5.1 of the
registrant's Registration Statement on Form S-3 (File
No. 33-80055).
8.1 The opinion of Cravath, Swaine & Moore with respect to
federal tax matters s incorporated by reference from
Exhibit 8.1 of the registrant's Registration Statement
on Form S-3 (File No. 33-80055).
<PAGE>
8.2 The opinion of Honigman, Miller Schwartz & Cohn with
respect to Michigan state tax matters is incorporated
by reference from Exhibit 8.2 of the registrant's
Registration Statement on Form S-3 (File No. 33-80055).
23.1 The consent of Cravath, Swaine & Moore is incorporated
by reference from Exhibit 23.1 of the registrant's
Registration Statement on Form S-3 (File 33-80055).
23.2 The Consent of Honigman, Miller, Schwartz & Cohn is
incorporated by reference from Exhibit 23.2 of the
registrant's Registration Statement on Form S-3 (File
No. 33-80055).
99.1 The Annual Certificate of VW Credit, Inc., as Servicer
is attached hereto as Exhibit 99.1
99.2 The report on the activities of VW Credit, Inc., as
Servicer, prepared by PricewaterhouseCoopers L.L.P.,
pursuant to Section 3.06 of the Pooling Agreement is
Attached hereto as Exhibit 99.2.
99.3 The Monthly Certificates containing information
relating to the Receivables and the Accounts for the
Collection Periods from and including January 1998
through December 1998 are incorporated by reference
from the registrant's Current Reports on Form 8-K filed
with the Commission on February 27, 1998, March 25,
1998, April 29, 1998, May 21, 1998, June 24, 1998, July
22, 1998, August 20, 1998, September 23, 1998, October
23, 1998, November 18, 1998, December 22, 1998, January
19, 1999, respectively.
<PAGE>
EXHIBIT 99.1
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FORM OF ANNUAL SERVICER'S CERTIFICATE
VW CREDIT, INC.
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VOLKSWAGEN CREDIT, AUTO MASTER TRUST
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The undersigned, a duly authorized representative of VW Credit, Inc.
("VWCI"), as Servicer, pursuant to the Pooling and Servicing Agreement dated as
of February 29, 1996 (as amended and supplemented, the "Agreement"), by and
among Volkswagen Auto Receivables Corporation, as seller, VWCI, as Servicer, and
Citibank, N.A., as Trustee, do hereby certify that:
1. VWCI is, as of the date hereof, the Servicer under the Agreement.
2. The Undersigned is a Servicing Officer and is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to the
Trustee, any Agent and any Enhancement Providers.
3. A Review of the activities of the Servicer during the period from
the initial Closing Date through the calender year ended December 31, 1998 and
of its performance under the Agreement was conducted under my supervision.
4. Based on such review, the Servicer has, to the best of my
knowledge, performed in all material respects all of its obligations under the
Agreement throughout such period and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph 5
below.
5. None.
Capitalized terms used but not defined herein are used as defined in
the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this Nineteenth day of March, 1999.
_________________________
Name: Dennis Tack
Title:Controller
<PAGE>
Exhibit 99.2
VOLKSWAGEN CREDIT AUTO MASTER TRUST 1996-1
ANNUAL DISTRIBUTION STATEMENT: 1998 ACTIVITY
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<S> <C> <C> <C> <C> <C> <C>
15-Feb-98 15-Mar-98 15-Apr-98 15-May-98 15-Jun-98 15-Jul-98
a.Aggregate Amount of Collections $251,700,605.27 $224,144,244.72 $273,424,969.23 $301,712,223.21 $278,759,675.77 $345,943,798.74
Aggregate Amount of Interest
Collections $ 3,840,507.97 $ 3,973,652.46 $ 3,486,290.53 $ 3,712,205.93 $ 3,934,230.10 $ 4,057,530.81
Aggregate Amount of Principle
Collections $247,860,097.30 $220,170,572.26 $269,938,678.70 $298,000,017.28 $274,825,445.67 $341,886,267.93
Investment Proceeds $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
b.Series Allocation Percentage 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Floating Allocation Percentage 68.99% 73.92% 71.58% 72.13% 68.44% 70.30%
Fixed Allocation Percentage N/A N/A N/A N/A N/A N/A
c.Total Amount Distributed on
Series 1996-1 $ 1,977,851.56 $ 1,627,031.25 $ 1,827,343.75 $ 1,817,578.13 $ 1,878,164.06 $ 1,817,578.13
d.Amount of Such Distribution
Allocable to Principal on 1996-1$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
e.Amount of Such Distribution
Allocable to Interest on 1996-1 $ 1,977,851.56 $ 1,627,031.25 $ 1,827,343.75 $ 1,817,578.13 $ 1,878,164.06 $ 1,817,578.13
f.Investor Default Amount $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
g.Draw Amount $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
h.Investor Charge Offs $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Amounts of Reimbursements $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
i.Monthly Servicing Fee 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
j.Expected Controlled
Distribution Amount $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
k.Invested Amount $375,000,000.00 $375,000,000.00 $375,000,000.00 $375,000,000.00 $375,000,000.00 $375,000,000.00
l.Pool Factor 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
m.Available Subordinated Amount $ 63,944,652.02 $ 62,672,469.14 $ 68,606,381.69 $ 68,031,229.66 $ 68,658,005.28 $ 73,644,010.88
n.Reserve Fund Balance $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00
o.Principle Funding Account
Balance $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Yield Supplement Account
Balance $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00
</TABLE>
<PAGE>
VOLKSWAGEN CREDIT AUTO MASTER TRUST 1996-1
ANNUAL DISTRIBUTION STATEMENT: 1998 ACTIVITY
<TABLE>
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<S> <C> <C> <C> <C>
15-Aug-98 15-Sep-98 15-Oct-98 15-Nov-98
Aggregate Amount of Collections $353,518,575.72 $323,143,332.43 $318,663,692.83 $296,466,789.31
Aggregate Amount of Interest
Collections $ 4,233,100.66 $ 4,031,844.26 $ 4,136,277.42 $ 3,638,076.14
Aggregate Amount of Principal
Collections $349,285,475.06 $319,111,488.17 $314,526,815.41 $292,828,713.17
Investment Proceeds $ 0.00 $ 0.00 $ 0.00 $ 0.00
Series Allocation Percentage 100.00% 100.00% 100.00% 100.00%
Floating Allocation Percentage 69.99% 69.36% 76.86% 80.06%
Fixed Allocation Percentage N/A N/A N/A N/A
Total Amount Distributed on
Series 1996-1 $ 1,999,335.94 $ 1,752,273.65 $ 1,796,825.00 $ 1,836,196.67
Amount of Such Distribution
Allocable to Principal on 1996-1 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Amount of Such Distribution
Allocable to Interest on 1996-1 $ 1,999,335.94 $ 1,752,273.65 $ 1,796,825.00 $ 1,836,196.67
Investor Default Amount $ 0.00 $ 0.00 $ 0.00 $ 0.00
Draw Amount $ 0.00 $ 0.00 $ 0.00 $ 0.00
Investor Charge Offs $ 0.00 $ 0.00 $ 0.00 $ 0.00
Amounts of Reimbursements $ 0.00 $ 0.00 $ 0.00 $ 0.00
Monthly Servicing Fee 1.00% 1.00% 1.00% 1.00%
Expected Controlled
Distribution Amount $ 0.00 $ 0.00 $ 0.00 $ 0.00
Invested Amount $375,000,000.00 $375,000,000.00 $370,679,848.79 $375,000,000.00
Pool Factor 100.00% 100.00% 98.85% 100.00%
Available Subordinated Amount $ 77,413,638.47 $ 84,970,949.69 $ 77,469,560.68 $ 64,895,745.30
Reserve Fund Balance $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00
Principal Funding Account
Balance $ 0.00 $ 0.00 $ 0.00 $ 0.00
Yield Supplement Account
Balance $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00
<CAPTION>
<S> <C> <C> <C>
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15-Dec-98 15-Jan-99 Total
Aggregate Amount of Collections $263,635,575.29 $334,583,713.94 $3,565,696,576.46
Aggregate Amount of Interest
Collections $ 3,019,881.31 $ 3,341,639.63 $ 45,405,237.22
Aggregate Amount of Principal
Collections $260,615,693.98 $331,242,074.31 $3,520,291,339.24
Investment Proceeds $ 0.00 $ 0.00 $ 0.00
Series Allocation Percentage 100.00% 100.00% 100.00%
Floating Allocation Percentage 78.37% 78.30% 73.19%
Fixed Allocation Percentage N/A N/A N/A
Total Amount Distributed on
Series 1996-1 $ 1,642,671.77 $ 1,839,162.19 $ 21,832,012.08
Amount of Such Distribution
Allocable to Principal on 1996-1 $ 0.00 $ 0.00 $ 0.00
Amount of Such Distribution
Allocable to Interest on 1996-1 $ 1,642,671.77 $ 1,839,162.19 $ 21,832,012.08
Investor Default Amount $ 0.00 $ 0.00 $ 0.00
Draw Amount $ 0.00 $ 0.00 $ 0.00
Investor Charge Offs $ 0.00 $ 0.00 $ 0.00
Amounts of Reimbursements $ 0.00 $ 0.00 $ 0.00
Monthly Servicing Fee 1.00% 1.00% 1.00%
Expected Controlled
Distribution Amount $ 0.00 $ 0.00 $ 0.00
Invested Amount $375,000,000.00 $375,000,000.00 $ 375,000,000.00
Pool Factor 100.00% 100.00% 100.00%
Available Subordinated Amount $ 61,368,209.05 $ 80,625,091.69 $ 71,274,995.30
Reserve Fund Balance $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00
Principal Funding Account
Balance $ 0.00 $ 0.00 $ 0.00
Yield Supplement Account
Balance $ 1,875,000.00 $ 1,875,000.00 $ 1,875,000.00
</TABLE>
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PRICEWATERHOUSECOOPERS
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PRICEWATERHOUSECOOPERS LLP
INDEPENDENT ACCOUNTANT'S REPORT 400 Renaissance Center
Detroit, MI 48243-1507
Telephone (313) 446 7100
Facsimile (313) 446 7117
To the Board of Directors of
VW Credit, Inc. as servicer under
the Pooling and Servicing Agreement
dated February 29, 1996 and
Citibank, N.A. as Trustee:
We have examined management's assertion about VW Credit, Inc.'s compliance with
the minimum servicing standards identified in the Mortgage Bankers Association
of America's Uniform Single Attestation Program for Mortgage Bankers ("USAP")
------- ------ ----------- ------- --- -------- -------
for the year ended December 31, 1998 included in the accompanying management
assertion to the extent the procedures in such program are applicable to the
Pooling and Servicing Agreement dated February 29, 1996. As Program Step I.,
four relating to Escrow Accounts, Program Step III., three and four relating to
Tax, Insurance and Late Payment Penalties, Program Step V., two, three and four
relating to Adjustable Rate Mortgages and Program Step VII., one relating to
Fidelity Bond and Error and Omissions Policies are not applicable to the
servicing obligations set forth in the Pooling and Servicing Agreement, we did
not perform the related procedures. Management is responsible for VW Credit,
Inc.'s compliance with those minimum servicing standards. Our responsibility is
to express an opinion on management's assertion about the entity's compliance
based on our examination.
Our examination was made in accordance with the standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about VW Credit, Inc.'s compliance with the
minimum servicing standards and performing other such procedures as we
considered necessary in the circumstances. We believe that our examination
provides a reasonable basis for our opinion. Our examination does not provide a
legal determination on VW Credit, Inc.'s compliance with the minimum servicing
standards.
In our opinion, management's assertion that VW Credit, Inc. complied with the
aforementioned minimum servicing standards for the year ending December 31, 1998
is fairly stated, in all material respects.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
February 5, 1999
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[LOGO] VOLKSWAGEN
CREDIT
[LOGO] AUDI
Financial Services
3800 Hamlin Road
Auburn Hills, MI 48326
February 5, 1999 Tel. (248) 340-5885
Fax (248) 340-5387
PricewaterhouseCoopers LLP
400 Renaissance Center
Detroit, MI 48243
Ladies and Gentleman:
As of and for the year ended December 31, 1998, VW Credit, Inc. has complied in
all material respects with the applicable minimum servicing standards set forth
in the Mortgage Bankers Association of America's Uniform Single Attestation
------- ------ -----------
Program for Mortgage Bankers and the Pooling and Servicing Agreement dated
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February 29, 1996.
Sincerely,
/s/ Wolfgang J. Rasper
Wolfgang J. Rasper
Chief Financial Officer, VW Credit, Inc.
