<PAGE> 1
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 Commission File Number
February 28, 1997 33-80699
- ------------------------- ----------------------
Reliable Auto Receivables
Grantor Trust, 1996-1
- -------------------------------------------------------------------------------
(Name of Trust Fund issuing 5.80% Asset Backed Certificates, Class A
and 0.72% Asset Backed Certificates, Class I)
Reliable Financial Services, Inc.
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(Exact name of Registrant as specified in its charter)
Puerto Rico 66-0436232
-------------------------------- ------------------
(State or other jurisdiction (IRS employer
or incorporation or organization) Identification no.)
1101 Munoz Rivera Avenue
Rio Piedras, Puerto Rico 00908
------------------------------- -----------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (787) 759-2174
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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 during the preceding 12 months (or for such shorter 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant: None.
Number of shares of common stock of the Registrant outstanding as of February
28, 1997: Not applicable.
<PAGE> 2
2
DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated herein by reference are as follows:
1. The Prospectus filed pursuant to Rule 424(b) under the Securities
Act of 1933 on February 28, 1996 (File No. 33-80699).
2. Monthly statements sent to Certificateholders with the distributions
for the period ranging from March 1996 to August 1997, incorporated as
an exhibit to the Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission on August 27, 1997.
3. Articles of Incorporation of Registrant (incorporated by reference
to Exhibit 3.1 to Registration Statement on Form S-1 (File No. 33-
80699)).
4. Registrant's Bylaws (incorporated by reference to Exhibit 3.2 to
Registration Statement on Form S-1 (File No. 33-80699)).
5. The Pooling and Servicing Agreement (incorporated by reference to
Exhibit 4.1 to Regitration Statement on Form S-1
(File No. 33-80699)).
PART I
ITEM 1. BUSINESS
Not applicable.
ITEM 2. PROPERTIES
The information furnished by the Servicer on behalf of the
Trust, with regard to aggregate principal amount of
delinquent receivables, is hereby incorporated by reference
to the monthly distribution date statements sent to the
certificateholders for the distribution dates occurring on
March 15, 1996 through February 15, 1997.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings with respect
to the Registrant either as Originator or Servicer, or to the
best of our knowledge, the Issuer or the Trustee, with
respect to the Issuer, other than ordinary routine
litigation, if any, incidental to the duties of the Issuer,
the Trustee, or the Registrant under the Pooling and
Servicing Agreement.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No vote or consent of the Class A or Class I
Certificateholders has been solicited or required during the
period covered by this Report.
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3
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) There is no established public trading market for
the Certificates representing undivided interest in
the pool established by the Registrant of retail
installment sale contracts secured by new and used
automobiles and light-duty trucks.
(b) At February 28, 1997, the approximate number of
holders of record of the Certificates was as follows:
<TABLE>
<CAPTION>
Number of
Record
Holders
---------
<S> <C>
Reliable Auto Receivables Grantor Trust 1996-1
5.80% Asset Backed Certificates, Class A
0.72% Asset Backed Certificates, Class I..... 14
</TABLE>
(c) Not applicable.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Not applicable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Not applicable.
ITEM 11. EXECUTIVE COMPENSATION
Not applicable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Not applicable.
<PAGE> 4
4
(b) Not applicable.
(c) Not applicable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Not applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) 1. (1) Pursuant to the Pooling and Servicing
Agreement, the Servicer is required to deliver
an annual statement as to compliance with the
provisions of the Pooling and Servicing
Agreement and certain other matters (the "Annual
Officer's Certificate"). The Servicer is also
required to cause a firm of independent public
accountants to deliver an annual report as to
compliance with the servicing provisions of
the Pooling and Servicing Agreement (the "Annual
Report of the Firm of Accountants"). The Annual
Officer's Certificate for the Issuer's fiscal
year ended on February 28, 1997 and the Annual
Report of the Firm of Accountants for said
fiscal year are each included as Exhibits to
this Form 10-K.
(2) Monthly statements sent to Certificate-
holders with the distributions for the period
ranging from March 1996 to February 1997,
incorporated herein by reference as an exhibit
to the Registrant's Current Report on Form 8-K
filed with the Securities and Exchange
Commission on August 27, 1997.
2. Not applicable.
3. The required exhibits are as follows:
3(i)(a) Articles of Incorporation of Registrant
(incorporated by reference to Exhibit 3.1 to
Registration Statement on Form S-1 (File
No. 33-80699)).
3(i)(b) Certificate of Merger dated February 21, 1997
with respect to the merger of Normerge
Corporation with and into Reliable Financial
Services, Inc. which amended Articles of
Incorporation of Registrant.
3(ii) Registrant's Bylaws (incorporated by
reference to Exhibit 3.2 to Registration
Statement on Form S-1 (File No. 33-80699)).
4. The Pooling and Servicing Agreement
(incorporated by reference to Exhibit 4.1 to
Amendment No. 1 to Regitration Statement on
Form S-1 (File No. 33-80699)).
99.1 Annual Officer's Certificate
99.2 Annual Report of the Firm of Accountants
<PAGE> 5
5
(b) Reports on Form 8-K filed during the last quarter of
the period covered by this Report: None.
(c) Exhibits required to be filed by the Registrant
pursuant to item 601 of Regulation S-K are listed in
the Exhibit Index immediately following the signature
page hereof.
(d) Not applicable.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT
TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT
No annual report, proxy statement, form of proxy or other soliciting material
has been sent to Certificateholders.
<PAGE> 6
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
RELIABLE FINANCIAL SERVICES, INC., as
originator of RELIABLE AUTO RECEIVABLES
TRUST 1996-1, issuer of the 5.80% Asset
Backed Certificates, Class A and 0.72%
Asset Backed Certificates, Class I
By: Reliable Financial Services, Inc.,
as Servicer*
By: /s/ Jose Arbona Lago
----------------------------
Name: Jose Arbona Lago
Title: Executive Vice President
Date: August 27, 1997
* This report is being filed by the Servicer on behalf of the
Reliable Auto Receivables Grantor Trust 1996-1 (the "Trust").
The Trust does not have officers or directors.
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Page
- ----------- ----
<S> <C> <C>
3(i)(b) Certificate of Merger dated February 21, 1997
with respect to the merger of Normerge
Corporation with and into Reliable Financial
Services, Inc., which amended Articles of
Incorporation of Registrant
99.1 Annual Officer's Certificate of Reliable
Financial Services, Inc. for the year
ended February 28, 1997
99.2 Annual Accountants' Report on servicing for
year ended February 28, 1997
</TABLE>
<PAGE> 1
EXHIBIT 3 (i)(b)
CERTIFICATE OF MERGER
Between
RELIABLE FINANCIAL SERVICES, INC.
a Puerto Rico corporation
(the surviving corporation)
and
NORMERGE CORPORATION
a Puerto Rico corporation
(the merged corporation)
WHEREAS, NORMERGE CORPORATION, a Puerto Rico corporation ("Merger
Co.") and a wholly-owned subsidiary of Norwest Corporation ("Norwest"), was
incorporated by a Certificate of Incorporation filed in the office of the
Secretary of State of the Commonwealth of Puerto Rico on December 10, 1996, and
said corporation is now a corporation subject to and governed by the provisions
of the Puerto Rico General Corporation Act of 1995, as amended (the "Puerto
Rico Corporation Act"). Merger Co. has authorized capital stock of 1,000 shares
of common stock having a par value of $.10 per share ("Merger Co. Common
Stock"), of which 10 shares were outstanding as of the date hereof; and
WHEREAS, RELIABLE FINANCIAL SERVICES, INC., a Puerto Rico corporation
(hereinafter sometimes called "RELIABLE" and sometimes called the "surviving
corporation") was incorporated by a Certificate of Incorporation filed in the
office of the Secretary of State of the Commonwealth of Puerto Rico on July 1,
1987 and said corporation is now a corporation subject to and governed by the
provisions of the Puerto Rico Corporation Act. RELIABLE has authorized capital
stock of (i) 40,000 shares of Common Stock, par value $100.00 per share
("RELIABLE Common Stock"), of which 40,000 shares were outstanding and no
shares were held in the treasury as of September 30, 1996; and (ii) 1,000
shares of Preferred Stock, 12% cumulative, participating and convertible with a
par value of $1,000.00 per share, of which no shares were outstanding and no
shares were held in the treasury as of September 30, 1996 (Merger Co. and
RELIABLE being hereafter sometimes referred to as the "constituent
corporation"); and
WHEREAS, each of the constituent corporations has approved, adopted,
certified and authenticated an Agreement and Plan of Reorganization dated
November 13, 1996, as amended by an Amendment to Agreement dated December 4,
1996 (such agreement as amended being hereafter called the "Reorganization
Agreement") in accordance with Article 10.01 of the Puerto Rico Corporation
Act; and
WHEREAS, the directors, or a majority of them, of each of the
constituent corporations respectively deem it advisable for the welfare and
advantage of said corporations and for the best interests of the respective
shareholders of said corporations that said corporations merge and that Merger
Co. be merged with and into RELIABLE, with RELIABLE continuing as the surviving
<PAGE> 2
2
corporation, on the terms and conditions hereinafter set forth in accordance
with the provisions of the Puerto Rico Corporation Act, which statute permits
such merger; and
WHEREAS, it is the intent of the constituent corporations to effect a
merger which qualifies as a tax-free reorganization pursuant to Sections
1112(g)(1)(A) and 1112(g)(2)(C) of the Puerto Rico Internal Revenue Code of
1994, as amended;
NOW, THEREFORE, the majority of the shareholders of each of the
constituent corporations hereto having approved the merger described herein,
the constituent corporations hereto, in consideration of the premises and of
the mutual covenants and agreements contained herein or in the Reorganization
Agreement and of the benefits to accrue to the constituent corporations hereto,
have agreed in the Reorganization Agreement that Merger Co. shall be merged
with and into RELIABLE pursuant to the laws of the Commonwealth of Puerto Rico,
and do hereby prescribe and set forth the terms and conditions of the merger of
Merger Co. with and into RELIABLE, the mode of carrying said merger into
effect, the manner and basis of exchanging the issued and outstanding shares of
RELIABLE Common Stock for shares of common stock of Norwest of the par value of
$1-2/3 per share ("Norwest Common Stock"), and such other provisions with
respect to said merger as are deemed necessary or desirable, as follows:
FIRST: At the time of merger, Merger Co. shall be merged with and into
RELIABLE, one of the constituent corporations, which shall be the surviving
corporation, and the separate existence of Merger Co. shall cease and the name
of the surviving corporation shall be Reliable Financial Services, Inc.
SECOND: The Certificate of Incorporation of RELIABLE at the time of
merger shall be amended as set forth below and, as so amended, shall be the
Certificate of Incorporation of the surviving corporation until further amended
according to law:
The Certificate of Incorporation of this corporation shall be, and it
hereby is amended by deleting sub-divisions 6(a) and 6(b) of article
EIGHTH in their entirety.
Article SECOND is amended to reflect that the registered office of the
surviving corporation in the Commonwealth of Puerto Rico will be
located at 361 San Francisco Street, Penthouse, Old San Juan, Puerto
Rico 00901, and the name of the registered agent of RELIABLE at such
address is CT Corporation System.
THIRD: The By-Laws of RELIABLE at the time of merger shall be and
remain the By-Laws of the surviving corporation until amended according to the
provisions of the Certificate of Incorporation of the surviving corporation or
of said By-Laws.
FOURTH: The directors of Merger Co. at the time of merger shall be the
persons listed below, which persons shall be and remain the directors of the
surviving corporation and shall hold office from the time of merger until their
respective successors are elected and qualify:
Jaime Marti
<PAGE> 3
3
Faye L. Kunz
Steve R. Wagner
FIFTH: The officers of RELIABLE at the time of merger shall continue
and remain the officers of the surviving corporation and shall hold office from
the time of merger until their respective successors are elected or appointed
and qualify.
SIXTH: The manner and basis of converting the shares of RELIABLE
Common Stock into cash or shares of Norwest Common Stock shall be as follows:
1. Each of the shares of RELIABLE Common Stock outstanding immediately
prior to the time of merger (other than shares as to which statutory
dissenters' rights have been exercised) shall at the time of merger,
by virtue of the merger and without any action on the part of the
holder or holders thereof, be converted into and exchanged for the
number of shares or Norwest Common Stock determined by dividing the
Adjusted Norwest Shares by the number of shares of RELIABLE Common
Stock then outstanding. The "Adjusted Norwest Shares" shall be a
number equal to $38,340,000 divided by the Norwest Measurement Price.
The "Norwest Measurement Price" is defined as $43.74.
2. As soon as practicable after the merger becomes effective, each
holder of a certificate for shares of RELIABLE Common Stock
outstanding immediately prior to the time of merger shall be entitled,
upon surrender of such certificate for cancellation to the surviving
corporation or to Norwest Bank Minnesota, National Association, as the
designated agent of the surviving corporation (the "Agent"), to
receive a new certificate for the number of whole shares of Norwest
Common Stock to which such holder shall be entitled on the basis set
forth in paragraph 1 above. Until so surrendered each certificate
which, immediately prior to the time of merger, represented shares of
RELIABLE Common Stock shall not be transferable on the books of the
surviving corporation but shall be deemed to evidence the right to
receive (except for the payment of dividends as provided below)
ownership of the number of whole shares of Norwest Common Stock into
which such shares of RELIABLE Common Stock have been converted on the
basis above set forth; provided, however, until the holder of such
certificate for RELIABLE Common Stock shall have surrendered the same
for exchange as above set forth, no dividend payable to holders of
record of Norwest Common Stock as of any date subsequent to the
effective date of merger shall be paid to such holder with respect to
the Norwest Common Stock, if any, represented by such certificate,
but, upon surrender and exchange thereof as herein provided, there
shall be paid by the surviving corporation or the Agent to the record
holder of such certificate for Norwest Common Stock issued in exchange
therefor an amount with respect to such shares of Norwest Common Stock
equal to all dividends that shall have been paid or become payable to
holders of record of Norwest Common Stock between the effective date
of merger and the date of such exchange.
3. If between the date of the Reorganization Agreement and the time of
merger, shares of Norwest Common Stock shall be changed into a
different number of shares or a different class of shares by reason of
any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustments, or if a stock dividend thereon
shall be declared with a record date within such period, then the
number of shares of Norwest Common Stock exchanged, if any, into which
a share of RELIABLE Common Stock shall be exchanged on
<PAGE> 4
4
the basis above set forth, will be appropriately and proportionately
adjusted so that the number of such shares of Norwest Common Stock for
which a share of RELIABLE Common Stock shall be exchanged will equal
the number of shares of Norwest Common Stock which holders of shares
of RELIABLE Common Stock would have received pursuant to such
reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or stock dividend had the record date thereof
been immediately following the time of merger.
4. No fractional shares of Norwest Common Stock and no certificates or
scrip certificates therefor shall be issued to represent any such
fractional interest, and any holder of a fractional interest shall be
paid an amount of cash equal to the product obtained by multiplying
the fractional share interest to which such holder is entitled by the
Norwest Measurement Price.
5. Each share of Merger Co. Common Stock issued and outstanding at the
time of merger shall be converted into and exchanged for shares of the
surviving corporation after the time of merger.
SEVENTH: The merger provided for by the Reorganization Agreement and
this Certificate of Merger (the "Certificate") shall be effective on the date
on which this Certificate shall be delivered to and filed with the Secretary of
State of the Commonwealth of Puerto Rico.
The merger shall become effective as of 11:59 p.m. (the "time of
merger") on the effective date of merger.
EIGHTH: At the time of merger:
1. The separate existence of Merger Co. shall cease, and the
corporate existence and identity of RELIABLE shall continue as the
surviving corporation.
2. The merger shall have the other effects prescribed by Article
10.09 and Article 10.11 of the Puerto Rico Corporation Act.
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
1. The Reorganization Agreement will be available at the registered
office of RELIABLE, the surviving corporation.
2. RELIABLE, the surviving corporation, will provide a copy of the
Reorganization Agreement to any shareholder of the constituent
corporations upon request and free of charge.
3. If at any time the surviving corporation shall consider or be
advised that any further assignment or assurance in law or other
action is necessary or desirable to vest, perfect or confirm in the
surviving corporation the title to any property or rights of Merger
Co. acquired or to be acquired as a result of the merger provided for
herein or in the Reorganization Agreement, the proper officers and
directors of RELIABLE and Merger Co. may execute and deliver such
deeds, assignments and assurances in law and take such other action as
may be
<PAGE> 5
5
necessary or proper to vest, perfect or confirm title to such property
or right in the surviving corporation and otherwise carry out the
purposes of this Certificate.
4. This Certificate and the legal relations among the parties hereto
shall be governed by and construed in accordance with the laws of the
Commonwealth of Puerto Rico.
5. This Certificate cannot be altered or amended except pursuant to
an instrument in writing signed by both of the constituent
corporations.
IN WITNESS WHEREOF, this Certificate is signed in the corporate name
by the undersigned officer and its respective corporate seal affixed hereto,
pursuant to authority duly given by its Board of Directors, all as of the 21st
day of February, 1997.
RELIABLE FINANCIAL SERVICES, INC.,
as the surviving corporation
By: /s/ Jaime Marti
-------------------------
President
(Corporate Seal)
Attest: /s/ Jose Arbona Lago
----------------------
Secretary
<PAGE> 1
EXHIBIT 99.1
OFFICER'S CERTIFICATE
OF
RELIABLE FINANCIAL SERVICES, INC.
The undersigned hereby CERTIFIES on behalf of Reliable Financial
Services, Inc., a corporation duly organized and existing under the laws of the
Commonwealth of Puerto Rico, that:
(1) I am duly elected and qualified as President of Reliable Financial
Services, Inc. This Certificate is provided to Banco Popular de Puerto Rico
(the "Bank") as per Section 3.10 of that certain Deed of Constitution of Trust
and Pooling and Servicing Agreement (Reliable Auto Receivables Grantor Trust
1996-1) dated February 29, 1996. Capitalized terms used herein shall have the
meaning provided in such Agreement unless the context otherwise requires; and
(2) a review of the activities of the Servicer during the period
comprised between the Closing Date and the date hereof and of the Servicer's
performance under the Agreement has been made under my supervision; and
(3) to the best of my knowledge, based on such review, the
Servicer has fulfilled all of its obligations under the Agreement
throughout such period.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of the
Corporation, this 30th day of June, 1996.
RELIABLE FINANCIAL SERVICES, INC.
/s/ Jaime Marti
---------------------------
Jaime Marti
President
<PAGE> 1
EXHIBIT 99.2
[LETTERHEAD OF COOPERS & LYBRAND]
May 29, 1996
Independent Certified Public Accountant's Report
on Applying Agreed-Upon Procedures
To: Reliable Financial Services, Inc.,
Financial Security Assurance, Inc.,
Banco Popular de Puerto Rico,
Standard & Poor's,
Moody's Investors Service, Inc., and
the Certificate Holder's as said term
is defined in the Agreement
We have performed the procedures enumerated below, which were agreed to by
Reliable Financial Services, Inc. ("Reliable"), Financial Security Assurance,
Inc., Banco Popular de Puerto Rico, ("BPPR"), Standard & Poor's, Moody's
Investors Service, Inc., and the Certificate Holder's as said term is defined
in the Agreement solely to assist you with respect to the requirements of Deed
Number One -- Deed of Constitution of Trust and Pooling Agreement (the
"Agreement"), Section 3.11, effective February 28, 1996 and relating to the
servicing of the accounts receivable under the Agreement for the first two
collection periods.
This agreement to apply agreed-upon procedures was performed in accordance with
the standards established by the American Institute of Certified Public
Accountants. The sufficiency of these procedures is solely the responsibility
of the specified users of the report. Consequently, we make no representations
regarding the sufficiency of the procedures described below either for the
purpose for which this report has been requested or for any other purpose.
Unless otherwise indicated, the following conventions have been adopted in
presenting our procedures and findings:
The term "read," when used in conjunction with the data tapes, means
we electronically read the specified information on the tapes and
imported such information into our relational database software.
The term "compare" means compared information contained in separate
files and found such information to be in agreement.
<PAGE> 2
The term "agree" means traced information contained in one file to a
similar information in a separate file and found such information to
be in agreement.
Our procedures and findings are as follows:
A) Automated Procedures
1) Obtained from Reliable Financial Services, Inc. tape or tapes
of the following files:
a) all accounts comprising the Grantor Trust, as of the
sale dates (Master File T0).
b) all accounts comprising the Grantor Trust, as of April 30,
1996 (Master File T1).
c) all transactions to Grantor Trust accounts recorded during
March through April 1996 (Transaction File).
2) Read the relevant data fields from the above-referenced Tapes and
imported the data into our relational database software.
3) Compare account numbers contained on the Master File T0 with
those contained on Master File T1 and found them to be in
agreement. No exceptions were noted as result of the procedure.
4) Agree the Transaction File account numbers to Master File T0.
No exceptions were noted as result of the procedure.
5) Use the Transaction File to obtain the daily payments amounts for
all Grantors Trust accounts comprising the period from March 1,
1996 through April 30, 1996.
B) Manual Procedures
1) From the daily payments obtained in step A(5) above select on a
random basis a sample of 20 daily payments and agree the daily
liquidation proceeds for Banco Popular de Puerto Rico ( Master
File Tl) to the bank statement (BPPR account number 106-035363).
We found no exception as a result of the above procedure.
2) For the sample of 20 daily payments selected above ascertain that
the liquidation proceeds deposited in BPPR account number
106-035363 were transferred to BPPR account number 106-035339
(the "Collection Account") as evidenced by the bank statement no
later than the business day following receipt by Reliable from
the Customers.
We found no exception as a result of the above procedure.
<PAGE> 3
We were not engaged to, and did not, perform an examination, the objective of
which would be the expression of an opinion on management's assertion.
Accordingly, we do not express such an opinion. Had we performed additional
procedures, other matters might have come to our attention that would have been
reported to you.
This report is intended solely for the use of Reliable Financial Services,
Inc., Financial Security Assurance, Inc., Banco Popular de Puerto Rico,
Standard & Poor's, Moody's Investors Service, Inc., and the Certificate
Holder's as said term is defined in the Agreement and should not be used by
those who have not agreed to the procedures and taken responsibility for the
sufficiency of the procedures for their purposes.
The terms of our engagement are such that we have no obligation to update this
letter.
Coopers & Lybrand is independent of the Seller and the Servicer within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
Very truly yours,
/s/
-----------------
Coopers & Lybrand
<PAGE> 4
EXHIBIT 99.2
[LETTERHEAD OF COOPERS & LYBRAND]
May 29, 1997
Independent Certified Public Accountant's Report
on Applying Agreed-Upon Procedures
To: Reliable Financial Services, Inc.,
Financial Security Assurance, Inc.,
Banco Popular de Puerto Rico,
Standard & Poor's,
Moody's Investors Service, Inc., and
the Certificate Holder's as said term
is defined in the Agreement
We have performed the procedures enumerated below, which were agreed to by
Reliable Financial Services, Inc. ("Reliable"), Financial Security Assurance,
Inc., Banco Popular de Puerto Rico ("BPPR"), Standard & Poor's, Moody's
Investors Service, Inc., and the Certificate Holder's as said term is defined
in the Agreement solely to assist you with respect to the requirements of Deed
Number One -- Deed of Constitution of Trust and Pooling Agreement (the
"Agreement"), Section 3.11 effective February 28, 1996 and relating to the
servicing of the accounts receivable under the Agreement from May 1, 1996
through April 30, 1997.
This agreement to apply agreed-upon procedures was performed in accordance with
the standards established by the American Institute of Certified Public
Accountants. The sufficiency of these procedures is solely the responsibility
of the specified users of the report. Consequently, we make no representations
regarding the sufficiency of the procedures described below either for the
purpose for which this report has been requested or for any other purpose.
Unless otherwise indicated, the following conventions have been adopted in
presenting our procedures and findings:
The term "read," when used in conjunction with the data tapes, means
we electronically read the specified information on the tapes and
imported such information into our relational database software.
The term "compare" means compared information contained in separate
files and found such information to be in agreement.
<PAGE> 5
The term "agree" means traced information contained in one file to
similar information contained in a separate file and found such
information to be in agreement.
Our procedures and findings are as follows:
A) AUTOMATED PROCEDURES
1) Obtained from Reliable tape or tapes of the following files:
a) all accounts comprising the Grantor Trust, as of the sale
dates (Master File T0);
b) all accounts comprising the Grantor Trust, as of April 30,
1997 (Master File T1); and
c) all transactions to Grantor Trust accounts recorded during
May 1, 1996 through April 30, 1997 (Transaction File).
2) Read the relevant data fields from the above-referenced Tapes and
imported the data into our relational database software.
3) Compare account numbers contained on the Master File T0 with
those contained on Master File T1 and found them to be in
agreement. No exceptions were noted as a result of the procedure.
4) Agree the Transaction File account numbers to Master File T0.
No exceptions were noted as a result of the procedures.
5) Use the Transaction File to obtain the daily payment amounts for
all Grantor Trust accounts comprising the period from May 1, 1996
through April 30, 1997.
B) MANUAL PROCEDURES
1) From the daily payments obtained in step A(5) above select on a
random basis a sample of 40 daily payments and agree the daily
liquidation proceeds for Banco Popular de Puerto Rico (Master
File T1) to the bank statement (BPPR account number 106-035339).
We found no exceptions as a result of the above procedures.
2) For the sample of 40 daily payments selected above determine if
the liquidation proceeds were deposited in BPPR account number
106-035339 (the "Collection Account") no later than the business
day following receipt of the proceeds by Reliable from the
Customers by reference to the bank statement.
We found no exceptions as a result of the above procedures.
We were not engaged to, and did not, perform an examination, the objective of
which would be the expression of an opinion on management's assertion.
Accordingly, we do not express such an opinion. Had we performed additional
procedures, other matters might have come to our attention that would have been
reported to you.
<PAGE> 6
This report is intended solely for the use of Reliable, Financial Security
Assurance, Inc., Banco Popular de Puerto Rico, Standard & Poor's, Moody's
Investors Service, Inc., and the Certificate Holder's as said term is defined
in the Agreement and should not be used by those who have not agreed to the
procedures and taken responsibility for the sufficiency of, the procedures for
their purposes.
The terms of our engagement are such that we have no obligation to update this
letter.
Coopers & Lybrand is independent of the Seller and the Servicer within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
Very truly yours,
/s/
-----------------
Coopers & Lybrand
