SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION 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 Nos. 333-29495 and 333-29495-01
PARTNERS FIRST RECEIVABLES FUNDING, LLC
(Exact Name of Registrant as Specified in its Charter)
PARTNERS FIRST CREDIT CARD MASTER TRUST
(Issuer with respect to the Securities)
Delaware 52-2072056
(State of Organization) (I.R.S. Employee Identification No.)
900 Elkridge Landing Road, Suite 301 21090
Linthicum, Maryland (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (410) 855-8600
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each Class Name of Exchange on which each
to be so Registered Class is to be Registered
None Not Applicable
Securities Registered Pursuant to Section 12(g) of the Act:
None
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
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
This Annual Report of Form 10-K is filed in reliance on a series of
no-action letters issued by the Office of Chief Counsel, Division of
Corporate Finance of the Securities and Exchange Commission (the
"Division"), stating that the Division would raise no objection if issuers
of master trust asset-backed securities generally file a monthly Report on
Form 8-K summarizing the performance of the assets of the master trust and
file an Annual Report on Form 10-K in the manner set forth below in order
to comply with Sections 13, 15(d) and 16 of the Securities Exchange Act of
1934, as amended. Accordingly, responses to certain Items have been omitted
from or modified in this Annual Report on Form 10-K.
PART I
Item 1. Business
The Partners First Credit Card Master Trust (the "Trust") was formed
pursuant to the Pooling and Servicing Agreement, dated as of January 29,
1998 (as may have been amended, restated or supplemented, the "Pooling and
Servicing Agreement") among Partners First Receivables Funding, LLC (the
"Registrant" or the "Transferor"), as Transferor, Partners First Holdings,
LLC (the "Servicer"), as Servicer, and The Bank of New York (the
"Trustee"), as Trustee. The Trust's only business is to act as a passive
conduit to permit investment in a pool of consumer credit card account
receivables.
Item 2. Properties
The property of the Trust includes a portfolio of receivables (the
"Receivables") arising under certain credit card accounts (the "Accounts")
purchased by Partners First Receivables, LLC ("PFR") in the ordinary course
of its business from BankBoston (NH), National Association and Harris Trust
and Savings Bank. The Receivables consist of indebtedness owing from
obligors under such Accounts. Pursuant to the Amended and Restated Purchase
Agreement, dated June 26, 1998, between PFR and the Transferor, PFR sold to
the Transferor the Receivables arising under the Accounts on such date, and
has and will sell additional Receivables as they arise under the Accounts
thereafter until the termination of the Trust. Pursuant to the Pooling and
Servicing Agreement, the Transferor in turn transferred the Receivables
arising under the Accounts to the Trust on such day, and has and will
transfer additional Receivables as they arise under the Accounts thereafter
until the termination of the Trust. Information related to the performance
of the Receivables during 1998 is set forth in the Annual Reports filed as
Exhibits 99.1, 99.2 and 99.3 to this Annual Report on Form 10-K.
Year 2000 Compliance. The Servicer has informed the Transferor that
it has (i) reviewed and assessed its computer applications which are
related to or involved in the origination, collection, management or
servicing of the Receivables that could be adversely affected by the "Year
2000 Problem" (that is, the risk that computer applications used by the
Servicer may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000
Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable.
Based on the foregoing, the Transferor believes that all such
computer applications that are material to the Servicer's business and
operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1,
2000 (that is, be "Year 2000 Compliant"), except to the extent that a
failure to do so could not reasonably be expected to have a material
adverse effect on the Trust or on the origination, collection, management
or servicing activities of the Servicer with respect to the Receivables.
Pursuant to agreements between the Servicer and certain third-party
service providers, including First Data Resources Inc. ("FDR"), the
Accounts and the Receivables are primarily serviced by such third-party
service providers. The potential for the Year 2000 Problem to have any
effect on the servicing of the Accounts and the Receivables would therefore
most likely be based on a failure of such a third-party service provider,
particularly FDR, to be Year 2000 Compliant. Any such failure could result
in a delay in collecting Receivables, which in turn could result in a delay
in making payments on the Securities. The Transferor and the Servicer have
been monitoring and will continue to monitor the initiatives and efforts
undertaken by such third-party service providers, including FDR, to become
Year 2000 Compliant. Based on representations made by these companies, the
Transferor expects these companies to be Year 2000 Compliant on a timely
basis. FDR's parent company, First Data Corp., has additionally made public
representations that, among other things, its management believes that its
Year 2000 Compliance effort is on schedule overall and that its
mission-critical systems, i.e., systems directly serving its clients or
clients' customers and having a material impact on its client service in a
normative mode of operation if not working properly, will be Year 2000
Compliant in a timely manner.
All forward-looking statements regarding Year 2000 Compliance are
inherently uncertain as they are based on various expectations and
assumptions concerning future events and are subject to numerous risks and
uncertainties which could cause actual events or results to differ
materially from those projected. Important factors upon which the
Transferor's and the Servicer's Year 2000 forward-looking statements are
premised include: (a) retention of employees and contractors working on
Year 2000 Compliance projects; (b) no material disruption of
telecommunications, data transmission networks, payment networks,
government services, utilities or other infrastructure services; (c) no
unexpected failures on the part of third-party service providers; (d) no
undiscovered sabotage of systems or program codes affecting the Servicer's
systems; and (e) no undiscovered material flaws in the testing procedures
undertaken by the Servicer in its efforts to become Year 2000 Compliant.
Item 3. Legal Proceedings
None
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
Investor Securities are held and delivered in book-entry form through
the facilities of the Depository Trust Company("DTC"), a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The only definitive Investor Securities
are held by Cede & Co., the nominee of DTC.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 26, 1999, 100% of the Investor Securities were held in the
nominee name of Cede & Co. for beneficial owners
As of March 26, 1999, Partners First Funding, LLC ("PFF") owned 100%
of the Supplemental Security, issued pursuant to the Supplemental Security
Supplement to the Pooling and Servicing Agreement, dated as of January 29,
1998, among the Transferor, the Servicer and the Trustee. The Supplemental
Security was sold by the Transferor to PFF pursuant to the Supplemental
Security Purchase Agreement, dated as of January 29, 1998, between the
Transferor and PFF. The Supplemental Security represents certain beneficial
ownership interests in the assets of the Trust as provided in the Pooling
and Servicing Agreement.
As of March 26, 1999, the Transferor owned 100% of the Transferor
Security, which represents beneficial ownership of a residual interest in
the assets of the Trust as provided in the Pooling and Servicing Agreement.
Item 13. Certain Relationships and Related Transactions
None
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
The following documents are filed as part of this Annual Report on
Form 10-K:
(a) Exhibits
Exhibit Description
99.1 Annual Certificate of Servicer pursuant to Section
3.5 of the Pooling and Servicing Agreement
99.2 Annual Servicing Reports of Independent Accountants
pursuant to Section 3.6(a) of the Pooling and
Servicing Agreement
99.3 Annual Report of Independent Accountants on Applying
Agreed-Upon Procedures pursuant to Section 3.6(b)
of the Pooling and Servicing Agreement
(b) Reports on Form 8-K
Current Reports on Form 8-K are filed promptly, but in no event more
than 15 days, after each distribution to Securityholders attaching as
an exhibit thereto the related Monthly Servicing Report in response
to Item 5 (Other Events). Such reports were filed on July 9,
September 2, September 18, October 16, November 20 and December 30,
1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrants have duly caused this report to be
signed on their behalf by the undersigned hereunto duly authorized.
PARTNERS FIRST RECEIVABLES FUNDING, LLC
(REGISTRANT)
DATED: March 30, 1999 By: /s/ MARK J. NORWICZ
--------------------------------------
Name: Mark J. Norwicz
Title: Treasurer
PARTNERS FIRST CREDIT CARD MASTER TRUST
(CO-REGISTRANT)
DATED: March 30, 1999 By: PARTNERS FIRST RECEIVABLES FUNDING, LLC
(Originator of the Co-Registrant)
By: /s/ MARK J. NORWICZ
--------------------------------------
Name: Mark J. Norwicz
Title: Treasurer
EXHIBIT INDEX
Exhibit No.
- -----------
99.1 Annual Certificate of Servicer pursuant to Section 3.5 of
the Pooling and Servicing Agreement
99.2 Annual Servicing Reports of Independent Accountants
pursuant to Section 3.6(a) of the Pooling and Servicing
Agreement
99.3 Annual Report of Independent Accountants on Applying
Agreed-Upon Procedures pursuant to Section 3.6(b) of the
Pooling and Servicing Agreement
[LETTERHEAD OF PARTNERS FIRST]
ANNUAL SERVICER'S CERTIFICATE
PARTNERS FIRST HOLDINGS, LLC
PARTNERS FIRST CREDIT CARD MASTER TRUST
The undersigned, a duly authorized representative of Partners
First Holdings, LLC, as Servicer ("Holdings"), pursuant to the Amended and
Restated Pooling and Servicing Agreement dated as of June 26, 1998 (as
amended and supplemented, the "Agreement"), among Partners First
Receivables Funding, LLC, as Transferor, Holdings, as Servicer, and The
Bank of New York, as Trustee, does hereby certify that:
1. Holdings is, as of the date hereof, the Servicer under the Agreement.
Capitalized terms used in this Certificate have their respective
meanings as set forth in the Agreement.
2. The undersigned is a Servicing Officer who is duly authorized pursuant
to the Agreement to execute and deliver this Certificate to the
Trustee.
3. A review of the activities of the Servicer during the 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 its obligations under the Agreement
throughout such year and no default in the performance of such
obligations has occurred or is continuing except as set forth in
paragraph 5 below.
5. The following is a description of each default in the performance of
the Servicer's obligations under the provisions of the Agreement known
to me to have been made by the Servicer during the year ended December
31, 1998 which sets forth in detail (i) the nature of each such
default, (ii) the action taken by the Servicer, if any, to remedy each
such default and (iii) the current status of each such default: None.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this 30th day of March, 1999.
PARTNERS FIRST HOLDINGS, LLC
Servicer
By: /s/ Mark Norwicz
-------------------------
Name: Mark Norwicz
Title: Treasurer
[LETTERHEAD OF ERNST & YOUNG LLP]
Report of Independent Accountants
Partners First Holdings, LLC
900 Elkridge Landing Road, Suite 300
Linthicum, Maryland 21090-2925
and
The Bank of New York
101 Barclay Street
New York, New York 10286
Partners First Credit Card Master Trust
We have examined management's assertion that Partners First Holdings, LLC's
("PFH") controls over the functions performed as servicer of the Partners
First Credit Card Master Trust ("Trust"), including all Series of the Trust
as specified in Attachment A, are effective, as of December 31, 1998, in
providing reasonable assurance that Trust assets are safeguarded against
loss from unauthorized use or disposition and that transactions are
executed in accordance with management's authorization in conformity with
the Pooling and Servicing Agreement dated as of June 26, 1998, as amended
and restated (the "Agreement"), and the applicable Pooling and Servicing
Agreement Supplement for each Series, as specified in Attachment A (the
"Agreement Supplements" together with the Agreement, the "Agreements"),
between PFH as Servicer and The Bank of New York as Trustee, on behalf of
the Securityholders of the Trust, and are recorded properly to permit the
preparation of the required financial reports. This assertion is included
in the accompanying report by management titled, "Report of Management on
Credit Card Trust Internal Control and Pooling and Servicing Agreement
Compliance" (the "Report"). Management is responsible for PFH's controls
over the functions performed as servicer of the Trust. Our responsibility
is to express an opinion on management's assertion based on our
examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly,
included obtaining an understanding of the controls over the functions
performed by PFH as servicer of the Trust, testing and evaluating the
design and operating effectiveness of those controls, and such other
procedures as we considered necessary in the circumstances. We believe that
our examination provides a reasonable basis for our opinion.
Because of inherent limitations in any control, errors or fraud may occur
and not be detected. Also, projections of any evaluation of the controls
over the functions performed by PFH as servicer of the Trust to future
periods are subject to the risk that the controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
controls may deteriorate.
In our opinion, management's assertion, that PFH's controls over the
functions performed as servicer of the Trust are effective, as of December
31, 1998, in providing reasonable assurance that Trust assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization in
conformity with the Agreements, between PFH as Servicer and The Bank of New
York, as Trustee on behalf of the Securityholders of the Trust, and are
recorded properly to permit the preparation of the required financial
reports, is fairly stated, in all material respects, based upon the
following criteria specified in the Report:
o The controls provide reasonable assurance that funds collected are
remitted to the Trustee in accordance with the Agreements.
o The controls provide reasonable assurance that Trust assets are
segregated from those retained by PFH in accordance with the
Agreements.
o The controls provide reasonable assurance that expenses incurred
by the Trust are calculated and remitted in accordance with the
Agreements.
o The controls provide reasonable assurance that the addition of
accounts to the Trust are authorized in accordance with the
Agreements.
o The controls provide reasonable assurance that Trust assets
amortizing out of the Trust are calculated in accordance with the
Agreements.
o The controls provide reasonable assurance that monthly Trust
reports generated in the form of "Monthly Servicer Reports" and
provided to the Trustee are reviewed by the Treasurer prior to
distribution.
o The controls provide reasonable assurance that monthly Trust
reports generated in the form of "Monthly Servicer Reports"
contain all required information per section 5.2 of the
Agreements.
This report is intended solely for the use of the management committee and
management of PFH and should not be referred to or distributed for any
purpose to anyone who is not authorized to receive such information as
specified in the Agreements. However, this report is a matter of public
record as a result of being included as an exhibit to the annual report on
Form 10-K prepared by PFH and filed with the Securities and Exchange
Commission on behalf of Partners First Master Credit Card Trust and its
distribution is not limited.
/s/ Ernst & Young LLP
March 22, 1999
Attachment A
Agreement
Trust Supplement Date Servicing Period
- -------------------------------------------------------------------------
Partners First Credit June 26, 1998 June 26, 1998 to
Card Master Trust December 31, 1998
Series 1998-2
Partners First Credit June 26, 1998 June 26, 1998 to
Card Master Trust December 31, 1998
Series 1998-3
Partners First Credit December 4, 1998, December 8, 1998 to
Card Master Trust amended December 31, 1998
Series 1998-4 and restated January
12, 1999
[LETTERHEAD OF ERNST & YOUNG LLP]
Report of Independent Accountants
Partners First Holdings, LLC
900 Elkridge Landing Road, Suite 300
Linthicum, Maryland 21090-2925
and
The Bank of New York
101 Barclay Street
New York, New York 10286
Partners First Credit Card Master Trust
We have examined management's assertion that Partners First Holdings, LLC
("PFH') was in material compliance with the covenants and conditions of
sections 2.9, 2.10, 2.12, 2.13, 3.2, 3.4(a) and (b), 3.5, 3.6(a) and (b),
4.2, 4.3 and 4.4 of the Pooling and Servicing Agreement dated as of June
26, 1998, as amended and restated (the "Agreement"), and the applicable
sections of the Series' Pooling and Servicing Agreement Supplements (the
"Agreement Supplements" together with the Agreement, the "Agreements"),
specified in Attachment A, between PFH as Servicer, Partners First
Receivables Funding, LLC as Transferor and the Bank of New York as Trustee,
during the compliance periods specified in Attachment A. Management's
assertion is included in the accompanying report by management titled,
"Report of Management on Credit Card Trust Internal Control and Pooling and
Servicing Agreement Compliance" (the "Report"). Management is responsible
for PFH's compliance with those requirements. Our responsibility is to
express an opinion on management's assertion about PFH's compliance based
on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly,
included examining, on a test basis, evidence about PFH's compliance with
those requirements and performing such other 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 of PFH's compliance with specified requirements.
In our opinion, management's assertion, that it believes that PFH was in
material compliance with the covenants and conditions of the sections in
the Agreement and the Agreement Supplements, referred to above, during the
compliance periods specified in Attachment A, is fairly stated, in all
material respects.
This report is intended solely for the use of the management committee and
management of PFH and should not be referred to or distributed for any
purpose to anyone who is not authorized to receive such information as
specified in the Agreements. However, this report is a matter of public
record as a result of being included as an exhibit to the annual report on
Form 10-K prepared by PFH and filed with the Securities and Exchange
Commission on behalf of Partners First Credit Card Master Trust and its
distribution is not limited.
/s/ Ernst & Young LLP
March 22, 1999
Attachment A
<TABLE>
<CAPTION>
Agreement Servicing Agreement Supplement
Trust Supplement Date Compliance Period Covenants and Conditions
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners First June 26, 1998 June 26, 1998 to 3.1, 4.1c(i) and (ii), 4.2,
Credit Card December 31, 1998 4.3(a)(i), 4.5, 4.6, 4.7,
Master Trust 4.10, 4.12, 4.15(a) and (b), 5.1(a)
Series 1998-2 - (e), 5.1(h),
5.2(b), 6.1(g)
Partners First June 26, 1998 June 26, 1998 to 3.1, 4.1c(i) and (ii), 4.2,
Credit Card December 31, 1998 4.3(a)(i), 4.5, 4.6, 4.7,
Master Trust 4.10, 4.12, 4.15(a) and (b), 5.1(a)
Series 1998-3 - (e), 5.1(h),
5.2(b), 6.1(g)
Partners First December 4, 1998, December 8, 1998 to 3.1, 4.1c(i) and (ii), 4.2,
Credit Card amended December 31, 1998 4.3(a)(i), 4.5, 4.6, 4.7,
Master Trust and restated January 4.10, 4.12, 4.13, 5.1(a) - (c),
Series 1998-4 12, 1999 5.1(f), 5.2(b),
6.1(g)
</TABLE>
[LETTERHEAD OF PARTNERS FIRST]
Report of Management of Credit Card Trust Internal Control and
Pooling and Servicing Agreement Compliance
Credit Card Trust Internal Control
Partners First Holdings, LLC ("PFH" or the "Company") is responsible for
establishing and maintaining effective controls over the functions
performed as servicer of the Partners First Credit Card Master Trust (the
"Trust"), Series 1998-2, 1998-3 and 1998-4. These controls
are designed to provide reasonable assurance to the Company's management
and management committee that Trust assets are safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization in conformity with the Pooling
and Servicing Agreements between PFH as Servicer and The Bank of New York
as Trustee, and the applicable Pooling and Servicing Agreement Supplements
(the "Agreement Supplements" together with the Agreement, "Agreements") as
specified in Appendix I, and are recorded properly to permit the
preparation of the required financial reports.
There are inherent limitations in any control including the possibility of
human error and circumvention or overriding of the control. Accordingly,
even effective controls can provide only reasonable assurance with respect
to the achievement of any objectives of controls. Further, because of
changes in conditions, the effectiveness of controls may vary over time.
The Company has determined that the objectives of controls with respect to
servicing and reporting of sold loans are to provide reasonable, but not
absolute assurance that:
o Funds collected are remitted to the Trustee in accordance with the
Agreements.
o Trust assets are segregated from those retained by PFH in accordance
with the Agreements.
o Expenses incurred by the Trust are calculated and remitted in
accordance with the Agreements.
o The additions of accounts to the Trusts are authorized in accordance
with the Agreements.
o Monthly Trust reports generated in the form of "Monthly Servicer
Reports" and provided to the Trustee are reviewed by the Treasurer
prior to distribution.
o Monthly Trust reports generated in the form of "Monthly Servicer
Reports" contain all information required per section 5.2 of the
Agreement Supplements.
The Company has assessed its controls over the functions performed as
servicer of the Trust in relation to these criteria. Based upon this
assessment, the Company believes that, as of December 31, 1998, its
controls over the functions performed as servicer of the Trust are
effective in providing reasonable assurance that Trust assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization in
conformity with the agreements between PFH and The Bank of New York and are
recorded properly to permit the preparation of the required financial
reports.
Pooling and Servicing Agreement Compliance
The Company is responsible for complying with the covenants and conditions
of the Agreements listed in Appendix I to this report. The Company assessed
its compliance with the relevant covenants and conditions identified in
Appendix I for each of the Agreements. Based upon this assessment, PFH was
in material compliance with the relevant covenants and conditions of the
Agreements identified in Appendix I for each of the Agreements during the
periods specified in Appendix I.
March 22, 1999
Partners First Holdings, LLC by:
/s/ Harry G. Pappas
--------------------------------
Harry G. Pappas
Chief Financial Officer
/s/ Mark Norwicz
--------------------------------
Mark Norwicz
Treasurer
Appendix I
<TABLE>
<CAPTION>
Agreement Servicing
Trust Supplement Date Compliance Period Covenants and Conditions
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners First June 26, 1998 June 26, 1998 to Agreement Sections: 2.9, 2.10,
Credit Card December 31, 1998 2.12, 2.13, 3.2, 3.4(a) and (b),
Master Trust 3.5, 3.6(a) and (b), 4.2,
Series 1998-2 4.3 and 4.4
Agreement Supplement Sections:
3.1, 4.1c(i) and (ii), 4.2,
4.3(a)(i), 4.5, 4.6, 4.7,
4.10, 4.12, 4.15(a) and (b),
5.1(a) - (e), 5.1(h),
5.2(b), 6.1(g)
Partners First June 26, 1998 June 26, 1998 to Agreement Sections: 2.9, 2.10,
Credit Card December 31, 1998 2.12, 2.13, 3.2, 3.4(a) and
Master Trust (b), 3.5, 3.6(a) and (b), 4.2,
Series 1998-3 4.3 and 4.4
Agreement Supplement Sections:
3.1, 4.1c(i) and (ii), 4.2,
4.3(a)(i), 4.5, 4.6, 4.7,
4.10, 4.12, 4.15(a) and (b),
5.1(a) - (e), 5.1(h), 5.2(b),
6.1(g)
Partners First December 4, 1998, December 8, 1998 to Agreement Sections: 2.9, 2.10,
Credit Card amended and December 31, 1998 2.12, 2.13, 3.2, 3.4(a) and (b),
Master Trust restated 3.5, 3.6(a) and (b), 4.2, 4.3 and 4.4
Series 1998-4 January 12, 1999
Agreement Supplement Sections:
3.1, 4.1c(i) and (ii), 4.2,
4.3(a)(i), 4.5, 4.6, 4.7, 4.10,
4.12, 4.13, 5.1(a) - (c), 5.1(f),
5.2(b), 6.1(g)
</TABLE>
[LETTERHEAD OF ERNST & YOUNG LLP]
Report of Independent Accountants
on Applying Agreed-Upon Procedures
Partners First Holdings, LLC
900 Elkridge Landing Road, Suite 300
Linthicum, Maryland 21090-2925
and
The Bank of New York
101 Barclay Street
New York, New York 10286
Partners First Credit Card Master Trust
We have performed the procedures enumerated below, which were agreed to by
Partners First Holdings, LLC ("PFH") and The Bank of New York, solely to
assist you with respect to the amounts set forth in the "Monthly Servicer
Reports" prepared for each Series of the Partners First Credit Card Master
Trust by PFH pursuant to subsection 5.2(b) of the applicable Pooling and
Servicing Agreement Supplements as defined in Attachment A, during the
periods specified in Attachment A. This engagement to apply agreed-upon
procedures was performed in accordance with standards established by the
American Institute of Certified Public Accountants. The sufficiency of the
procedures is solely the responsibility of PFH and The Bank of New York.
Consequently, we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has
been requested or for any other purpose.
Our procedures were as follows: We compared the amounts set forth in the
"Monthly Servicer Reports" for each Series in the Trust, for the periods
specified in Attachment A, prepared by PFH pursuant to subsection 5.2(b)
of the applicable Pooling and Servicing Agreement Supplements (as defined
in Attachment A) with reports prepared by PFH's bank card processor or PFH,
which were the source of such amounts. We also recalculated the
mathematical accuracy of amounts derived in such "Monthly Servicer Reports"
for each Series in the Trust for the periods specified in Attachment A.
As a result of the procedures performed we noted that in all instances the
amounts set forth in the "Monthly Servicer Reports" for each series in the
Trust, for the periods specified in Attachment A, were in agreement with
reports prepared by PFH's bank card processor or PFH, and that all amounts
derived in such "Monthly Servicer Reports" were mathematically accurate,
except for following:
The Principal Allocation and Floating Allocation Percentages used to
allocate amounts between Series were incorrectly calculated and misstated
on the "Monthly Servicer Reports" as follows:
Percentage Percentage
"Monthly Servicer Report" as Reported as Recalculated
------------------------- ----------- ---------------
Dated September 15, 1998
------------------------
Principal Allocation Percentage 89.16% 86.36%
Floating Allocation Percentage 89.16% 86.36%
Dated October 15, 1998
----------------------
Principal Allocation Percentage 92.40% 89.16%
Floating Allocation Percentage 92.40% 89.16%
Dated November 16, 1998
-----------------------
Principal Allocation Percentage (10/1 - 10/14) 90.23% 92.40%
Principal Allocation Percentage (10/15 - 10/31) 90.23% 86.67%
Floating Allocation Percentage (10/1 - 10/14) 90.23% 92.40%
Floating Allocation Percentage (10/15 - 10/31) 90.23% 86.67%
The miscalculation of the Principal Allocation and Floating Allocation
Percentages scheduled above, affected the amounts allocated to each Series
as reported on the following line items of the "Monthly Trust Activity"
section of the "Monthly Servicer Reports":
Principal Collections Reallocation of Finance Charge Collection
Finance Charge Collections Dollars of Excess Spread
Interchange Collections Percentage of Excess Spread
Investor Default Amount Reallocated Finance Charge Collection
Total Amount Due
The amounts reported for the above line items for each Series are used to
derive amounts reported throughout the remainder of the applicable "Monthly
Servicer Reports". The recomputed amounts are shown in Attachments B, C
and D, respectively.
We were not engaged to, and did not, perform an audit, the objective of
which would be the expression of an opinion on the amounts set forth in the
"Monthly Servicer Reports" for each Series in the Trust, prepared by PFH
pursuant to subsection 5.2(b) of the applicable Pooling and Servicing
Agreement Supplements as defined in Attachment A, or on the reports
prepared by PFH's bank card processor or PFH. Accordingly, we do not
express such an opinion. Had we performed additional procedures with
respect to the "Monthly Servicer Reports" prepared by PFH pursuant to
subsection 5.2(b) of the applicable Pooling and Servicing Agreement
Supplements as defined in Attachment A and the reports prepared by PFH's
bank card processor and PFH, which were the source of such amounts, other
matters might have come to our attention that would have been reported to
you. This report relates only to the comparison of the amounts, and the
recalculation of the mathematical accuracy of such amounts specified above
and does not extend to any financial statements of PFH taken as a whole.
This report is intended solely for the information and use of the specified
users listed above and is not intended to be and should not be used by
anyone other than those specified parties. However, this report is a
matter of public record as a result of being included as an exhibit to the
annual report on Form 10-K prepared by PFH and filed with the Securities
and Exchange Commission on behalf of Partners First Credit Card Master
Trust and its distribution is not limited.
/s/ Ernst & Young LLP
March 22, 1999
ATTACHMENT A
POOLING AND
SERVICING AGREEMENT MONTHLY SERVICING REPORTS
TRUST SUPPLEMENT DATE COVERING THE PERIOD
----- ------------------- -------------------------
Partners First Credit June 26, 1998 June 26, 1998 to
Card Master Trust December 31, 1998
Series 1998-2
Partners First Credit June 26, 1998 June 26, 1998 to
Card Master Trust December 31, 1998
Series 1998-3
Partners First Credit December 4, 1998, December 8, 1998 to
Card Master Trust amended and restated December 31, 1998
Series 1998-4 January 12, 1999
