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<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1999
Commission File Number 33-63697
--------
Paragon Auto Receivables Corporation
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-0653501
- --------------------------------- -------------------------------------
(State or Other Jurisdiction of (U.S. Employer Identification No.)
Incorporation or Organization)
27405 Puerta Real, suite 200, Mission Viejo, California 92691
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (949) 348-8700
------------------------------
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. X
-----
DOCUMENTS INCORPORATED BY REFERENCE.
No documents have been incorporated by reference in this Form 10-K.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I ............................................................................................................. 1
Item 1. Business............................................................................................ 1
Item 2. Properties........................................................................................... 1
Item 3. Legal Proceedings.................................................................................... 1
Item 4. Submission of Matters to a Vote of Security Holders.................................................. 1
PART II ............................................................................................................. 1
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters................................ 1
Item 6. Selected Financial Data.............................................................................. 2
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................ 2
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.......................................... 2
Item 8. Financial Statements and Supplementary Data.......................................................... 2
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure................. 2
PART III ............................................................................................................. 2
Item 10. Directors and Executive Officers of the Registrants................................................. 2
Item 11. Executive Compensation.............................................................................. 2
Item 12. Security Ownership of Certain Beneficial Owners and Management...................................... 2
Item 13. Certain Relationships and Related Transactions...................................................... 2
PART IV ............................................................................................................. 2
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.................................... 2,3
</TABLE>
-i-
<PAGE>
In no-action letters issued to a variety of issuers of asset-backed or
pass-through certificates representing ownership interests in, or of asset
backed notes issued by, trusts established by financial institutions, whose
principal assets are receivables generated under motor vehicle retail
installment sales contracts owned by such institutions and transferred to such
trusts, the Division of Corporation Finance has stated that it would not raise
any objection if the servicer of the trust, on behalf of the trust, files its
Annual Report on Form 10-K in accordance with a specified format. See e.g., Bay
---
View Auto Trusts (January 15, 1998); Nissan Auto Receivables 1995-A Grantor
- ---------------- --------------------------------------
Trust (June 28, 1996); CIT Group Securitization Corp. II (January 25, 1996); AFG
- ----- --------------------------------- ---
Receivables Trust 1995-A (May 29, 1996); Old Kent Auto Receivables Trust 1995-A
- ------------------------ --------------------------------------
(April 11, 1996); Mercedes-Benz Credit Corp. (January 6, 1995); CIT Group
-------------------------- ---------
Securitization Corp. (April 15, 1994); Western Financial Savings Bank, F.S.B.
- -------------------- --------------------------------------
(January 7, 1994); Toyota Motor Credit Corp. (November 11, 1993); Hyundai
------------------------- -------
Motor Finance Co. (August 20, 1993); World Omni Financial Corp. (March 24,
- ----------------- --------------------------
1993); American Honda Receivables Corp. (March 12, 1993); and Volvo Auto
-------------------------------- ----------
Receivables Grantor Trust 1992-B (January 28, 1993).
- --------------------------------
The Paragon Auto Receivable Owner Trust 1999-A (the "Trust") was formed
pursuant to a Trust Agreement, dated as of March 15, 1999 (the "Agreement"),
between Paragon Auto Receivables Corporation ("Paragon Auto") and Wilmington
Trust Company, as Owner Trustee. The assets of the Trust include, among other
things, receivables consisting of motor vehicle installment contracts
("Receivables") secured by motor vehicles, rights to receive certain principal
and interest payments with respect to such Receivables, security interests in
the motor vehicles financed thereby and the proceeds thereof. On March 30,
1999, the Trust issued $100,000,000 5.95% Class A Asset Backed Notes (the
"Notes").
This Annual Report on Form 10-K has been filed in substantially the form
that the Division of Corporate Finance, in the no-action letters referred to
above, has stated that it would not object to.
PART I
Item 1. Business.
Omitted.
Item 2, Properties.
The assets of the Trust include, among other things, receivables
consisting of simple interest motor vehicle installment contracts secured by a
motor vehicle, rights to receive certain principal and interest payments with
respect to such Receivables, security interests in the motor vehicles financed
thereby, and the proceeds thereof.
Item 3. Legal Proceedings.
None with respect to the Notes or the Trust.
Item 4. Submission of Matters to a Vote of Security Holders.
None with respect to the Notes or the Trust.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
To the best knowledge of Paragon Auto Receivables Corporation and the
Trust, there is no established public trading market for the Notes.
-1-
<PAGE>
One certificate representing a fractional undivided interest in the Trust
(the "Certificate") was issued to Paragon Auto in the principal amount of
$2,564,102.56. All of the Notes are registered in the name of Cede & Co., as
the nominee of The Depository Trust Company ("DTC"). As of January 15, 2000,
there were 13 participants listed by DTC, in the DTC system, as holding
positions in the Notes.
The Trust does not pay dividends on the Notes.
The Trust used the net proceeds from the sale of the Notes and the
Certificate to purchase the Receivables from Paragon Auto, which in turn used
such proceeds to make the initial deposit into a reserve account and to purchase
the Receivables from Paragon Acceptance Corporation, a Delaware Corporation.
Item 6. Selected Financial Data.
Omitted.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Omitted.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Omitted.
Item 8. Financial Statements and Supplementary Data.
Omitted.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrants.
Omitted.
Item 11. Executive Compensation.
Omitted.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Paragon Auto holds 100% of the Certificate in the principal amount of
$2,564,102.56.
Item 13. Certain Relationships and Related Transactions.
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Listed below are the documents filed as part of this report:
-2-
<PAGE>
Exhibit
No. Document Description
------- --------------------
20.1 Servicer's Report and Notheholder and Certificateholder Statement
dated as of January 15, 2000.
(b) Reports on Form 8-K:
With respect to the last quarter of 1999, the following Form 8-K's were
filed with the Commission:
Date Items Listed
---- ------------
September 20, 1999 Servicer's Report and Monthly Noteholder and
Certificateholder Statement, dated as of September
15, 1999.
November 03, 1999 Servicer's Report and Monthly Noteholder and
Certificateholder Statement, dated as of October 15,
1999.
November 30, 1999 Servicer's Report and Monthly Noteholder and
Certificateholder Statement, dated as of November 15,
1999.
December 29, 1999 Servicer's Report and Monthly Noteholder and
Certificateholder Statement, dated as of December 15,
1999.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PARAGON AUTO RECEIVABLES CORPORATION
(Registrant)
Dated: March 24, 2000 By: /S/ James E. Stublarec
------------------------------------------------------
Name: James E. Stublarec
Title: Vice President, Finance
-4-
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Document Description
- ------- --------------------
20.1 Servicer's Report and Noteholder and Certificateholder Statement,
dated as of January 15, 2000.
-5-
<PAGE>
Exhibit 20.1
PARAGON AUTO RECEIVABLES OWNER TRUST 1999-A
5.95% Class A Notes
Servicer's Certificate
Collection Period: March 1 to December 31, 1999
January 15, 2000
<TABLE>
<CAPTION>
<S> <C>
I. Available Funds
- ------------------
Scheduled Principal Payments Received $13,405,679.15
Partial and Full Prepayments Received 14,436,220.75
Interest Payments Received 7,402,677.71
Policy Claim Amount -
Pre-Funding Earnings 132,399.63
Interest Reserve Requirement 234,376.51
Class A Redemption Amount 0.94
Income From Collection Account Eligible Investments 97,261.38
Recoveries On Previously Liquidated Receivables 144,356.08
Liquidation Proceeds 495,573.76
Recoveries From Insurance -
Purchase Amount of Purchased Receivables 16,408.34
---------------
Total Available Funds $36,364,954.25
===============
II. Distribution
- ----------------
A. Calculation of Total Principal Payment Amount
- -------------------------------------------------
Beginning Principal Balance of Notes 100,000,000.00
Principal Portion of Scheduled Payments Received 12,937,377.69
Principal Portion of Prepayments 14,026,787.27
Principal Portion of Purchased Receivables 15,649.45
Principal Balance of Liquidated Receivables 1,221,149.58
Aggregate Amount of Cram Down Losses 11,531.31
Class A Redemption Amount 0.94
---------------
Total Principal Payment Amount $28,212,496.24
---------------
Overcollateralization Amount to Principal 1,318,399.47
---------------
Ending Principal Balance of Notes $70,469,104.29
===============
B. Priority of Distributions
- -----------------------------
1. Indenture Trustee, Backup Servicer, Owner Trustee $ 45,261.70
2a. Basic Servicing Fee 678,490.99
b. Supplemental Servicing Fee 23,485.17
3. Class A Interest Payment Amount 4,494,871.35
4. Class A Principal Payment Amount 28,212,496.24
5. Note Insurer Payment 324,553.17
6. To The Reserve Fund 2,585,795.63
7. Accrued or Unpaid Fees to Indenture Trustee, Backup Servicer, Owner Trustee or successor Servicer -
---------------
Total Distributions Before Overcollateralization or Certificateholder Payments $36,364,954.25
---------------
8. Overcollateralization Amount to Class A Principal 1,318,399.47
9. Accrued or Unpaid Basic and Supplemental Servicing Fees -
10. Remaining Payment To The Certificateholder, Including Reserve Account Release -
---------------
Total Payments $37,683,353.72
===============
</TABLE>
Page 1 of 5
<PAGE>
PARAGON AUTO RECEIVABLES OWNER TRUST 1999-A
5.95% Class A Notes
Servicer's Certificate
Collection Period: March 1 to December 31, 1999
January 15, 2000
<TABLE>
<CAPTION>
III. Note Balances
- ------------------
<S> <C>
Beginning Note Balance 100,000,000.00
Ending Note Balance $70,469,104.29
Class A Note Factor 0.704691
Class A Original Balance 100,000,000.00
Class A Beginning Balance 100,000,000.00
Class A Ending Balance $70,469,104.29
Class A Interest Carryover Shortfall $ -
Class A Principal Carryover Shortfall $ -
Overcollateralization Amount 2,936,212.68
Target Overcollateralization Amount 2,936,212.68
IV. Interest Reserve Requirement
- --------------------------------
Sum of Distributions to Indenture Trustee, Backup Servicer, Owner Trustee, Class A Interest
Payment Amount, and Note Insurer Payment $ -
Less: Class A Interest Calculated On Principal Balance Of Receivables -
Less: Pre-Funding Earnings -
---------------
Interest Reserve Requirement $ -
===============
V. Pre-Funded Amount
- --------------------
Beginning Balance $26,015,156.02
Plus: Pre-Funding Earnings 132,399.63
Less: Pre-Funding Distributions 26,147,554.71
Less: Class A Redemption Amount 0.94
---------------
Ending Balance $ (0.00)
===============
</TABLE>
Page 2 of 5
<PAGE>
PARAGON AUTO RECEIVABLES OWNER TRUST 1999-A
5.95% Class A Notes
Servicer's Certificate
Collection Period: March 1 to December 31, 1999
January 15, 2000
VI. Receivables Performance
- ---------------------------
<TABLE>
<CAPTION> Beginning Additional End
A. General Information Of Period Receivables Of Period
- ----------------------- ---------------- ---------------- ---------------
<S> <C> <C> <C>
Principal Balance $76,548,946.54 $26,015,155.08 $73,405,316.97
================ ================ ===============
Number of Receivables 4,105 1,271 4,463
================ ================ ===============
Weighted Average Coupon (WAC) 10.64%
Weighted Average Remaining Maturity (WAM) in months 52.6
B. Delinquency/Repossession Information
- ----------------------------------------
No. Of Principal % of Rec.
Receivables Balance Balance
---------------- ---------------- ---------------
30 - 59 Days Delinquent 45 $ 817,992.20 1.11%
60 - 89 Days Delinquent 15 284,828.59 0.39%
90 + Days Delinquent 4 68,650.51 0.09%
---------------- ---------------- ---------------
Total 64 $ 1,171,471.30 1.60%
================ ================ ===============
Principal/
(Proceeds)
---------------
Principal Balance of Repossessed Vehicles Sold During Collection Period $ 760,233.46
Principal Balance of Other Liquidated Receivables 529,314.43
Cram Down Losses 11,687.41
Liquidation Proceeds (495,573.76)
Deficiency Recoveries On Previously Liquidated Receivables (144,356.08)
Recoveries From Insurance -
Other Recoveries -
---------------
Net Losses $ 661,305.46
===============
VII. Reserve Account
- --------------------
Beginning Balance $ 1,530,978.93
Additional Deposit 520,303.10
Income From Eligible Investments 70,586.15
Deposits 2,585,795.63
Release of Excess To The Noteholders 1,318,399.47
Release of Excess To The Certificateholder -
---------------
Ending Balance $ 3,389,264.34
---------------
Reserve Account Required Amount $70,469,104.29
===============
</TABLE>
Page 3 of 5
<PAGE>
PARAGON AUTO RECEIVABLES OWNER TRUST 1999-A
5.95% Class A Notes
Servicer's Certificate
Collection Period: March 1 to December 31, 1999
January 15, 2000
VIII. Triggers
A. Calculations
- ---------------
<TABLE>
<CAPTION>
Dec-99 Nov-99 Oct-99
Delinquency Ratio Collection Collection Collection
- ----------------- Period Period Period
--------------------- -------------------- ----------------------
<S> <C> <C> <C>
Principal Balance of Receivables, Of Which 10% Or More
Of Any Scheduled Payment Is 60 Or More Days Past Due $ 353,479.10 $ 424,047.16 $ 255,100.65
Divided By: Beginning Aggregate Principal Balance $76,043,411.90 $78,772,673.30 $81,464,059.95
--------------------- -------------------- ----------------------
Delinquency Ratio 0.46% 0.54% 0.31%
===================== ==================== ======================
----------------------
Average For The Three Preceding Collection Periods 0.44%
======================
<CAPTION>
Dec-99 Nov-99 Oct-99
Default Ratio Collection Collection Collection
- ------------- Period Period Period
--------------------- -------------------- ----------------------
<S> <C> <C> <C>
Principal Balance of all Liquidated Receivables $ 237,159.45 $ 158,233.69 $ 200,912.45
Divided By: Beginning Aggregate Principal Balance $76,043,411.90 $78,772,673.30 $81,464,059.95
--------------------- -------------------- ----------------------
Default Ratio 0.31% 0.20% 0.25%
===================== ==================== ======================
Average For The Three Preceding Collection Periods 0.25%
======================
<CAPTION>
Cumulative, Cumulative
During The As Of The As Of The
Dec-99 Nov-99 Oct-99
Cumulative Net Loss Ratio Collection Accounting Accounting
- ------------------------- Period Date Date
--------------------- -------------------- ----------------------
<S> <C> <C> <C>
Principal Balance Of Liquidated Receivables $ 1,289,547.89 $ 1,052,388.44 $ 894,154.75
Less: Liquidation Proceeds And Recoveries Received (639,929.84) (555,761.69) (476,828.21)
Plus: Cram Down Losses 11,687.41 11,687.41 7,784.84
--------------------- -------------------- ----------------------
Net Losses $ 661,305.46 $ 508,314.16 $ 425,111.38
===================== ==================== ======================
Aggregate Principal Balance As Of The Cutoff Date $ 102,564,101.62 $ 102,564,101.62 $ 102,564,101.62
--------------------- -------------------- ----------------------
Net Loss Ratio 0.64% 0.50% 0.41%
===================== ==================== ======================
</TABLE>
Page 4 of 5
<PAGE>
PARAGON AUTO RECEIVABLES OWNER TRUST 1999-A
5.95% Class A Notes
Servicer's Certificate
Collection Period: March 1 to December 31, 1999
January 15, 2000
B. Triggers In Effect
<TABLE>
<CAPTION>
Actual Reserve Trigger
Ratio Event Event
------------------ ------------------ ------------------
<S> <C> <C> <C>
1. Delinquency Ratio 0.44% 1.50% 2.00%
================== ================== ==================
2. Default Ratio 0.25% 7.00% N/A
================== ================== ==================
3. Cumulative Net Loss Ratio
Months 06-08 0.41% 0.75% 1.00%
Months 09-11 0.64% 1.35% 1.60%
Months 12-14 N/A 2.00% 2.30%
Months 15-17 N/A 2.50% 3.00%
Months 18-20 N/A 3.35% 3.65%
Months 21-23 N/A 4.65% 5.10%
Months 24-26 N/A 5.50% 6.00%
Months 27-29 N/A 5.75% 6.30%
Months 30 + N/A 5.90% 6.50%
4. Reserve/Trigger Events Occurrences Deemed Cured
------------------ ------------------
Reserve Event No N/A
Trigger Event Yes No
Servicer Termination Event Yes
5. The Collection Period Above Corresponds To Month No. 1 through 10
==================
</TABLE>
Page 5 of 5
<PAGE>
PARAGON AUTO RECEIVABLES OWNER TRUST 1999-A
5.95% Class A Notes
Statement to Noteholders
Collection Period: March 1 to December 31, 1999
January 15, 2000
<TABLE>
<CAPTION>
Payments Allocable To Principal Per $1,000 Of
- ------------------------------- Total Orig. Principal
-------------------- --------------------
<S> <C> <C>
Class A Noteholders $ 29,530,895.71 $ 295.31
Payments Allocable To Interest Per $1,000 Of
- ------------------------------ Total Orig. Principal
-------------------- --------------------
Class A Noteholders $ 4,494,871.35 $ 44.95
Amount Of Above Payments Paid From Reserve Remaining
- ------------------------------------------ Total Reserve
-------------------- --------------------
Principal $ -
Interest -
-------------------- --------------------
Total $ - $ 3,389,264.34
==================== ====================
Note Balances Per $1,000 Of
- ------------- Total Orig. Principal
-------------------- --------------------
Class A Noteholders $ 70,469,104.29 $ 704.69
Amount Of Fees Paid By The Trust $ 1,071,791.03
- -------------------------------- ====================
Change From
Carryover Shortfalls Prior
- -------------------- Total Payment Date
-------------------- --------------------
Class A Interest $ - $ -
Class A Principal - -
Note Factor
Class A 0.704691
</TABLE>
Page 1 of 2
<PAGE>
PARAGON AUTO RECEIVABLES OWNER TRUST 1999-A
5.95% Class A Notes
Statement to Noteholders
Collection Period: March 1 to December 31, 1999
January 15, 2000
<TABLE>
<S> <C>
Delinquency Ratio 0.46%
- ----------------- ====================
Default Ratio 0.31%
- ------------- ====================
Cumulative Net Loss Ratio 0.64%
- ------------------------- ====================
Reserve/Trigger Events Occurrences Deemed Cured
- ---------------------- -------------------- --------------------
Reserve Event No N/A
Trigger Event Yes No
Servicer Termination Trigger Event Yes
Policy Claim Amount $ -
- ------------------- ===================
Reimbursements to Note Insurer $ -
- ------------------------------ ===================
Occurrences Continuing
-------------------- --------------------
Insurer Default No N/A
- ---------------
During Funding Period
Principal Balance of Subsequent Receivables $ 26,015,155.08
Class A Redemption Amount $ 0.94
Remaining Pre-Funded Amount $ -
Class A Redemption Amount $ 0.94
- ------------------------- ====================
Overcollateralization
Overcollateralization Amount $ 2,936,212.68 4.00%
Target Overcollateralization Amount $ 2,936,212.68 4.00%
</TABLE>
Page 2 of 2
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