Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1999
--------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ____________ to ____________
Commission file number: 333-71169-02
------------
PREMIER AUTO TRUST 1999-1
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
State of Delaware 52-2167444
- -----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27777 Franklin Road, Southfield, Michigan 48034
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (248) 948-3067
--------------------------
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 _____
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The interim financial data presented herein are unaudited, but in the opinion
of management reflect all adjustments necessary for a fair presentation of
such information (see Note 1). Results for interim periods should not be
considered indicative of results for a full year.
2
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
PREMIER AUTO TRUST 1999-1
STATEMENT OF ASSETS, LIABILITIES AND EQUITY
JUNE 30, 1999
(in millions of dollars)
ASSETS
Cash and Cash Equivalents (Note 1) $ 4.4
Receivables (Note 3) 1,612.1
--------
TOTAL ASSETS $1,616.5
========
LIABILITIES AND EQUITY
Amounts Held for Future Distribution (Note 1) $ 42.3
Asset Backed Notes (Notes 3 and 4) 1,574.2
--------
TOTAL LIABILITIES AND EQUITY $1,616.5
========
See Notes to Financial Statements.
3
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
PREMIER AUTO TRUST 1999-1
STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
FOR THE PERIOD MARCH 1, 1999 (INCEPTION) THROUGH JUNE 30, 1999
(in millions of dollars)
CASH RECEIPTS
Proceeds from Sale of Notes $1,750.0
Collections of Principal & Interest, and Other 205.5
--------
TOTAL CASH RECEIPTS 1,955.5
--------
CASH DISBURSEMENTS
Purchase of Receivables 1,750.0
Distribution of Principal & Interest, and Other 201.1
--------
TOTAL CASH DISBURSEMENTS 1,951.1
--------
CASH RECEIPTS IN EXCESS OF CASH DISBURSEMENTS $ 4.4
========
See Notes to Financial Statements.
4
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
PREMIER AUTO TRUST 1999-1
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of Premier Auto Trust 1999-1 (the "Trust") are
prepared on the basis of cash receipts and disbursements, which is a
comprehensive basis of accounting other than generally accepted accounting
principles. The primary difference from the accrual basis to this basis is
that the financial statements do not record accrued interest receivable on
the Receivables or accrued interest payable on the Notes from the most recent
Distribution Date to the balance sheet date.
Cash and Cash Equivalents
Short-term instruments with a maturity of less than three months when
purchased are considered to be cash equivalents. The Trust received certain
cash deposits from Chrysler Financial Company L.L.C. ("CFC") which are held
as liquidity and credit enhancement reserves and invested in short-term
instruments. Under the Sale and Servicing Agreement, the servicer is required
to convey principal and interest collections to the Trust on a monthly basis.
Amounts Held for Future Distribution
Amounts held for future distribution represent certain short-term investments
held for future distributions to Noteholders and for liquidity and credit
enhancement reserves. Amounts held for liquidity and credit enhancement
reserves which are not utilized for future distributions to Noteholders will
be distributed to Premier Receivables L.L.C. ("Premier L.L.C.").
NOTE 2 - RELATED PARTIES
Premier L.L.C. is a limited liability company controlled by CFC. On November
12, 1998, CFC's parent, Chrysler Corporation, became a wholly owned
subsidiary of DaimlerChrysler AG ("Daimler") and on November 17, 1998,
Chrysler Corporation changed its name to DaimlerChrysler Corporation
("DaimlerChrysler").
5
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
PREMIER AUTO TRUST 1999-1
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - SALE OF ASSET BACKED NOTES
The Trust was formed under the laws of Delaware pursuant to an Amended and
Restated Trust Agreement dated as of March 1, 1999, among Premier L.L.C.,
CFC, and Chase Manhattan Bank Delaware, acting thereunder not in its
individual capacity but solely as trustee of the Trust.
On March 17, 1999, the Trust issued $325,000,000 aggregate principal amount
of 4.995% Asset Backed Notes, Class A-1 (the "Class A-1 Notes"), $520,000,000
aggregate principal amount of 5.51% Asset Backed Notes, Class A-2 (the "Class
A-2 Notes"), $510,000,000 aggregate principal amount of 5.69% Asset Backed
Notes, Class A-3 (the "Class A-3 Notes"), and $329,367,000 aggregate
principal amount of 5.82% Asset Backed Notes, Class A-4 (the "Class A-4
Notes" and, together with the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, the "Notes"). The Notes were issued pursuant to an Indenture
dated as of March 1, 1999, between the Trust and The First National Bank of
Chicago, as Indenture Trustee. The assets of the Trust include a pool of
motor vehicle retail installment sale contracts ("Receivables"), secured by
security interests in the motor vehicles financed thereby and including
certain monies due or received thereunder on or after February 24, 1999,
transferred to the Trust by CFC on March 17, 1999. The Notes are secured by
the assets of the Trust pursuant to the Indenture. The Trust also issued
$65,625,000 aggregate principal amount of Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities"). The
Certificates represent fractional undivided interests in the Trust. The
Certificates were not offered and will initially be held by the servicer,
which may thereafter sell the Certificates. The Certificates will not bear
interest and no principal will be paid until the Notes have been paid in
full.
NOTE 4 - PRINCIPAL AND INTEREST PAYMENTS
Interest on the Notes will accrue at the respective fixed per annum interest
rates specified above. Interest on the Notes will generally be payable on the
eighth day of each month or, if any such day is not a Business Day, on the
next succeeding Business Day (each, a "Distribution Date"), commencing April
8, 1999. Principal of the Notes will be payable on each Distribution Date to
the extent described in the Prospectus Supplement dated March 4, 1999, and
the Prospectus dated March 4, 1999 (collectively, the "Prospectus"); however,
no principal payments will be made (i) on the Class A-2 Notes until the Class
A-1 Notes have been paid in full, (ii) on the Class A-3 Notes until the Class
A-2 Notes have been paid in full or (iii) on the Class A-4 Notes until the
Class A-3 Notes have been paid in full. Each class of the Notes will be
payable in full on the applicable final scheduled Distribution Date as set
forth in the Prospectus. However, payment in full of a class of Notes could
occur earlier than such dates as described in the Prospectus. In addition,
the Class A-4 Notes will be subject to redemption in whole, but not in part,
on any Distribution Date on which the servicer exercises its option to
purchase the Receivables. The servicer may purchase the Receivables when the
aggregate principal balance of the Receivables shall have declined to 10% or
less of the initial aggregate principal balance of the Receivables purchased
by the Trust.
6
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
PREMIER AUTO TRUST 1999-1
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - FEDERAL INCOME TAXES
In the opinion of outside legal counsel, for federal income tax purposes, the
Notes will be characterized as debt, and the Trust will not be characterized
as an association (or a publicly traded partnership) taxable as a
corporation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Trust was formed under the laws of Delaware pursuant to an Amended and
Restated Trust Agreement (the "Trust Agreement") dated as of March 1, 1999,
among Premier L.L.C., CFC, and Chase Manhattan Bank Delaware, acting
thereunder not in its individual capacity but solely as trustee of the Trust.
On March 17, 1999, the Trust issued $325,000,000 aggregate principal amount
of 4.995% Asset Backed Notes, Class A-1 (the "Class A-1 Notes"), $520,000,000
aggregate principal amount of 5.51% Asset Backed Notes, Class A-2 (the "Class
A-2 Notes"), $510,000,000 aggregate principal amount of 5.69% Asset Backed
Notes, Class A-3 (the "Class A-3 Notes"), and $329,367,000 aggregate
principal amount of 5.82% Asset Backed Notes, Class A-4 (the "Class A-4
Notes" and, together with the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, the "Notes"). The Notes were issued pursuant to an Indenture
dated as of March 1, 1999, between the Trust and The First National Bank of
Chicago, as Indenture Trustee. The assets of the Trust include a pool of
motor vehicle retail installment sale contracts ("Receivables"), secured by
security interests in the motor vehicles financed thereby and including
certain monies due or received thereunder on or after February 24, 1999,
transferred to the Trust by CFC on March 17, 1999. The Notes are secured by
the assets of the Trust pursuant to the Indenture. The Trust also issued
$65,625,000 aggregate principal amount of Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities"). The
Certificates represent fractional undivided interests in the Trust. The
Certificates were not offered and will initially be held by the servicer,
which may thereafter sell the Certificates. The Certificates will not bear
interest and no principal will be paid until the Notes have been paid in
full.
The Trust has no employees.
Year 2000
The Trust relies on the servicer's computer systems. CFC, as servicer, has
conducted an evaluation of the actions necessary to ensure that its business
critical computer systems will function without disruption with respect to
the application of dating systems in the Year 2000. As a result of this
evaluation, CFC is engaged in the process of upgrading, replacing and testing
certain of its information and other computer systems. CFC's remedial actions
are scheduled to be completed during the third quarter of 1999 and, based
upon information currently available, CFC does not anticipate that the costs
of its remedial actions will be material to the consolidated results of
operations and financial position of CFC and are being expensed as incurred.
However, there can be no assurance that the remedial actions being
implemented by CFC will be completed in time to avoid dating systems problems
or that the cost will not be material to CFC. If CFC is unable to complete
its remedial actions in the planned timeframe, contingency plans will be
developed to address those business
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
critical computer systems that may not be Year 2000 compliant.
In addition, disruptions with respect to vendor or customer computer systems,
which are outside the control of CFC, could impair the ability of CFC to
obtain necessary services or to provide services to their customers.
Disruptions of CFC's computer systems, or the computer systems of CFC's
vendors or customers, as well as the cost of avoiding such disruption, could
have a material adverse effect upon the financial condition and results of
operations of CFC. CFC has a process in place to assess the Year 2000
readiness of its business critical vendors and customers. CFC believes that
the most likely worst case scenario is that a small number of vendors will be
unable to supply service for a short time after January 1, 2000. As part of
the assessment process, CFC will develop contingency plans for those business
critical vendors who are either unable or unwilling to develop remediation
plans to become Year 2000 compliant. Although these plans have yet to be
developed, CFC expects that these plans will include selective resourcing of
services to Year 2000 compliant vendors. CFC expects that vendors in this
category will represent an insignificant part of its total service base. It
is expected that these plans will be in place by the third quarter of 1999.
Any inability to complete the remedial actions referred to in the preceding
two paragraphs in a timely manner could result in delays in collections on
the Receivables and payments on the Notes.
8
PART II. OTHER INFORMATION
ITEM 1
There is nothing to report with regard to this item.
Item 2
(1) The effective date of the Securities Act registration statement:
February 12, 1999. The date of the Prospectus Supplement is March 4,
1999.
(2) The offering date: March 17, 1999
(4) The offering did not terminate before any securities were sold.
(i) The offering has terminated and all securities registered were sold
before termination.
(ii) The name(s) of the managing underwriter(s):
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Bear, Stearns & Co. Inc
Chase Securities Inc.
Morgan Stanley & Co. Incorporated
Salomon Smith Barney Inc.
(iii) The title of each class of securities registered:
5.51% Asset Backed Notes, Class A-2
5.69% Asset Backed Notes, Class A-3
5.82% Asset Backed Notes, Class A-4
(iv) For each class of securities (other than a class of securities into
which a class of convertible securities registered may be converted
without additional payment to the issuer):
9
ITEM 2. (4)(IV) OTHER INFORMATION - (CONTINUED)
<TABLE>
<CAPTION>
Aggregate Aggregate
Price of Offering
Title Offering Price of
of Amount Amount Amount Amount
Security Registered Registered Sold Sold
-------- ---------- ---------- ------ ----------
<S> <C> <C> <C> <C>
5.51% Asset Backed Notes,
Class A-2 $ 520,000,000 $ 519,979,720 $ 520,000,000 $ 519,979,720
5.69% Asset Backed Notes,
Class A-3 $ 510,000,000 $ 509,924,520 $ 510,000,000 $ 509,924,520
5.82% Asset
Backed Notes, Class A-4 $ 329,367,000 $ 329,340,651 $ 329,367,000 $ 329,340,651
-------------- -------------- -------------- --------------
TOTAL $1,359,367,000 $1,359,244,891 $1,359,367,000 $1,359,244,891
============== ============== ============== ==============
</TABLE>
(v) The amount of expenses incurred for the issuer's account in
connection with the issuance and distribution of the securities
registered for the following:
(A) Direct or indirect payments to directors, officers, general partners
of the issuer or their associates; to person owning ten (10) percent
or more of any class of equity securities of the issuer; and to
affiliates of the issuer: None
(B) Direct or indirect payments to others:
(1) Underwriting discounts and commissions: $2,624,668
(2) Finders' Fees: $0
(3) Expenses paid to or for underwriters: $0
(4) Other expenses: $0
(5) Total expenses: $2,624,668
(vi) The net offering proceeds to the issuer after deducting the total
expenses: $1,356,620,223
(vii) The amount of net offering proceeds to the issuer used for
construction of plant, building and facilities; purchase and
installation of machinery and equipment; purchase of real estate;
acquisition of other business(es); repayment of indebtedness;
working capital; temporary investments (which should be specified):
None
10
ITEM 2. OTHER INFORMATION - (CONTINUED)
Any other purposes for which at least five (5) percent of the
issuer's total offering proceeds or $100,000 has been used:
(A) Direct or indirect payments to directors, officers, general partners
of the issuer or their associates; to persons owning ten (10)
percent or more of any class of equity securities of the issuer; and
to affiliates of the issuer: None
(B) Direct or indirect payments to others:
The net proceeds from the sale of the securities were applied by the
issuer (i) to the purchase of receivables from Chrysler Financial
Company L.L.C. and (ii) to make the initial deposit into the Reserve
Account: $1,356,620,223
(viii) This Item does not represent a material change in the use of
proceeds described in the prospectus.
ITEMS 3,4,5
There is nothing to report with regard to these items.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as a part of this report:
Exhibit No.
3 Certificate of Trust of Premier Auto Trust 1999-1. Filed as
Exhibit 3 to the Trust's Quarerly Report on Form 10Q for the
period ended March 31, 1999, and incorporated by reference
4.1 Amended and Restated Trust Agreement, dated as of March 1,
1999, among Premier Receivables L.L.C., Chrysler Financial
Company L.L.C. and Chase Manhattan Bank Delaware, as Owner
Trustee. Filed as Exhibit 4.1 to the Trust's Quarterly Report
on Form 10Q for the period ended March 31, 1999, and
incorporated herein by reference
4.2 Indenture, dated as of March 1, 1999, between Premier Auto
Trust 1999-1 and The First National Bank of Chicago, as
Indenture Trustee. Filed as Exhibit 4.2 to the Trust's
Quarterly Report on Form 10Q for the period ended March 31,
1999, and incorporated herein by reference
4.3 Sale and Servicing Agreement, dated as of March 1, 1999,
between Premier Auto Trust 1999-1 and Chrysler Financial
Company L.L.C. Filed as Exhibit 4.3 to the Trust's Quarterly
Report on Form 10Q for the period ended March 31, 1999, and
incorporated herein by reference
27 Financial Data Schedule
(b) No reports on Form 8-K were filed by the Trust during the quarter
for which this report is filed.
11
PREMIER AUTO TRUST 1999-1
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 thereunto duly authorized.
Premier Auto Trust 1999-1 (Registrant)
By: Chrysler Financial Company, L.L.C., as Servicer
-----------------------------------------------
Date: August 9, 1999 By: /s/David H. Olsen
-----------------------------------------------
David H. Olsen, Vice President and Controller
Principal Accounting Officer
12
PREMIER AUTO TRUST 1999-1
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------- ----------------------
3 Certificate of Trust of Premier Auto Trust 1999-1. Filed
as Exhibit 3 to the Trust's Quarterly Report on Form 10Q
for the period ended March 31, 1999, and incorporated
herein by reference
4.1 Amended and Restated Trust Agreement, dated as of March
1, 1999, among Premier Receivables L.L.C., Chrysler
Financial Company L.L.C. and Chase Manhattan Bank
Delaware, as Owner Trustee. Filed as Exhibit 4.1 to the
Trust's Quarterly Report on Form 10Q for the period ended
March 31, 1999, and incorporated herein by reference
4.2 Indenture, dated as of March 1, 1999, between Premier
Auto Trust 1999-1 and The First National Bank of Chicago,
as Indenture Trustee. Filed as Exhibit 4.2 to the Trust's
Quarterly Report on Form 10Q for the period ended March
31, 1999, and incorporated herein by reference
4.3 Sale and Servicing Agreement, dated as of March 1, 1999,
between Premier Auto Trust 1999-1 and Chrysler Financial
Company L.L.C. Filed as Exhibit 4.3 to the Trust's
Quarterly Report on Form 10Q for the period ended March
31, 1999, and incorporated herein by reference
27 Financial Data Schedule
E-1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> MAR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> $ 4
<SECURITIES> 0
<RECEIVABLES> 1,612
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,616
<CURRENT-LIABILITIES> 42
<BONDS> 1,574
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,616
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
