<PAGE> 1
Filed Pursuant to Rule 424(b)2
Registration Statement No. 333-30737
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 9, 1998)
NAVISTAR FINANCIAL DEALER NOTE MASTER TRUST
$200,000,000 CLASS A FLOATING RATE DEALER NOTE ASSET BACKED CERTIFICATES, SERIES
1998-1
NAVISTAR FINANCIAL SECURITIES CORPORATION, Seller
NAVISTAR FINANCIAL CORPORATION, Servicer
The Class A Floating Rate Dealer Note Asset Backed Certificates, Series 1998-1
(the "Series 1998-1 Certificates") offered hereby evidence undivided interests
in certain assets of the Navistar Financial Dealer Note Master Trust (the
"Master Trust" or the "Issuer") created pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") among Navistar Financial
Corporation ("NFC" or the "Servicer"), Navistar Financial Securities
Corporation ("NFSC" or the "Seller"), The Chase Manhattan Bank, as Trustee
under the Dealer Note Trust 1990 (the "1990 Trust"), and The Bank of New York,
as trustee (the "Master Trust Trustee"). The Master Trust assets in which the
Series 1998-1 Certificates have an undivided interest will include, initially,
the Class A-6 Floating Rate Pass-Through Certificate (the "Class A-6 Investor
Certificate") issued by the 1990 Trust created pursuant to a Pooling and
Servicing Agreement dated as of December 1, 1990 (as amended, the "1990 Trust
Agreement") among NFSC, NFC and The Chase Manhattan Bank, as trustee.
Following the termination of the 1990 Trust, the Master Trust assets in which
the Series 1998-1 Certificateholders will have an interest will include the
Dealer Notes and other assets described in the accompanying Prospectus dated
July 9, 1998 (the "Prospectus").
Interest on the Series 1998-1 Certificates will generally be paid on the
twenty-fifth day of each month commencing August 25, 1998 (each, a
"Distribution Date"). The interest rate for the period from July 17, 1998 (the
"Closing Date") through August 24, 1998 (the "Initial Distribution Period") and
for each Distribution Period thereafter will be equal to LIBOR (as defined
herein) as of the related LIBOR Determination Date (as defined herein) plus
0.16% (the "Offered Certificate Rate"). The payment of principal with respect
to the Series 1998-1 Certificates is expected to be made in full on the July
2008 Distribution Date (the "Expected Payment Date"). However, under certain
circumstances, the actual payment in full of the Series 1998-1 Certificates
could occur earlier or later than the Expected Payment Date.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGES 27 THROUGH 30 IN THE ACCOMPANYING PROSPECTUS
THE SERIES 1998-1 CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE MASTER
TRUST ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE SELLER, THE
SERVICER OR ANY AFFILIATE THEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
================================================================================
Price to Underwriting Proceeds to
Public Discount the Seller(1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Series 1998-1 Certificates 100.000% 0.380% 99.620%
- --------------------------------------------------------------------------------
Total $200,000,000 $760,000 $199,240,000
- --------------------------------------------------------------------------------
</TABLE>
(1) Before deducting expenses payable by the Seller estimated to be $500,000.
The Series 1998-1 Certificates are offered by the Underwriter, subject to prior
sale, when, as and if issued by the Seller and accepted by the Underwriter.
The Underwriter reserves the right to withdraw, cancel or modify such offer and
reject orders in whole or in part. It is expected that the Series 1998-1
Certificates will be delivered in book-entry form through the facilities of the
Depository Trust Company on or about July 17, 1998, against payment therefor in
immediately available funds.
J.P. MORGAN & CO.
The date of this Prospectus Supplement is July 13, 1998.
<PAGE> 2
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus
Supplement and the Prospectus in connection with the offer made by this
Prospectus Supplement and the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been
authorized by Navistar International Corporation ("NIC"), Navistar
International Transportation Corp. ("NITC"), NFC, NFSC or the Underwriter.
This Prospectus Supplement and the Prospectus do not constitute an offer to
sell or a solicitation of any offer to buy any securities other than the
registered securities offered by this Prospectus Supplement and the Prospectus,
nor does it constitute an offer to sell or a solicitation of any offer to buy
any securities by anyone in any jurisdiction in which such offer or
solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus
Supplement and the Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that information herein is correct as of
any time subsequent to the date hereof.
Until October 11, 1998, all dealers effecting transactions in the Series 1998-1
Certificates, whether or not participating in this distribution, may be
required to deliver a Prospectus Supplement and the Prospectus to which it
relates. This delivery requirement is in addition to the obligation of dealers
to deliver a Prospectus Supplement and Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE PAGE
<S> <C> <C> <C>
PROSPECTUS SUPPLEMENT
The Dealer Notes....................................... S-3 Use of Proceeds................................... 32
Description of the Series 1998-1 Certificates.......... S-9 The Navistar Financial Dealer Floor Plan Financing
Other Series Issued By Master Trust.................... S-14 Business......................................... 32
1990 Trust Investor Certificates....................... S-14 Relationship with NITC............................ 36
Plan of Distribution................................... S-16 Description of the Offered Certificates........... 40
Legal Matters.......................................... S-16 Terms of the 1990 Trust Investor Certificates..... 76
Index of Terms......................................... S-17 Description of the Purchase Agreements............ 85
Federal Income Tax Matters........................ 87
PROSPECTUS Certain State Tax Matters......................... 93
Certain Matters Relating to Bankruptcy............ 94
Available Information.................................. 3 Certain Matters Relating to the Dealer Notes...... 95
Reports to the Offered Certificateholders.............. 3 ERISA Considerations.............................. 95
Incorporation of Certain Documents by Reference........ 3 Plan of Distribution.............................. 96
Prospectus Summary..................................... 5 Legal Matters..................................... 97
Risk Factors........................................... 27 Index of Terms.................................... 98
Navistar Financial Securities Corporation and the Annex I-Global Clearance, Settlement and Tax
Master Trust.......................................... 31 Documentation Procedures......................... 104
</TABLE>
THE SERIES 1998-1 CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE
PART OF A SEPARATE SERIES OF OFFERED CERTIFICATES BEING OFFERED BY THE SELLER
PURSUANT TO ITS PROSPECTUS DATED JULY 9, 1998, OF WHICH THIS PROSPECTUS
SUPPLEMENT IS A PART AND WHICH ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE
PROSPECTUS CONTAINS IMPORTANT INFORMATION REGARDING THIS OFFERING WHICH IS NOT
CONTAINED HEREIN, AND PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS
AND THIS PROSPECTUS SUPPLEMENT IN FULL. SALES OF THE SERIES 1998-1
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
There is currently no secondary market for the Series 1998-1 Certificates, and
there is no assurance that one will or, if one does develop, that it will
continue until the Series 1998-1 Certificates are paid in full.
Capitalized terms used and not defined herein have the meanings they are given
in the Prospectus.
S-2
<PAGE> 3
THE DEALER NOTES
GENERAL
Dealer Notes that are conveyed to the Active Trust consist of all
wholesale notes issued by Dealers that are identified by the Servicer as
meeting the eligibility criteria specified in the Applicable Agreement for
Dealer Notes. In order to be eligible, each Dealer Note must be issued
pursuant to NFC's Credit Guidelines and meet certain other criteria provided in
the Agreement. See "Description of the Offered Certificates -- Eligible Dealer
Notes" and "-- Certain Representations and Warranties; Ineligible Dealer Notes;
Purchase of Certificateholders' Interest" in the Prospectus. The aggregate
principal amount of Eligible Dealer Notes as of the Closing Date is expected to
be in excess of $800 million.
The following tables provide general statistics regarding the total
portfolio of wholesale notes serviced by NFC (the "Wholesale Portfolio") for
the periods ended on the dates specified. As of the Closing Date, the Dealer
Notes which are expected to be held in the 1990 Trust will represent
approximately 95% of the Wholesale Portfolio. However, there can be no
assurance that the Dealer Notes which are transferred to the 1990 Trust after
the Closing Date and which, after the 1990 Trust Termination Date, will be
transferred to the Master Trust, will continue to constitute such a significant
portion of the Wholesale Portfolio. There can be no assurance that the
experience of the Dealer Notes in the future will be similar to the historical
experience set forth below.
The Seller believes that the improved performance of the Wholesale
Portfolio since fiscal year 1993 is largely attributable to the improved United
States economy since 1993. Fluctuations in net losses and delinquencies in the
Wholesale Portfolio generally follow cycles in the overall business environment
and, the Seller believes, are particularly sensitive to the industrial sector,
which generates a significant portion of freight tonnage hauled. Truck demand
and Wholesale Portfolio performance also depend on general economic conditions,
interest rates and fuel costs.
S-3
<PAGE> 4
LOSS EXPERIENCE
The following table provides the loss experience on the Wholesale
Portfolio for the periods indicated:
<TABLE>
<CAPTION>
LOSS EXPERIENCE FOR THE WHOLESALE PORTFOLIO
(DOLLARS IN MILLIONS)
=================================================================================================
Annualized
Net Losses Average
(Recoveries)/ Maturity
Fiscal Year- Net Losses Average Average (Days in
To-Date Period Net Dealer Note Liquidations (Recoveries)/ Dealer Note Dealer Notes Year/
Ending Last Losses of Dealer Liquidations Principal Principal Annualized Annualized
Day of (Recoveries)(1) Notes(1) (1) Balance(2) Balance(3) Turnover(4) Turnover)
- ----------------- --------------- ------------ ------------- ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal Year 1998
January......... $(0.1) $725.3 (0.01)% $716.7 (0.06)% 4.05x 90.1
April........... (0.3) 1,557.0 (0.02) 775.4 (0.08) 4.02x 90.8
Fiscal Year 1997
January......... 0.0 599.7 0.00 690.2 0.00 3.48x 105.2
April........... (0.1) 1,232.1 (0.01) 683.2 (0.03) 3.61x 101.4
July............ (0.1) 1,945.5 (0.01) 682.3 (0.02) 3.80x 96.1
October......... (0.2) 2,767.8 (0.01) 674.9 (0.03) 4.10x 89.0
Fiscal Year 1996
January......... 0.1 721.6 0.01 913.0 0.04 3.16x 115.5
April........... 0.0 1,436.2 0.00 920.3 0.00 3.12x 117.0
July............ 0.0 2,139.8 0.00 906.5 0.00 3.15x 116.2
October......... (0.2) 2,874.4 (0.01) 859.7 (0.02) 3.34x 109.3
Fiscal Year 1995
January......... (0.1) 618.6 (0.01) 597.5 (0.07) 4.14x 88.2
April........... (0.1) 1,237.5 (0.01) 643.9 (0.03) 3.84x 95.1
July............ (0.3) 1,963.3 (0.02) 689.7 (0.06) 3.80x 96.3
October......... (0.9) 2,712.4 (0.03) 706.0 (0.13) 3.84x 95.1
Fiscal Year 1994
January......... 0.1 485.6 0.03 576.8 0.07 3.37x 108.3
April........... 0.1 1,024.8 0.01 593.6 0.03 3.45x 105.8
July............ 0.1 1,656.1 0.01 602.5 0.02 3.66x 99.7
October......... 0.1 2,278.9 0.01 579.2 0.03 3.93x 92.9
Fiscal Year 1993
January......... 0.0 377.1 0.00 431.1 0.00 3.50x 104.3
April........... 0.4 795.2 0.05 461.2 0.17 3.45x 105.8
July............ 0.9 1,283.5 0.07 475.3 0.25 3.60x 101.4
October......... 0.8 1,820.1 0.04 477.1 0.16 3.81x 95.8
</TABLE>
(1) Figures shown for Net Dealer Note Losses (Recoveries) and Liquidations of
Dealer Notes are cumulative within each fiscal year. Thus, figures as of
January 31 of each fiscal year represent the Net Dealer Note Losses or
Liquidations of Dealer Notes for the first quarter of such fiscal year;
figures as of April 30 of each fiscal year represent the cumulative Net
Dealer Note Losses or Liquidations of Dealer Notes for the first six
months of such fiscal year; and so on.
(2) Figures shown for Average Dealer Note Principal Balance are calculated as
the year-to-date average of the daily outstanding Dealer Note Principal
Balance.
(3) The Net Losses (Recoveries) for a fiscal quarter used in the numerator
are cumulative within a fiscal year and have been annualized. Thus, the
numerator for the figure shown as of the fiscal quarter ended January 31
of each fiscal year equals the Net Dealer Note Losses (Recoveries) for
such fiscal quarter multiplied by four; for April 30 equals the cumulative
Net Dealer Note Losses (Recoveries) for the six months ended on such date
multiplied by two; for July 31 equals the cumulative Net Dealer Note
Losses (Recoveries) for the nine months ended on such date multiplied by
4/3; and for October 31 equals such cumulative Net Dealer Note Losses
(Recoveries).
(4) Turnover is calculated as the annualized Liquidations of Dealer Notes for
each fiscal period (annualized in the same manner described in note 3 for
Net Losses (Recoveries)) divided by Average Dealer Note Principal Balance.
S-4
<PAGE> 5
Losses occur on wholesale notes when a Dealer has been terminated under
circumstances in which the Dealer has sold one or more financed vehicles to a
retail customer and has failed to remit the appropriate proceeds of such sale to
NFC. Losses also occur when used trucks financed at wholesale and repossessed
by NFC from a terminated Dealer cannot be sold for the balance due on the
underlying wholesale note. By contrast, losses generally have not occurred when
new trucks financed by NFC are repossessed from terminated Dealers, because such
new trucks are repurchased by the manufacturer NITC or an OEM Supplier. NFC
recognizes losses on wholesale notes at the time it deems such wholesale notes
to be uncollectible (which is generally at the time it has exhausted all
non-legal remedies).
The characteristics of the Dealer Notes held by the Active Trust have not
been and are not expected to be significantly different from the characteristics
of the Wholesale Portfolio at any given time, except to the extent that the
eligibility requirements in the Applicable Agreement for Dealer Notes serve to
screen out certain types of wholesale notes at their inception (such as
wholesale notes from Dealers who are on cash on delivery terms or who are
insolvent, although Dealer Notes which have been or are transferred to the
Active Trust will not become ineligible if the Dealer thereafter is put on cash
on delivery status or becomes insolvent). Such differences are not expected to
affect adversely the performance of the Dealer Notes held by the Active Trust in
comparison to the Wholesale Portfolio at such time.
DELINQUENCIES
The following table presents the aggregate amount of delinquent principal
payments (past due over 30 days) for the Wholesale Portfolio as a percentage of
the total principal amount outstanding as of the end of the fiscal quarters
specified:
<TABLE>
<CAPTION>
DELINQUENCIES AS A PERCENTAGE OF THE WHOLESALE PORTFOLIO
(DOLLARS IN MILLIONS)
=============================================
Total Principal Aggregate Amount of
Amount of Dealer Delinquent Principal
Notes Payments on Dealer Notes
Last Day of Outstanding (Past Due Over 30 Days)
- -------------------------------------------- ---------------- ------------------------
<S> <C> <C> <C>
Fiscal Year 1998
January.................................... $758.2 $2.1 0.28%
April...................................... 892.0 1.1 0.13
Fiscal Year 1997
January.................................... 651.3 1.4 0.22
April...................................... 670.2 2.1 0.31
July....................................... 649.1 2.4 0.38
October.................................... 691.1 2.0 0.28
Fiscal Year 1996
January.................................... 927.6 0.6 0.06
April...................................... 909.7 0.8 0.09
July....................................... 803.2 1.2 0.15
October.................................... 685.9 1.3 0.19
Fiscal Year 1995
January.................................... 611.3 0.6 0.11
April...................................... 766.0 0.3 0.04
July....................................... 723.2 0.4 0.06
October.................................... 854.4 0.4 0.05
Fiscal Year 1994
January.................................... 564.5 0.6 0.11
April...................................... 638.0 0.6 0.09
July....................................... 546.3 0.2 0.04
October.................................... 586.5 0.4 0.06
Fiscal Year 1993
January.................................... 447.4 1.4 0.32
April...................................... 522.9 1.0 0.19
July....................................... 449.3 0.5 0.11
October.................................... 559.0 0.7 0.13
</TABLE>
S-5
<PAGE> 6
AGING EXPERIENCE
The following table provides the age distribution of the Wholesale
Portfolio by principal amount outstanding as of the dates indicated:
<TABLE>
<CAPTION>
AGE DISTRIBUTION OF THE WHOLESALE PORTFOLIO
===============================================
April 30 October 31
----------- --------------------------------
Days 1998 1997 1997 1996 1995 1994 1993
----- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1-180........ 90% 81% 90% 70% 84% 88% 87%
181-360...... 8 11 7 21 14 10 11
Over 360..... 2 8 3 9 2 2 2
----- ---- ---- ---- ---- ---- ----
Total....... 100% 100% 100% 100% 100% 100% 100%
</TABLE>
CYCLICALITY
The average outstanding principal amount of the Wholesale Portfolio has
varied historically according to business cycles in the truck manufacturing
industry. The following table provides the highest, lowest and average
principal amounts outstanding based on month-end balances during the years
indicated:
<TABLE>
<CAPTION>
OUTSTANDING PRINCIPAL AMOUNT OF THE WHOLESALE PORTFOLIO
(DOLLARS IN MILLIONS)
================================================
Highest Lowest
During Year Ended Month-End Month-End Average of
October 31, Amount Amount Month-End Amounts
----------------- ------------- ----------- -------------------
<S> <C> <C> <C>
1997............ $694 $635 $669
1996............ 933 686 850
1995............ 854 588 709
1994............ 638 473 570
1993............ 559 425 475
</TABLE>
S-6
<PAGE> 7
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of the principal
amount of the Wholesale Portfolio as of April 30, 1998:
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION OF THE WHOLESALE PORTFOLIO
(DOLLARS IN MILLIONS)
==================================================================================
Percentage of Percentage of
Amount Wholesale Amount Wholesale
State Outstanding Portfolio State Outstanding Portfolio
- ---------------------------------------------------- ---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Illinois.......... $68.5 7.68% Tennessee......... $18.9 2.12%
Texas............. 68.0 7.63 Virginia.......... 18.7 2.10
Minnesota......... 57.2 6.41 Georgia........... 18.7 2.09
Pennsylvania...... 51.3 5.75 North Carolina.... 15.9 1.78
California........ 46.7 5.24 Nebraska.......... 14.6 1.64
Ohio.............. 42.8 4.80 Utah.............. 14.3 1.60
Indiana........... 37.3 4.18 Massachusetts..... 14.2 1.59
New York.......... 35.7 4.00 Arkansas.......... 13.2 1.47
Maryland.......... 29.6 3.32 Oregon............ 12.5 1.41
Alabama........... 29.5 3.30 Connecticut....... 10.2 1.15
Florida........... 28.5 3.20 Washington........ 9.9 1.11
Michigan.......... 26.9 3.02 Colorado.......... 9.2 1.03
Oklahoma.......... 25.0 2.80 Kentucky.......... 9.1 1.02
Wisconsin......... 23.8 2.67 Louisiana......... 9.0 1.01
Missouri.......... 21.9 2.46 Subtotal...... 820.6 91.99
New Jersey........ 19.7 2.21 All others(1)..... 71.4 8.01
------ ------
Mississippi....... 19.7 2.21 Total......... $892.0 100.00%
</TABLE>
(1) Includes the remaining 19 states (each of which represents less than 1%
of the Wholesale Portfolio).
SEASONALITY
The aggregate principal amount of the Wholesale Portfolio generally varies
during the year. The following table provides the average principal amount of
the Wholesale Portfolio during the months specified:
<TABLE>
<CAPTION>
SEASONAL FLUCTUATION IN THE WHOLESALE PORTFOLIO
(DOLLARS IN MILLIONS)
=======================================
Average Monthly Principal
Amount Outstanding
---------------------------------------
Month 1998 1997 1996 1995 1994 1993
---------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
November.............. $689 $694 $876 $604 $578 $411
December.............. 732 706 938 593 578 434
January............... 726 656 923 597 549 431
February.............. 794 658 925 633 567 459
March................. 836 674 927 683 601 486
April................. 869 677 928 749 649 514
May................... 676 903 776 643 508
June.................. 686 898 814 638 501
July.................. 675 831 752 578 483
August................ 648 759 705 508 453
September............. 645 703 745 480 471
October............... 666 690 811 534 523
</TABLE>
Declines in the principal amount of Dealer Notes outstanding due to
seasonality, cyclicality, competitive conditions or other factors may cause
Principal Collections to be invested in 1990 Trust Investment Securities or
Eligible
S-7
<PAGE> 8
Investments, as the case may be, rather than to be used for acquisitions or
assignments of Dealer Notes. See "Terms of the 1990 Trust Investor Certificates
- -- Application of Collections" and "Description of the Offered Certificates --
Allocation of Collections After the 1990 Trust Termination Date" in the
Prospectus.
LIQUIDATIONS
The following table provides the liquidation history with respect to NFC
month-end balances outstanding and one-month liquidations of notes in the
Wholesale Portfolio for the months indicated:
<TABLE>
<CAPTION>
LIQUIDATION HISTORY OF WHOLESALE PORTFOLIO
(DOLLARS IN MILLIONS)
==================================================================================
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fiscal Year 1998
Balances......... $713 $709 $758 $819 $852 $892
Liquidations..... 216 250 260 240 299 293
Fiscal Year 1997
Balances......... 694 655 651 668 675 670 $681 $688 $649 $635 $649 $691
Liquidations..... 184 209 207 193 208 230 216 238 259 264 263 296
Fiscal Year 1996
Balances......... 904 913 928 926 933 910 896 892 803 709 694 686
Liquidations..... 236 236 250 222 243 249 237 216 251 267 219 249
Fiscal Year 1995
Balances......... 599 588 611 656 737 766 809 806 723 707 778 854
Liquidations..... 213 199 206 183 231 205 225 246 254 256 219 273
Fiscal Year 1994
Balances......... 579 545 565 566 622 638 631 612 546 473 482 587
Liquidations..... 157 182 147 153 192 194 210 206 215 236 189 198
Fiscal Year 1993
Balances......... 428 425 447 473 508 523 504 525 449 450 482 559
Liquidations..... 120 130 127 117 143 158 155 154 179 173 169 195
</TABLE>
MONTHLY PAYMENT RATES
The following table sets forth the highest and lowest monthly payment
rates for the Wholesale Portfolio in the periods shown and the average of the
monthly payment rates for all months during the periods shown, in each case
calculated as the percentage equivalent of a fraction, the numerator of which
is the aggregate of all collections of principal during the specified period
and the denominator of which is the aggregate ending principal balance of the
Wholesale Portfolio for such period.
<TABLE>
<CAPTION>
HISTORICAL MONTHLY PAYMENT RATES
=========================================================
Six Months Ended
April 30 Year Ended October 31
---------------- --------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Highest Month........................ 35.3% 34.3% 42.8% 37.7% 36.2% 49.9% 39.9%
Lowest Month......................... 29.3 26.5 26.5 24.0 26.8 26.0 24.7
Average for the Months in the Period 32.8 30.7 34.6 28.2 31.4 33.3 31.5
</TABLE>
S-8
<PAGE> 9
DESCRIPTION OF THE SERIES 1998-1 CERTIFICATES
MASTER TRUST TRUSTEE
The Bank of New York is the Master Trust Trustee. NFC and its affiliates
(other than the Seller) may from time to time enter into normal banking and
trustee relationships with The Bank of New York or any other bank that may
become a successor Master Trust Trustee. As of the date of this Prospectus
Supplement, the Corporate Trust Office is located at 101 Barclay Street, New
York, New York 10286, Attention: Corporate Trust Administration.
TERMS AND CONDITIONS
The Series 1998-1 Certificates are a Series of Offered Certificates
described in the attached Prospectus to be issued by the Master Trust. In
addition to the terms and conditions set forth below, reference is made to the
Prospectus for the terms and conditions of the Series 1998-1 Certificates
(including a description of when principal and interest distributions are to be
made on, and settlement information for, the Series 1998-1 Certificates).
Also, see "Other Series Issued by Master Trust" for a description of Other
Series issued by the Master Trust which are outstanding as of the date of this
Prospectus Supplement.
<TABLE>
<S> <C>
Initial Invested Amount.............................. $200,000,000
Expected Payment Date................................ July 25, 2008
Subordinated Percentage.............................. 15.5%
Specified Accumulation Period Commencement Date...... October 1, 2007
Series Termination Date.............................. July 25, 2011
</TABLE>
There will be no Investment Events with respect to the Series 1998-1
Certificates and thus there will be no Investment Period, Investment Period
Commencement Date, Investment Period Short Fall Amount or Fully Funded Date.
In addition, there will be no Negative Carry Reserve Fund with respect to the
Series 1998-1 Certificates and thus there will be no Negative Carry Reserve
Fund Deposit Amount, Negative Carry Reserve Fund Required Amount or Negative
Carry Subordinated Amount.
"Accumulation Period Commencement Date" shall mean the first day of the
nth full Due Period prior to the Expected Payment Date where n is the
number of Due Periods in the Accumulation Period Length; provided, however,
that the Accumulation Period Commencement Date shall be the Specified
Accumulation Period Commencement Date if, on the Specified Accumulation
Period Commencement Date, any other outstanding Series shall have entered
into an investment period or an early amortization period; and provided
further that, if the Accumulation Period Length and the Accumulation Period
Commencement Date have been determined previously but the Accumulation
Period has not commenced and any other outstanding Series shall enter into
an investment period or any early amortization period, the Accumulation
Period Commencement Date shall be the date that such outstanding Series
shall have entered into an investment period or an early amortization
period.
"Accumulation Period Length" shall mean a period which is between one
and nine Due Periods and which is determined by the Servicer in its sole
discretion on or prior to the first day of the Due Period which is nine
months prior to the Due Period related to the Distribution Date which is
the Expected Payment Date.
"LIBOR" shall mean (a) prior to the 1990 Trust Termination Date, the
one-month London interbank offered rate as determined by the 1990 Trust
Trustee in accordance with the 1990 Trust Agreement, and (b) after the 1990
Trust Termination Date, the interest rate determined by the Master Trust
Trustee in accordance with the following provisions:
(i) On each LIBOR Determination Date, LIBOR will be determined on the
basis of the offered rates for deposits in United States Dollars having
a one month maturity, which appear on the Reuters Screen LIBO Page as
of 11:00 A.M., London time, on such LIBOR Determination Date. Such
posted offered rates are for value on the second business day after
which dealings in deposits in United States Dollars are transacted in
the London interbank market. If at least two such offered rates appear
on the Reuters Screen LIBO Page, the rate
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<PAGE> 10
in respect of such LIBOR Determination Date will be the arithmetic mean
(rounded, if necessary, to the nearest one hundred-thousandth of a
percent) of such offered rates as determined by the Master Trust
Trustee. If fewer than two offered rates appear, LIBOR in respect of
such LIBOR Determination Date will be determined as if the parties had
specified the rate described in (ii) below.
(ii) On any LIBOR Determination Date on which fewer than two offered
rates appear on the Reuters Screen LIBO Page as specified in (i) above,
LIBOR will be determined on the basis of the rates at which deposits in
United States Dollars are offered by the Reference Banks at
approximately 11:00 A.M., London time, on such LIBOR Determination Date
to prime banks in the London interbank market, having a one month
maturity, such deposits commencing on the second London business day
immediately following such LIBOR Determination Date and in a principal
amount of not less than U.S. $1,000,000 that is representative for a
single transaction in such market at such time. The Master Trust
Trustee will request the principal London office of each of such
Reference Banks to provide a quotation of its rate. If at least two
such quotations are provided, LIBOR in respect of such LIBOR
Determination Date will be the arithmetic mean (rounded, if necessary,
to the nearest one hundred-thousandth of a percent) of such quotations.
If fewer than two quotations are provided, LIBOR in respect of such
LIBOR Determination Date will be the arithmetic mean (rounded, if
necessary, to the nearest one hundred-thousandth of a percent) of the
rates quoted by three major banks in The City of New York selected by
the Master Trust Trustee at approximately 11:00 A.M., New York City
time, on such LIBOR Determination Date for loans in United States
Dollars to leading European banks, having a one month maturity, such
loans commencing on the second London business day immediately
following such LIBOR Determination Date and in a principal amount of
not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time, provided, however, that if the
banks in The City of New York selected as aforesaid by the Master Trust
Trustee are not quoting as mentioned in this sentence, LIBOR with
respect to such LIBOR Determination Date will be LIBOR in effect
immediately prior to such LIBOR Determination Date.
"LIBOR Determination Date" means, with respect to any Distribution
Period, the date which is two London business days prior to the start of
such Distribution Period, which with respect to the Initial Distribution
Period is July 15, 1998.
"Minimum Series Seller's Interest" shall mean, with respect to any
business day after the 1990 Trust Termination Date, the sum of (a) the
Available Subordinated Amount as of the end of the preceding Transfer Date
and (b) the Required Excess Seller Interest as of the end of the preceding
Distribution Date.
"New Vehicle Monthly Interest Rate" shall mean, with respect to any Due
Period, the product of (a) the per annum rate of interest and finance
charges billed by NFC during such Due Period on Dealer Notes financing new
vehicles and (b) the quotient of (i) the number of days during such Due
Period and (ii) the actual number of days in the related calendar year.
"Offered Certificate Rate" shall mean the interest rate on the Series
1998-1 Certificates, which shall be calculated on the basis of actual days
elapsed and a 360-day year, and for the Initial Distribution Period and for
each Distribution Period thereafter will equal LIBOR as of the related
LIBOR Determination Date plus 0.16%.
"Projected Dealer Note Income" shall mean, on any Transfer Date after
the 1990 Trust Termination Date, an amount equal to the sum of (a) the
product of (i) the principal amount of Dealer Notes financing new vehicles
outstanding on such Transfer Date, (ii) the New Vehicle Monthly Interest
Rate for the Due Period in which such Transfer Date occurs and (iii) the
Series Allocation Percentage for such Due Period and (b) the product of (i)
the principal amount of Dealer Notes financing used vehicles outstanding on
such Transfer Date, (ii) the Used Vehicle Monthly Interest Rate for such
Due Period and (iii) the Series Allocation Percentage for such Due Period.
"Projected Monthly Interest" shall mean, on any LIBOR Determination
Date after the 1990 Trust Termination Date with respect to the related
Distribution Period, an amount equal to the product of (a) the Offered
Certificate Rate for such Distribution Period, (b) the Invested Amount as
of the immediately preceding Distribution Date and (c) the result of (i)
the actual number of days in such Distribution Period divided by (ii) 360.
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<PAGE> 11
"Projected Monthly Servicing Fee" shall mean, on any Transfer Date
after the 1990 Trust Termination Date with respect to the Due Period in
which such Transfer Date occurs, an amount equal to one-twelfth of the
product of (a) 1%, (b) the aggregate principal amount of Dealer Notes as of
such Transfer Date, (c) the Series 1998-1 Allocation Percentage for the Due
Period related to such Transfer Date and (d) the Floating Allocation
Percentage for the Due Period related to such Transfer Date.
"Projected Spread" shall mean, on any Transfer Date after the 1990
Trust Termination Date with respect to the Distribution Period next
following the Distribution Period to which such Transfer Date relates, the
sum of (a) the positive amount, if any, by which (i) the sum of (A)
Projected Monthly Interest for such Distribution Period and (B) the
Projected Monthly Servicing Fee for the Due Period in which such Transfer
Date occurs exceeds (ii) the Projected Dealer Note Income as of such
Transfer Date and (b) 1.25% of the Invested Amount as of the preceding
Distribution Date.
"Reference Banks" shall mean the principal London offices of Morgan
Guaranty Trust Company of New York, Swiss Bank Corporation and Barclays
Bank PLC.
"Required Excess Seller Interest" shall mean, with respect to any
business day, 3.0% of the Invested Amount as of the end of the preceding
Distribution Date (and such percentage shall be the "Required Excess Seller
Interest Percentage").
"Required Subordinated Amount" shall mean, with respect to any Transfer
Date related to a Due Period commencing after the 1990 Trust Termination
Date, an amount equal to 87.1% of the Maximum Subordinated Amount as of
such Transfer Date.
"Series Allocable Servicing Fee" shall equal, for each Due Period
commencing after the 1990 Trust Termination Date and occurring prior to the
earlier of the first Distribution Date following the Series Termination
Date and the first Distribution Date on which the Invested Amount is zero,
an amount equal to one-twelfth of the product of (a) 1%, (b) the aggregate
principal amount of Dealer Notes outstanding as of the last day of such Due
Period, and (c) the Series Allocation Percentage with respect to such Due
Period.
"Used Vehicle Monthly Interest Rate" shall mean, with respect to any
Due Period, the product of (a) the per annum rate of interest and finance
charges billed by NFC during such Due Period on Dealer Notes financing used
vehicles and (b) the quotient of (i) a number equal to the number of days
during such Due Period and (ii) the actual number of days in the related
calendar year.
INVESTMENT IN STRUCTURED NOTES BACKED BY INVESTOR CERTIFICATES
In addition to the investments described as Eligible Investments in the
Prospectus, Eligible Investments for the Excess Funding Account will include
any security (a "SPECIAL STRUCTURED NOTE") issued by a trust (the "SPECIAL
ISSUER") the assets of which consist solely of Investor Certificates issued by
the Master Trust and of one or more liquidity swap arrangements for the benefit
of investors in the Special Issuer. In addition, the Rating Agencies will
permit 100% of the Eligible Investments in the Excess Funding Account to
consist of Special Structured Notes, so long as such Special Structured Notes
have at the time of the Master Trust's investment therein a credit rating from
each of the Rating Agencies in the highest investment category granted thereby,
notwithstanding the otherwise applicable limitation that Eligible Investments
consisting of obligations of or investments in any single issuer not exceed the
greater of $1,000,000 and 20% of the aggregated amount of funds in the Series
Principal Account, the Excess Funding Account, the Negative Carry Reserve Fund
and the Liquidity Reserve Fund. See "Description of the Offered Certificates
- -- Master Trust Accounts; Other Accounts for the Offered Series" in the
Prospectus.
In the event that an Early Amortization Event occurs at a time that
Special Structured Notes are held in the Excess Funding Account, an Early
Distribution will be deemed to occur immediately prior to the end of the last
day of the Revolving Period with respect to a portion (the "EARLY DISTRIBUTION
AMOUNT") of the Invested Amount of the Offered Certificates equalling the
principal amount of the Special Structured Notes held in the Excess Funding
Account. An "EARLY DISTRIBUTION" with respect to the Offered Certificates
means that principal in respect of the Offered Certificates, in an amount equal
to the principal amount of the Special Structured Notes held in the Excess
Funding Account, will
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<PAGE> 12
be deemed to be paid to the Special Issuer in exchange for the cancellation of
such Special Structured Notes. The effect of such an Early Distribution will be
to reduce, simultaneously, the Invested Amount of the Offered Certificates and
the amount of Eligible Investments in the Excess Funding Account, each by an
amount equal to the Early Distribution Amount.
RATINGS OF THE CERTIFICATES
It is a condition to issuance of the Series 1998-1 Certificates that they
be rated in the highest long-term rating category by each of Standard and Poor's
Ratings Services and Moody's Investors Service, Inc. The rating of the Series
1998-1 Certificates addresses the likelihood of the timely payment of interest
at the Offered Certificate Rate and the ultimate payment of principal by the
Series Termination Date on the Series 1998-1 Certificates. However, a Rating
Agency does not evaluate, and the rating of the Series 1998-1 Certificates does
not address, the likelihood that the outstanding principal amount of the Series
1998-1 Certificates will be paid on the Expected Payment Date or the likelihood
of the payment of any penalty interest. The rating of the Series 1998-1
Certificates is based primarily on the value of the Class A-6 Investor
Certificate and the Dealer Notes and the rating requirements for investments of
funds in Eligible Deposit Accounts maintained for the benefit of the Series
1998-1 Certificateholders and the level of subordination of the 1990 Trust
Seller Interest and the Master Trust Seller's Interest. A rating is not a
recommendation to buy, sell or hold securities, inasmuch as such rating does not
comment as to the market price or the suitability for a particular investor.
There is no assurance that a rating will remain for any given period of time or
that a rating will not be lowered or withdrawn entirely by a Rating Agency if in
its judgment circumstances in the future so warrant.
EARLY AMORTIZATION EVENTS
An "Early Amortization Event" with respect to Series 1998-1 refers to any
of the following events:
(a) the Master Trust becomes an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, and is not exempt from
compliance with such Act;
(b) the Invested Amount is not reduced to zero by the Expected Payment
Date;
(c) the United States government or any agency or instrumentality
thereof files a notice of a lien under Internal Revenue Code Section 6323
or any similar statutory provision (including, but not limited to, 302(f)
or Section 4068 of ERISA) on the assets of NFC or NFSC which is or may in
the future be prior to the lien of the Master Trust Trustee on the assets
of the Master Trust (including without limitation proceeds of the Dealer
Notes);
(d) failure on the part of the Seller (i) to make any payment,
distribution or deposit required under the Pooling and Servicing Agreement
on the date due or within five business days thereafter or (ii) to observe
or perform in any material respect any other material covenants or
agreements of the Seller, which continues unremedied for a period of 60
days after written notice of such failure shall have been given to the
Seller;
(e) any representation or warranty made by the Seller pursuant to the
Pooling and Servicing Agreement or any information contained in the
schedule of Dealer Notes delivered thereunder shall prove to have been
incorrect in any material respect when made or when delivered, which
representation, warranty or schedule, or the circumstances or condition
that caused such representation, warranty or schedule to be incorrect,
continues to be incorrect or uncured in any material respect for a period
of 60 days after written notice of such incorrectness shall have been given
to the Seller and as a result of which the interests of the Series 1998-1
Certificateholders are materially and adversely affected, except that an
Early Amortization Event shall not be deemed to occur if the Seller has
repurchased the related Dealer Notes or all such Dealer Notes, if
applicable, during such period in accordance with the provisions of the
Pooling and Servicing Agreement;
(f) after the 1990 Trust Termination Date, the Seller shall become
legally unable for any reason to transfer Dealer Notes to the Master Trust
in accordance with the provisions of the Pooling and Servicing Agreement;
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<PAGE> 13
(g) on any Transfer Date related to a Due Period commencing after the
1990 Trust Termination Date, the Available Subordinated Amount for such
Transfer Date will be reduced to an amount less than the Required
Subordinated Amount;
(h) any Servicer Termination Event shall occur (i) which would have a
material adverse effect on the Series 1998-1 Certificateholders and (ii)
for which the Servicer has received a notice of termination;
(i) after the 1990 Trust Termination Date, the delivery by the Seller
to the Master Trust Trustee of a notice stating that the Seller will no
longer continue to sell Dealer Notes to the Master Trust commencing on the
date specified in such notice;
(j) after the 1990 Trust Termination Date, on three consecutive
Determination Dates, the "Average Coverage Differential" (defined as the
average of the highest three of the four most recent Coverage Differentials
(defined generally as the difference between the annualized percentage
yield on the Dealer Notes and the sum of 1.00% and the Offered Certificate
Rate for the related Due Period)) shall be equal to or less than negative
two percent (-2.00%);
(k) at the end of any Due Period commencing after the 1990 Trust
Termination Date, the Master Trust Seller's Interest is reduced to an
amount less than the Master Trust Minimum Seller's Interest and the Seller
has failed to assign additional Dealer Notes or cash to the Master Trust in
the amount of such deficiency within ten business days following the end of
such Due Period;
(l) on any Determination Date after the 1990 Trust Termination Date,
the Turnover is less than 1.7;
(m) on any Determination Date after the 1990 Trust Termination Date,
the quotient of (i) the sum of Dealer Note Losses for each of the related
Due Period and the five immediately preceding Due Periods and (ii) the sum
of Principal Collections for each of the related Due Period and the five
immediately preceding Due Periods, is greater than or equal to 1%;
(n) at any time prior to the 1990 Trust Termination Date, a 1990 Trust
Amortization Event occurs under the 1990 Trust with respect to the Related
1990 Certificate (other than a 1990 Trust Amortization Event that also
constitutes an Early Amortization Event under the Master Trust) or the
Scheduled Class Amortization Date occurs with respect to the Related 1990
Certificate;
(o) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to the Seller, NFC, NITC or NIC; and
(p) after the 1990 Trust Termination Date, failure on the part of NITC
to make a deposit in the Interest Deposit Account required by the terms of
the Master Trust Interest Deposit Agreement on or before the date occurring
five business days after the date such deposit is required by the Master
Trust Interest Deposit Agreement to be made.
Upon the occurrence of Early Amortization Event (c), distributions in
respect of the Invested Amount will commence on the immediately succeeding
Distribution Date. Upon the occurrence of any other Early Amortization Event,
distributions in respect of the Invested Amount will commence at the time
described in the Prospectus.
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<PAGE> 14
OTHER SERIES ISSUED BY THE MASTER TRUST
The table below sets forth the principal characteristics of the other
Series of investor certificates issued by the Master Trust which are
outstanding on the date of this Prospectus Supplement.
<TABLE>
<CAPTION>
SERIES 1995-1
<S> <C>
Certificate Rate ......................................... LIBOR + 0.30%
Closing Date .............................................. June 8, 1995
Expected Payment Date .................................. August 25, 2004
Initial Invested Amount ................................... $200,000,000
Interest in 1990 Trust .................. Class A-4 Investor Certificate
Number of classes within Series .................................... One
Ordinary means of principal repayment .............. Accumulation Period
Primary source of credit enhancement ..................... Subordination
Series Termination Date ................................ August 25, 2007
Servicing Fee Percentage ............................................ 1%
Subordinated Percentage .......................................... 15.5%
SERIES 1997-1
Certificate Rate ......................................... LIBOR + 0.15%
Closing Date ........................................... August 19, 1997
Expected Payment Date .................................. August 25, 2003
Initial Invested Amount ................................... $200,000,000
Interest in 1990 Trust .................. Class A-5 Investor Certificate
Number of classes within Series .................................... One
Ordinary means of principal repayment .............. Accumulation Period
Primary source of credit enhancement ..................... Subordination
Series Termination Date ................................ August 25, 2006
Servicing Fee Percentage ............................................ 1%
Subordinated Percentage .......................................... 15.5%
</TABLE>
1990 TRUST INVESTOR CERTIFICATES
PRINCIPAL TERMS
The principal terms of each Class of 1990 Trust Investor Certificates (the
"Principal Terms") are as follows:
Related 1990 Certificate. The Class A-6 Investor Certificate is the
Related 1990 Certificate to be issued to the Master Trust in connection with
the issuance of the Series 1998-1 Certificates, as described in the attached
Prospectus. The Class A-6 Investor Certificate will be issued by the 1990
Trust. In addition to the terms and conditions set forth below, reference is
made to the Prospectus for the terms and conditions of the Class A-6 Investor
Certificate.
<TABLE>
<S> <C>
Class Initial Invested Amount.............. $200,000,000
Class Initial Investor Interest............ $200,000,000
Class Termination Date..................... June 25, 2011
</TABLE>
The Related 1990 Certificate Rate for the Class A-6 Investor Certificate
equals LIBOR plus the Class Certificate Margin. The "Class Certificate Margin"
with respect to any Distribution Period shall be an amount equal to (a) the
product of (1) the sum of LIBOR with respect to such Distribution Period and
0.16% and (2) a fraction the numerator of which is the number of days in the
related Distribution Period and the denominator of which is 30 days (39 days
with respect to the Initial Distribution Period) minus (b) LIBOR with respect
to such Distribution Period. The "Scheduled
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<PAGE> 15
Class Amortization Date" for the Class A-6 Investor Certificate shall mean the
earlier of (a) July 25, 2008, and (b) the date on which any Early Amortization
Event with respect to the Series 1998-1 Certificates occurs.
<TABLE>
<CAPTION>
Class A-3 Investor Certificates
<S> <C>
Class Initial Invested Amount.................... $100,000,000
Class Initial Investor Interest.................. $100,000,000
Class Certificate Margin................................ 0.90%
Scheduled Class Amortization Date............. December 1,1998
Class Termination Date....................... January 25, 2003
Class A-4 Investor Certificates
Class Initial Invested Amount.................... $207,860,000
Class Initial Investor Interest.................. $207,860,000
Class Certificate Margin................................ 0.30%
Class Termination Date.......................... July 25, 2007
</TABLE>
The "Scheduled Class Amortization Date" for the Class A-4 Investor
Certificate shall mean the earlier of (a) August 25, 2004 and (b) the date on
which any Early Amortization Event or Investment Event, in each case with
respect to the Series 1995-1 Certificates (the Series of certificates issued by
the Master Trust in connection with the Class A-4 Investor Certificate),
occurs.
<TABLE>
<CAPTION>
Class A-5 Investor Certificates
<S> <C>
Class Initial Invested Amount................... $200,000,000
Class Initial Investor Interest................. $200,000,000
Class Termination Date.......................... July 25, 2006
</TABLE>
The "Class Certificate Margin" with respect to any Distribution Period
shall be an amount equal to (a) the product of (1) the sum of LIBOR with
respect to such Distribution Period and 0.15% and (2) a fraction the numerator
of which is the number of days in the related Distribution Period and the
denominator of which is 30 (37 with respect to the Initial Distribution Period)
minus (b) LIBOR with respect to such Distribution Period. The "Scheduled Class
Amortization Date" for the Class A-5 Investor Certificate shall mean the
earlier of (a) August 25, 2003, and (b) the date on which any Early
Amortization Event with respect to the Series 1997-1 Certificates occurs.
SUBORDINATION OF SELLER'S INTEREST
The right of the holder of the 1990 Trust Seller Certificate to receive
payments in respect of the 1990 Trust Seller Interest is subordinated to the
interests of the 1990 Trust Investor Certificates, including the Class A-6
Investor Certificate, to the extent of the 1990 Trust Available Subordinated
Amount. As of the June 1998 Distribution Date (after giving pro forma effect
to the issuance of the Class A-6 Investor Certificate to the Master Trust and
the issuance of the Series 1998-1 Certificates by the Master Trust), the 1990
Trust Available Subordinated Amount was $109 million. For additional
information regarding the subordination of the 1990 Trust Seller Interest, see
"Terms of the 1990 Trust Investor Certificates -- Limited Subordination of the
1990 Trust Seller Interest; 1990 Trust Available Subordinated Amount" in the
Prospectus.
ISSUANCE OF ADDITIONAL CLASSES OF CERTIFICATES
The Seller may in the future issue additional classes of Dealer Note
Asset Backed Certificates ("Additional Classes") which would be payable out of
Series Allocable Principal Collections and Series Allocable Finance Charge
Collections allocated to the Series 1998-1 Certificates on the basis of the
Series Allocation Percentage for the Series 1998-1 Certificates. Such issuance
will require amendment to the Pooling and Servicing Agreement, the Supplement
with respect to the Series 1998-1 Certificates and other related documents,
which, not withstanding the description set forth
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<PAGE> 16
under the caption "Description of the Offered Certificates -- Amendments" in the
Prospectus, may be done without the consent of the holders of the Series 1998-1
Certificates provided that the Rating Agency Condition shall have been satisfied
with respect to the Series 1998-1 Certificates in connection with any such
issuance.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Seller has agreed to sell to J.P. Morgan
Securities, Inc. (the "Underwriter"), and the Underwriter has agreed to
purchase from the Seller, all of the Series 1998-1 Certificates.
The Underwriter intends initially to sell the Series 1998-1 Certificates
to a trust with respect to which the Underwriter will act as depositor. The
Seller does not intend to apply for listing of the Series 1998-1 Certificates
on a national securities exchange, and has been advised by the Underwriter that
it does not intend to make a market in the Series 1998-1 Certificates.
In the ordinary course of its business, the Underwriter and its affiliates
have engaged and may in the future engage in commercial banking or investment
banking transactions with affiliates of the Seller, including the Seller's
parent, NFC.
The Seller has agreed to indemnify the Underwriter against certain
liabilities including liabilities under the Securities Act of 1933 and to
contribute to payments the Underwriter may be required to make in respect
thereof.
LEGAL MATTERS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Series 1998-1 Certificates will be passed upon
for the Underwriter by Mayer, Brown & Platt.
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<PAGE> 17
INDEX OF TERMS
1990 Trust.................................................................S-1
1990 Trust Agreement.......................................................S-1
Accumulation Period Commencement Date................................S-9, S-13
Accumulation Period Length.................................................S-9
Additional Classes........................................................S-15
Average Coverage Differential.............................................S-13
Class A-6 Investor Certificate.............................................S-1
Class Certificate Margin............................................S-14, S-15
Closing Date...............................................................S-1
Distribution Date..........................................................S-1
Early Amortization Event..................................................S-12
Early Distribution........................................................S-11
Early Distribution Amount.................................................S-11
Expected Payment Date......................................................S-1
Initial Distribution Period................................................S-1
Issuer.....................................................................S-1
LIBOR......................................................................S-9
LIBOR Determination Date..................................................S-10
Master Trust...............................................................S-1
Master Trust Trustee.......................................................S-1
Minimum Series Seller's Interest..........................................S-10
New Vehicle Monthly Interest Rate.........................................S-10
NFC........................................................................S-1
NFSC.......................................................................S-1
NIC........................................................................S-2
NITC.......................................................................S-2
Offered Certificate Rate.............................................S-1, S-10
Pooling and Servicing Agreement............................................S-1
Principal Terms...........................................................S-14
Projected Dealer Note Income..............................................S-10
Projected Monthly Interest................................................S-10
Projected Monthly Servicing Fee...........................................S-11
Projected Spread..........................................................S-11
Prospectus.................................................................S-1
Reference Banks...........................................................S-11
Required Excess Seller Interest...........................................S-11
Required Excess Seller Interest Percentage................................S-11
Required Subordinated Amount..............................................S-11
Scheduled Class Amortization Date...................................S-14, S-15
Seller.....................................................................S-1
Series 1998-1 Certificates.................................................S-1
Series Allocable Servicing Fee............................................S-11
Servicer...................................................................S-1
Special Issuer............................................................S-11
Special Structured Note...................................................S-11
Underwriter...............................................................S-16
Underwriting Agreement....................................................S-16
Used Vehicle Monthly Interest Rate........................................S-11
Wholesale Portfolio........................................................S-3
S-17