CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
June 15, 1998
Date of Report .........................................................
(Date of earliest event reported)
CARCO Auto Loan Master Trust
........................................................................
(Exact name of registrant as specified in its charter)
State of Delaware 333-38873 and 33-55795 None
......................................................................
(State or other jurisdiction (Commission) (IRS Employer
of incorporation) File No.) Identification No.)
27777 Franklin Rd., Southfield, Michigan 48034
..............................................
(Address of principal executive offices)
(248) 948-3067
Registrant's telephone number, including area code....................
This filing relates to Registration Statement No. 333-38873 and
33-55795.
<PAGE>
Item 5. Other Events.
In connection with the proposed offering of CARCO Auto Loan Master Trust
Floating Rate Auto Loan Asset Backed Certificates, Series 1998-1, Class A-1
and Class A-2, attached as Exhibit 99 are certain materials prepared by
Chrysler Financial Corporation that are required to be filed pursuant to the
no-action letter dated May 20, 1994 issued by the staff of the Securities and
Exchange Commission (the "Commission") to Kidder, Peabody Acceptance
Corporation-1, Kidder, Peabody & Co. Incorporated and Kidder Structured Asset
Corporation and the no-action letter dated February 15, 1995 issued by the
staff of the Commission to the Public Securities Association.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
Listed below are the financial statements, pro forma financial
information and exhibits, if any, filed as a part of this Report:
(a) Financial statements of businesses acquired;
None
(b) Pro forma financial information:
None
(c) Exhibits:
Exhibit 99
<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.
CHRYSLER FINANCIAL CORPORATION
Date: June 16, 1998 By: /s/ B.C. Babbish
------------------
B.C. Babbish
Assistant Secretary
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description of Exhibit
- - ------- --------------------------------
99 Material prepared by Chrysler Financial Corporation in connection
with CARCO Auto Loan Master Trust Floating Rate Auto Loan Asset
Backed Certificates, Series 1998-1 pursuant to the no-action letter
dated May 20, 1994 issued by the staff of the Securities and
Exchange Commission (the "Commission") to Kidder, Peabody
Acceptance Corporation-1, Kidder, Peabody & Co. Incorporated and
Kidder Structured Asset Corporation and the no-action letter dated
February 15, 1995 issued by the staff of the Commission to the
Public Securities Association.
<PAGE>
EXHIBIT 99
CARCO Auto Loan Master Trust Floating Rate Auto Loan Asset Backed
Certificates, Series 1998-1 Structural and Collateral Materials
Exhibit 99
CARCO Auto Loan Master Trust
U.S. AUTO RECEIVABLES COMPANY, Seller
CHRYSLER FINANCIAL CORPORATION, Servicer
Subject to Revision
Term Sheet dated June 16, 1998.
Issuer .................. CARCO Auto Loan Master Trust (the "Trust").
Seller .................. U.S. Auto Receivables Company ("USA" or the
"Seller").
Servicer ................ Chrysler Financial Corporation ("CFC" or the
"Servicer").
Trustee ................. The Bank of New York (the "Trustee").
Title of Securities ..... $1,000,000,000 Floating Rate Auto Loan Asset Backed
Certificates, Series 1998-1 (the "Series 1998-1
Certificates"). The Series 1998-1 Certificates will
be issued in two classes (each a "Class"):
$500,000,000 aggregate initial principal amount of
Class A-1 Certificates, Series 1998-1 (the "Class
A-1 Certificates"); and $500,000,000 aggregate
initial principal amount of Class A-2 Certificates,
Series 1998-1 (the "Class A-2 Certificates").
The Series 1998-1
Invested Amount ...... The aggregate Series 1998-1 Invested Amount is
expected to be $1,000,000,000 on the Series
Issuance Date (based on information as of the
Series Cut-Off Date) and represents the principal
amount of the Series 1998-1 Certificates invested
in Receivables as of the Series Issuance Date. The
Series 1998-1 Invested Amount will be allocated
equally between the Class A-1 Certificates (the
"Class A-1 Invested Amount") and the Class A-2
Certificates (the "Class A-2 Invested Amount"). The
Invested Amount is subject to decrease to the
extent funds are deposited in the Excess Funding
Account and, subsequently, to increase to the
extent amounts are withdrawn from the Excess
Funding Account and paid to the Seller. The
Invested Amount is also subject to reduction during
the Class A-1 Accumulation Period, the Class A-2
Accumulation Period and any Early Amortization
Period and at such other times as deposits are made
to the Excess Funding Account in connection with
the payment of Receivables. Any such increases or
decreases in the aggregate Invested Amount in
connection with deposits to or withdrawals from the
Excess Funding Account generally will be allocated
to the Class A-1 Certificates and the Class A-2
Certificates pro rata based on the Class A-1
Allocation Percentage and the Class A-2 Allocation
Percentage, respectively, for the related
Collection Period. The Class A-1 Allocation
Percentage for any Collection Period is the
percentage obtained by dividing the outstanding
principal amount of the Class A-1 Certificates as
of the last day of the immediately preceding
Collection Period (after giving effect to any
reduction thereof to occur on the immediately
following Distribution Date) by the aggregate
outstanding principal amount of all the Series
1998-1 Certificates as of such last day (after
giving effect
<PAGE>
to any reductions thereof to occur on the
immediately following Distribution Date); and the
Class A-2 Allocation Percentage for any Collection
Period is the percentage obtained by subtracting
from 100% the Class A-1 Allocation Percentage. A
"Collection Period" is a calendar month.
The Trust's assets that are allocated to Series
1998-1 will be allocated in part to the Class A-1
Certificateholders (the "Class A-1
Certificateholders' Interest") and the Class A-2
Certificateholders (the "Class A-2
Certificateholders' Interest"; the Class A-1
Certificateholders' Interest and the Class A-2
Certificateholders' Interest are collectively
referred to herein as the "Series 1998-1
Certificateholders' Interest").
Interest ................ Interest on the principal balance of the Class A-1
Certificates and the Class A-2 Certificates will
accrue at the Class A-1 Certificate Rate and the
Class A-2 Certificate Rate, respectively, and will
be payable to Series 1998-1 Certificateholders on
the fifteenth day of each month (or, if such day is
not a business day, on the next succeeding business
day) (each, a "Distribution Date"), commencing July
15, 1998. Interest will accrue for the period from
and including the most recent Distribution Date to
but excluding the next succeeding Distribution Date
(each an "Interest Period"), except that the first
Interest Period will be the period from and
including the Series Issuance Date to but excluding
the July 1998 Distribution Date. Interest for any
Distribution Date due but not paid on such
Distribution Date will be due on the next
Distribution Date, together with, to the extent
permitted by applicable law, interest on such
amount at the applicable Certificate Rate
calculated on the basis of the Index. The Class A-1
Certificate Rate and the Class A-2 Certificate Rate
for each Interest Period will be determined on the
second day that is both a business day and a day on
which banking institutions in the City of London,
England are not required or authorized by law to be
closed preceding the first day of such Interest
Period. The Class A-1 Certificate Rate will equal
one-month LIBOR (the "Index") for the applicable
Interest Period, plus [ ]%, and the Class A-2
Certificate Rate will equal the Index for the
applicable Interest Period, plus [ ]%; provided
that, if the Class A-1 Certificate Rate or the
Class A-2 Certificate Rate for any Distribution
Date calculated on the basis of the Index is
greater than a rate based primarily on Interest
Collections on the Receivables and earnings on
certain Trust accounts (the "Assets Receivables
Rate"), then the Class A-1 Certificate Rate or the
Class A-2 Certificate Rate, as applicable, for such
Distribution Date will be the Assets Receivables
Rate. If the Class A-1 Certificate Rate or the
Class A-2 Certificate Rate for any Distribution
Date is based on the Assets Receivables Rate, the
excess of (a) the amount of interest on the Class
A-1 Certificates or the Class A-2 Certificates, as
the case may be, that would have accrued in respect
of the related Interest Period had interest been
calculated based on the Index, over (b) the amount
of interest on the Series 1998-1 Certificates of
that Class actually accrued in respect of such
Interest Period based on the Assets Receivables
Rate (such excess, together with the unpaid portion
of any such excess from prior Distribution Dates
(and interest accrued thereon
2
<PAGE>
calculated on the basis of the Index), is referred
to as a "Carry-over Amount") with respect to such
Class of Series 1998-1 Certificates will be paid on
such Distribution Date from amounts on deposit in
the Yield Supplement Account and, if such amounts
are depleted, to the extent funds are allocated and
available therefor after making all required
distributions and deposits with respect to the
Series 1998-1 Certificates, including payments with
respect to principal (including payments to the
Excess Funding Account), interest on the Series
1998-1 Certificates ("Monthly Interest"), the
monthly servicing fee ("the Monthly Servicing
Fee"), the Reserve Fund Deposit Amount and the
investor default amount ("the Investor Default
Amount"). In addition, any Class A-1 Carry-over
Amount outstanding on the final payment date with
respect to the Class A-1 Certificates (the "Class
A-1 Final Payment Date") and any Class A-2
Carry-over Amount outstanding on the final payment
date with respect to the Class A-2 Certificates
(the "Class A-2 Final Payment Date"), after making
the distributions described in the preceding
sentence, will be paid on such date from (i)
certain amounts on deposit in the Reserve Fund and
(ii) certain collections allocable to the Seller on
deposit in the Collection Account on such date.
Interest will be calculated on the basis of the
actual number of days in each Interest Period
divided by 360.
Yield Supplement
Account .............. On the Series Issuance Date, the Seller will
deposit $4,000,000 (0.40% of the principal balance
of the Series 1998-1 Certificates) in a trust
account which will be established by the Seller
with the Trustee (the "Yield Supplement Account").
The Yield Supplement Account for any Distribution
Date will equal 0.40% of the outstanding principal
balance of the Series 1998-1 Certificates for such
Distribution Date (after giving effect to any
change therein on such Distribution Date). The
Yield Supplement Account will be funded, from time
to time, by the deposit thereto of certain amounts
otherwise distributable to the Seller.
Reserve Fund ............ The "Reserve Fund" will be a trust account
established and maintained in the name of the
Trustee for the benefit of the Series 1998-1
Certificateholders. On the Series Issuance Date,
the Seller will deposit $3,500,000 (0.35% of the
principal balance of the Series 1998-1
Certificates) into the Reserve Fund. The "Reserve
Fund Required Amount" for any Distribution Date
will equal 0.35% of the outstanding principal
balance of the Series 1998-1 Certificates for such
Distribution Date (after giving effect to any
change therein on such Distribution Date). The
"Reserve Fund Deposit Amount" is the amount, if
any, by which the Reserve Fund Required Amount
exceeds the amount on deposit in the Reserve Fund.
Funds in the Reserve Fund will be invested in
investments that will mature on or prior to the
next Distribution Date. Amounts on deposit in the
Reserve Fund will be available to pay Monthly
Interest, the Monthly Servicing Fee, Investor
Default Amounts, on the Class A-1 Final Payment
Date, Class A-1 Carry-over Amounts and, on the
Class A-2 Final Payment Date, Class A-2 Carry-over
Amounts.
Class A-1 Expected
Payment Date ......... June 15, 2001.
3
<PAGE>
Class A-2 Expected
Payment Date ......... June 16, 2003.
Excess Funding Account .. Except as provided below, the Excess Funded Amount
(the amount, if any, of the Series 1998-1
Certificates not invested in Receivables) will be
maintained in the a trust account established with
the Trustee (the "Excess Funding Account").
Upon (a) the commencement of any Early Amortization
Period, (b) the December 2000 Distribution Date and
(c) the December 2002 Distribution Date, some or
all of funds on deposit in the Excess Funding
Account will be distributed to the Series 1998-1
Certificateholders or deposited in the Principal
Funding Account.
Class A-1 Accumulation
Period ............... Unless an Early Amortization Event that is not
cured or waived shall have occurred, the Class A-1
Certificates will have a Class A-1 Accumulation
Period of one, two, three, four or five month(s)
long as described in the following paragraph.
During the Class A-1 Accumulation Period, Principal
Collections and certain other amounts allocable to
the Class A-1 Certificateholders' Interest will be
deposited on each Distribution Date in a trust
account established for the benefit of the Series
1998-1 Certificateholders (the "Principal Funding
Account") and used to make principal distributions
to the Class A-1 Certificateholders when due.
On the December 2000 Distribution Date and each
Distribution Date thereafter that occurs prior to
the Class A-1 Accumulation Period Commencement
Date, the Servicer shall calculate the Class A-1
Accumulation Period Length. The "Class A-1
Accumulation Period Length" will be calculated on
each such date as the lesser of (i) the number of
full Collection Periods between such Distribution
Date and the Class A-1 Expected Payment Date and
(ii) the product, rounded upwards to the nearest
integer not greater than five, of (a) one divided
by the lowest Monthly Payment Rate on the
Receivables during the last 12 months and (b) a
fraction, the numerator of which is the sum of (i)
the Class A-1 Invested Amount as of such
Distribution Date (after giving effect to all
changes therein on such date) and (ii) the invested
amounts of all other Series (excluding certain
Series) currently in their amortization or
accumulation periods or expected to be in their
amortization or accumulation periods by the Class
A-1 Expected Payment Date and the denominator of
which is the sum of the Series 1998-1 Invested
Amount and the invested amounts as of such
Distribution Date (after giving effect to all
changes therein on such date) of all other
outstanding Series (excluding certain Series) which
are expected to be outstanding on the Class A-1
Expected Payment Date. The Class A-1 Accumulation
Period Commencement Date (which will be the first
day of a Collection Period) will occur when the
number of full Collection Periods remaining until
the Class A-1 Expected Payment Date first equals
the Accumulation Period Length as calculated above.
If the Class A-1 Accumulation Period Length is one
month, two months, three months, four months or
five months in length, the "Class A-1 Accumulation
Period Commencement Date" shall be the first day of
the May 2001 Collection Period, the April 2001
Collection Period, the March 2001 Collection
Period, the February 2001 Collection Period or the
January
4
<PAGE>
2001 Collection Period, respectively. In addition,
if at any time after the December 2000 Distribution
Date, any other outstanding Series (excluding
certain Series) shall have entered into a
reinvestment period or an early amortization
period, the Class A-1 Accumulation Period
Commencement Date shall be the earlier of (i) the
date that such outstanding Series shall have
entered into its reinvestment period or early
amortization period and (ii) the Class A-1
Accumulation Period Commencement Date as previously
determined.
The effect of the calculation described above is to
permit the reduction of the length of the Class A-1
Accumulation Period based on the invested amounts
of certain other Series which are scheduled to be
in their revolving periods during the Class A-1
Accumulation Period and on increases in the
principal payment rate, which, if continued, would
result in a shorter Class A-1 Accumulation Period.
Class A-2 Accumulation
Period ............... Unless an Early Amortization Event that is not
cured or waived shall have occurred, the Class A-2
will have a Class A-2 Accumulation Period of one,
two, three, four or five month(s) long as described
in the following paragraph. During the Class A-2
Accumulation Period, Principal Collections and
certain other amounts allocable to the Class A-2
Certificateholders' Interest will be deposited each
month in the Principal Funding Account and used to
make distributions to the Class A-2
Certificateholders when due.
On the December 2002 Distribution Date and each
Distribution Date thereafter that occurs prior to
the Class A-2 Accumulation Period Commencement
Date, the Servicer shall calculate the Class A-2
Accumulation Period Length. The "Class A-2
Accumulation Period Length" will be calculated on
each such date as the lesser of (i) the number of
full Collection Periods between such Distribution
Date and the Class A-2 Expected Payment Date and
(ii) the product, rounded upwards to the nearest
integer not greater than five, of (a) one divided
by the lowest Monthly Payment Rate on the
Receivables during the last 12 months and (b)
a fraction, the numerator of which is the sum of
(i) the Class A-2 Invested Amount as of such
Distribution Date (after giving effect to all
changes therein on such date) and (ii) the invested
amounts of all other Series (excluding certain
Series) currently in their amortization or
accumulation periods or expected to be in their
amortization or accumulation periods by the Class
A-2 Expected Payment Date and the denominator of
which is the sum of such Invested Amount and the
invested amounts as of such Distribution Date
(after giving effect to all changes therein on such
date) of all other outstanding Series (excluding
certain Series) which are expected to be
outstanding on the Class A-2 Expected Payment Date.
The Class A-2 Accumulation Period Commencement Date
(which will be the first day of a Collection
Period) will occur when the number of full
Collection Periods remaining until the Class A-2
Expected Payment Date first equals the Class A-2
Accumulation Period Length as calculated above. If
the Class A-2 Accumulation Period Length is one
month, two months, three months, four months or
five months in length, the "Class A-2 Accumulation
Period Commencement Date" shall be the first day of
the May 2003 Collection Period, the April 2003
Collection Period, the March 2003 Collection
Period, the February 2003 Collection Period or the
January 2003
5
<PAGE>
Collection Period, respectively. In addition, if at
any time after the December 2002 Distribution Date,
any other outstanding Series (excluding certain
Series) shall have entered into a reinvestment
period or an early amortization period, the Class
A-2 Accumulation Period Commencement Date shall be
the earlier of (i) the date that such outstanding
Series shall have entered into its reinvestment
period or early amortization period and (ii) the
Class A-2 Accumulation Period Commencement Date as
previously determined.
The effect of the calculation described above is to
permit the reduction of the length of the Class A-2
Accumulation Period based on the invested amounts
of certain other Series which are scheduled to be
in their revolving periods during the Class A-2
Accumulation Period and on increases in the
principal payment rate, which, if continued, would
result in a shorter Class A-2 Accumulation Period.
Early Amortization
Period ............... The Series 1998-1 Certificates will have an Early
Amortization Period if an Early Amortization Event
occurs. During an Early Amortization Period with
respect to Series 1998-1, Principal Collections and
certain other amounts allocable to the Series 1998-1
Certificateholders' Interest will be distributed to
the Series 1998-1 Certificateholders monthly on each
Distribution Date beginning with the Distribution
Date following the Collection Period in which such
Early Amortization Period commences.
The Seller is required to add Receivables to the
Trust under certain circumstances. The failure of
the Seller to add Receivables when required will
result in the occurrence of an Early Amortization
Event. However, if no other Early Amortization
Event has occurred, the Early Amortization Period
resulting from such failure will terminate and the
Class A-1 Revolving Period or the Class A-2
Revolving Period, as applicable, will recommence
when the Seller would no longer be required to add
Receivables to the Trust, so long as the scheduled
termination date of such Revolving Period has not
occurred.
Notwithstanding the foregoing, in the event of the
occurrence of certain Early Amortization Events,
provided that the scheduled termination date of the
Class A-1 Revolving Period or the Class A-2
Revolving Period, as applicable, has not occurred,
such Revolving Period may recommence following
receipt of (i) written confirmation from each
rating agency rating the Series 1998-1 Certificates
(each, a "Rating Agency") (other than Moody's) that
such Rating Agency's rating of the Series 1998-1
Certificates will not be withdrawn or lowered as a
result of such recommencement and (ii) the consent
of Series 1998-1 Certificateholders holding Series
1998-1 Certificates evidencing more than 50% of the
aggregate unpaid principal amount of the Series
1998-1 Certificates to such recommencement.
Subordination of the
Seller's Interest .... If the Interest Collections, Investment Proceeds,
certain amounts in the Reserve Fund, certain
amounts in the Yield Supplement Account and certain
other amounts allocable to the Series 1998-1
Certificateholders for any Collection Period are
not sufficient to cover the interest payable with
respect to the Series 1998-1 Certificates
6
<PAGE>
on the next Distribution Date (plus any overdue
interest and interest thereon), the Monthly
Servicing Fee for such Distribution Date, any
Investor Default Amount for such Distribution Date
and certain other amounts, the Available
Subordinated Amount will be applied to make up such
deficiency. Certain collections allocable to the
Seller on deposit in the Collection Account will
also be applied to pay any Class A-1 Carry-over
Amount on the Class A-1 Final Payment Date and any
Class A-2 Carry-over Amount on the Class A-2 Final
Payment Date, in each case that is not satisfied by
the application of Certificateholder Interest
Collections, Investment Proceeds and funds on
deposit in the Yield Supplement Account and the
Reserve Fund on such date.
The "Available Subordinated Amount" for a
Determination Date is equal to (a) the lesser of
(i) the Available Subordinated Amount for the
preceding Determination Date, minus, with certain
limitations, the Draw Amount for such preceding
Determination Date, minus funds from the Reserve
Fund applied to cover any portion of the Investor
Default Amount, plus the excess, if any, of the
Required Subordinated Amount for such Determination
Date over the Required Subordinated Amount for the
immediately preceding Determination Date due to an
increase in the Subordination Factor, plus the
amount of Excess Servicing available to be paid to
the Seller and (ii) the product of the fractional
equivalent of the Subordinated Percentage and the
Invested Amount minus (b) in the case of clause
(a)(i), the Incremental Subordinated Amount for
such preceding Determination Date, plus (c) the
Incremental Subordinated Amount for the current
Determination Date, plus (d) the Subordinated
Percentage of funds to be withdrawn from the Excess
Funding Account on the succeeding Distribution Date
and paid to the Seller or allocated to one or more
Series; provided, however, (x) that, from and after
the commencement of the Class A-1 Accumulation
Period until the Class A-1 Certificates are paid in
full, (y) from and after the commencement of the
Class A-2 Accumulation Period until the Class A-2
Certificates are paid in full and (z) from and
after the commencement of any Early Amortization
Period that is not terminated as described herein
until the payment in full of the Series 1998-1
Certificates, the Available Subordinated Amount
shall be calculated based on the Invested Amount or
the Class A-2 Invested Amount, as applicable, as of
the close of business on the day preceding such
Class A-1 Accumulation Period, Class A-2
Accumulation Period or Early Amortization Period,
as applicable. The Available Subordinated Amount
for the first Determination Date is equal to the
Required Subordinated Amount. The "Required
Subordinated Amount" shall mean, as of any date of
determination, the sum of (a) the product of the
initial Subordinated Percentage, as adjusted from
time to time other than as a result of an increase
therein at the option of the Seller, and the
Invested Amount and (b) the Incremental
Subordinated Amount.
The "Incremental Subordinated Amount" on any
Determination Date will equal the result obtained
by multiplying (a) a fraction, the numerator of
which is the sum of the Invested Amount on the last
day of the immediately preceding Collection Period
and the Available Subordinated Amount for such
Determination Date (calculated without adding the
Incremental Subordinated Amount for such
7
<PAGE>
Determination Date as described in clause (c)
above), and the denominator of which is the Pool
Balance on such last day by (b) the excess, if any,
of (x) the sum of the Overconcentration Amount, the
Installment Balance Amount and the aggregate amount
of Ineligible Receivables on such Determination
Date over (y) the aggregate amount of Ineligible
Receivables, Receivables in Accounts containing
Dealer Overconcentrations and Receivables in
Installment Balances, in each case that became
Defaulted Receivables during the preceding
Collection Period and are not subject to
reassignment from the Trust, unless certain
insolvency events relating to the Seller or CFC
have occurred.
The "Subordinated Percentage" will initially equal
the percentage equivalent of a fraction, the
numerator of which is the Subordination Factor and
the denominator of which will be the excess of 100%
over the Subordination Factor. The Subordination
Factor will initially be 10%, but will be subject
to increase to 11% in the event that the rating of
CFC's long-term unsecured debt is lowered below
BBB- by Standard & Poor's or withdrawn by Standard
& Poor's, unless the Seller receives written
confirmation from Standard & Poor's that the
failure to so increase the Subordination Factor
would not result in such Rating Agency lowering or
withdrawing its rating of the Series 1998-1
Certificates. The Seller may, in its sole
discretion, increase at any time the Available
Subordinated Amount for so long as the cumulative
amount of such discretionary increases does not
exceed the lesser of (i) $11,111,111 or (ii) 1.11%
of the Invested Amount on such date. The Seller is
not under any obligation to increase the Available
Subordinated Amount at any time, except as
described herein. If the Available Subordinated
Amount were reduced to less than the Required
Subordinated Amount, an Early Amortization Event
would occur. The Seller could elect to increase the
Available Subordinated Amount at the time such an
Early Amortization Event would otherwise occur,
thus preventing or delaying the occurrence of the
Early Amortization Event.
Required Participation
Percentage ........... "Required Participation Percentage" shall mean,
with respect to Series 1998-1, 103%; provided,
however, that if the aggregate amount of Principal
Receivables due from any Dealer or group of
affiliated Dealers at the close of business on the
last day of any Collection Period with respect to
which such determination is being made is greater
than 1.5% of the Pool Balance on such last day, the
Required Participation Percentage shall mean, as of
such last day and with respect to such Collection
Period and the immediately following Collection
Period only, 104%; provided, further, that the
Seller may, upon ten days' prior notice to the
Trustee and the Rating Agencies reduce the Required
Participation Percentage to not less than 100%, so
long as the Rating Agencies shall not have notified
the Seller or the Servicer that any such reduction
will result in a reduction or withdrawal of the
rating of the Series 1998-1 Certificates or any
other outstanding Series or Class of Certificates.
Other Series Issuances .. As of the date hereof, nine other Series issued by
the Trust are outstanding.
8
<PAGE>
Allocations ............. Interest Collections, Principal Collections and
Defaulted Receivables allocated to Series 1998-1
will be further allocated between the Series 1998-1
Certificateholders' Interest and the Seller's
Interest as described below.
Interest Collections and Defaulted Receivables
allocated to Series 1998-1 will be allocated at all
times to the Series 1998-1 Certificateholders'
Interest based on the Floating Allocation
Percentage applicable during the related Collection
Period. The Floating Allocation Percentage for any
Collection Period is the percentage obtained by
dividing the Invested Amount on the last day of the
immediately preceding Collection Period by the
product of (x) the Pool Balance on the last day of
the immediately preceding Collection Period and (y)
the Series Allocation Percentage for the Collection
Period in respect of which the Floating Allocation
Percentage is being calculated. Principal
Collections allocated to Series 1998-1 will be
allocated to the Series 1998-1 Certificateholders'
Interest based on the Floating Allocation
Percentage during any period (a "Nonprincipal
Period") that is not the Class A-1 Accumulation
Period, the Class A-2 Accumulation Period or an
Early Amortization Period and based on the
Principal Allocation Percentage during the Class
A-1 Accumulation Period, the Class A-2 Accumulation
Period and any Early Amortization Period.
"Principal Allocation Percentage" for any
Collection Period generally means the percentage
equivalent (which shall never exceed 100%) of a
fraction, the numerator of which is the sum of (x)
the Class A-1 Invested Amount as of the last day of
the Class A-1 Revolving Period, if such last day
has occurred or, if such last day has not occurred,
as of the last day of the immediately preceding
Collection Period or, after the Class A-1
Certificates have been paid in full, zero and (y)
the Class A-2 Invested Amount as of the last day of
the Class A-2 Revolving Period, if such last day
has occurred or, if such last day has not occurred,
as of the last day of the immediately preceding
Collection Period and the denominator of which is
the product of (x) the Pool Balance as of such last
day and (y) the Series Allocation Percentage for
the Collection Period in respect of which the
Principal Allocation Percentage is being
calculated.
Excess Principal
Collections .......... Principal Collections otherwise allocable to other
Series, to the extent such collections are not needed
to make payments to or deposits for the benefit of
the Certificateholders of such other Series, will be
applied to cover principal payments due to or for the
benefit of the holders of the Series 1998-1
Certificates and of other Series of Certificates
entitled thereto.
Registration of Series
1998-1 Certificates .. The Series 1998-1 Certificates will initially be
represented by one or more Certificates registered
in the name of Cede & Co., as the nominee of The
Depository Trust Company ("DTC"). No person
acquiring an interest in the Series 1998-1
Certificates will be entitled to receive a
definitive certificate representing such person's
interest except under certain limited
circumstances. Series 1998-1 Certificateholders may
hold their Series 1998-1 Certificates through DTC
(in the United States) or through CEDEL,
societe anonyme or the Euroclear System (in
Europe).
9
<PAGE>
Servicing Fee Rate ...... 1.0% or, if the Monthly Servicing Fee has been
waived, 0% for the Distribution Date in respect of
which the Monthly Servicing Fee has been waived.
Optional Repurchase ..... The Class A-1 Certificateholders' Interest will be
subject to optional repurchase by CFC on any
Distribution Date after the Class A-1 Invested
Amount is reduced to an amount less than or equal
to $50,000,000 (10% of the initial outstanding
principal amount of the Class A-1 Certificates);
and the Class A-2 Certificateholders' Interest will
be subject to optional repurchase by CFC on any
Distribution Date after the Class A-2 Invested
Amount is reduced to an amount less than or equal
to $50,000,000 (10% of the initial outstanding
principal amount of the Class A-2 Certificates).
The purchase price will equal the sum of (i) the
Invested Amount of the Class of Certificates to be
repurchased on the Determination Date preceding the
Distribution Date on which the purchase is
scheduled to be made, (ii) accrued and unpaid
interest on that Class of Series 1998-1
Certificates at the applicable Certificate Rate
(together with interest on overdue interest) and
(iii) any outstanding Carry-over Amount with
respect to such Class of Series 1998-1
Certificates.
Class A-1 Termination
Date ................. June 16, 2003.
Class A-2 Termination
Date ................. June 15, 2005.
ERISA Considerations .... Series 1998-1 Certificates may be eligible for
purchase by employee benefit plans.
Certificate Ratings ..... It is a condition to the issuance of the Series
1998-1 Certificates that they be rated in the
highest long-term rating category by at least one
nationally recognized rating agency. A security
rating is not a recommendation to buy, sell or hold
securities and is subject to revision or withdrawal
in the future by the assigning rating agency. The
rating of the Certificates does not address the
likelihood of payment of any Carry-over Amount.
Series Issuance Date .... July 1, 1998.
Series Cut-Off Date ..... May 31, 1998.
10
<PAGE>
THE DEALER FLOORPLAN FINANCING BUSINESS
The Receivables sold to the Trust by the Seller pursuant to a Pooling
and Servicing Agreement among USA, CFC and the Trustee (the "Pooling and
Servicing Agreement") were or will be selected from extensions of credit and
advances made by Chrysler Corporation ("Chrysler") and CFC, directly or as
successor to Chrysler Credit Corporation ("CCC"), to approximately 3,200
domestic motor vehicle dealers to finance their automobile and light duty
truck inventory. CFC, directly or as successor to CCC, financed 56.1% of the
total number of all Chrysler franchised dealers as of March 31, 1998.
Furthermore, CFC, directly or as successor to CCC, has extended credit lines
to 1,175 Chrysler-franchised dealers that also operate non-Chrysler
franchises (representing approximately 41.3% of the aggregate credit lines of
dealers in the U.S. Wholesale Portfolio as of March 31, 1998) and 443
non-Chrysler dealers (representing approximately 15.3% of such aggregate
credit lines). As of March 31, 1998, the balance of Principal Receivables in
the accounts of dealers serviced by CFC (the "U.S. Wholesale Portfolio") was
approximately $10.2 billion. CFC currently services the U.S. Wholesale
Portfolio through its Southfield Support office and through a network of 25
zone offices located throughout the United States.
As of March 31, 1998, the average credit lines per dealer in the U.S.
Wholesale Portfolio for new and used vehicles (which includes Auction
Vehicles) were $2.91 million and $0.44 million, respectively, and the average
balance of principal receivables per dealer was $3.13 million. As of March
31, 1998, the aggregate total receivables balance as a percentage of the
aggregate total credit line was approximately 93.6%.
The following table sets forth the percentages of dealer account
balances by year of credit line origination for the U.S. Wholesale Portfolio.
Portfolio Percentages by Year
of Credit Line Origination
As of March 31, 1998
<TABLE>
<CAPTION>
Prior to
1998 1997 1996 1995 1994 1993 1992 1992
- - ---- ---- ---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1.63% 8.47% 5.65% 7.93% 4.43% 7.27% 6.57% 58.05%
</TABLE>
As of March 31, 1998, the weighted average spread over the Prime Rate
charged to dealers in the U.S. Wholesale Portfolio was approximately 0.86%.
Used Vehicles (which excludes Auction Vehicles) represented
approximately 3.58% of the aggregate principal amount of receivables in the
U.S. Wholesale Portfolio as of March 31, 1998. As of March 31, 1998, Used
Vehicles represented approximately 3.62% of the aggregate principal amount of
Receivables in the Trust (including Excluded Receivables).
The following table provides the percentage of dealers in the U.S.
Wholesale Portfolio that were subject to finance hold.
Finance Hold Experience
As of December 31,
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage
of Dealers ...... 2.1% 1.1% 1.8% 1.6% 3.2% 6.8% 9.4% 6.8% 4.6%
</TABLE>
11
<PAGE>
The following table provides the number and percentage of dealers in
Dealer Trouble Status in the U.S. Wholesale Portfolio.
Dealer Trouble Experience
As of December 31,
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Dealers ........ 24 20 6 12 21 56 100 129 106
Percentage of Dealers .... 0.7% 0.6% 0.2% 0.3% 0.6% 1.8% 3.1% 4.2% 3.5%
</TABLE>
THE ACCOUNTS
As of March 31, 1998, with respect to the Accounts in the Trust: (a)
there were 2,890 Accounts and the Principal Receivables balance was
approximately $8.8 billion; (b) the average credit lines per Dealer for new
and used vehicles (which include Auction Vehicles) were approximately $2.72
million and $0.44 million, respectively, and the average balance of Principal
Receivables per Dealer was approximately $3.04 million; and (c) the aggregate
total Receivables balance as a percentage of the aggregate total credit line
was approximately 96.0%. Unless otherwise indicated, the statistics included
in this paragraph, in the table below and under " -- Geographic Distribution"
with respect to the Accounts and the Receivables in the Trust give effect to
approximately $18.6 million of principal receivables balances with respect to
certain Dealers (the "Excluded Receivables" and the "Excluded Dealers",
respectively) that are in voluntary or involuntary bankruptcy proceedings or
voluntary or involuntary liquidation or that, subject to certain limitations,
are being voluntarily removed by the Seller (or the Servicer on its behalf)
from the Trust. A portion of such principal receivables was created after
such Dealers entered into such status or were designated by the Seller (or
the Servicer on its behalf) for removal from the Trust and, as a result
thereof, are owned by CFC and not the Trust. Principal receivables balances
created prior to such Dealers entering into such status or being designated
for removal from the Trust are included in the Principal Receivables balance.
The following table sets forth the percentages of dealer account
balances by year of credit line origination for the accounts in the Trust.
Portfolio Percentages by Year
of Credit Line Origination
As of March 31, 1998
<TABLE>
<CAPTION>
Prior to
1998 1997 1996 1995 1994 1993 1992 1992
- - ---- ---- ---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0.00% 1.20% 6.12% 6.90% 5.11% 8.17% 7.53% 64.98%
</TABLE>
As of March 31, 1998, the weighted average spread over the Prime Rate
charged to Dealers was approximately 0.87%.
12
<PAGE>
Loss Experience
The following tables set forth the average Principal Receivables
balance and loss experience for each of the periods shown on the U.S.
Wholesale Portfolio. Because the eligible Accounts in the Trust (the
"Eligible Accounts") will be only a portion of the entire U.S. Wholesale
Portfolio, actual loss experience with respect to the Eligible Accounts may
be different. There can be no assurance that the loss experience for the
Receivables in the future will be similar to the historical experience set
forth below with respect to the U.S. Wholesale Portfolio. In addition, the
historical experience set forth below reflects the repurchase provision of
new vehicles in the dealer agreements between Chrysler and the
Chrysler-franchised dealers. If Chrysler is not able to repurchase the new
vehicles under such provision, the loss experience in respect of the U.S.
Wholesale Portfolio may be adversely affected.
Loss Experience for the U.S. Wholesale Portfolio
<TABLE>
<CAPTION>
Three
Months
Ended
March 31, Year Ended December 31,
-------------- -------------------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average
Principal
Receivables
Balance(1) .... $ 9,530 $9,720 $8,877 $ 8,825 $ 8,256 $ 6,754 $6,271 $5,344 $4,826 $4,726 $4,933
Net Losses
(Recoveries)(2) $ (0) $ 1 $ 4 $ (0) $ (1) $ (1) $ 12 $ 26 $ 36 $ 23 $ 13
Net Losses
(Recoveries)/
Liquidations .. (0.000)% 0.005% 0.007% (0.000)% (0.002)% (0.003)% 0.035% 0.098% 0.163% 0.117% 0.060%
Net Losses
(Recoveries)/
Average
Principal
Receivables
Balance(3) .... (0.00)% 0.03% 0.04% (0.00)% (0.01)% (0.01)% 0.19% 0.49% 0.75% 0.49% 0.26%
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------------------
1988 1987 1986 1985 1984 1983 1982 1981 1980 1979
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Principal
Receivables
Balance(1) .... $4,129 $3,787 $2,991 $2,532 $ 2,098 $1,461 $1,451 $1,390 $1,622 $1,837
Net Losses
(Recoveries)(2) $ 3 $ 2 $ 3 $ 1 $ (2) $ 2 $ 14 $ 12 $ 18 $ 11
Net Losses
(Recoveries)/
Liquidations .. 0.015% 0.015% 0.023% 0.004% (0.019)% 0.023% 0.239% 0.225% 0.338% 0.163%
Net Losses
(Recoveries)/
Average
Principal
Receivables
Balance(3) .... 0.07% 0.06% 0.10% 0.02% (0.09)% 0.12% 0.95% 0.85% 1.12% 0.58%
<FN>
- - ----------------
(1) Average Principal Receivables Balance is the average of the month-end
principal balances for the thirteen months ending on the last day of the
period, except for the three months ended March 31, 1998 and 1997 which
are based on a four-month average.
(2) Net losses in any period are gross losses less recoveries for such
period.
(3) Percentages for the three months ended March 31, 1998 and 1997 are
expressed on an annualized basis.
</TABLE>
13
<PAGE>
Aging Experience
The following table provides the age distribution of vehicle inventory
for all dealers in the U.S. Wholesale Portfolio, as a percentage of total
principal outstanding at the date indicated. Because the Eligible Accounts
will only be a portion of the entire U.S. Wholesale Portfolio, actual age
distribution with respect to the Eligible Accounts may be different.
Age Distribution for the U.S. Wholesale Portfolio
<TABLE>
<CAPTION>
As of As of
March 31, December 31,
----------- ---------------------------------------------------------------------------------
Days 1998 1997 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1-120 ........... 76.0% 74.2% 80.1% 80.4% 82.2% 82.5% 82.4% 77.2% 75.9% 72.2% 71.3% 78.8% 73.0% 81.5%
121-180 ......... 12.1 13.0 10.8 10.0 9.3 10.1 9.6 13.8 12.9 13.7 14.5 11.0 13.9 9.2
181-270 ......... 8.4 8.9 4.2 5.0 3.8 4.0 4.6 4.8 4.8 7.1 6.4 4.7 6.8 4.4
Over 270 ........ 3.5 3.9 4.9 4.6 4.7 3.4 3.4 4.2 6.4 7.0 7.8 5.5 6.3 4.9
</TABLE>
Geographic Distribution
The following table provides the geographic distribution of the vehicle
inventory for all dealers in the Trust on the basis of receivables
outstanding and the number of dealers generating such portfolio.
Geographic Distribution of Accounts in the Trust
As of March 31, 1998
<TABLE>
<CAPTION>
Percentage
Percentage of Total of
Receivables Receivables Number Number of
Outstanding Outstanding of Dealers
(2) (2)(4) Dealers(3) (3)(4)
----------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
California ...... $ 792,137,850.89 9.03% 197 6.82%
Texas ........... 652,844,592.22 7.44 185 6.40
New York ........ 616,778,507.51 7.03 195 6.75
New Jersey ...... 528,805,212.70 6.03 128 4.43
Michigan ........ 485,343,700.93 5.53 126 4.36
Illinois ........ 480,334,218.31 5.47 144 4.98
Other(1) ........ 5,218,595,125.07 59.47 1,915 66.26
----------------- ------ ----- ------
Total ........... $8,774,839,207.63 100.00% 2,890 100.00%
================= ====== ===== ======
<FN>
- - ----------------
(1) No other state includes more than 5% of the outstanding Receivables.
(2) Includes Excluded Receivables.
(3) Includes Excluded Dealers.
(4) May not add to 100.0% due to rounding.
</TABLE>
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
Principal with respect to the Series 1998-1 Certificates will be
payable if an Early Amortization Period that is not terminated has commenced.
Full amortization of the Class A-1 Certificates by the June 2001 Distribution
Date (the "Class A-1 Expected Payment Date") and of the Class A-2
Certificates by the June 2003 Distribution Date (the "Class A-2 Expected
Payment Date") depends on, among other things, repayment by Dealers of the
Receivables and may not occur if Dealer payments are insufficient therefor.
Because the Receivables generally are paid upon retail sale of the underlying
Vehicle, the timing of such payments is uncertain. In addition, there is no
assurance that CFC will generate additional Receivables under the Accounts or
that any particular pattern of Dealer payments will occur. In addition, the
shorter the Class A-1 Accumulation Period Length or the Class A-2
Accumulation Period Length the greater the likelihood that payment of the
Class A-1 Certificates in full by the Class A-1
14
<PAGE>
Expected Payment Date or the Class A-2 Certificates in full by the Class A-2
Expected Payment Date, as applicable, will be dependent on the reallocation
of Principal Collections which are initially allocated to other outstanding
Series. If one or more other Series from which Principal Collections are
expected to be available to be reallocated to the payment of the Class A-1
Certificates enters into an early amortization period or reinvestment period
after the December 2000 Distribution Date, Principal Collections allocated to
such Series generally will not be available to be reallocated to make
payments of principal of the Class A-1 Certificates and the final payment of
principal of the Class A-1 Certificates may be later than the Class A-1
Expected Payment Date. If one or more other Series from which Principal
Collections are expected to be available to be reallocated to the payment of
the Class A-2 Certificates enters into an early amortization period or
reinvestment period after the December 2002 Distribution Date, Principal
Collections allocated to such Series generally will not be available to be
reallocated to make payments of principal of the Class A-2 Certificates and
the final payment of principal of the Class A-2 Certificates may be later
than the Class A-2 Expected Payment Date.
Because an Early Amortization Event with respect to the Series 1998-1
Certificates may occur which would initiate an Early Amortization Period, the
final distribution of principal on the Class A-1 Certificates may be made
prior to the scheduled termination of the Class A-1 Revolving Period or prior
to the Class A-1 Expected Payment Date and the final distribution of
principal on the Class A-2 Certificates may be made prior to the scheduled
termination of the Class A-2 Revolving Period or prior to the Class A-2
Expected Payment Date.
The amount of new Receivables generated in any month and monthly
payment rates on the Receivables may vary because of seasonal variations in
Vehicle sales and inventory levels, retail incentive programs provided by
Vehicle manufacturers and various economic factors affecting Vehicle sales
generally. The following table sets forth the highest and lowest monthly
payment rates for the U.S. Wholesale Portfolio during any month 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 period and the denominator of which is
the average aggregate principal balance for such period. Monthly payment
rates reflected in the table include principal credit adjustments. The
monthly payment rates presented for 1979 through 1985 are calculated using
quarterly data while monthly payment rates for 1986 through March of 1998
reflect actual monthly data. There can be no assurance that the rate of
Principal Collections will be similar to the historical experience set forth
below. Because the Eligible Accounts will be only a portion of the entire
U.S. Wholesale Portfolio, historical monthly payment rates with respect to
the Eligible Accounts may be different than those shown below.
Monthly Payment Rates for the U.S. Wholesale Portfolio
<TABLE>
<CAPTION>
Three
Months
Ended
March 31, Year Ended December 31,
----------- ------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Highest Month ... 47.0% 44.5% 57.7% 58.3% 59.1% 59.7% 54.7% 50.6% 49.0% 42.1% 41.5%
Lowest Month .... 42.5 41.1 41.1 43.2 36.5 34.2 35.9 34.4 30.2 25.3 29.5
Average of the
Months in the
Period ........ 44.2 43.3 48.2 49.0 45.6 50.3 46.6 41.3 38.4 35.7 35.6
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
1988 1987 1986 1985 1984 1983 1982 1981 1980 1979
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Highest Month ... 48.7% 40.3% 56.7% 45.9% 43.7% 45.9% 35.5% 34.3% 28.9% 36.5%
Lowest Month .... 29.5 26.8 27.7 35.8 35.7 37.7 29.0 27.4 26.7 26.0
Average of the
Months in the
Period ........ 41.2 34.2 37.7 40.1 39.9 42.2 32.9 32.2 28.1 30.0
</TABLE>
15
