<PAGE>
FILED PURSUANT TO RULE NO. 424(b)(5)
REFERENCE IS MADE TO REGISTRATION NO. 33-55865
DATED NOVEMBER 29, 1994
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 29, 1994)
NAVISTAR FINANCIAL 1994-C OWNER TRUST
$315,029,921.60
$304,000,000.00 Asset Backed Notes
$11,029,921.60 Asset Backed Certificates
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
SELLER
NAVISTAR FINANCIAL CORPORATION
SERVICER
The Navistar Financial 1994-C Owner Trust (the "Trust" or the "Issuer") will be
formed pursuant to a Trust Agreement, to be dated as of December 15, 1994 (the
"Closing Date"), between the Seller and Chemical Bank Delaware, as Owner Trust-
ee, and will issue two classes of Asset Backed Notes (the "Notes") in the re-
spective aggregate principal amounts set forth below pursuant to an Indenture,
to be dated as of the Closing Date, between the Issuer and The Bank of New
York, as Indenture Trustee. The Trust will also issue the 8.30% Asset Backed
Certificates (the "Certificates").
[Continued on following page]
PROCEEDS OF THE ASSETS OF THE TRUST AND AMOUNTS ON DEPOSIT IN THE RESERVE
ACCOUNT ARE THE SOLE SOURCES OF PAYMENTS ON THE SECURITIES. NONE OF THE
SECURITIES REPRESENTS AN INTEREST IN OR OBLIGATION OF, OR IS INSURED OR
GUARANTEED BY, NAVISTAR FINANCIAL CORPORATION, NAVISTAR FINANCIAL RETAIL
RECEIVABLES CORPORATION OR ANY OF THEIR RESPECTIVE AFFILIATES.
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>
FINAL
AGGREGATE SCHEDULED
PRINCIPAL INTEREST DISTRIBUTION PRICE UNDERWRITING PROCEEDS TO THE
AMOUNT RATE(1) DATE TO PUBLIC DISCOUNT SELLER(2)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-1 Notes $207,000,000.00 7.65% December 22, 1997 99.921875% .175% 99.746875%
- ---------------------------------------------------------------------------------------------------------
Class A-2 Notes $ 97,000,000.00 8.00% July 20, 2000 99.781250% .250% 99.531250%
- ---------------------------------------------------------------------------------------------------------
Certificates (3) $ 11,029,921.60 8.30% July 20, 2000 99.828125% .500% 99.328125%
- ---------------------------------------------------------------------------------------------------------
Total $315,029,921.60 $314,526,326.72 $659,345.00 $313,866,981.72
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pass Through Rate, in the case of Certificates.
(2) Before deducting expenses, estimated to be $450,000.00.
(3) The Seller will retain ownership of Certificates with an initial
Certificate Balance of $110,921.60.
The Securities are offered by the Underwriters, subject to prior sale, when, as
and if issued by the Issuer and accepted by the Underwriters, and subject to
approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that the Securities will be
delivered in book-entry form on or about the Closing Date through the
facilities of DTC, against payment therefor in immediately available funds.
J.P. MORGAN SECURITIES INC. CHEMICAL SECURITIES INC.
The date of this Prospectus Supplement is December 7, 1994.
<PAGE>
[Continued from previous page]
Interest on both classes of Notes will accrue at the fixed interest rates
specified below. Interest on the Notes will accrue at the applicable Interest
Rate and will generally be payable monthly on the twentieth day of each month,
or, if any such day is not a Business Day, on the next succeeding Business Day,
commencing on January 20, 1995 (each, a "Distribution Date"). Principal on the
Notes will be payable on each Distribution Date, except that no principal
payments on the Class A-2 Notes will be made until the Class A-1 Notes have
been paid in full. Each class of Notes will be payable in full on the
applicable Final Scheduled Distribution Date. However, the actual payment in
full of either class of Notes could occur sooner.
The Certificates represent fractional undivided interests in the Trust.
Interest to the extent of the Pass Through Rate of 8.30% per annum will be
distributed to the Certificateholders on each Distribution Date. Payments in
respect of the Certificate Balance will be made on and after the Distribution
Date occurring in June 1995. Distributions on the Certificates will be
subordinated in priority to payments due on the Notes as described herein. The
Final Scheduled Distribution Date for the Certificates will be July 20, 2000.
The Trust Property will include a pool of Retail Notes, certain monies due
thereunder on and after November 1, 1994, security interests in the vehicles
financed thereby and certain other property. The Initial Aggregate Receivables
Balance is $315,029,921.60.
There is currently no secondary market for the Securities. There can be no
assurance that a secondary market for the Securities will develop or, if it
does develop, that it will continue. The Securities will not be listed on any
securities exchange.
The Securities initially will be represented by Securities registered in the
name of Cede & Co., the nominee of DTC. The interests of beneficial owners of
the Securities will be represented by book entries on the records of DTC and
participating members thereof. Definitive Securities will be available only
under limited circumstances.
S-2
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN 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 THE SELLER, THE SERVICER
OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CON-
STITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES
OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UN-
LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UN-
DER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT INFORMATION HEREIN OR THEREIN
IS CORRECT AS OF ANY TIME SINCE THE DATE OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS.
UNTIL MARCH 7, 1995, ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES OR THE
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE RE-
QUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS TO WHICH IT RE-
LATES. 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 OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.............................................................. S-4
The Trust............................................................ S-9
The Receivables Pool................................................. S-9
Use of Proceeds...................................................... S-11
The Servicer......................................................... S-12
The Notes............................................................ S-13
The Certificates..................................................... S-14
The Transfer and Servicing Agreements................................ S-15
Certain Federal Income Tax Consequences.............................. S-19
ERISA Considerations................................................. S-20
Underwriting......................................................... S-20
Legal Opinions....................................................... S-21
Index of Terms....................................................... S-22
PROSPECTUS
Available Information................................................ 3
Reports to Securityholders........................................... 3
Owner Trusts/Grantor Trusts.......................................... 3
Prospectus Summary................................................... 4
The Trusts........................................................... 12
The Receivables Pools................................................ 14
Weighted Average Life of the Securities.............................. 16
Pool Factors and Trading Information................................. 16
Use of Proceeds...................................................... 17
The Seller........................................................... 17
The Servicer......................................................... 19
The Notes............................................................ 21
Owner Certificates................................................... 25
Class A Certificates................................................. 26
Certain Information Regarding the Securities......................... 27
The Transfer and Servicing Agreements................................ 31
Certain Legal Aspects of the Receivables............................. 47
Certain Federal Income Tax Consequences.............................. 50
Certain State Tax Matters............................................ 61
ERISA Considerations................................................. 62
Plan of Distribution................................................. 65
Legal Opinions....................................................... 65
Index of Terms....................................................... 66
</TABLE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AND THE
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-3
<PAGE>
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used in this summary but not otherwise defined in this
summary have the meanings assigned such terms elsewhere herein or in the
Prospectus. Listings of the pages on which such terms are defined are found in
the "Index of Terms" in each of this Prospectus Supplement and the Prospectus.
Issuer................................ Navistar Financial 1994-C Owner Trust,
a Delaware business trust to be formed
by the Seller and the Owner Trustee
pursuant to the Owner Trust Agreement.
Seller................................ Navistar Financial Retail Receivables
Corporation.
Servicer.............................. Navistar Financial Corporation.
Indenture Trustee..................... The Bank of New York, as trustee under
the Indenture.
Owner Trustee......................... Chemical Bank Delaware, as trustee un-
der the Owner Trust Agreement.
The Notes............................. The Trust will issue Notes as follows:
Class A-1 7.65% Asset Backed Notes (the
"CLASS A-1 NOTES") in the aggregate
principal amount of $207,000,000.00.
Class A-2 8.00% Asset Backed Notes (the
"CLASS A-2 NOTES") in the aggregate
principal amount of $97,000,000.00.
The Certificates...................... The Trust will issue Certificates with
an aggregate initial Certificate Bal-
ance of $11,029,921.60.
The Trust Property.................... The Trust Property will include a pool
of Retail Notes, certain monies due or
received thereunder on and after No-
vember 1, 1994 (the "CUTOFF DATE"),
security interests in the vehicles fi-
nanced thereby, certain accounts and
the proceeds thereof, the proceeds, if
any, of Dealer Liability, NITC Pur-
chase Obligations and any Guaranties,
any proceeds from claims on certain
insurance policies, the benefits of
any lease assignments and certain
rights of the Seller under the related
Purchase Agreement and the related
Custodian Agreement. The Initial Ag-
gregate Receivables Balance is
$315,029,921.60.
Terms of the Notes.................... The principal terms of the Notes will
be as described below:
A. Distribution Dates............... Payments of interest and principal on
the Notes will be made on each Distri-
bution Date. Payments will be made to
Noteholders of record as of the day
immediately preceding such Distribu-
tion Date (or, if Definitive Certifi-
cates are issued, the last day of the
preceding Monthly Period).
S-4
<PAGE>
B. Interest......................... Interest on the outstanding principal
amount of the Notes will accrue at the
applicable Interest Rate from the
Closing Date or from the most recent
Distribution Date on which interest
has been paid to but excluding the
following Distribution Date.
The Interest Rate for each class of
Notes is as specified on the cover
page of this Prospectus Supplement.
Interest on the Notes will be calcu-
lated on the basis of a 360-day year
consisting of twelve 30-day months.
See "The Notes--Payments of Interest."
C. Principal........................ Principal of the Notes will be payable
on each Distribution Date in an amount
equal to the sum of the Aggregate
Noteholders' Principal Distributable
Amount for the Monthly Period preced-
ing such Distribution Date to the ex-
tent of funds available therefor. The
Aggregate Noteholders' Principal Dis-
tributable Amount for a Monthly Period
will be the Noteholders' Percentage of
the Principal Distributable Amount for
such Monthly Period and will be calcu-
lated by the Servicer as described
herein under "The Transfer and Servic-
ing Agreements-Distributions." The
Noteholders' Percentage will be 100%
for each Distribution Date occurring
before the Distribution in June 1995,
and generally 96.5% thereafter until
all of the Notes have been paid in
full. See "The Notes--Payments of
Principal."
Payments of principal on the Notes will
be made on each Distribution Date in
the amounts and subject to the priori-
ties described in "The Notes--Payments
of Principal." After an Event of De-
fault and acceleration of the Notes,
principal payments will be made rata-
bly to all Noteholders. See "The
Transfer and Servicing Agreements--
Distributions."
The unpaid principal balance of a class
of Notes will be payable on the Final
Scheduled Distribution Date for such
class of Notes specified on the cover
page of this Prospectus Supplement.
D. Redemption....................... If the Servicer exercises its option to
purchase the Receivables when the Ag-
gregate Receivables Balance declines
to 10% or less of the Initial Aggre-
gate Receivables Balance, the holders
of Class A-2 Notes will be redeemed in
whole, but not in
S-5
<PAGE>
part, on any Distribution Date at a
redemption price equal to the unpaid
principal amount of such Notes, plus
accrued and unpaid interest thereon.
See "The Notes--Redemption."
Terms of the Certificates............. The principal terms of the Certificates
will be as described below:
A. Distribution Dates............... Distributions with respect to the Cer-
tificates will be made on each Distri-
bution Date. Distributions will be
made to Certificateholders of record
as of the day immediately preceding
such Distribution Date (or, if Defini-
tive Certificates are issued, the last
day of the preceding Monthly Period).
B. Pass Through Rate................ 8.30% per annum, payable monthly on
each Distribution Date at one-twelfth
of the annual rate.
C. Interest......................... On each Distribution Date, the Owner
Trustee will distribute pro rata to
Certificateholders accrued interest at
the Pass Through Rate with respect to
the outstanding Certificate Balance.
Interest on the Certificates will ac-
crue from the Closing Date or from the
most recent Distribution Date on which
interest has been paid to but exclud-
ing the next Distribution Date (calcu-
lated on the basis of a 360-day year
of twelve 30-day months).
D. Distributions in Respect of On each Distribution Date occurring on
Certificate Balance................ and after the Distribution Date in
June 1995, Certificateholders will re-
ceive, in respect of the Certificate
Balance, an amount equal to the Cer-
tificateholders' Principal Distributa-
ble Amount for the Monthly Period pre-
ceding such Distribution Date, to the
extent of funds available therefor.
The Certificateholders' Principal Dis-
tributable Amount will be the
Certificateholders' Percentage (100%
minus the Noteholders' Percentage) of
the Principal Distributable Amount and
will be calculated by the Servicer in
the manner described under "The Trans-
fer and Servicing Agreements--Distri-
butions."
On and after any Distribution Date on
which all of the Notes have been paid
in full, funds in the Reserve Account
will be applied to reduce the Certifi-
cate Balance to zero if, after giving
effect to all distributions to the
Servicer and the Securityholders on
such Distribution Date, the amount on
deposit in the Reserve Account is
equal to or greater than the Certifi-
cate Balance. See "The Certificates--
Distributions of Interest and Certifi-
cate Balance."
S-6
<PAGE>
E. Optional Purchase................ If the Servicer exercises its option to
purchase the Receivables when the Ag-
gregate Receivables Balance declines
to 10% or less of the Initial Aggre-
gate Receivables Balance, the
Certificateholders will receive an
amount in respect of the Certificates
equal to the Certificate Balance to-
gether with accrued and unpaid inter-
est at the Pass Through Rate. See "The
Certificates--Distributions of Inter-
est and Certificate Balance."
Priority of Distributions............. Funds available for payment to the
Securityholders will generally be dis-
tributed in the following order of
priority: (i) interest on the Notes;
(ii) interest with respect to the Cer-
tificates; (iii) principal on the
Notes; and (iv) payments in respect of
the Certificate Balance. See "The
Transfer and Servicing Agreements--
Distributions" and "--Reserve Ac-
count." Upon the occurrence of an
Event of Default and the acceleration
of the Notes under the Indenture, the
Notes will be paid in full prior to
making any further payments on or with
respect to the Certificates.
Reserve Account....................... The Reserve Account will be created
with the Reserve Account Initial De-
posit. The Reserve Account will be in-
creased on each Distribution Date by
the deposit in the Reserve Account of
amounts remaining after payment to the
Servicer of the Total Servicing Fee
and deposits to the Note Distribution
Account and to the Certificate Distri-
bution Account of amounts to be dis-
tributed to Securityholders.
Amounts in the Reserve Account on any
Distribution Date (after giving effect
to all distributions to be made to the
Servicer and the Securityholders on
such Distribution Date) in excess of
the Specified Reserve Account Balance
for such Distribution Date will be
paid to the Seller.
Funds will be withdrawn from cash in
the Reserve Account on the day preced-
ing each Distribution Date to pay the
Total Servicing Fee and to make re-
quired distributions on the Securities
to the extent funds are not otherwise
available, as described herein. See
"The Transfer and Servicing Agree-
ments--Distributions" and "--Reserve
Account."
Tax Status............................ In the opinion of Tax Counsel, for fed-
eral income tax purposes, the Notes
will be characterized as indebtedness,
and the Certificates should be charac-
terized as equity interests in a part-
nership
S-7
<PAGE>
which will not be taxable as an asso-
ciation or a publicly traded partner-
ship taxable as a corporation. Each
Noteholder and Certificateholder, by
the acceptance of a Note or Certifi-
cate, will agree to treat the Notes as
indebtedness and the Certificates as
an equity interest in a partnership
which will not be taxable as an asso-
ciation or a publicly traded partner-
ship taxable as a corporation for fed-
eral, state and local income and fran-
chise tax purposes. See "Certain Fed-
eral Income Tax Consequences" herein
and in the Prospectus and "Certain
State Tax Matters" in the Prospectus
for additional information concerning
the application of federal and state
tax laws.
ERISA Considerations.................. Subject to the considerations discussed
under "ERISA Considerations" herein
and in the Prospectus, the Notes are
eligible for purchase by a Benefit
Plan.
The Certificates may not be acquired by
any Benefit Plan subject to ERISA or
by an individual retirement account.
See "ERISA Considerations" herein and
"ERISA Considerations" in the Prospec-
tus.
Ratings............................... As a condition of issuance, the Class
A-1 Notes and the Class A-2 Notes will
be rated in the highest rating cate-
gory for long-term debt obligations
and the Certificates will be rated in
the "A' category or its equivalent, in
each case, by at least one nationally
recognized rating agency. There is no
assurance that a rating will not be
lowered or withdrawn by a rating
agency if circumstances so warrant. In
the event that the rating initially
assigned to any Security is subse-
quently lowered for any reason, no
person or entity will be obligated to
provide any additional credit enhance-
ment with respect to such Security.
----------------
S-8
<PAGE>
THE TRUST
The Issuer, Navistar Financial 1994-C Owner Trust, is a business trust formed
under the laws of the State of Delaware pursuant to a Trust Agreement dated as
of the Closing Date between the Seller and the Owner Trustee, acting thereunder
not in its individual capacity but solely as trustee of the Trust (as amended
and supplemented from time to time, the "OWNER TRUST AGREEMENT"). After its
formation, the Trust will not engage in any activity other than (i) acquiring,
holding and managing the Receivables and the other assets of the Trust and
proceeds therefrom, (ii) issuing the Securities, (iii) making payments or
distributions on the Securities and (iv) engaging in other activities that are
necessary, suitable, desirable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.
The Certificate Balance represents the equity of the Trust. The Seller will
retain approximately 1% of the initial Certificate Balance and the remaining
equity interest is being sold pursuant to this Prospectus Supplement to third
party investors that are expected to be unaffiliated with the Seller, the
Servicer or the Trust. The Trust will deliver the Securities to the Seller in
exchange for the Receivables pursuant to the Pooling and Servicing Agreement.
The Trust's principal offices are in Wilmington, Delaware, in care of
Chemical Bank Delaware, as Owner Trustee, at the address listed in "--The Owner
Trustee" below.
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Cutoff Date, as if the issuance and sale of the Securities offered hereby had
taken place on such date:
<TABLE>
<S> <C>
Class A-1 7.65% Asset Backed Notes...................... $ 207,000,000.00
Class A-2 8.00% Asset Backed Notes...................... $ 97,000,000.00
8.30% Asset Backed Certificates......................... $ 11,029,921.60
Total............................................... $ 315,029,921.60
</TABLE>
THE OWNER TRUSTEE
Chemical Bank Delaware is the Owner Trustee under the Owner Trust Agreement.
Chemical Bank Delaware is a Delaware banking corporation and a wholly-owned
subsidiary of Chemical Banking Corp., a Delaware corporation, and its principal
offices are located at 1201 Market Street, Wilmington, Delaware 19801.
THE RECEIVABLES POOL
The Receivables were acquired by Navistar Financial Corporation ("NFC") from
(i) NITC dealers, (ii) other dealers, including those selling other
manufacturers' vehicles and equipment and (iii) retail customers. The
Receivables were selected randomly for inclusion in the Receivables Pool from
those Retail Notes in NFC's portfolio of owned Retail Notes which satisfied
several criteria, including that each Receivable (i) has a first payment due
date on or before November 30, 1994, (ii) has an original term to maturity of
12 to 84 months and a remaining term to maturity of 12 to 62 months, (iii)
provides for finance charges at an APR of no less than 6.50%, (iv) as of the
Cutoff Date, was not more than 60 days past due and (v) satisfies the other
criteria set forth in the Prospectus under the caption "The Receivables Pools."
The composition, distribution by annual percentage rate, distribution by
remaining maturity, distribution by payment terms and geographic distribution
of the Receivables Pool are as set forth in the following tables. Due to
rounding, the percentages shown in these tables may not add to 100.00%.
S-9
<PAGE>
COMPOSITION OF THE RECEIVABLES POOL
<TABLE>
<CAPTION>
WEIGHTED AVERAGE WEIGHTED WEIGHTED
ANNUAL PERCENTAGE INITIAL AGGREGATE AVERAGE AVERAGE AVERAGE
RATE OF AGGREGATE ORIGINAL NUMBER OF INITIAL ORIGINAL REMAINING
RECEIVABLES RECEIVABLES PRINCIPAL RECEIVABLES RECEIVABLE MATURITY MATURITY
(RANGE) BALANCE BALANCE IN POOL BALANCE (RANGE) (RANGE)
- ----------------- --------------- --------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
10.162% $315,029,921.60 $331,307,702.56 6,201 $50,803.08 51.92 48.55
months months
(12 to 84 (12 to 62
(6.50%-24.99%)(1) months) months)
</TABLE>
- --------
(1) Excludes eight Receivables with APRs above 24.99%.
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE RECEIVABLES POOL
<TABLE>
<CAPTION>
ANNUAL PERCENTAGE OF
PERCENTAGE NUMBER OF INITIAL INITIAL AGGREGATE
RATE RANGE RECEIVABLES RECEIVABLES BALANCE RECEIVABLES BALANCE
---------- ----------- ------------------- -------------------
<S> <C> <C> <C>
6.50-7.49%................ 60 $ 5,261,344.51 1.67%
7.50-8.49%................ 1,012 57,337,631.10 18.20%
8.50-9.49%................ 1,643 95,963,575.94 30.46%
9.50-10.49%............... 991 70,498,310.48 22.38%
10.50-11.49%............... 646 32,637,931.98 10.36%
11.50-12.49%............... 340 13,242,952.05 4.20%
12.50-13.49%............... 326 13,480,391.04 4.28%
13.50-14.49%............... 264 7,209,038.24 2.29%
14.50-15.49%............... 310 6,913,589.47 2.19%
15.50-16.49%............... 303 6,376,040.05 2.02%
16.50 & Over............... 306 6,109,116.74 1.94%
Total.................... 6,201 $315,029,921.60 100.00%
</TABLE>
DISTRIBUTION BY REMAINING MATURITY OF THE RECEIVABLES POOL
<TABLE>
<CAPTION>
REMAINING PERCENTAGE OF
MATURITY NUMBER OF INITIAL INITIAL AGGREGATE
(MONTHS) RECEIVABLES RECEIVABLES BALANCE RECEIVABLES BALANCE
--------- ----------- ------------------- -------------------
<S> <C> <C> <C>
1-12...................... 28 $ 448,198.45 .14%
13-24...................... 793 13,199,141.73 4.19%
25-36...................... 1,466 45,973,630.81 14.59%
37-48...................... 1,555 93,624,633.50 29.72%
49-60...................... 2,013 132,811,277.02 42.16%
61 & Over.................. 346 28,973,040.09 9.20%
Total.................. 6,201 $315,029,921.60 100.00%
</TABLE>
DISTRIBUTION BY PAYMENT TERMS OF RECEIVABLES
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL AGGREGATE
TYPE OF RECEIVABLE RECEIVABLES BALANCE
------------------ -------------------------------
<S> <C>
Equal Payment Fully Amortizing............ 58.80%
Equal Payment Balloon..................... 7.22%
Equal Payment Skip........................ 9.21%
Level Principal Fully Amortizing.......... 10.64%
Level Principal Balloon................... 9.84%
Level Principal Skip...................... .02%
Other..................................... 4.27%
Total................................. 100.00%
</TABLE>
S-10
<PAGE>
The Receivables Pool includes Receivables originated in 48 states and The
District of Columbia. The following table sets forth the percentage of the
Initial Aggregate Receivables Balance in the states with the largest
concentration of Receivables. No other state accounts for more than 3.88% of
the Initial Aggregate Receivables Balance. None of the Receivables were
originated in Alaska or Hawaii.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL
AGGREGATE RECEIVABLES
STATE(1) BALANCE
-------- ---------------------
<S> <C>
Illinois............................................ 9.01%
Texas............................................... 8.29%
New York............................................ 8.15%
California.......................................... 6.21%
Ohio................................................ 6.11%
Wisconsin........................................... 4.59%
Alabama............................................. 4.49%
Missouri............................................ 4.43%
Indiana............................................. 4.15%
Other............................................... 44.57%
Total........................................... 100.00%
</TABLE>
- --------
(1) Based on billing addresses of the obligors on the Receivables.
No single obligor accounts for more than 1.99% of the Initial Aggregate
Receivables Balance. As of the Cutoff Date, approximately 78.38% of the Initial
Aggregate Receivables Balance, constituting 64.05% of the aggregate number of
Receivables, represent Receivables secured by new vehicles. The remainder are
secured by used vehicles.
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the Securities
(after making the Reserve Account Initial Deposit) will be applied to the
purchase of the Receivables from NFC. NFC will use the proceeds of its sale of
the Receivables to the Seller (a) for general working capital purposes and (b)
to repay amounts owing to a group of lenders, including affiliates of each of
the Underwriters, under one or more credit agreements.
S-11
<PAGE>
THE SERVICER
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning NFC's experience in the
United States pertaining to delinquencies, repossessions and net losses on its
entire portfolio of Retail Notes (including Retail Notes previously sold which
NFC continues to service). Fluctuations in retail delinquencies, repossessions
and losses generally follow cycles in the overall business environment.
Although NFC believes retail delinquencies, repossessions and net losses are
particularly sensitive to the industrial sector, which generates a significant
portion of the freight tonnage hauled, NFC does not track such data and is
unable to ascertain the specific causes of such fluctuations. Higher net losses
for 1990 and 1991 reflect the prolonged weakness of the U.S. economy during
that time. The Prospectus sets forth an explanation of the bases on which these
numbers have been calculated. See "The Servicer--Delinquencies, Repossessions
and Net Losses" in the Prospectus. There can be no assurance that the
delinquency, repossession and net loss experience on the Receivables Pool will
be comparable to that set forth below. Due to rounding, the percentages shown
for NFC and NITC separately in these tables may not add to the percentage shown
for NFC and NITC combined.
<TABLE>
<CAPTION>
NFC RETAIL NOTES YEAR ENDED OCTOBER 31
- ---------------- ---------------------------------------
1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Gross Balance Outstanding at end of
Period (in millions)................ $1,432 $1,414 $1,330 $1,437 $1,653
Gross Balance Past Due as a
Percentage of Gross Balance
Outstanding at end of Period
31-60 days......................... 1.49% 1.25% 1.03% 0.67% 0.41%
over 60 days....................... 0.43% 0.21% 0.19% 0.09% 0.06%
Average Gross Balance (in millions).. $1,439 $1,397 $1,320 $1,341 $1,515
------ ------ ------ ------ ------
Net losses (in millions)
NFC................................ $ 1.9 $ 3.0 $ 2.3 $ (0.1) $ 0.6
NITC............................... 14.5 14.4 10.5 4.8 0.6
Combined........................... 16.4 17.4 12.8 4.7 1.2
------ ------ ------ ------ ------
Liquidations minus Net Losses (in
millions)........................... $ 724 $ 719 $ 794 $ 713 $ 790
------ ------ ------ ------ ------
Net Losses as a Percentage of
Liquidations minus Net Losses
NFC................................ 0.26% 0.40% 0.29% (0.01)% 0.08%
NITC............................... 2.00% 2.01% 1.32% 0.67% 0.07%
Combined........................... 2.26% 2.41% 1.61% 0.66% 0.15%
------ ------ ------ ------ ------
Net Losses as a Percentage of Average
Gross Balance
NFC................................ 0.13% 0.21% 0.18% 0.00% 0.04%
NITC............................... 1.00% 1.03% 0.79% 0.35% 0.04%
Combined........................... 1.13% 1.24% 0.97% 0.35% 0.08%
------ ------ ------ ------ ------
Repossessions as a Percentage of
Average Gross Balance............... 5.61% 4.54% 3.70% 1.95% 0.97%
</TABLE>
S-12
<PAGE>
THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of an Indenture to be dated as
of the Closing Date between the Trust and the Indenture Trustee (as amended and
supplemented from time to time, the "INDENTURE"), a form of which has been
filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and the Prospectus form a part. A copy of the Indenture will be
available from the Seller upon request to holders of Securities and will be
filed with the Commission following the issuance of the Securities. The
following summary describes certain terms of the Notes and the Indenture. The
summary does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all of the provisions of the Notes, the Indenture
and the Prospectus. Where particular provisions or terms used in the Indenture
are referred to, the actual provisions (including definitions of terms) are
incorporated by reference as part of such summary. The Bank of New York, a New
York banking association, will be the Indenture Trustee.
The "INTEREST RATE" and the "FINAL SCHEDULED DISTRIBUTION DATE" for each
class of Notes will be as set forth below.
<TABLE>
<CAPTION>
INTEREST RATE FINAL SCHEDULED
(PER ANNUM) DISTRIBUTION DATE
------------- -----------------
<S> <C> <C>
Class A-1 Notes......................... 7.65% December 22, 1997
Class A-2 Notes......................... 8.00% July 20, 2000
</TABLE>
PAYMENTS OF INTEREST
Interest on the unpaid principal balance of each class of Notes will accrue
at the applicable Interest Rate and will be payable monthly on each
Distribution Date commencing January 20, 1995. All references in the Prospectus
to "Payment Date" or "Payment Dates" shall be deemed references to
"Distribution Date" or "Distribution Dates", as applicable, for purposes of
this Prospectus Supplement.
PAYMENTS OF PRINCIPAL
On each Distribution Date, principal will be paid on the Notes, to the extent
of the Noteholders' Percentage of the Principal Distributable Amount, in the
following priority:
(i) First, to the Class A-1 Notes, until the Class A-1 Notes are paid in
full; and
(ii) Second, to the Class A-2 Notes, until the Class A-2 Notes are paid
in full.
The remaining outstanding principal amount of each class of Notes will be due
in full on the Final Scheduled Distribution Date for such class.
REDEMPTION
If the Servicer exercises its option to purchase the Receivables when the
Aggregate Receivables Balance declines to 10% or less of the Initial Aggregate
Receivables Balance, the Class A-2 Notes will be redeemed in whole, but not in
part, on any Distribution Date, as described in the Prospectus under "Transfer
and Servicing Agreements--Termination." The redemption price will be equal to
the unpaid principal amount of Class A-2 Notes, plus accrued and unpaid
interest thereon.
PARITY AND PRIORITY OF NOTES
Interest payments to all classes of Noteholders will have the same priority.
Under certain circumstances, the amount available for such payments could be
less than the amount of interest payable on the Notes on
S-13
<PAGE>
any Distribution Date, in which case each class of Noteholders will receive
their ratable share (based upon the aggregate amount of interest due to such
class of Noteholders) of the aggregate amount available to be distributed in
respect of interest on the Notes. See "The Transfer and Servicing Agreements--
Distributions" and "--Reserve Account."
In general, no payments of principal on the Class A-2 Notes will be made
until the Class A-1 Notes have been paid in full. However, if an Event of
Default occurs as a result of which the Notes are declared immediately due and
payable, each class of Notes will be entitled to ratable repayment of principal
on the basis of their respective unpaid principal balances.
THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of an Owner Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the Prospectus form a part. A
copy of the Owner Trust Agreement will be filed with the Commission following
the issuance of the Securities. The following summary describes certain terms
of the Certificates and the Owner Trust Agreement. The summary does not purport
to be complete and is subject to, and qualified in its entirety by reference
to, all of the provisions of the Certificates, the Owner Trust Agreement and
the Prospectus. Where particular provisions or terms used in the Owner Trust
Agreement are referred to, the actual provisions (including definitions of
terms) are incorporated by reference as part of such summary.
DISTRIBUTIONS OF INTEREST AND CERTIFICATE BALANCE
Interest. On each Distribution Date, commencing January 20, 1995, interest
will be distributed to Certificateholders at the Pass Through Rate with respect
to the Certificate Balance. Any Certificateholders' Interest Distributable
Amount with respect to a Distribution Date which is not distributed on such
Distribution Date will be distributed on the next Distribution Date. Interest
with respect to the Certificates will accrue from the Closing Date (or from the
most recent Distribution Date on which interest has been paid) to but excluding
the following Distribution Date and will be calculated on the basis of a 360-
day year of twelve 30-day months. See "The Transfer and Servicing Agreements--
Distributions" and "--Reserve Account."
Certificate Balance. Certificateholders will be entitled to distributions on
each Distribution Date in an amount equal to the Certificateholders' Principal
Distributable Amount. The Certificateholders' Principal Distributable Amount
will be zero for each Distribution Date occurring before the Distribution Date
in June 1995; on and after the Distribution Date in June 1995, it will
generally be 3.5% of the Principal Distributable Amount until all of the Class
A-2 Notes have been paid in full. Thereafter, until the Certificate Balance is
reduced to zero, the Certificateholders' Principal Distributable Amount will be
100% of the Principal Distributable Amount. If the Servicer exercises its
option to purchase the Receivables when the Aggregate Receivables Balance
declines to 10% or less of the Initial Aggregate Receivables Balance,
Certificateholders will receive an amount in respect of the Certificates equal
to the Certificate Balance together with accrued interest at the Pass Through
Rate, which distribution shall effect early retirement of the Certificates. See
"The Transfer and Servicing Agreements-Termination" in the Prospectus. In
addition, on and after any Distribution Date on which all of the Notes have
been paid in full, funds in the Reserve Account will be applied to reduce the
Certificate Balance to zero if, after giving effect to all distributions to the
Servicer and the Securityholders on such Distribution Date, the amount on
deposit in the Reserve Account is equal to or greater than the Certificate
Balance. Under certain circumstances, the Certificateholders' Principal
Distributable Amount will not be deposited in the Certificate Deposit Account
and paid to the Certificateholders, but will instead be paid to the Noteholders
or deposited into the Reserve Account. See "The Transfer and Servicing
Agreements--Distributions" and "--Reserve Account."
S-14
<PAGE>
THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Transfer and Servicing
Agreements. Forms of the Transfer and Servicing Agreements have been filed as
exhibits to the Registration Statement of which this Prospectus Supplement and
the Prospectus form a part. A copy of the Transfer and Servicing Agreements
will be available from the Seller upon request to Securityholders. The summary
does not purport to be complete and is subject to, and qualified in its
entirety by reference to, all of the provisions of the Transfer and Servicing
Agreements and the Prospectus. Where particular provisions or terms used in the
Transfer and Servicing Agreements are referred to, the actual provisions
(including definitions of terms) are incorporated by reference as part of such
summary.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
On each Distribution Date, the Servicer will be entitled to receive the Total
Servicing Fee, which consists of the Basic Servicing Fee for the related
Monthly Period and any unpaid Basic Servicing Fees from prior Distribution
Dates. In addition, the Servicer will receive any Supplemental Servicing Fees.
The Basic Servicing Fee Rate will be 1% per annum.
DISTRIBUTIONS
Unless the Servicer satisfies the conditions for monthly remittances
described in "The Transfer and Servicing Agreements--Collections" in the
Prospectus, it will transfer all collections on the Receivables (including all
Prepayments) to the Collection Account within two Business Days of receipt
thereof. The Indenture Trustee will make distributions to the Note Distribution
Account and the Certificate Distribution Account out of the amounts on deposit
in the Collection Account. The amount to be distributed to the Note
Distribution Account and the Certificate Distribution Account will be
determined in the manner described below.
Determination of Available Amounts. The "TOTAL AVAILABLE AMOUNT" for a
Distribution Date will be the sum of the Available Amount and all cash or other
immediately available funds on deposit in the Reserve Account immediately prior
to such Distribution Date. See "The Transfer and Servicing Agreements--
Distributions; Determination of Available Amount" in the Prospectus.
Monthly Withdrawals and Deposits. On or before the fifteenth day of each
calendar month, or if such day is not a Business Day, the next succeeding
Business Day, with respect to the preceding Monthly Period and the related
Distribution Date, the Servicer will calculate the Total Available Amount,
Collected Interest, Collected Principal, the Total Servicing Fee, the Aggregate
Noteholders' Interest Distributable Amount, the Aggregate Noteholders'
Principal Distributable Amount, the Certificateholders' Interest Distributable
Amount, the Certificateholders' Principal Distributable Amount and certain
other items. Based on such calculations, the Servicer will deliver to the
Indenture Trustee a certificate specifying such amounts and instructing the
Indenture Trustee to make withdrawals, deposits and payments of the following
amounts on the day preceding such Distribution Date:
(i) the amount, if any, to be withdrawn from the Reserve Account and
deposited in the Collection Account;
(ii) the amounts to be withdrawn from the Collection Account and paid to
the Servicer in respect of reimbursement of Outstanding Monthly Advances
and payments in respect of Liquidation Expenses with respect to Receivables
which became Liquidating Receivables during the related Monthly Period (and
any unpaid Liquidation Expenses from prior periods);
(iii) the amount to be withdrawn from the Collection Account and paid to
the Servicer in respect of the Total Servicing Fee for such Distribution
Date;
S-15
<PAGE>
(iv) the amounts to be withdrawn from the Collection Account in respect
of the Aggregate Noteholders' Interest Distributable Amount and the
Aggregate Noteholders' Principal Distributable Amount and deposited in the
Note Distribution Account for payment to Noteholders on such Distribution
Date;
(v) the amounts to be withdrawn from the Collection Account in respect of
the Certificateholders' Interest Distributable Amount and the
Certificateholders' Principal Distributable Amount and deposited in the
Certificate Distribution Account for distribution to Certificateholders on
such Distribution Date;
(vi) the amount, if any, to be withdrawn from the Collection Account and
deposited in the Reserve Account; and
(vii) the amount, if any, to be withdrawn from the Reserve Account and
paid to the Seller.
The amount, if any, to be withdrawn from the Reserve Account and deposited to
the Collection Account on the day preceding any Distribution Date as specified
in clause (i) above will be the lesser of (i) the amount of cash or other
immediately available funds therein on the day preceding such Distribution Date
and (ii) the amount, if any, by which (a) the sum of the Total Servicing Fee,
the Aggregate Noteholders' Interest Distributable Amount, the
Certificateholders' Interest Distributable Amount, the Aggregate Noteholders'
Principal Distributable Amount and the Certificateholders' Principal
Distributable Amount exceeds (b) the Available Amount for such Distribution
Date. The amount, if any, to be withdrawn from the Reserve Account and paid to
the Seller as specified in clause (vii) above will equal the amount, if any, by
which the amount on deposit in the Reserve Account after all other deposits and
withdrawals on the day preceding such Distribution Date exceeds the Specified
Reserve Account Balance for such Distribution Date.
Priorities for Withdrawals from Collection Account. Withdrawals of funds from
the Collection Account on the day preceding a Distribution Date will be made
first for reimbursements of Outstanding Monthly Advances and payments in
respect of Liquidation Expenses. Thereafter, withdrawals of funds from the
Collection Account will be made for application as described in clauses (iii),
(iv) and (v) under "--Distributions--Monthly Withdrawals and Deposits" above,
but only to the extent of the Total Available Amount allocated to such
application for such Distribution Date. In calculating the amounts which can be
withdrawn from the Collection Account and applied as specified in such clauses
(iii), (iv) and (v), the Indenture Trustee, at the direction of the Servicer,
will allocate the Total Available Amount in the following order of priority:
(i) the Total Servicing Fee;
(ii) the Aggregate Noteholders' Interest Distributable Amount;
(iii) the Certificateholders' Interest Distributable Amount;
(iv) the Aggregate Noteholders' Principal Distributable Amount; and
(v) the Certificateholders' Principal Distributable Amount.
Notwithstanding the foregoing, at any time that the Notes have not been paid
in full and the principal balance of the Notes has been declared due and
payable following the occurrence of an Event of Default, until such time as the
Notes have been paid in full or such declaration has been rescinded and any
continuing Events of Default have been waived pursuant to the Indenture, no
amounts will be deposited in or distributed to the Certificate Distribution
Account. Any such amounts otherwise distributable to the Certificate
Distribution Account will be deposited instead into the Note Distribution
Account as payments of principal on the Notes.
"AGGREGATE NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of the Noteholders' Interest Distributable
Amounts for all classes of Notes and the Noteholders' Interest Carryover
Shortfall as of the preceding Distribution Date.
S-16
<PAGE>
"AGGREGATE NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date, the sum of the Noteholders' Principal Distributable
Amounts for all classes of Notes and the Noteholders' Principal Carryover
Shortfall as of the preceding Distribution Date.
"CERTIFICATE BALANCE" means, initially, $11,029,921.60 (3.5% of the Initial
Aggregate Receivables Balance) and, on any Distribution Date thereafter, will
equal the initial Certificate Balance, reduced by the sum of (i) all
distributions in respect of Certificate Balance actually made on or prior to
such date to Certificateholders, (ii) the Noteholders' Principal Carryover
Shortfall as of the preceding Distribution Date and (iii) the
Certificateholders' Principal Carryover Shortfall as of the preceding
Distribution Date.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, as of the close of
any Distribution Date, the excess of the Certificateholders' Interest
Distributable Amount for such Distribution Date over the amount that was
actually deposited in the Certificate Distribution Account on the day preceding
such current Distribution Date in respect of interest on the Certificates.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of (i) the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date, (ii) the Certificateholders'
Interest Carryover Shortfall as of the close of the preceding Distribution Date
and (iii) one-twelfth of the Pass Through Rate multiplied by the sum of (a) the
Noteholders' Principal Carryover Shortfall as of the preceding Distribution
Date and (b) the Certificateholders' Principal Carryover Shortfall as of the
preceding Distribution Date.
"CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, interest equal to one-twelfth of the Pass
Through Rate multiplied by the Certificate Balance as of the last day of the
related Monthly Period (or in the case of the first Distribution Date, as of
the Closing Date).
"CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the lesser of (a) the Certificateholders'
Percentage of the Principal Distributable Amount and (b) the Certificate
Balance as of the close of the preceding Distribution Date.
"CERTIFICATEHOLDERS' PERCENTAGE" means, with respect to any Distribution
Date, 100% minus the Noteholders' Percentage.
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of
any Distribution Date, the excess of the Certificateholders' Principal
Distributable Amount for such Distribution Date over the amount that was
actually deposited in the Certificate Distribution Account on the day preceding
such current Distribution Date in respect of Certificate Balance.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and any outstanding
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date. In addition, on July 20, 2000 (with respect to the
Certificates, the "FINAL SCHEDULED DISTRIBUTION DATE"), the amount required to
be distributed to Certificateholders in respect of the Certificate Balance will
include the lesser of (a) the sum of any principal due and remaining unpaid on
each Receivable in the Trust as of the last day of the related Monthly Period,
and (b) the amount that is necessary (after giving effect to the other amounts
to be deposited in the Certificate Distribution Account on the day preceding
such Distribution Date and allocable to payments in respect of the Certificate
Balance) to reduce the Certificate Balance to zero, in either case after giving
effect to any required distribution of the Aggregate Noteholders' Principal
Distributable Amount to the Note Distribution Account. In addition, on any
Distribution Date on which, after giving effect to all distributions to the
Servicer and the Securityholders on such Distribution Date, (i) the outstanding
principal balance of the Notes is zero and (ii) the amount on deposit in the
Reserve Account is equal to or greater than the Certificate Balance,
Certificateholders' Principal Distributable Amount shall include an amount
equal to such Certificate Balance.
S-17
<PAGE>
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, as of the close of any
Distribution Date, the excess of the Aggregate Noteholders' Interest
Distributable Amount for such Distribution Date over the amount that was
actually deposited in the Note Distribution Account on the day preceding such
current Distribution Date in respect of interest.
"NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any class
of Notes and any Distribution Date, the product of (i) the outstanding
principal balance of such class of Notes on the preceding Distribution Date
after giving effect to all payments of principal in respect of such class of
Notes on such preceding Distribution Date (or, in the case of the first
Distribution Date, the outstanding principal balance on the Closing Date) and
(ii) the product of the Interest Rate for such class and a fraction, the
numerator of which is 30, and the denominator of which is 360.
"NOTEHOLDERS' PERCENTAGE" means 100% for each Distribution Date occurring
before the Distribution Date in June 1995, 96.5% thereafter until the principal
balance of the Class A-2 Notes is paid in full and zero thereafter; provided,
however, that if the amount on deposit in the Reserve Account is less than
1.00% of the Initial Aggregate Receivables Balance on any Distribution Date,
then Noteholders' Percentage means 100% until the Notes are paid in full or the
amount on deposit in the Reserve Account exceeds the Specified Reserve Account
Balance.
"NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of any
Distribution Date, the excess of the Aggregate Noteholders' Principal
Distributable Amount for such Distribution Date over the amount that was
actually deposited in the Note Distribution Account on the day preceding such
current Distribution Date in respect of principal.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to a class
of Notes on a Distribution Date, the lesser of (i) the remainder of (A) the
Noteholders' Percentage of the Principal Distributable Amount minus (B) the
Noteholders' Principal Distributable Amount for each class of Notes then having
priority of payment and (ii) the outstanding principal balance of such class of
Notes (after giving effect to the distribution to the Noteholders of amounts
deposited in the Note Distribution Account on the previous Distribution Date).
In addition, on the Final Scheduled Distribution Date for any class of Notes,
the Noteholders' Principal Distributable Amount for such Notes will also
include the amount necessary to reduce the outstanding principal balance of
such class of Notes to zero.
"PASS THROUGH RATE" means, with respect to the Certificates, 8.30% per annum.
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of the following items: (a) the principal portion of all
Scheduled Payments due with respect to the related Monthly Period on
Receivables held by the Trust (other than Liquidating Receivables), (b) the
principal portion of all Prepayments received during the related Monthly Period
(except to the extent included in (a) above) and (c) the Receivable Balance of
each Receivable that the Servicer purchased, the Seller repurchased or that
became a Liquidating Receivable during the related Monthly Period (except to
the extent included in (a) or (b) above).
On each Distribution Date, all amounts on deposit in the Note Distribution
Account will be distributed to the Noteholders, and all amounts on deposit in
the Certificate Distribution Account will be distributed to the
Certificateholders.
RESERVE ACCOUNT
Pursuant to the Pooling and Servicing Agreement, the Seller will establish
the Reserve Account with the Indenture Trustee. The Reserve Account will be
funded by an initial deposit by the Seller on the Closing Date of cash or
Eligible Investments having a value equal to at least $18,901,795.30 (6.0% of
the Initial Aggregate Receivables Balance) (the "RESERVE ACCOUNT INITIAL
DEPOSIT"). If on the day preceding any Distribution Date the amount on deposit
in the Reserve Account is less than the Specified Reserve Account
S-18
<PAGE>
Balance, an amount equal to the lesser of such insufficiency and the Available
Amount remaining with respect to such Distribution Date after the payment of
the Total Servicing Fee, the deposit of the Aggregate Noteholders' Interest
Distributable Amount and the Aggregate Noteholders' Principal Distributable
Amount in the Note Distribution Account and the deposit of the
Certificateholders' Interest Distributable Amount and the Certificateholders'
Principal Distributable Amount in the Certificate Distribution Account (see
"Distributions--Monthly Withdrawals and Deposits") shall be deposited in the
Reserve Account.
"SPECIFIED RESERVE ACCOUNT BALANCE" with respect to any Distribution Date
means the greater of:
(a) 6.0% of the Aggregate Receivables Balance as of the close of business
on the last day of the related Monthly Period, except that if on any
Distribution Date (i) the product (expressed as a percentage) of (A) twelve
and (B) a fraction, the numerator of which is equal to the sum of the
Aggregate Losses plus Liquidation Proceeds for each of the Monthly Periods
which are the fifth, fourth and third Monthly Periods preceding the Monthly
Period related to such Distribution Date, minus the sum of the Liquidation
Proceeds for the Monthly Periods which are the first, second and third
Monthly Periods preceding the Monthly Period related to such Distribution
Date, and the denominator of which is the sum of the Remaining Gross
Balances of all outstanding Receivables as of the last day of each of the
sixth, fifth and fourth Monthly Periods preceding the Monthly Period
related to such Distribution Date, exceeds 1.5% or (ii) the average of the
Delinquency Percentages for the preceding three months exceeds 2.0%, then
the percentage of the Aggregate Receivables Balance referred to in this
clause (a) shall be equal to 10%; and
(b) 2.1% of the Initial Aggregate Receivables Balance.
If the amount on deposit in the Reserve Account on any Distribution Date
(after giving effect to all deposits or withdrawals therefrom on the day
preceding such Distribution Date) is greater than the Specified Reserve Account
Balance for such Distribution Date, subject to certain limitations, the
Servicer will instruct the Indenture Trustee to distribute the amount of the
excess to the Seller. Upon any distribution to the Seller of amounts from the
Reserve Account, the Securityholders will not have any rights in, or claims to,
such amounts. In certain circumstances, funds in the Reserve Account will be
used to reduce the Certificate Balance to zero. See "The Certificates--
Distributions of Interest and Certificate Balance." The Seller may at any time,
without consent of the Securityholders, sell, transfer, convey or assign in any
manner its rights to and interests in distributions from the Reserve Account,
including interest earnings thereon, provided that certain conditions are
satisfied, including: (i) such action will not result in a reduction or
withdrawal of the rating of either class of the Notes or the Certificates, (ii)
the Seller provides to the Owner Trustee and the Indenture Trustee an opinion
of independent counsel that such action will not cause the Trust to be treated
as an association (or publicly traded partnership) taxable as a corporation for
Federal income tax purposes, and (iii) such transferee or assignee agrees to
take positions for tax purposes consistent with the tax positions agreed to be
taken by the Seller.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Tax Counsel, the Trust will not be taxable as an
association or publicly traded partnership taxable as a corporation, but should
be classified as a partnership under the Code. It is Tax Counsel's opinion that
the Notes will be treated as indebtedness and the Certificates should
constitute the equity of the Trust. For a discussion of the anticipated
material federal income tax consequences of the purchase, ownership and
disposition of the Securities, see "Certain Federal Income Tax Consequences,"
particularly the sections entitled "The Notes" and "Partnership Certificates,"
and "Certain State Tax Matters" in the Prospectus. For purposes of such
discussion, the Trust is a Tax Partnership and the Certificates are Partnership
Certificates.
S-19
<PAGE>
ERISA CONSIDERATIONS
THE NOTES
Although there is little guidance on the subject, the Seller believes the
Notes should be treated as indebtedness without substantial equity features for
purposes of the Plan Assets Regulation. Therefore, the Notes are available for
investment by a Benefit Plan, subject to a determination by such Benefit Plan's
fiduciary that the Notes are suitable investments for such Benefit Plan under
ERISA and the Code. For additional information regarding treatment of the Notes
under ERISA, see "ERISA Considerations" in the Prospectus.
THE CERTIFICATES
The Seller believes that the Certificates would be treated as plan assets
under the Plan Assets Regulation. Accordingly, the Certificates may not be
acquired by (a) a Benefit Plan that is subject to the provisions of Title 1 of
ERISA, (b) a Benefit Plan described in Section 4975(e)(1) of the Code or (c)
any entity whose underlying assets include assets of a Benefit Plan described
under (a) or (b). By its acceptance of a Certificate, each Certificateholder
will be deemed to have represented and warranted that it is not subject to the
foregoing limitation.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Seller has agreed to sell to each of the Underwriters named below, and each
of the Underwriters has severally agreed to purchase from the Seller, the
principal amount of securities set forth opposite its name below:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT TO BE PURCHASED
---------------------------------------------------------
CLASS A-1 NOTES CLASS A-2 NOTES CERTIFICATES TOTAL
--------------- --------------- ------------ ------------
<S> <C> <C> <C> <C>
J. P. Morgan Securities
Inc.................... $103,500,000 $48,500,000 $ 5,459,500 $157,459,500
Chemical Securities
Inc.................... $103,500,000 $48,500,000 $ 5,459,500 $157,459,500
------------ ----------- ----------- ------------
Total............... $207,000,000 $97,000,000 $10,919,000 $314,919,000
============ =========== =========== ============
</TABLE>
The Seller has been advised by the Underwriters that they propose initially
to offer the Securities to the public at the prices set forth on the cover page
hereof, and to certain dealers at such prices less a selling concession not in
excess of the percentage set forth below for each class of securities. The
Underwriters may allow, and such dealers may reallow to certain other dealers,
a subsequent concession not in excess of the percentage set forth below for
each class of securities. After the initial public offering, the public
offering price and such concessions may be changed.
<TABLE>
<CAPTION>
SELLING
CONCESSION REALLOWANCE
---------- -----------
<S> <C> <C>
Class A-1 Notes.................................... .125% .100%
Class A-2 Notes.................................... .175% .125%
Certificates....................................... .300% .200%
</TABLE>
The Seller has agreed not to offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a registration statement
for, or announce any offering of, any securities collateralized by, or
evidencing an ownership interest in, a pool of Retail Notes (other than the
Securities) for a period of 30 days from the date of this Prospectus
Supplement, without the prior written consent of the Underwriters.
In the ordinary course of their respective businesses, the Underwriters and
their respective affiliates have engaged and may in the future engage in
commercial banking and investment banking transactions with affiliates of the
Seller, including the Seller's parent, NFC.
S-20
<PAGE>
As discussed under "Use of Proceeds," NFC intends to use the proceeds of its
sale of the Receivables to the Seller to repay amounts owing to a group of
lenders, including affiliates of each of the Underwriters, under one or more
credit agreements. Accordingly, because more than 10% of the net offering
proceeds may be paid to an affiliate of a member of the National Association of
Securities Dealers, Inc. (the "NASD") which is participating in the
distribution of the Securities, the offering of the Securities is being made
pursuant to the provisions of Article III, Section 44(c)(8) of the NASD Rules
of Fair Practice.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain legal
matters relating to the Securities will be passed upon for the Underwriters by
Simpson Thacher & Bartlett (a partnership which includes professional
corporations).
S-21
<PAGE>
INDEX OF TERMS
Set forth below is a list of the capitalized terms defined in this Prospectus
Supplement and the pages on which the definitions of such terms may be found
herein. Certain capitalized terms used but not otherwise defined herein shall
have the meanings assigned such terms in the Prospectus.
<TABLE>
<S> <C>
Aggregate Noteholders' Interest Distributable Amount................. S-16
Aggregate Noteholders' Principal Distributable Amount................ S-17
Certificate Balance.................................................. S-17
Certificateholders' Interest Carryover Shortfall..................... S-17
Certificateholders' Interest Distributable Amount.................... S-17
Certificateholders' Monthly Interest Distributable Amount............ S-17
Certificateholders' Monthly Principal Distributable Amount........... S-17
Certificateholders' Percentage....................................... S-17
Certificateholders' Principal Carryover Shortfall.................... S-17
Certificateholders' Principal Distibutable Amount.................... S-17
Certificates......................................................... S-1
Class A-1 Notes...................................................... S-4
Class A-2 Notes...................................................... S-4
Closing Date......................................................... S-1
Distribution Date.................................................... S-2
Final Scheduled Distribution Date.................................... S-13, S-17
Indenture............................................................ S-13
Interest Rate........................................................ S-13
Issuer............................................................... S-1
NFC.................................................................. S-9
Noteholders' Interest Carryover Shortfall............................ S-18
Noteholders' Interest Distributable Amount........................... S-18
Noteholders' Percentage.............................................. S-18
Noteholders' Principal Carryover Shortfall........................... S-18
Noteholders' Principal Distributable Amount.......................... S-18
Notes................................................................ S-1
Owner Trust Agreement................................................ S-9
Pass Through Rate.................................................... S-18
Principal Distributable Amount....................................... S-18
Reserve Account Initial Deposit...................................... S-18
Specified Reserve Account Balance.................................... S-19
Total Available Amount............................................... S-15
Trust................................................................ S-1
</TABLE>
S-22
