<PAGE>
FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION NO. 033-55865
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 21, 1996)
$500,000,000
NAVISTAR FINANCIAL 1997-A OWNER TRUST
$85,000,000 CLASS A-1 5.841% ASSET BACKED NOTES
$221,500,000 CLASS A-2 6.350% ASSET BACKED NOTES
$176,000,000 CLASS A-3 6.750% ASSET BACKED NOTES
$17,500,000 CLASS B 6.950% ASSET BACKED NOTES
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
SELLER
NAVISTAR FINANCIAL CORPORATION
SERVICER
The Navistar Financial 1997-A Owner Trust (the "TRUST" or the "ISSUER") will
be formed pursuant to a Trust Agreement, to be dated as of May 7, 1997 (the
"CLOSING DATE"), between the Seller and Chase Manhattan Bank Delaware, as
Owner Trustee, and will issue four classes of Asset Backed Notes
(collectively, the "NOTES") in the respective 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 Certificates (the "CERTIFICATES," and together with the Notes,
the "SECURITIES"), but the Certificates are not offered hereby.
(continued on following page)
PROCEEDS OF THE ASSETS OF THE TRUST AND AMOUNTS ON DEPOSIT IN THE RESERVE
ACCOUNT, THE NEGATIVE CARRY ACCOUNT AND THE PRE-FUNDING ACCOUNT ARE THE SOLE
SOURCES OF PAYMENTS ON THE NOTES. NONE OF THE NOTES 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 NOTES 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>
Aggregate
Principal Interest Final Scheduled Price Underwriting Proceeds to
Amount Rate Distribution Date to Public Discount Seller(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-1 Notes......... $ 85,000,000.00 5.841% May 15, 1998 100.0000000% .125% 99.8750000%
- -------------------------------------------------------------------------------------------------------------------
Class A-2 Notes......... $221,500,000.00 6.350% January 17, 2000 99.9453125% .200% 99.7453125%
- -------------------------------------------------------------------------------------------------------------------
Class A-3 Notes......... $176,000,000.00 6.750% March 15, 2002 99.9062500% .250% 99.6562500%
- -------------------------------------------------------------------------------------------------------------------
Class B Notes........... $ 17,500,000.00 6.950% January 15, 2004 99.9765625% .500% 99.4765625%
- -------------------------------------------------------------------------------------------------------------------
Total................... $500,000,000.00 $499,709,765.63 $1,076,750.00 $498,633,015.63
</TABLE>
(1) Before deducting expenses, estimated to be $450,000.
The Notes 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 Notes will be
delivered in book-entry form on or about the Closing Date through the
facilities of The Depository Trust Company ("DTC"), against payment therefor
in immediately available funds.
CHASE SECURITIES INC.
BANCAMERICA SECURITIES, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
The date of this Prospectus Supplement is April 23, 1997
<PAGE>
(continued from previous page)
Interest on all 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 fifteenth day of each month,
or, if any such day is not a Business Day, on the next succeeding Business
Day, commencing on May 15, 1997 (each, a "DISTRIBUTION DATE"). Principal on
the Notes will be payable on each Distribution Date as follows: 100% to the
Class A-1 Notes until the Class A-1 Notes are paid in full; after the Class A-
1 Notes have been paid in full, 100% to the Class A-2 Notes until the Class A-
2 Notes are paid in full; after the Class A-1 Notes and the Class A-2 Notes
have been paid in full, 100% to the Class A-3 Notes until the Class A-3 Notes
are paid in full; and, after the Class A-1 Notes, Class A-2 Notes and Class A-
3 Notes have been paid in full, 100% to the Class B Notes. Distributions of
principal and interest on the Class B Notes will be subordinated in priority
to payments due on the Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes (collectively, the "CLASS A NOTES") to the extent described herein. Each
class of Notes will be payable in full on the applicable Final Scheduled
Distribution Date. However, the actual payment in full of any class of Notes
could occur sooner.
The Trust Property will initially include a pool of Retail Notes, certain
monies due thereunder on and after April 1, 1997, security interests in the
vehicles financed thereby, certain other property and monies on deposit in the
Pre-Funding Account. The Initial Aggregate Receivables Balance is
$411,613,980.45. Additional Retail Notes may be purchased by the Trust from
the Seller from time to time on or before the July 1997 Distribution Date from
funds on deposit in the Pre-Funding Account. The Initial Pre-Funded Amount is
$88,386,019.55.
There is currently no secondary market for the Notes. There can be no
assurance that a secondary market for the Notes will develop or, if it does
develop, that it will continue. The Notes will not be listed on any securities
exchange.
The Notes initially will be represented by notes registered in the name of
Cede & Co., the nominee of DTC. The interests of beneficial owners of the
Notes will be represented by book entries on the records of DTC and
participating members thereof. Definitive Notes will be available only under
limited circumstances.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT TRANSACTIONS, STABILIZING TRANSACTIONS, SYNDICATE COVERING
TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
S-2
<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 1997-A Owner Trust, a
Delaware business trust to be formed by
the Seller and the Owner Trustee pursu-
ant 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....................... Chase Manhattan Bank Delaware, as trustee
under the Owner Trust Agreement.
The Notes........................... The Trust will issue Notes as follows:
Class A-1 5.841% Asset Backed Notes in
the aggregate principal amount of
$85,000,000 (the "CLASS A-1 NOTES").
Class A-2 6.350% Asset Backed Notes in
the aggregate principal amount of
$221,500,000 (the "CLASS A-2 NOTES").
Class A-3 6.750% Asset Backed Notes in
the aggregate principal amount of
$176,000,000 (the "CLASS A-3 NOTES").
Class B 6.950% Asset Backed Notes in the
aggregate principal amount of
$17,500,000 (the "CLASS B NOTES"). The
Class B Notes will be subordinated to
the Class A Notes to the extent de-
scribed herein.
The Trust Property.................. The Trust Property will include a pool of
Retail Notes, certain monies due or re-
ceived thereunder on and after (i) for
the Initial Receivables, April 1, 1997
and (ii) for any Subsequent Receivables,
the date preceding the related Subse-
quent Transfer Date that is designated
as such by the Seller (in each case, the
"CUTOFF DATE"), security interests in
the vehicles financed thereby, certain
accounts, including the Pre-Funding Ac-
count and the Negative Carry Account,
and the proceeds thereof, the proceeds,
if any, of Dealer Liability, NITC Pur-
chase Obligations and any Guaranties,
any proceeds from claims on certain in-
surance policies, the benefits of any
lease assignments and certain rights of
the Seller under the related Purchase
Agreement and the
S-3
<PAGE>
related Custodian Agreement. The aggre-
gate Starting Receivables Balance for
the Initial Receivables is
$411,613,980.45 and the Initial Pre-
Funded Amount is $88,386,019.55.
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 Distribution
Date to Noteholders of record as of the
day immediately preceding such Distribu-
tion Date (or, if Definitive Notes are
issued, the last day of the preceding
Monthly Period).
B. Interest....................... Interest on the outstanding principal
amount of the Notes will accrue at the
applicable Interest Rate from the Clos-
ing Date or from the most recent Distri-
bution Date on which interest has been
paid to but excluding the following Dis-
tribution 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 calculated on the ba-
sis of a 360-day year consisting of
twelve 30-day months. Interest on the
Class B Notes will not be paid on any
Distribution Date until all accrued in-
terest due and payable on the Class A
Notes on such Distribution Date has been
paid in full. In addition, after an
Event of Default and acceleration of the
Notes, no interest will be payable on
the Class B Notes until all principal of
and interest on the Class A Notes has
been paid in full. See "The Notes--Pay-
ments of Interest."
C. Principal...................... Principal of the Notes will be payable on
each Distribution Date to the extent of
the Principal Distributable Amount for
the Monthly Period preceding such Dis-
tribution Date as follows: 100% to the
Class A-1 Notes until the Class A-1
Notes are paid in full; thereafter, 100%
to the Class A-2 Notes until the Class
A-2 Notes are paid in full; thereafter,
100% to the Class A-3 Notes until the
Class A-3 Notes are paid in full; and
thereafter, 100% to the Class B Notes
until the Class B Notes are paid in
full. See "The Notes--Payments of Prin-
cipal."
After an Event of Default and accelera-
tion of the Notes, principal payments
will be made ratably to the holders of
record of the Class A Notes (the "CLASS
A NOTEHOLDERS") according to the amounts
due and payable on the Class A Notes for
principal until paid in full and then to
the holders of record of the Class B
Notes
S-4
<PAGE>
(the "CLASS B NOTEHOLDERS") until paid
in full. 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. Mandatory Prepayment........... The Class A-1 Notes will be prepaid in
whole or in part on the Distribution
Date on or immediately following the
last day of the Funding Period if any
amount remains on deposit in the Pre-
Funding Account on such date, after giv-
ing effect to the purchase of all Subse-
quent Receivables, including any such
purchase on such date. Any such prepay-
ment will be made in accordance with the
priorities described in "The Notes--Pay-
ments of Principal;" provided, that if
the remaining Pre-Funded Amount at the
time of such prepayment exceeds
$100,000, each class of Notes (including
the Class B Notes) will be prepaid in an
amount equal to such class' Pre-Funded
Percentage of the remaining Pre-Funded
Amount.
In addition, the Trust will be obligated
to pay the Noteholders' Prepayment Pre-
mium with respect to each class of Notes
in connection with such mandatory pre-
payment if the remaining Pre-Funded
Amount at the time of such prepayment
exceeds $100,000. The Trust's obligation
to pay the Noteholders' Prepayment Pre-
mium will be limited to the Noteholders'
Pre-Funded Percentage of funds that are
received from the Seller under the Pool-
ing and Servicing Agreement as liqui-
dated damages for the failure to deliver
Subsequent Receivables (and the Seller's
obligation to pay such liquidated dam-
ages thereunder is limited to funds it
receives from NFC as liquidated damages
for NFC's failure to deliver Subsequent
Receivables to the Seller). No other as-
sets of the Trust will be available for
the purpose of making such payment. See
"The Notes--Mandatory Prepayment."
E. Redemption..................... If the Servicer exercises its option to
purchase the Receivables when the Class
A-1 Notes and the Class A-2 Notes have
been paid in full and the Aggregate Re-
ceivables Balance declines to 10% or
less of the Aggregate Starting Receiv-
ables Balance, the holders of Class A-3
Notes and the Class B Notes will be re-
deemed in whole, but not in part, on any
Distribution Date at a redemption price
equal to the unpaid principal amount of
such Notes, plus accrued and unpaid in-
terest thereon. See "The Notes--Redemp-
tion."
S-5
<PAGE>
Priority of Distributions........... Distributions of the Total Available
Amount to the Noteholders and the
Servicer will generally be distributed
in the following order of priority: (i)
the Total Servicing Fee; (ii) interest
on the Class A Notes; (iii) interest on
the Class B Notes; (iv) principal on the
Class A Notes; and (v) principal on the
Class B Notes. See "The Transfer and
Servicing Agreements--Distributions" and
"--Reserve Account." Upon the occurrence
of an Event of Default and the accelera-
tion of the Notes, all principal of and
interest on the Class A Notes will be
paid in full prior to making any further
payments on or with respect to the Class
B Notes.
Reserve Account..................... The Reserve Account will be created with
the Reserve Account Initial Deposit for
the Closing Date. On each Subsequent
Transfer Date, additional amounts will
be deposited in the Reserve Account from
the Pre-Funding Account in connection
with the transfer of Subsequent Receiv-
ables to the Trust. The Reserve Account
will be increased on each Distribution
Date by the deposit in the Reserve Ac-
count of amounts remaining after payment
to the Servicer of the Total Servicing
Fee and deposits to the Note Distribu-
tion Account of amounts to be distrib-
uted to Noteholders.
Amounts in the Reserve Account on any
Distribution Date (after giving effect
to all distributions to be made to the
Servicer and the Noteholders on such
Distribution Date) in excess of the
Specified Reserve Account Balance for
such Distribution Date will be paid to
the Certificateholders.
Funds will be withdrawn from cash in the
Reserve Account on the day preceding
each Distribution Date to pay the Total
Servicing Fee and to make required dis-
tributions on the Notes to the extent
funds are not otherwise available, as
described herein. See "The Transfer and
Servicing Agreements--Distributions" and
"--Reserve Account."
Pre-Funding Account ................ The Pre-Funding Account will be created
with the deposit of the Initial Pre-
Funded Amount. During the Funding Peri-
od, funds will be withdrawn from the
Pre-Funding Account to purchase Subse-
quent Receivables in accordance with the
Pooling and Servicing Agreement and to
deposit amounts in the Reserve Account
in connection with such purchase. Any
Pre-Funded Amount remaining at the end
of the Funding Period will be payable to
the Noteholders as described in "The
Notes--Mandatory Prepayment."
S-6
<PAGE>
Negative Carry Account ............. The Negative Carry Account will be cre-
ated with the Negative Carry Account
Initial Deposit. On each Distribution
Date, an amount equal to the Negative
Carry Amount for such Distribution Date
will be withdrawn from the Negative
Carry Account and deposited in the Col-
lection Account. Amounts on deposit in
the Negative Carry Account in excess of
the Required Negative Carry Account Bal-
ance will be released to the Seller on
each Distribution Date, and all amounts
remaining on deposit in the Negative
Carry Account on the Distribution Date
on or immediately following the last day
of the Funding Period (after giving ef-
fect to all withdrawals therefrom on
such Distribution Date) will be released
to the Seller.
Tax Status.......................... In the opinion of Tax Counsel, for fed-
eral income tax purposes, the Notes will
be characterized as indebtedness and the
Trust will not be characterized as an
association (or publicly traded partner-
ship) taxable as a corporation. Each
Noteholder, by the acceptance of a Note,
will agree to treat the Notes as indebt-
edness. See "Certain Federal Income Tax
Consequences" herein and in the Prospec-
tus and "Certain State Tax Matters" in
the Prospectus for additional informa-
tion concerning the application of fed-
eral and state tax laws.
ERISA Considerations................ Subject to the considerations discussed
under "ERISA Considerations" herein and
"ERISA Considerations" in the Prospec-
tus, the Notes are eligible for purchase
by a Benefit Plan. See "ERISA Considera-
tions" herein and "ERISA Considerations"
in the Prospectus.
Legal Investment.................... The Class A-1 Notes will be eligible se-
curities for purchase by money market
funds under Rule 2a-7 under the Invest-
ment Company Act of 1940, as amended.
Ratings............................. As a condition of issuance, the Class A-1
Notes will be rated in one of the two
highest rating categories for short-term
debt obligations by at least two nation-
ally recognized rating agencies, and the
Class A-2 Notes and Class A-3 Notes will
be rated in the highest rating category
for long-term debt obligations and the
Class B Notes will be rated in the "A'
category or its equivalent, in each
case, by at least one nationally recog-
nized rating agency. The rating agencies
do not evaluate, and the ratings do not
address, the likelihood that the Note-
holders' Prepayment Premium will be
paid. There is no assurance that a rat-
ing will not be lowered or withdrawn by
a rating agency if circumstances so war-
rant. In the event that the rating ini-
tially assigned to any Note is sub-
sequently lowered for any reason, no
person or entity will be obligated to
provide any additional credit enhance-
ment with respect to such Note.
S-7
<PAGE>
THE TRUST
The Issuer, Navistar Financial 1997-A 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 Trust will
deliver the Securities to the Seller in exchange for the Receivables, the
Reserve Account Initial Deposit, the Initial Pre-Funded Amount and the
Negative Carry Account Initial Deposit pursuant to the Pooling and Servicing
Agreement.
The Trust's principal offices are in Wilmington, Delaware, in care of Chase
Manhattan 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 April
1, 1997, as if the issuance and sale of the Notes offered hereby had taken
place on such date:
<TABLE>
<S> <C>
Class A-1 5.841% Asset Backed Notes......................... $ 85,000,000
Class A-2 6.350% Asset Backed Notes......................... $221,500,000
Class A-3 6.750% Asset Backed Notes......................... $176,000,000
Class B 6.950% Asset Backed Notes........................ $ 17,500,000
------------
Total................................................... $500,000,000
</TABLE>
The Certificates represent the equity of the Trust and will be issued
pursuant to the Trust Agreement. The Certificates will be held by one or more
of the Seller, the Servicer or one of their affiliates.
In addition, the Trust will hold the Reserve Account, the Pre-Funding
Account and the Negative Carry Account.
THE OWNER TRUSTEE
Chase Manhattan Bank Delaware is the Owner Trustee under the Owner Trust
Agreement. Chase Manhattan Bank Delaware is a Delaware banking corporation and
a wholly-owned, indirect subsidiary of The Chase Manhattan Corporation, a
Delaware corporation, and its principal offices are located at 1201 Market
Street, Wilmington, Delaware 19801.
THE RECEIVABLES POOL
THE INITIAL RECEIVABLES
The Receivables transferred to the Trust on the Closing Date (the "INITIAL
RECEIVABLES") were originally 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.
Certain of the Initial Receivables were sold by NFC to Truck Retail Instalment
Paper Corp. ("TRIP"), a special purpose, wholly-owned subsidiary of NFC, and
will be repurchased by NFC from TRIP as of the Closing Date for resale to the
Seller. The Initial 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 Initial Receivable
(i) has a first payment due date on or before April 30, 1997, (ii) has an
original term to maturity of 12 to 84 months and a remaining term to maturity
of 12 to 72 months, (iii) provides for finance charges at an APR of no less
than 7.00%, (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."
S-8
<PAGE>
The composition, distribution by annual percentage rate, distribution by
remaining maturity, distribution by payment terms and geographic distribution
of the Initial Receivables are as set forth in the following tables. Due to
rounding, the percentages shown in these tables may not add to 100.00%.
COMPOSITION OF THE INITIAL RECEIVABLES
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE ANNUAL AGGREGATE AGGREGATE AVERAGE AVERAGE AVERAGE
PERCENTAGE RATE STARTING ORIGINAL STARTING ORIGINAL REMAINING
OF RECEIVABLES RECEIVABLES PRINCIPAL NUMBER OF RECEIVABLE MATURITY MATURITY
(RANGE) BALANCE BALANCE RECEIVABLES BALANCE (RANGE) (RANGE)
- --------------- ----------- --------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
10.234% $411,613,980.45 $472,652,987.22 8,581 $47,968.07 53.04 47.80
months months
(7.20%- (12 to 84 (12 to 72
24.99%)(1) months) months)
</TABLE>
- --------
(1) Excludes twenty Receivables with APRs above 24.99%.
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE INITIAL RECEIVABLES
<TABLE>
<CAPTION>
ANNUAL PERCENTAGE OF
PERCENTAGE NUMBER OF STARTING AGGREGATE STARTING
RATE RANGE RECEIVABLES RECEIVABLES BALANCE RECEIVABLES BALANCE
---------- ----------- ------------------- -------------------
<S> <C> <C> <C>
7.00-8.49%................ 1,100 $ 59,706,495.60 14.51%
8.50-9.49%................ 2,113 120,677,476.01 29.32%
9.50-10.49%............... 1,892 104,063,809.83 25.28%
10.50-11.49%............... 1,004 46,523,007.83 11.30%
11.50-12.49%............... 641 27,698,728.00 6.73%
12.50-13.49%............... 539 21,891,781.42 5.32%
13.50-14.49%............... 448 13,295,353.32 3.23%
14.50-15.49%............... 323 7,591,009.44 1.84%
15.50-16.49%............... 227 4,745,771.50 1.15%
16.50-17.49%............... 57 1,148,919.77 0.28%
17.50 & Over............... 237 4,271,627.73 1.04%
Total.................... 8,581 $411,613,980.45 100.00%
</TABLE>
DISTRIBUTION BY REMAINING MATURITY OF THE INITIAL RECEIVABLES
<TABLE>
<CAPTION>
REMAINING PERCENTAGE OF
MATURITY NUMBER OF STARTING AGGREGATE STARTING
(MONTHS) RECEIVABLES RECEIVABLES BALANCE RECEIVABLES BALANCE
--------- ----------- ------------------- -------------------
<S> <C> <C> <C>
1-12...................... 206 $ 3,769,467.82 0.92%
13-24...................... 1,589 29,812,946.43 7.24%
25-36...................... 1,702 58,923,818.80 14.32%
37-48...................... 1,785 106,248,720.39 25.81%
49-60...................... 2,869 186,081,332.04 45.21%
61-66...................... 106 6,994,542.36 1.70%
67 & Over.................. 324 19,783,152.61 4.81%
Total.................. 8,581 $411,613,980.45 100.00%
</TABLE>
DISTRIBUTION BY PAYMENT TERMS OF INITIAL RECEIVABLES
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE STARTING
TYPE OF RECEIVABLE RECEIVABLES BALANCE
------------------ --------------------------------
<S> <C>
Equal Payment Fully Amortizing........... 67.62%
Equal Payment Balloon.................... 10.09%
Equal Payment Skip....................... 5.71%
Level Principal Fully Amortizing......... 5.21%
Level Principal Balloon.................. 7.73%
Level Principal Skip..................... 0.59%
Other.................................... 3.05%
Total................................ 100.00%
</TABLE>
S-9
<PAGE>
The Receivables Pool includes Receivables originated in 48 states and The
District of Columbia. The following table sets forth the percentage of the
aggregate Starting Receivables Balance of the Initial Receivables in the
states with the largest concentration of Receivables. No other state accounts
for more than 3.00% of the aggregate Starting Receivables Balance of the
Initial Receivables. None of the Initial Receivables were originated in Alaska
or Hawaii.
GEOGRAPHIC DISTRIBUTION OF THE INITIAL RECEIVABLES
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE STARTING
RECEIVABLES
STATE(1) BALANCE
-------- ------------------
<S> <C>
Texas.................................................. 8.03%
California............................................. 7.72%
Illinois............................................... 6.94%
Ohio................................................... 6.86%
New York............................................... 4.92%
Florida................................................ 4.80%
Tennessee.............................................. 3.62%
Indiana................................................ 3.31%
Pennsylvania........................................... 3.13%
Other.................................................. 50.65%
Total.............................................. 100.00%
</TABLE>
- --------
(1) Based on billing addresses of the obligors on the Initial Receivables.
No single obligor accounts for more than 1.46% of the aggregate Starting
Receivables Balance of the Initial Receivables. As of April 1, 1997,
approximately 71.64% of the aggregate Starting Receivables Balance of the
Initial Receivables, constituting 62.39% of the aggregate number of Initial
Receivables, represent Receivables secured by new vehicles. The remainder are
secured by used vehicles.
THE SUBSEQUENT RECEIVABLES
During the period (the "FUNDING PERIOD") from and including the Closing Date
until the earliest of (a) the Distribution Date on which the amount on deposit
in the Pre-Funding Account (after giving effect to the purchase of all
Subsequent Receivables, including any such purchase on such date) is less than
$100,000, (b) the occurrence of an Event of Default under the Indenture or a
Servicer Default under the Pooling and Servicing Agreement, (c) the occurrence
of certain events of insolvency with respect to the Seller or the Servicer or
(d) the close of business on the July 1997 Distribution Date, the Seller will
be obligated to sell to the Trust additional Receivables (the "SUBSEQUENT
RECEIVABLES") having an aggregate Starting Receivables Balance equal to the
Initial Pre-Funded Amount to the extent that such Subsequent Receivables have
been acquired by the Seller from NFC.
On each date during the Funding Period that the Seller elects to transfer
Subsequent Receivables to the Trust (each, a "SUBSEQUENT TRANSFER DATE"),
subject to the conditions described below, the Seller will sell and assign to
the Trust, without recourse, the Seller's entire interest in the Subsequent
Receivables designated by the Seller as of the related Cutoff Date and
identified in a schedule attached to an assignment relating to such Subsequent
Receivables executed on such date by the Seller. Upon the transfer of
Subsequent Receivables to the Trust on a Subsequent Transfer Date, (i) an
amount equal to 5.25% of the Starting Receivables Balance for all such
Subsequent Receivables will be withdrawn from the Pre-Funding Account and
deposited in the Reserve Account, and (ii) an amount equal to the excess of
the sum of the Initial Receivables Balance (the "STARTING RECEIVABLES
BALANCE") of all such Subsequent Receivables over the amount described in
clause (i) above will be withdrawn from the Pre-Funding Account and paid to
the Seller.
S-10
<PAGE>
Any transfer of Subsequent Receivables is subject to the satisfaction, on or
before the related Subsequent Transfer Date, of certain conditions precedent,
including the following: (i) each such Subsequent Receivable must satisfy the
eligibility criteria specified in "The Receivables Pool--The Initial
Receivables" herein (other than as to the first payment due date, which for
any Subsequent Receivable shall occur on or before the last day of the first
Monthly Period following the Monthly Period during which the related Cutoff
Date occurs) and in "The Receivables Pools" in the Prospectus; (ii) NFC shall
not have selected such Subsequent Receivables in a manner that it believes is
adverse to the interests of the Noteholders; (iii) the Seller shall have
executed and delivered to the Trust (with a copy to the Indenture Trustee) a
written assignment conveying such Subsequent Receivables to the Trust
(including a schedule identifying such Subsequent Receivables); (iv) the
Reserve Account Initial Deposit for such Subsequent Transfer Date shall have
been withdrawn from the Pre-Funding Account and deposited in the Reserve
Account; (v) after giving effect to the transfer of the Subsequent Receivables
to the Trust on such Subsequent Transfer Date, (A) the weighted average Annual
Percentage Rate of the Receivables in the Trust shall not be less than 9.75%,
(B) the weighted average remaining maturity of the Receivables in the Trust
shall not be greater than 52 months and (C) the aggregate principal balance of
all Receivables owing from any single Obligor shall not exceed 2% of the
aggregate principal balance of the Receivables in the Trust; (vi) the Seller
shall have delivered certain opinions of counsel to the Trustee, the Indenture
Trustee and the Rating Agencies with respect to the transfer of such
Subsequent Receivables on such Subsequent Transfer Date; (vii) the Trust and
the Indenture Trustee shall have received written confirmation from a firm of
certified independent public accountants that, as of the related Cutoff Date,
the Subsequent Receivables being transferred to the Trust satisfied the
eligibility criteria described in clause (i) above; and (viii) Standard &
Poor's Ratings Services ("S&P") shall have notified the Seller in writing
that, following the addition of all such Subsequent Receivables, the Notes
will be rated by S&P in the same rating category as they were rated by S&P
prior to such addition.
Each Subsequent Receivable must satisfy the eligibility criteria specified
in the Pooling and Servicing Agreement at the time of its addition. The
Subsequent Receivables, however, need not satisfy any other eligibility
criteria. Subsequent Receivables may be originated by NITC dealers, other
dealers or NFC at a later date using credit criteria different from those that
were applied to the Initial Receivables and may be of a different credit
quality and seasoning. In addition, following the transfer of Subsequent
Receivables to the Trust, the characteristics of the Receivables, including
the composition of the Receivables, the distribution by APR, equipment type,
payment frequency, average maturity, current Receivable Balance and geographic
distribution, may vary from those of the Initial Receivables. Since the
weighted average life of the Notes will be influenced by the rate at which the
principal balances of the Receivables are paid, some of these variations will
affect the weighted average life of each class of Notes. The requirements that
no Subsequent Receivables have a remaining term in excess of 72 months and
that on each Subsequent Transfer Date the weighted average remaining maturity
of the Receivables in the Trust will not be greater than 52 months are
intended to minimize the effect of the addition of Subsequent Receivables on
the weighted average life of the Notes.
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the Notes
(after making the Reserve Account Initial Deposit for the Closing Date, the
Negative Carry Account Initial Deposit and the deposit of the Initial Pre-
Funded Amount) will be applied to the purchase of the Initial Receivables from
NFC. NFC will use the proceeds from its sale of the Initial Receivables to the
Seller (a) to finance the purchase of Initial Receivables from TRIP, (b) for
general working capital purposes, (c) to repay amounts owing to NITC, and (d)
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. Due to the
bankruptcy of one of NFC's largest obligors and economic conditions affecting
the trucking industry generally, delinquencies, repossessions and net losses
for 1996 were higher than those reported for 1994 or 1995. 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 amounts shown for NFC and NITC separately in
this table may not add to the amount shown for NFC and NITC combined.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
NFC RETAIL NOTES YEAR ENDED OCTOBER 31, JANUARY 31,
- ---------------- ---------------------------------------- --------------
1992 1993 1994 1995 1996(1) 1996 1997
------ ------ ------ ------ ------- ------ ------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Balance
Outstanding at end of
Period................. $1,330 $1,437 $1,653 $2,073 $2,282 $2,140 $2,247
Gross Balance Past Due
as a Percentage of
Gross Balance
Outstanding at end of
Period
31-60 days............ 1.03% 0.67% 0.41% 2.43% 1.99% 1.88% 3.57%
over 60 days.......... 0.19% 0.09% 0.06% 0.09% .30% .29% .90%
Average Gross Balance... $1,320 $1,341 $1,515 $1,809 $2,204 $2,109 $2,263
Net Losses
NFC................... $ 2.3 $ (0.1) $ 0.6 $ 0.3 $ 5.0 $ -- $ 0.2
NITC.................. 10.5 4.8 0.6 0.6 9.5 -- 0.6
Combined.............. 12.8 4.7 1.2 0.9 14.5 -- 0.8
------ ------ ------ ------ ------ ------ ------
Liquidations minus Net
Losses................. $ 794 $ 713 $ 790 $ 833 $1,002 $ 231 $ 258
Net Losses as a
Percentage of
Liquidations minus Net
Losses
NFC................... 0.29% (0.01)% 0.08% 0.04% .50% -- .07%
NITC.................. 1.32% 0.67% 0.07% 0.07% .95% -- .24%
Combined.............. 1.61% 0.66% 0.15% 0.11% 1.45% -- .31%
------ ------ ------ ------ ------ ------ ------
Net Losses as a
Percentage of Average
Gross Balance(2)
NFC................... 0.18% 0.00% 0.04% 0.02% .23% -- .02%
NITC.................. 0.79% 0.35% 0.04% 0.03% .43% -- .12%
Combined.............. 0.97% 0.35% 0.08% 0.05% .66% -- .14%
------ ------ ------ ------ ------ ------ ------
Repossessions as a
Percentage of Average
Gross Balance(2)....... 3.70% 1.95% 0.97% 0.92% 3.15% .90% 1.43%
</TABLE>
- -------
(1) The information presented herein for the year ended October 31, 1996
includes the effect of the bankruptcy of one of NFC's largest obligors,
with obligations under Retail Notes covering approximately 720 vehicles.
As adjusted to eliminate the impact of that obligor's bankruptcy, the
Combined Net Losses, Combined Net Losses as a Percentage of Liquidations
minus Net Losses, Combined Net Losses as a Percentage of Average Gross
Balance and Repossessions as a Percentage of Average Gross Balance for the
same period would have been $4.0 million, 0.39%, 0.18% and 1.64%,
respectively.
(2) January 31 figures have been annualized.
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 Notes and will be filed
with the Commission following the issuance of the Notes. 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......................... 5.841% May 15, 1998
Class A-2 Notes......................... 6.350% January 17, 2000
Class A-3 Notes......................... 6.750% March 15, 2002
Class B Notes........................... 6.950% January 15, 2004
</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 May 15, 1997; provided, however, that interest on
the Class B Notes will not be paid on any Distribution Date until all accrued
interest due and payable on the Class A Notes on such Distribution Date has
been paid in full. In addition, after an Event of Default and acceleration of
the Notes, no interest will be payable on the Class B Notes until all
principal of and interest on the Class A Notes has been paid in full. Interest
on the Notes will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. 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 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;
(ii) Second, to the Class A-2 Notes, until the Class A-2 Notes are paid
in full;
(iii) Third, to the Class A-3 Notes, until the Class A-3 Notes are paid
in full; and
(iv) Fourth, to the Class B Notes, until the Class B 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
Class A-1 Notes and the Class A-2 Notes have been paid in full and the
Aggregate Receivables Balance declines to 10% or less of the sum of the
S-13
<PAGE>
aggregate Starting Receivables Balances of all Receivables previously
transferred to the Trust (as of any date, the "AGGREGATE STARTING RECEIVABLES
BALANCE"), the Class A-3 Notes and the Class B 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 for each
class of Notes so redeemed will be equal to the unpaid principal amount of such
class of Notes and accrued and unpaid interest thereon.
MANDATORY PREPAYMENT
The Class A-1 Notes then outstanding will be prepaid in whole or in part on
the Distribution Date on or immediately following the last day of the Funding
Period if any amount remains on deposit in the Pre-Funding Account on such date
after giving effect to the purchase of all Subsequent Receivables, including
any such purchase on such date. Any such prepayment will be made in accordance
with the priorities described in "--Payments of Principal" above; provided,
that if the remaining Pre-Funded Amount at the time of such prepayment exceeds
$100,000, each class of Notes (including the Class B Notes) will be prepaid in
an amount equal to such class' Pre-Funded Percentage of the remaining Pre-
Funded Amount, to be allocated among the Notes in each such class based on the
respective principal amounts outstanding.
The Trust will be obligated to pay a limited recourse mandatory prepayment
premium (the "NOTEHOLDERS' PREPAYMENT PREMIUM") to the Noteholders if the
remaining Pre-Funded Amount exceeds $100,000. The Noteholders' Prepayment
Premium, if any, with respect to the Class A-1 Notes will equal the excess, if
any, discounted as described below, of (i) the amount of interest that would
have accrued on the principal amount of Class A-1 Notes being prepaid at 5.841%
during the period commencing on and including the Distribution Date on which
the prepayment is required to be made to but excluding August 15, 1997, over
(ii) the amount of interest that would have accrued on such prepaid amount over
the same period at a per annum rate of interest equal to the bond equivalent
yield to maturity on the Determination Date preceding such Distribution Date on
the United States Treasury Bill due August 14, 1997. Such excess will be
discounted on a monthly basis to present value to such Distribution Date at the
applicable yield described in clause (ii) above. The Noteholders' Prepayment
Premium, if any, with respect to the Class A-2 Notes, the Class A-3 Notes and
the Class B Notes, respectively, will be calculated in the same manner, but
substituting in the foregoing calculation (w) the principal amount of the Class
A-2 Notes, Class A-3 Notes or Class B Notes, as the case may be, being prepaid,
(x) 6.350% (for the Class A-2 Notes), 6.750% (for the Class A-3 Notes) or
6.950% (for the Class B Notes) for the rate described in clause (i) above, (y)
August 15, 1998 (for the Class A-2 Notes), February 15, 2000 (for the Class A-3
Notes) or September 15, 2000 (for the Class B Notes) for the date described in
clause (i) above and (z) the 6.250% United States Treasury Note due July 31,
1998 (for the Class A-2 Notes), the 5.875% United States Treasury Note due
February 15, 2000 (for the Class A-3 Notes) or the 6.125% United States
Treasury Note due September 30, 2000 (for the Class B Notes) for the security
described in clause (ii) above. The Trust's obligation to pay the Noteholders'
Prepayment Premium will be limited to the Noteholders' Pre-Funded Percentage of
funds that are received from the Seller under the Pooling and Servicing
Agreement as liquidated damages for the failure to deliver Subsequent
Receivables (and the Seller's obligation to pay such liquidated damages
thereunder is limited to funds it receives from NFC as liquidated damages for
NFC's failure to deliver Subsequent Receivables to the Seller). No other assets
of the Trust will be available for the purpose of making such payment. If the
Noteholders' Prepayment Premium with respect to each class of Notes exceeds the
amount available, the Noteholders of each class will receive their ratable
share (based upon the amount of Noteholders' Prepayment Premium with respect to
each class of Notes) of the amount available to be distributed in respect of
Noteholders' Prepayment Premium.
"PRE-FUNDED PERCENTAGE" means, for any class of Notes, the quotient
(expressed as a percentage) of (i) the initial principal balance of such class
of Notes as of the Closing Date and (ii) the sum of the initial principal
balances of all classes of Notes as of the Closing Date.
PARITY AND PRIORITY OF NOTES
Interest payments to all classes of Class A Notes will have the same priority
while interest on the Class B Notes will not be paid until all accrued interest
on the Class A Notes has been paid in full. Under certain
S-14
<PAGE>
circumstances, the amount available for such payments could be less than the
amount of interest payable on the Class A Notes on any Distribution Date, in
which case Noteholders of each class of Class A Notes 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 Class A Notes. See "The Transfer and Servicing Agreements--
Distributions" and "--Reserve Account."
In general, no payments of principal on the Class A-2 Notes, the Class A-3
Notes or the Class B Notes will be made until the Class A-1 Notes have been
paid in full, no payments of principal on the Class A-3 Notes or the Class B
Notes will be made until the Class A-1 Notes and the Class A-2 Notes have been
paid in full and no payments of principal on the Class B Notes will be made
until the Class A 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 the Class A Notes will be entitled to ratable repayment
of principal on the basis of their respective unpaid principal balances and,
upon repayment of the Class A Notes in full, the Class B Notes will be
entitled to repayment of principal.
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 Noteholders. 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 out of the amounts on deposit in the Collection Account.
The amount to be distributed to the Note 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, the amount to be
deposited into the Collection Account from the Pre-Funding Account and the
Negative Carry Account on the day preceding such Distribution Date 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 day that is two Business
Days prior to each Distribution Date, the Servicer will calculate, with
respect to the preceding Monthly Period and the related Distribution Date, the
Total Available Amount, Collected Interest, Collected Principal, the Total
Servicing Fee,
S-15
<PAGE>
the Aggregate Class A Noteholders' Interest Distributable Amount, the Class B
Noteholders' Interest Distributable Amount, the Aggregate Noteholders'
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 to be withdrawn from the Pre-Funding Account and the
Negative Carry Account and deposited in the Collection Account;
(ii) the amount, if any, to be withdrawn from the Reserve Account and
deposited in the Collection Account;
(iii) 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);
(iv) 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;
(v) the amounts to be withdrawn from the Collection Account in respect of
the Aggregate Class A Noteholders' Interest Distributable Amount, the Class
B 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;
(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 Certificateholders.
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 (ii) 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 Class A Noteholders' Interest Distributable
Amount, the Class B Noteholders' Interest Distributable Amount and the
Aggregate Noteholders' Principal Distributable Amount exceeds (b) the sum of
the amount described in clause (i) above and the Available Amount for such
Distribution Date. The amount, if any, to be withdrawn from the Reserve
Account and paid to the Certificateholders 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 (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 (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 Class A Noteholders' Interest Distributable Amount;
(iii) the Class B Noteholders' Interest Distributable Amount; and
(iv) the Aggregate Noteholders' Principal Distributable Amount.
Notwithstanding the foregoing, at any time that the Class A 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 Class A Notes have been paid in full or such declaration has been
rescinded
S-16
<PAGE>
and any continuing Events of Default have been waived pursuant to the
Indenture, no amounts will be distributed to the Class B Noteholders. Any such
amounts otherwise distributable to the Class B Noteholders will be distributed
instead as payments of principal on the Class A Notes.
"AGGREGATE CLASS A NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of the Class A Noteholders' Interest
Distributable Amounts for all classes of Class A Notes and the Class A
Noteholders' Interest Carryover Shortfall as of the preceding Distribution
Date.
"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.
"CLASS A NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, as of the close
of any Distribution Date, the excess of the Aggregate Class A 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 on the Class A Notes.
"CLASS A NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any class of Class A Notes and any Distribution Date, the product of (i) the
outstanding principal balance of such class of Class A Notes on the preceding
Distribution Date after giving effect to all payments of principal in respect
of such class of Class A 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
(but, in the case of the first Distribution Date, pro-rated for the number of
days from the Closing Date to but excluding such Distribution Date).
"CLASS B NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, as of the close
of any Distribution Date, the excess of the Class B 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 on the Class B Notes.
"CLASS B NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of (i) the Class B Noteholders' Monthly
Interest Distributable Amount for such Distribution Date and (ii) the Class B
Noteholders' Interest Carryover Shortfall as of the preceding Distribution
Date.
"CLASS B NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to the Class B Notes and any Distribution Date, the product of (i) the
outstanding principal balance of the Class B Notes on the preceding
Distribution Date after giving effect to all payments of principal in respect
of the Class B 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 the Class B Notes and a
fraction, the numerator of which is 30 and the denominator of which is 360
(but, in the case of the first Distribution Date, pro-rated for the number of
days from the Closing Date to but excluding such Distribution Date).
"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
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
S-17
<PAGE>
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.
"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.
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 a deposit by the Seller of $21,609,733.97 of cash on the Closing
Date, and by the withdrawal and transfer from the Pre-Funding Account to the
Reserve Account on each Subsequent Transfer Date, of cash or Eligible
Investments having a value equal to at least 5.25% of the aggregate Starting
Receivables Balance of the Receivables being transferred to the Trust on such
date (each a "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 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 and the deposit
of the Aggregate Class A Noteholders' Interest Distributable Amount, the Class
B Noteholders' Interest Distributable Amount and the Aggregate Noteholders'
Principal Distributable Amount in the Note 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 lesser of (i) the aggregate Note Principal Balance for all classes
of Notes as of such Distribution Date, and (ii) the greater of:
(a) 5.25% 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 Aggregate Starting 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 Certificateholders. Upon any distribution to the
Certificateholders of amounts from the Reserve Account, the Noteholders will
not have any rights in, or claims to, such amounts. The initial
Certificateholders may at any time, without consent of the Noteholders, sell,
S-18
<PAGE>
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 any class of the
Notes, (ii) the Certificateholders provide 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
Certificateholders.
PRE-FUNDING ACCOUNT
The Servicer will establish and maintain a Trust Account (the "PRE-FUNDING
ACCOUNT") in the name of the Indenture Trustee for the benefit of the
Noteholders. The Pre-Funding Account will be created with an initial deposit
of $88,386,019.55 (the "INITIAL PRE-FUNDED AMOUNT"). On each Subsequent
Transfer Date during the Funding Period, (i) an amount equal to 5.25% of the
aggregate Starting Receivables Balance of the Subsequent Receivables being
transferred on such date will be withdrawn from the Pre-Funding Account and
deposited in the Reserve Account and (ii) an amount equal to the excess of the
aggregate Starting Receivables Balance of such Subsequent Receivables over the
amount described in clause (i) above will be withdrawn from the Pre-Funding
Account and paid to the Seller. If the balance of funds on deposit in the Pre-
Funding Account (the "PRE-FUNDED AMOUNT") as of the end of the Funding Period
is greater than zero, the Trust will apply the remaining Pre-Funded Amount to
make a mandatory prepayment of the Class A-1 Notes; provided, that if the Pre-
Funded Amount as of the end of the Funding Period is greater than $100,000,
the Trust will apply the remaining Pre-Funded Amount to make ratable mandatory
prepayments of each class of Notes. See "The Notes--Mandatory Prepayment."
NEGATIVE CARRY ACCOUNT
The Servicer will establish and maintain a Trust Account (the "NEGATIVE
CARRY ACCOUNT") in the name of the Indenture Trustee for the benefit of the
Noteholders. The Negative Carry Account will be created with an initial
deposit of $686,170.00 (the "NEGATIVE CARRY ACCOUNT INITIAL DEPOSIT"). The
Negative Carry Account Initial Deposit will equal the Maximum Negative Carry
Amount as of the Closing Date. On subsequent Distribution Dates, the Servicer
will instruct the Indenture Trustee to withdraw from the Negative Carry
Account and deposit into the Collection Account an amount equal to the
Negative Carry Amount for such Distribution Date. If the amount on deposit in
the Negative Carry Account on any Distribution Date (after giving effect to
the withdrawal of the Negative Carry Amount for such Distribution Date) is
greater than the Required Negative Carry Account Balance as of the preceding
Determination Date, the excess will be released to the Seller. All amounts
remaining on deposit in the Negative Carry Account on the Distribution Date on
or immediately following the last day of the Funding Period (after giving
effect to all withdrawals therefrom on such Distribution Date) will be
released to the Certificateholders.
"FUNDING PERCENTAGE" means, for any Distribution Date, the percentage
derived from the fraction the numerator of which is the Pre-Funded Amount and
the denominator of which is the sum of the Aggregate Receivables Balance and
the Pre-Funded Amount, in each case, as of the last day of the related Monthly
Period.
"MAXIMUM NEGATIVE CARRY AMOUNT" means as of any Determination Date, an
amount equal to the product of (i) the excess, if any, of (a) the weighted
average of the Interest Rates on the Notes over (b) 2.5%, multiplied by (ii)
the amount on deposit in the Pre-Funding Account on such date multiplied by
(iii) the fraction of a year represented by the number of days until the end
of the Funding Period (calculated on the basis of a 360-day year of twelve 30-
day months).
"NEGATIVE CARRY AMOUNT" means, as of any Distribution Date, an amount
calculated by the Servicer as the excess, if any, of (i) the product of (a)
the sum of the Aggregate Class A Noteholders' Interest Distributable Amount
and the Class B Noteholders' Interest Distributable Amount for such
Distribution Date multiplied by (b) the Funding Percentage for such
Distribution Date, over (ii) the investment earnings on the Pre-Funded Amount
during the related Monthly Period.
S-19
<PAGE>
"REQUIRED NEGATIVE CARRY ACCOUNT BALANCE" means, as of any Determination
Date, an amount equal to the lesser of (a) the Negative Carry Account Initial
Deposit minus all previous withdrawals from the Negative Carry Account (other
than withdrawals of investment earnings thereon) and (b) the Maximum Negative
Carry Amount as of such date.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Tax Counsel, for federal income tax purposes, the Notes
will be characterized as debt and the Trust will not be characterized as an
association (or publicly traded partnership) taxable as a corporation. Each
Noteholder, by acceptance of a Note, agrees to treat the Notes as
indebtedness.
The Trust will be a Tax Partnership. A Tax Partnership is described in the
Prospectus as a trust which issues Certificates (including Strip Certificates)
and Strip Notes, representing interests in a trust fund which the Seller, the
Servicer and the applicable holders will agree to treat as equity interests in
partnership. The term Tax Partnership is hereby modified to include a trust
which has its equity interests owned solely by the Seller and is treated as a
division or branch of the Seller for federal income tax purposes.
Under recently issued Treasury regulations, which are effective as of
January 1, 1997, an unincorporated entity generally will be classified for
U.S. federal income tax purposes as a partnership rather than as an
association taxable as a corporation without regard to the traditional "four
factor" test previously used to distinguish partnerships and corporations
(unless such unincorporated entity elects to be classified as a corporation
for such purposes). As a result, the Transfer and Servicing Agreements and the
Indenture will not contain certain provisions described in the Prospectus that
were previously required in order for the Trust to be so classified as a
partnership. Therefore, notwithstanding anything to the contrary set forth in
the Prospectus: (i) the Receivables will not be liquidated, and the Trust will
not be terminated, upon the occurrence of an Insolvency Event with respect to
the Seller and (ii) the Seller will not agree to be liable to certain injured
parties as described in "The Transfer and Servicing Agreements--Owner Trust:
Seller Liability" in the Prospectus. For a discussion of the anticipated
material federal income tax consequences of the purchase, ownership and
disposition of the Notes, see "Certain Federal Income Tax Consequences,"
particularly the sections entitled "The Notes" and "Certain State Tax Matters"
in the Prospectus.
ERISA CONSIDERATIONS
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.
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 Notes set forth opposite its name below:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT TO BE PURCHASED
------------------------------------------------------------------------------
CLASS A-1 NOTES CLASS A-2 NOTES CLASS A-3 NOTES CLASS B NOTES TOTAL
--------------- --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Chase Securities Inc. .. $28,333,333.34 $ 73,833,333.34 $ 58,666,666.68 $ 5,833,333.34 $166,666,666.70
BancAmerica Securities,
Inc.................... 28,333,333.33 73,833,333.33 58,666,666.66 5,833,333.33 166,666,666.65
First Chicago Capital
Markets, Inc........... 28,333,333.33 73,833,333.33 58,666,666.66 5,833,333.33 166,666,666.65
-------------- --------------- --------------- -------------- ---------------
Total............... $85,000,000.00 $221,500,000.00 $176,000,000.00 $17,500,000.00 $500,000,000.00
============== =============== =============== ============== ===============
</TABLE>
S-20
<PAGE>
The Seller has been advised by the Underwriters that they propose initially
to offer the Notes 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.................................... .075% .050%
Class A-2 Notes.................................... .125% .100%
Class A-3 Notes.................................... .150% .125%
Class B Notes...................................... .300% .250%
</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.
Chase Securities Inc., on behalf of the Underwriters, may engage in over-
allotment transactions, stabilizing transactions, syndicate covering
transactions and penalty bids with respect to the Notes in accordance with
Regulation M under the Exchange Act. Over-allotment transactions involve
syndicate sales in excess of the offering size creating a syndicate short
position. Stabilizing transactions permit bids to purchase the Notes so long
as the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit Chase Securities Inc. to reclaim a selling concession from
a syndicate member when the Notes originally sold by such syndicate member are
purchased in a syndicate covering transaction. Such over-allotment
transactions, stabilizing transactions, syndicate covering transactions and
penalty bids may cause prices of the Notes to be higher than they would
otherwise be in the absence of such transactions. Neither the Trust nor any of
the Underwriters represent that Chase Securities Inc. will engage in any such
transactions nor that such transactions, once commenced, will not be
discontinued without notice.
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.
As discussed under "Use of Proceeds," NFC intends to use a portion of 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 Notes, the offering of the Notes is being made
pursuant to the provisions of Article III, Section 2710(c)(8) of the Conduct
Rules of the NASD.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain legal
matters relating to the Notes 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 Class A Noteholders' Interest Distributable Amount............... S-17
Aggregate Noteholders' Principal Distributable Amount...................... S-17
Aggregate Starting Receivables Balance..................................... S-14
Certificates............................................................... S- 1
Class A Notes.............................................................. S- 2
Class A Noteholders........................................................ S- 4
Class A Noteholders' Interest Carryover Shortfall.......................... S-17
Class A Noteholders' Interest Distributable Amount......................... S-17
Class A-1 Notes............................................................ S- 3
Class A-2 Notes............................................................ S- 3
Class A-3 Notes............................................................ S- 3
Class B Notes.............................................................. S- 3
Class B Noteholders........................................................ S- 5
Class B Noteholders' Interest Carryover Shortfall.......................... S-17
Class B Noteholders' Interest Distributable Amount......................... S-17
Class B Noteholders' Monthly Interest Distributable Amount................. S-17
Closing Date............................................................... S- 1
Cutoff Date................................................................ S- 3
Distribution Date.......................................................... S- 2
DTC........................................................................ S- 1
Final Scheduled Distribution Date.......................................... S-13
Funding Percentage......................................................... S-19
Funding Period............................................................. S-10
Indenture.................................................................. S-13
Initial Pre-Funded Amount.................................................. S-19
Initial Receivables........................................................ S- 8
Interest Rate.............................................................. S-13
Issuer..................................................................... S- 1
Maximum Negative Carry Amount.............................................. S-19
NFC........................................................................ S- 8
Negative Carry Account..................................................... S-19
Negative Carry Account Initial Deposit..................................... S-19
Negative Carry Amount...................................................... S-19
Noteholders' Prepayment Premium............................................ S-14
Noteholders' Principal Carryover Shortfall................................. S-17
Noteholders' Principal Distributable Amount................................ S-17
Notes...................................................................... S- 1
Owner Trust Agreement...................................................... S- 8
Pre-Funding Account........................................................ S-19
Pre-Funded Amount.......................................................... S-19
Pre-Funded Percentage...................................................... S-14
Principal Distributable Amount............................................. S-18
Reserve Account Initial Deposit............................................ S-18
Required Negative Carry Account Balance.................................... S-20
S&P........................................................................ S-11
Securities................................................................. S- 1
Specified Reserve Account Balance.......................................... S-18
Starting Receivables Balance............................................... S-10
Subsequent Receivables..................................................... S-10
Subsequent Transfer Date................................................... S-10
Total Available Amount..................................................... S-15
TRIP....................................................................... S- 8
Trust...................................................................... S- 1
</TABLE>
S-22
<PAGE>
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE SELLER OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE SELLER OR THE RECEIVABLES SINCE THE DATE
THEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER
OR SOLICITATION.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................... S- 3
The Trust.................................................................. S- 8
The Receivables Pool....................................................... S- 8
Use of Proceeds............................................................ S-11
The Servicer............................................................... S-12
The Notes.................................................................. S-13
The Transfer and Servicing Agreements...................................... S-15
Certain Federal Income Tax Consequences.................................... S-20
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>
---------------
UNTIL JULY 23, 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT),
ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS TO WHICH IT RELATES. THIS DELIVERY REQUIREMENT IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
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$500,000,000
NAVISTAR FINANCIAL 1997-A
OWNER TRUST
$85,000,000 CLASS A-1 5.841% ASSET
BACKED NOTES
$221,500,000 CLASS A-2 6.350% ASSET
BACKED NOTES
$176,000,000 CLASS A-3 6.750% ASSET
BACKED NOTES
$17,500,000 CLASS B 6.950% ASSET
BACKED NOTES
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
SELLER
NAVISTAR FINANCIAL CORPORATION
SERVICER
---------------
PROSPECTUS SUPPLEMENT
---------------
CHASE SECURITIES INC.
BANCAMERICA SECURITIES, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
April 23, 1997
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