<PAGE>
Filed Pursuant to Rule No. 424(B)(5)
Registration No. 033-64249
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 21, 1996
$500,000,000
NAVISTAR FINANCIAL 1997-B OWNER TRUST
$107,000,000 CLASS A-1 5.722% ASSET BACKED NOTES
$94,000,000 CLASS A-2 5.956% ASSET BACKED NOTES
$132,000,000 CLASS A-3 6.200% ASSET BACKED NOTES
$149,500,000 CLASS A-4 6.300% ASSET BACKED NOTES
$17,500,000 CLASS B 6.300% ASSET BACKED NOTES
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
SELLER
NAVISTAR FINANCIAL CORPORATION
SERVICER
---------------
The Navistar Financial 1997-B Owner Trust (the "Trust" or the "Issuer") will
be formed pursuant to a Trust Agreement, to be dated as of November 5, 1997
(the "Closing Date"), between the Seller and Chase Manhattan Bank
Delaware, as Owner Trustee, and will issue five classes of Asset Backed
Notes (collectively,
(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......... $107,000,000.00 5.722% November 16, 1998 100.000000% 0.120% 99.880000%
Class A-2 Notes......... $ 94,000,000.00 5.956% January 18, 2000 100.000000% 0.200% 99.800000%
Class A-3 Notes......... $132,000,000.00 6.200% March 15, 2001 99.968750% 0.225% 99.743750%
Class A-4 Notes......... $149,500,000.00 6.300% August 16, 2004 99.953125% 0.250% 99.703125%
Class B Notes........... $ 17,500,000.00 6.300% August 16, 2004 99.875000% 0.500% 99.375000%
Total................... $500,000,000.00 $499,866,796.88 $1,074,650.00 $498,792,146.88
</TABLE>
(1) Before deducting expenses, estimated to be $450,000.
---------------
The Notes are offered by the Underwriters when, as and if issued and
accepted by the Underwriters and subject to their right to reject orders in
whole or part. It is expected that delivery of the Notes will be made in book-
entry form only through the Same Day Funds Settlement System of The Depository
Trust Company ("DTC") on or about the Closing Date.
UNDERWRITERS OF THE CLASS A NOTES
CREDIT SUISSE FIRST BOSTON
BANCAMERICA ROBERTSON STEPHENS
CHASE SECURITIES INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
J.P. MORGAN & CO.
NATIONSBANC MONTGOMERY SECURITIES, INC.
UNDERWRITER OF THE CLASS B NOTES
CREDIT SUISSE FIRST BOSTON
Prospectus Supplement dated October 22, 1997
<PAGE>
(continued from previous page)
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.
Interest on all classes of Notes will accrue at the fixed interest rates
specified above. 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 November 17, 1997 (each, a "DISTRIBUTION DATE"). Principal
on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-
4 Notes (collectively, the "CLASS A NOTES") and the Class B Notes will
generally be payable as follows: first, 100% to the Class A-1 Notes until the
Class A-1 Notes are paid in full; second, 100% to the Class B Notes until the
principal balance of the Class B Notes equals 3.5% of the aggregate unpaid
principal balance of all outstanding Notes (following such payment); and
thereafter, 96.5% to the Class A Notes until the Class A Notes are paid in
full and 3.5% to the Class B Notes until the Class B Notes are paid in full.
No principal payments will be made on the Class A-3 Notes and the Class A-4
Notes until the Class A-2 Notes have been paid in full and no principal
payments will be made on the Class A-4 Notes until the Class A-3 Notes have
been paid in full. Payments of principal and interest on the Class B Notes
will be subordinated in priority to payments due on 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 October 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
$408,527,638.36. Additional Retail Notes may be purchased by the Trust from
the Seller from time to time on or before the January 1998 Distribution Date
from funds on deposit in the Pre-Funding Account. The Initial Pre-Funded
Amount is $91,472,361.64.
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-B 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 5.722% Asset Backed Notes in
the aggregate principal amount of
$107,000,000 (the "CLASS A-1 NOTES").
Class A-2 5.956% Asset Backed Notes in
the aggregate principal amount of
$94,000,000 (the "CLASS A-2 NOTES").
Class A-3 6.200% Asset Backed Notes in
the aggregate principal amount of
$132,000,000 (the "CLASS A-3 NOTES").
Class A-4 6.300% Asset Backed Notes in
the aggregate principal amount of
$149,500,000 (the "CLASS A-4 NOTES").
Class B 6.300% 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, October 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
S-3
<PAGE>
benefits of any lease assignments and
certain rights of the Seller under the
related Purchase Agreement and the re-
lated Custodian Agreement. The aggregate
Starting Receivables Balance for the
Initial Receivables is $408,527,638.36
and the Initial Pre-Funded Amount is
$91,472,361.64.
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 Class A-1 Notes and the Class A-2
Notes will be calculated on the basis of
the actual number of days elapsed from
the most recent Distribution Date on
which interest has been paid (or the
Closing Date, in the case of the initial
period) divided by 360. Interest on the
Class A-3 Notes, the Class A-4 Notes and
the Class B Notes will be calculated on
the basis 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...................... Subject to the exceptions described in
the following two paragraphs, on each
Distribution Date, principal of the
Notes will be payable, to the extent of
the Principal Payment Amount, as fol-
lows: (i) first, 100% of the Principal
Payment Amount to the Class A-1 Notes,
until the Class A-1 Notes are paid in
full; (ii) second, 100% of the Principal
Payment Amount to the Class B Notes, un-
til the principal balance of the Class B
Notes has been reduced to 3.5% of the
aggregate principal balance of all out-
standing Notes (following such payment);
and (iii) thereafter, 96.5% of the Prin-
cipal
S-4
<PAGE>
Payment Amount to the Class A Notes (all
of which shall be paid to the Class A-2
Notes until paid in full, then to the
Class A-3 Notes until paid in full, and
then to the Class A-4 Notes until paid
in full) and 3.5% of the Principal Pay-
ment Amount to the Class B Notes until
paid in full.
If the amount on deposit in the Reserve
Account on any Distribution Date would
be, after giving effect to distribution
of the Principal Payment Amount on such
Distribution Date, less than 1.0% of the
Aggregate Starting Receivables Balance,
then the Class A Notes will receive 100%
of the Principal Distributable Amount
until either the Class A Notes are paid
in full or the amount on deposit in the
Reserve Account equals or exceeds the
Specified Reserve Account Balance.
After an Event of Default and accelera-
tion of the Notes, the Class A Notes
will be allocated 100% of the Principal
Payment Amount on each Distribution Date
until the Class A Notes have been paid
in full (and principal payments will be
made ratably to the holders of record of
the Class A Notes (the "CLASS A NOTE-
HOLDERS") according to the amounts due
and payable on the Class A Notes for
principal) and then the holders of rec-
ord of the Class B Notes (the "CLASS B
NOTEHOLDERS") will be allocated 100% of
the Principal Payment Amount on each
Distribution Date until paid in full.
See "The Transfer and Servicing Agree-
ments--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........... Each class of Notes (including the Class
B Notes) will be prepaid on the Distri-
bution Date on or immediately following
the last day of the Funding Period if
the amount remaining on deposit in the
Pre-Funding Account on such date exceeds
$100,000, 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 de-
scribed in "The Notes--Payments of Prin-
cipal"; provided, that if the amount re-
maining in the Pre-Funding Account on
such date is $100,000 or less, the Class
A-1 Notes alone will be prepaid in whole
or in part in an amount equal to the en-
tire amount remaining on deposit in the
Pre-Funding Account on such Distribution
Date.
S-5
<PAGE>
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, the Class A-2 Notes and the
Class A-3 Notes have been paid in full
and the Aggregate Receivables Balance
declines to 10% or less of the Aggregate
Starting Receivables Balance, the hold-
ers of Class A-4 Notes and the Class B
Notes will be redeemed in whole, but not
in part, on any Distribution Date at a
redemption price equal to the unpaid
principal amount of such Notes, plus ac-
crued and unpaid interest thereon. See
"The Notes--Redemption."
F. Voting Rights.................. To the extent the Prospectus specifies
certain circumstances under which the
consent, approval, direction, or request
of a specified percentage in principal
amount of the outstanding Notes must be
obtained, given or made, or under which
such a specified percentage are permit-
ted to take an action or give a notice,
then such consent, approval, direction,
request, action or notice shall be valid
only if the holders of such specified
percentage in principal amount of (a)
all the outstanding Class A Notes and
Class B Notes voting together as a sin-
gle class and (b) the outstanding Class
A Notes voting as a single class have
voted to give such consent, approval,
direction, request or notice, or take
such action.
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; and (iv) principal on
the Notes. See "The Transfer and Servic-
ing Agreements--Dis-
S-6
<PAGE>
tributions" and "--Reserve Account."
Upon the occurrence of an Event of De-
fault and the acceleration 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."
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
S-7
<PAGE>
Certificateholders on each Distribution
Date, and all amounts remaining on de-
posit 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 with-
drawals therefrom on such Distribution
Date) will be released to the
Certificateholders.
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 the highest rat-
ing category for short-term debt obliga-
tions by at least two nationally recog-
nized rating agencies, and the Class A-2
Notes, Class A-3 Notes and Class A-4
Notes will be rated in the highest rat-
ing category for long-term debt obliga-
tions, and the Class B Notes will be
rated in the "A' category or its equiva-
lent, in each case, by at least one na-
tionally recognized rating agency. The
rating agencies do not evaluate, and the
ratings do not address, the likelihood
that the Noteholders' Prepayment Premium
will be paid. There is no assurance that
a rating will not be lowered or with-
drawn by a rating agency if circum-
stances so warrant. In the event that
the rating initially assigned to any
Note is subsequently lowered for any
reason, no person or entity will be ob-
ligated to provide any additional credit
enhancement with respect to such Note.
S-8
<PAGE>
THE TRUST
The Issuer, Navistar Financial 1997-B 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
October 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 5.722% Asset Backed Notes......................... $107,000,000
Class A-2 5.956% Asset Backed Notes......................... $ 94,000,000
Class A-3 6.200% Asset Backed Notes......................... $132,000,000
Class A-4 6.300% Asset Backed Notes......................... $149,500,000
Class B 6.300% 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 initially 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 October 31, 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-9
<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>
10.051% $408,527,638.36 $447,876,741.19 7,805 $52,341.79 53.91 50.11
(7.20%- months months
25.00%) (12 to 84 (12 to 72
months) months)
</TABLE>
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%................ 1,191 $ 81,661,004.21 19.99%
8.50-9.49%................ 2,027 123,778,778.16 30.30%
9.50-10.49%............... 1,495 86,507,275.22 21.18%
10.50-11.49%............... 811 39,895,110.85 9.77%
11.50-12.49%............... 581 25,550,208.75 6.25%
12.50-13.49%............... 518 21,561,370.95 5.28%
13.50-14.49%............... 421 12,371,373.63 3.03%
14.50-15.49%............... 342 8,103,933.47 1.98%
15.50-16.49%............... 217 4,706,129.57 1.15%
16.50-17.49%............... 71 1,547,143.20 0.38%
17.50 & Over............... 131 2,845,310.35 0.69%
Total.................... 7,805 $408,527,638.36 100.00%
</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...................... 161 $ 2,951,318.43 0.72%
13-24...................... 1,142 19,302,639.59 4.73%
25-36...................... 1,467 54,046,923.30 13.23%
37-48...................... 1,647 95,326,703.93 23.33%
49-60...................... 2,829 198,269,833.11 48.53%
61-66...................... 46 2,863,172.99 0.70%
67 & Over.................. 513 35,767,047.01 8.76%
Total.................. 7,805 $408,527,638.36 100.00%
</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........... 55.47%
Equal Payment Balloon.................... 15.02%
Equal Payment Skip....................... 8.98%
Level Principal Fully Amortizing......... 6.15%
Level Principal Balloon.................. 9.81%
Level Principal Skip..................... 0.40%
Other.................................... 4.17%
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
aggregate Starting Receivables Balance of the Initial Receivables in the
states with the largest concentration of Receivables. No other state accounts
for more than 3.33% 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>
Illinois............................................... 7.84%
Texas.................................................. 7.44%
Ohio................................................... 6.87%
New York............................................... 5.83%
California............................................. 5.80%
Florida................................................ 4.03%
Indiana................................................ 4.00%
Arkansas............................................... 3.48%
Wisconsin.............................................. 3.42%
Other.................................................. 51.29%
Total.............................................. 100.00%
</TABLE>
- --------
(1) Based on billing addresses of the obligors on the Initial Receivables.
No single obligor accounts for more than 1.74% of the aggregate Starting
Receivables Balance of the Initial Receivables. As of October 1, 1997,
approximately 75.28% of the aggregate Starting Receivables Balance of the
Initial Receivables, constituting 63.72% 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 January 1998 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-11
<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 9.50%,
(B) the weighted average remaining maturity of the Receivables in the Trust
shall not be greater than 54 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 54 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 each Underwriter or an
affiliate thereof, under one or more credit agreements.
S-12
<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, net losses for 1996 were higher
than those reported for 1994 or 1995. Due to economic conditions affecting the
trucking industry generally, delinquencies and repossessions for 1996 and 1997
were higher than reported for 1994 and 1995. Also, NFC's recent experience is
that competitive conditions are causing it increasingly to waive Dealer
Liability when acquiring Retail Notes, and the extent and terms of Dealer
Liability will continue to be subject to change as market conditions require.
As of July 31, 1997, approximately 34% of the aggregate principal amount of
Retail Notes serviced by NFC had the benefit of Dealer Liability. The
Prospectus sets forth an explanation of the extent, terms and effect of Dealer
Liability and the bases on which the delinquency, repossession and net loss
numbers set forth below 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>
NINE MONTHS
NFC RETAIL NOTES YEAR ENDED OCTOBER 31, ENDED JULY 31,
- ---------------- ---------------------------------------- ---------------
1992 1993 1994 1995 1996(1) 1996(1) 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 $2,280 $2,238
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% 2.43% 3.45%
over 60 days.......... 0.19% 0.09% 0.06% 0.09% 0.30% 1.36% 1.18%
Average Gross Balance of
Retail Notes
(13 month average) $1,320 $1,341 $1,515 $1,809 $2,204 $2,182 $2,237
Net Losses (recoveries):
NFC................... $ 2.3 $ (0.1) $ 0.6 $ 0.3 $ 5.0 $ 1.4 $ 1.1
NITC.................. 10.5 4.8 0.6 0.6 9.5 7.8 3.3
------ ------ ------ ------ ------ ------ ------
Combined.............. $ 12.8 $ 4.7 $ 1.2 $ 0.9 $ 14.5 $ 9.2 $ 4.4
Liquidations minus Net
Losses................. $ 794 $ 713 $ 790 $ 833 $1,002 $ 730 $ 794
Net Losses (recoveries)
as a Percentage of
Liquidations minus Net
Losses:
NFC................... 0.29% (0.01)% 0.08% 0.04% 0.50% 0.19% 0.14%
NITC.................. 1.32% 0.67% 0.07% 0.07% 0.95% 1.07% 0.42%
------ ------ ------ ------ ------ ------ ------
Combined.............. 1.61% 0.66% 0.15% 0.11% 1.45% 1.26% 0.56%
Net Losses (recoveries)
as a Percentage of
Average Gross
Balance(2):
NFC................... 0.18% 0.00% 0.04% 0.02% 0.23% 0.08% 0.06%
NITC.................. 0.79% 0.35% 0.04% 0.03% 0.43% 0.48% 0.20%
------ ------ ------ ------ ------ ------ ------
Combined.............. 0.97% 0.35% 0.08% 0.05% 0.66% 0.56% 0.26%
Repossessions as a
Percentage of Average
Gross Balance(2)....... 3.70% 1.95% 0.97% 0.92% 3.15% 3.04% 1.97%
</TABLE>
- -------
(1) The information presented herein for the year ended October 31, 1996 and
the nine months ended July 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 year ended October 31, 1996 would have been
$4.0 million, 0.39%, 0.18% and 1.64%, respectively, and for the nine
months ended July 31, 1996 would have been $1.8 million, 0.25%, 0.11% and
1.52%, respectively.
(2) July 31 figures have been annualized.
S-13
<PAGE>
WEIGHTED AVERAGE LIFE OF THE NOTES
Prepayments on medium and heavy duty truck, bus and trailer receivables can
be measured relative to a prepayment standard or model. The model used in this
Prospectus Supplement, the Absolute Prepayment Model ("ABS"), represents an
assumed rate of prepayment each month relative to the original number of
receivables in a pool of receivables. ABS further assumes that all the
receivables are the same size and amortize at the same rate and that each
receivable in each month of its life will either be paid as scheduled or
prepaid in full. ABS does not purport to be an historical description of
prepayment experience or a prediction of the anticipated rate of prepayment of
receivables, including the Receivables.
As the rate of payment of principal of each class of Notes will depend on
the rate of payment (including prepayments) of the principal balance of the
Receivables, final payment of any class of Notes will likely occur
significantly earlier than the respective Final Scheduled Distribution Dates.
Reinvestment risk associated with early payment of the Notes will be borne
exclusively by the Noteholders. Information regarding certain maturity and
prepayment considerations with respect to the Notes is set forth under
"Weighted Average Life Of The Securities" in the Prospectus.
The table captioned "Percent of Initial Principal Amount of the Notes
Remaining at Various ABS Percentages" (the "ABS TABLE") has been prepared on
the basis of characteristics of the Receivables. The ABS Table assumes that
(i) the Receivables prepay in full at the specified constant percentage of ABS
monthly, with no defaults, losses or repurchases, (ii) each scheduled monthly
payment on the Receivables is made on the last day of each month and each
month has 30 days, (iii) payments on the Notes are made on each Distribution
Date (and each such date is assumed to be the fifteenth day of each applicable
month), (iv) the balance in the Reserve Account on each Distribution Date is
equal to the Specified Reserve Account Balance, and (v) the Servicer exercises
its option to purchase the Receivables on the first Distribution Date on which
it is permitted to do so, as described herein. The ABS Table indicates the
projected weighted average life of each class of Notes and sets forth the
percent of the initial principal amount of each class of Notes that is
projected to be outstanding after each of the Distribution Dates shown at
various constant ABS percentages.
The ABS Table also assumes that the Receivables have been aggregated into
two hypothetical pools, the first pool being composed of the Initial
Receivables ("INITIAL RECEIVABLES POOL") and the second pool being composed of
the Subsequent Receivables ("SUBSEQUENT RECEIVABLES POOL"). The Initial
Receivables Pool has an assumed Cutoff Date of October 1, 1997 and the
Subsequent Receivables Pool has an assumed Cutoff Date of November 1, 1997,
and the first distribution of principal in respect of each such pool is
assumed to occur on November 15, 1997 for the Initial Receivables Pool and
December 15, 1997 for the Subsequent Receivables Pool. Moreover, the ABS Table
assumes that the Initial Receivables Pool and the Subsequent Receivables Pool
have the following Aggregate Starting Receivables Balances and that each of
the Receivables within each of the pools is an Equal Payment Fully Amortizing
Receivable that has the following annual percentage rate, original maturity
and remaining maturity:
<TABLE>
<CAPTION>
AGGREGATE
STARTING ANNUAL ORIGINAL REMAINING
RECEIVABLES PERCENTAGE MATURITY MATURITY
POOL BALANCE RATE (IN MONTHS) (IN MONTHS)
- ---- --------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Initial Receivables
Pool................... $408,527,638.36 10.051% 54 50
Subsequent Receivables
Pool................... 91,472,361.64 10.051% 54 54
---------------
$500,000,000.00
===============
</TABLE>
The actual characteristics and performance of the Receivables will differ
from the assumptions used in constructing the ABS Table. The assumptions used
are hypothetical and have been provided only to give a general sense of how
the principal cash flows might behave under varying prepayment scenarios. It
is very unlikely that the Receivables will prepay at a constant level of ABS
until maturity or that all of the Receivables will prepay at the same level of
ABS. Moreover, the diverse terms of Receivables within each of the
hypothetical pools could produce slower or faster principal distributions than
indicated in the ABS Table at the various constant percentages of ABS
specified, even if the original and remaining terms to maturity of the
Receivables are as assumed. For example, the Initial Receivables have annual
percentage rates that range from 7.20% to 25.00%, and only 55.47% of the
Initial Receivables (by percentage of Aggregate Starting Receivables Balance)
are Equal Payment Fully Amortizing Receivables. Any difference between such
assumptions and the actual characteristics and performance of the Receivables,
or actual prepayment experience, will affect the percentages of initial
balances outstanding over time and the weighted average lives of each class of
Notes.
S-14
<PAGE>
PERCENT OF INITIAL PRINCIPAL AMOUNT OF THE NOTES REMAINING AT VARIOUS ABS
PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-1 NOTES
------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.2% 1.5% 2.0%
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Closing Date...... 100 100 100 100 100
11/15/97........ 94 90 89 88 86
12/15/97........ 86 78 76 73 69
1/15/98........ 79 66 63 59 52
2/15/98........ 71 54 50 45 35
3/15/98........ 63 42 38 31 19
4/15/98........ 56 30 25 17 3
5/15/98........ 48 19 13 3 0
6/15/98........ 40 7 0 0 0
7/15/98........ 32 0 0 0 0
8/15/98........ 24 0 0 0 0
9/15/98........ 16 0 0 0 0
10/15/98........ 8 0 0 0 0
11/15/98........ 0 0 0 0 0
12/15/98........ 0 0 0 0 0
1/15/99........ 0 0 0 0 0
2/15/99........ 0 0 0 0 0
3/15/99........ 0 0 0 0 0
4/15/99........ 0 0 0 0 0
5/15/99........ 0 0 0 0 0
6/15/99........ 0 0 0 0 0
7/15/99........ 0 0 0 0 0
8/15/99........ 0 0 0 0 0
9/15/99........ 0 0 0 0 0
10/15/99........ 0 0 0 0 0
11/15/99........ 0 0 0 0 0
12/15/99........ 0 0 0 0 0
1/15/00........ 0 0 0 0 0
2/15/00........ 0 0 0 0 0
3/15/00........ 0 0 0 0 0
4/15/00........ 0 0 0 0 0
5/15/00........ 0 0 0 0 0
6/15/00........ 0 0 0 0 0
7/15/00........ 0 0 0 0 0
8/15/00........ 0 0 0 0 0
9/15/00........ 0 0 0 0 0
10/15/00........ 0 0 0 0 0
11/15/00........ 0 0 0 0 0
12/15/00........ 0 0 0 0 0
1/15/01........ 0 0 0 0 0
2/15/01........ 0 0 0 0 0
3/15/01........ 0 0 0 0 0
4/15/01........ 0 0 0 0 0
5/15/01........ 0 0 0 0 0
6/15/01........ 0 0 0 0 0
7/15/01........ 0 0 0 0 0
8/15/01........ 0 0 0 0 0
9/15/01........ 0 0 0 0 0
10/15/01........ 0 0 0 0 0
11/15/01........ 0 0 0 0 0
12/15/01........ 0 0 0 0 0
1/15/02........ 0 0 0 0 0
2/15/02........ 0 0 0 0 0
3/15/02........ 0 0 0 0 0
4/15/02........ 0 0 0 0 0
5/15/02........ 0 0 0 0 0
Average Life
(years)
to 10% Call....... 0.5 0.3 0.3 0.3 0.2
</TABLE>
<TABLE>
<CAPTION>
CLASS A-2 NOTES
------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.2% 1.5% 2.0%
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Closing Date...... 100 100 100 100 100
11/15/97........ 100 100 100 100 100
12/15/97........ 100 100 100 100 100
1/15/98........ 100 100 100 100 100
2/15/98........ 100 100 100 100 100
3/15/98........ 100 100 100 100 100
4/15/98........ 100 100 100 100 100
5/15/98........ 100 100 100 100 90
6/15/98........ 100 100 100 93 73
7/15/98........ 100 99 91 78 56
8/15/98........ 100 87 78 64 40
9/15/98........ 100 75 65 50 24
10/15/98........ 100 62 52 36 8
11/15/98........ 100 50 39 22 0
12/15/98........ 95 38 27 9 0
1/15/99........ 85 26 14 0 0
2/15/99........ 76 15 2 0 0
3/15/99........ 67 3 0 0 0
4/15/99........ 57 0 0 0 0
5/15/99........ 48 0 0 0 0
6/15/99........ 38 0 0 0 0
7/15/99........ 29 0 0 0 0
8/15/99........ 19 0 0 0 0
9/15/99........ 9 0 0 0 0
10/15/99........ 0 0 0 0 0
11/15/99........ 0 0 0 0 0
12/15/99........ 0 0 0 0 0
1/15/00........ 0 0 0 0 0
2/15/00........ 0 0 0 0 0
3/15/00........ 0 0 0 0 0
4/15/00........ 0 0 0 0 0
5/15/00........ 0 0 0 0 0
6/15/00........ 0 0 0 0 0
7/15/00........ 0 0 0 0 0
8/15/00........ 0 0 0 0 0
9/15/00........ 0 0 0 0 0
10/15/00........ 0 0 0 0 0
11/15/00........ 0 0 0 0 0
12/15/00........ 0 0 0 0 0
1/15/01........ 0 0 0 0 0
2/15/01........ 0 0 0 0 0
3/15/01........ 0 0 0 0 0
4/15/01........ 0 0 0 0 0
5/15/01........ 0 0 0 0 0
6/15/01........ 0 0 0 0 0
7/15/01........ 0 0 0 0 0
8/15/01........ 0 0 0 0 0
9/15/01........ 0 0 0 0 0
10/15/01........ 0 0 0 0 0
11/15/01........ 0 0 0 0 0
12/15/01........ 0 0 0 0 0
1/15/02........ 0 0 0 0 0
2/15/02........ 0 0 0 0 0
3/15/02........ 0 0 0 0 0
4/15/02........ 0 0 0 0 0
5/15/02........ 0 0 0 0 0
Average Life
(years)
to 10% Call....... 1.5 1.1 1.0 0.9 0.8
</TABLE>
S-15
<PAGE>
PERCENT OF INITIAL PRINCIPAL AMOUNT OF THE NOTES REMAINING AT VARIOUS ABS
PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-3 NOTES
------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.2% 1.5% 2.0%
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Closing Date...... 100 100 100 100 100
11/15/97........ 100 100 100 100 100
12/15/97........ 100 100 100 100 100
1/15/98........ 100 100 100 100 100
2/15/98........ 100 100 100 100 100
3/15/98........ 100 100 100 100 100
4/15/98........ 100 100 100 100 100
5/15/98........ 100 100 100 100 100
6/15/98........ 100 100 100 100 100
7/15/98........ 100 100 100 100 100
8/15/98........ 100 100 100 100 100
9/15/98........ 100 100 100 100 100
10/15/98........ 100 100 100 100 100
11/15/98........ 100 100 100 100 95
12/15/98........ 100 100 100 100 84
1/15/99........ 100 100 100 97 74
2/15/99........ 100 100 100 87 64
3/15/99........ 100 100 93 78 54
4/15/99........ 100 94 84 69 44
5/15/99........ 100 86 76 61 34
6/15/99........ 100 78 68 52 25
7/15/99........ 100 70 60 44 16
8/15/99........ 100 62 52 36 8
9/15/99........ 100 55 44 27 0
10/15/99........ 100 47 36 20 0
11/15/99........ 92 40 29 12 0
12/15/99........ 85 32 21 4 0
1/15/00........ 78 25 14 0 0
2/15/00........ 71 18 7 0 0
3/15/00........ 63 11 0 0 0
4/15/00........ 56 4 0 0 0
5/15/00........ 49 0 0 0 0
6/15/00........ 41 0 0 0 0
7/15/00........ 33 0 0 0 0
8/15/00........ 26 0 0 0 0
9/15/00........ 18 0 0 0 0
10/15/00........ 10 0 0 0 0
11/15/00........ 2 0 0 0 0
12/15/00........ 0 0 0 0 0
1/15/01........ 0 0 0 0 0
2/15/01........ 0 0 0 0 0
3/15/01........ 0 0 0 0 0
4/15/01........ 0 0 0 0 0
5/15/01........ 0 0 0 0 0
6/15/01........ 0 0 0 0 0
7/15/01........ 0 0 0 0 0
8/15/01........ 0 0 0 0 0
9/15/01........ 0 0 0 0 0
10/15/01........ 0 0 0 0 0
11/15/01........ 0 0 0 0 0
12/15/01........ 0 0 0 0 0
1/15/02........ 0 0 0 0 0
2/15/02........ 0 0 0 0 0
3/15/02........ 0 0 0 0 0
4/15/02........ 0 0 0 0 0
5/15/02........ 0 0 0 0 0
Average Life
(years) to 10%
Call.............. 2.5 2.0 1.8 1.7 1.4
</TABLE>
<TABLE>
<CAPTION>
CLASS A-4 NOTES
------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.2% 1.5% 2.0%
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Closing Date...... 100 100 100 100 100
11/15/97........ 100 100 100 100 100
12/15/97........ 100 100 100 100 100
1/15/98........ 100 100 100 100 100
2/15/98........ 100 100 100 100 100
3/15/98........ 100 100 100 100 100
4/15/98........ 100 100 100 100 100
5/15/98........ 100 100 100 100 100
6/15/98........ 100 100 100 100 100
7/15/98........ 100 100 100 100 100
8/15/98........ 100 100 100 100 100
9/15/98........ 100 100 100 100 100
10/15/98........ 100 100 100 100 100
11/15/98........ 100 100 100 100 100
12/15/98........ 100 100 100 100 100
1/15/99........ 100 100 100 100 100
2/15/99........ 100 100 100 100 100
3/15/99........ 100 100 100 100 100
4/15/99........ 100 100 100 100 100
5/15/99........ 100 100 100 100 100
6/15/99........ 100 100 100 100 100
7/15/99........ 100 100 100 100 100
8/15/99........ 100 100 100 100 100
9/15/99........ 100 100 100 100 99
10/15/99........ 100 100 100 100 92
11/15/99........ 100 100 100 100 85
12/15/99........ 100 100 100 100 78
1/15/00........ 100 100 100 98 72
2/15/00........ 100 100 100 91 66
3/15/00........ 100 100 100 85 60
4/15/00........ 100 100 94 79 54
5/15/00........ 100 97 88 74 49
6/15/00........ 100 91 82 68 44
7/15/00........ 100 86 77 63 39
8/15/00........ 100 80 71 57 34
9/15/00........ 100 74 66 52 0
10/15/00........ 100 69 60 48 0
11/15/00........ 100 63 55 43 0
12/15/00........ 95 58 50 39 0
1/15/01........ 88 53 46 34 0
2/15/01........ 81 48 41 0 0
3/15/01........ 74 43 36 0 0
4/15/01........ 67 38 0 0 0
5/15/01........ 59 33 0 0 0
6/15/01........ 52 0 0 0 0
7/15/01........ 45 0 0 0 0
8/15/01........ 37 0 0 0 0
9/15/01........ 0 0 0 0 0
10/15/01........ 0 0 0 0 0
11/15/01........ 0 0 0 0 0
12/15/01........ 0 0 0 0 0
1/15/02........ 0 0 0 0 0
2/15/02........ 0 0 0 0 0
3/15/02........ 0 0 0 0 0
4/15/02........ 0 0 0 0 0
5/15/02........ 0 0 0 0 0
Average Life
(years) to 10%
Call.............. 3.6 3.2 3.1 2.9 2.5
</TABLE>
S-16
<PAGE>
PERCENT OF INITIAL PRINCIPAL AMOUNT OF THE NOTES REMAINING AT VARIOUS ABS
PERCENTAGES
<TABLE>
<CAPTION>
CLASS B NOTES
------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.2% 1.5% 2.0%
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Closing Date...... 100 100 100 100 100
11/15/97........ 100 100 100 100 100
12/15/97........ 100 100 100 100 100
1/15/98........ 100 100 100 100 100
2/15/98........ 100 100 100 100 100
3/15/98........ 100 100 100 100 100
4/15/98........ 100 100 100 100 100
5/15/98........ 100 100 100 100 76
6/15/98........ 100 100 100 76 73
7/15/98........ 100 78 76 74 69
8/15/98........ 100 75 73 71 66
9/15/98........ 100 73 71 68 63
10/15/98........ 100 70 68 65 60
11/15/98........ 98 68 66 63 57
12/15/98........ 77 66 64 60 54
1/15/99........ 75 63 61 57 51
2/15/99........ 73 61 59 55 48
3/15/99........ 71 59 56 52 46
4/15/99........ 70 57 54 50 43
5/15/99........ 68 55 52 48 40
6/15/99........ 66 52 50 45 38
7/15/99........ 64 50 47 43 35
8/15/99........ 62 48 45 41 33
9/15/99........ 60 46 43 39 31
10/15/99........ 58 44 41 36 29
11/15/99........ 56 42 39 34 26
12/15/99........ 54 40 37 32 24
1/15/00........ 52 38 35 30 22
2/15/00........ 50 36 33 28 20
3/15/00........ 48 34 31 26 19
4/15/00........ 46 32 29 25 17
5/15/00........ 44 30 27 23 15
6/15/00........ 42 28 25 21 14
7/15/00........ 40 27 24 19 12
8/15/00........ 38 25 22 18 11
9/15/00........ 36 23 20 16 0
10/15/00........ 34 21 19 15 0
11/15/00........ 32 20 17 13 0
12/15/00........ 29 18 16 12 0
1/15/01........ 27 16 14 11 0
2/15/01........ 25 15 13 0 0
3/15/01........ 23 13 11 0 0
4/15/01........ 21 12 0 0 0
5/15/01........ 18 10 0 0 0
6/15/01........ 16 0 0 0 0
7/15/01........ 14 0 0 0 0
8/15/01........ 12 0 0 0 0
9/15/01........ 0 0 0 0 0
10/15/01........ 0 0 0 0 0
11/15/01........ 0 0 0 0 0
12/15/01........ 0 0 0 0 0
1/15/02........ 0 0 0 0 0
2/15/02........ 0 0 0 0 0
3/15/02........ 0 0 0 0 0
4/15/02........ 0 0 0 0 0
5/15/02........ 0 0 0 0 0
Average Life
(years) to 10%
Call.............. 2.4 1.9 1.8 1.7 1.4
</TABLE>
S-17
<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.
For each class of Notes, the "INTEREST RATE" and the "FINAL SCHEDULED
DISTRIBUTION DATE" will be as set forth below.
<TABLE>
<CAPTION>
INTEREST RATE FINAL SCHEDULED
(PER ANNUM) DISTRIBUTION DATE
------------- -----------------
<S> <C> <C>
Class A-1 Notes......................... 5.722% November 16, 1998
Class A-2 Notes......................... 5.956% January 18, 2000
Class A-3 Notes......................... 6.200% March 15, 2001
Class A-4 Notes......................... 6.300% August 16, 2004
Class B Notes........................... 6.300% August 16, 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 November 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 Class A-1 Notes and the Class A-2 Notes will be
calculated on the basis of the actual number of days elapsed from the most
recent Distribution Date on which interest has been paid (or the Closing Date,
in the case of the initial period) divided by 360. Interest on the Class A-3
Notes, the Class A-4 Notes and the Class B 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.
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
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."
PAYMENTS OF PRINCIPAL
On each Distribution Date, principal of the Notes will be payable, to the
extent of the lesser of (x) the Noteholders' Principal Distributable Amount
and (y) the Total Available Amount remaining after payment of the Total
Servicing Fee, the Aggregate Class A Noteholders' Interest Distributable
Amount and the Class B
S-18
<PAGE>
Noteholders' Interest Distributable Amount (the "PRINCIPAL PAYMENT AMOUNT"), as
follows: (i) first, 100% of the Principal Payment Amount to the Class A-1
Notes, until the Class A-1 Notes are paid in full; (ii) second, 100% of the
Principal Payment Amount to the Class B Notes, until the principal balance of
the Class B Notes has been reduced to 3.5% of the aggregate principal balance
of all outstanding Notes (following such payment); and (iii) thereafter, 96.5%
of the Principal Payment Amount to the Class A Notes (all of which shall be
paid to the Class A-2 Notes until paid in full, then to the Class A-3 Notes
until paid in full, and then to the Class A-4 Notes until paid in full) and
3.5% of the Principal Payment Amount to the Class B Notes (subject, in the case
of clauses (ii) and (iii) above, to subordination of principal payments on the
Class B Notes under the circumstances described in the two following
paragraphs).
If the amount on deposit in the Reserve Account on any Distribution Date
would be, after giving effect to the distribution of the Principal Payment
Amount in accordance with the foregoing priorities, less than 1.0% of the
Aggregate Starting Receivables Balance, then the Class A Notes will receive
100% of the Principal Payment Amount (all of which shall be paid to the Class
A-1 Notes until paid in full, then to the Class A-2 Notes until paid in full,
then to the Class A-3 Notes until paid in full, and then to the Class A-4 Notes
until paid in full) until either the Class A Notes are paid in full or the
amount on deposit in the Reserve Account equals or exceeds the Specified
Reserve Account Balance. When principal payments on the Class B Notes resume in
accordance with the preceding sentence, the Principal Payment Amount shall be
distributed in accordance with clause (iii) in the preceding paragraph until
the Class A-4 Notes have been paid in full, and thereafter 100% of the
Principal Payment Amount shall be paid to the Class B Notes until the Class B
Notes are paid in full.
Also, if an Event of Default occurs as a result of which the Notes are
declared immediately due and payable, the Class A Notes will be allocated 100%
of the Principal Payment Amount on each Distribution Date (and 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 allocated 100% of the
Principal Payment Amount on each Distribution Date until the Class B Notes are
repaid in full.
REDEMPTION
If the Servicer exercises its option to purchase the Receivables when the
Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been paid in
full and the Aggregate Receivables Balance declines to 10% or less of the sum
of the aggregate Starting Receivables Balances of all Receivables previously
transferred to the Trust (as of any date, the "AGGREGATE STARTING RECEIVABLES
BALANCE"), the Class A-4 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
Each class of Notes (including the Class B Notes) will be prepaid on the
Distribution Date on or immediately following the last day of the Funding
Period if the amount remaining on deposit in the Pre-Funding Account on such
date exceeds $100,000, 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 amount remaining in the Pre-Funding
Account on such date is $100,000 or less, the Class A-1 Notes alone will be
prepaid in whole or in part in an amount equal to the entire amount remaining
on deposit in the Pre-Funding Account on such Distribution Date.
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 5.722%
during the period commencing on and including the Distribution Date
S-19
<PAGE>
on which the prepayment is required to be made to but excluding March 15,
1998, 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 March 14, 1998. 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, the Class A-4 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,
Class A-4 Notes or Class B Notes, as the case may be, being prepaid, (x)
5.956% (for the Class A-2 Notes), 6.200% (for the Class A-3 Notes), 6.300%
(for the Class A-4 Notes) or 6.300% (for the Class B Notes) for the rate
described in clause (i) above, (y) November 15, 1998 (for the Class A-2
Notes), September 15, 1999 (for the Class A-3 Notes), December 15, 2000 (for
the Class A-4 Notes) or August 15, 1999 (for the Class B Notes) for the date
described in clause (i) above and (z) the 5.875% United States Treasury Note
due October 31, 1998 (for the Class A-2 Notes), the 5.875% United States
Treasury Note due August 31, 1999 (for the Class A-3 Notes), the 5.625% United
States Treasury Note due November 30, 2000 (for the Class A-4 Notes) or the
5.875% United States Treasury Note due August 31, 1999 (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
Distribution of principal and interest payments on the Notes will be made in
accordance with the priorities described in "--Payments of Interest" and
"Payments of Principal" above.
VOTING RIGHTS
To the extent the Prospectus specifies certain circumstances under which the
consent, approval, direction, or request of a specified percentage in
principal amount of the outstanding Notes must be obtained, given or made, or
under which such a specified percentage are permitted to take an action or
give a notice, then such consent, approval, direction, request, action or
notice shall be valid only if the holders of such specified percentage in
principal amount of (a) all the outstanding Class A Notes and Class B Notes
voting together as a single class and (b) the outstanding Class A notes voting
as a single class have voted to give such consent, approval, direction,
request or notice, or take such action.
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
S-20
<PAGE>
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, the Aggregate Class A Noteholders' Interest Distributable
Amount, the Class B Noteholders' Interest Distributable Amount, the
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 Noteholders' Principal
Distributable Amount and deposited in the Note Distribution Account for
payment to Noteholders on such Distribution Date;
S-21
<PAGE>
(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 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 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.
"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
the Class A-1 Notes and the Class A-2 Notes and any Distribution Date, the
product of (1) 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 (2) the product of the
Interest Rate for such class of Class A Notes and a fraction, the numerator of
which is the actual number of days elapsed from the most recent
S-22
<PAGE>
Distribution Date on which interest has been paid (or the Closing Date, in the
case of the initial period), and the denominator of which is 360, and with
respect to the Class A-3 Notes and the Class A-4 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, on a Distribution Date,
the excess, if any, of the Noteholders' Principal Distributable Amount over
the amount specified in clause (y) of the first paragraph under "The Notes--
Payment of Principal" on a Distribution Date.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, for any Distribution
Date, the sum of (i) the Principal Distributable Amount, (ii) the Noteholders'
Principal Carryover Shortfall and (iii) on the Final Scheduled Distribution
Date for a class of Notes, 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 $21,447,701.01 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
S-23
<PAGE>
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 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) 2.0% 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,
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 $91,472,361.64 (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."
S-24
<PAGE>
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 $652,521 (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 Certificateholders. 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.
"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. 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. As such a
division or branch, the Trust's assets will be part of the Seller, which is a
taxable entity. However, the Indenture Trustee, on behalf of the Noteholders,
holds a perfected, first priority security interest in the Receivables. Such
priority should protect the Noteholders against claims made against the Trust
or the Seller by taxing authorities.
S-25
<PAGE>
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 A-4 NOTES CLASS B NOTES
--------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Credit Suisse First
Boston Corporation..... $ 17,850,000 $15,670,000 $ 22,000,000 $ 24,920,000 $17,500,000
BancAmerica Robertson
Stephens............... 17,830,000 15,666,000 22,000,000 24,916,000 --
Chase Securities Inc.... 17,830,000 15,666,000 22,000,000 24,916,000 --
First Chicago Capital
Markets, Inc........... 17,830,000 15,666,000 22,000,000 24,916,000 --
J.P. Morgan Securities
Inc.................... 17,830,000 15,666,000 22,000,000 24,916,000 --
NationsBanc Montgomery
Securities, Inc........ 17,830,000 15,666,000 22,000,000 24,916,000 --
------------ ----------- ------------ ------------ -----------
Total............... $107,000,000 $94,000,000 $132,000,000 $149,500,000 $17,500,000
============ =========== ============ ============ ===========
</TABLE>
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 Notes. 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.................................... .120% .100%
Class A-3 Notes.................................... .135% .125%
Class A-4 Notes.................................... .150% .125%
Class B Notes...................................... .300% .150%
</TABLE>
S-26
<PAGE>
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.
Credit Suisse First Boston Corporation ("CSFB"), 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
which creates 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 CSFB 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 CSFB 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 each Underwriter or an affiliate thereof,
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-27
<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>
ABS........................................................................ S-14
ABS Table.................................................................. S-14
Aggregate Class A Noteholders' Interest Distributable Amount............... S-22
Aggregate Starting Receivables Balance..................................... S-19
Certificates............................................................... S- 2
Class A Notes.............................................................. S- 2
Class A Noteholders........................................................ S- 5
Class A Noteholders' Interest Carryover Shortfall.......................... S-22
Class A Noteholders' Interest Distributable Amount......................... S-22
Class A-1 Notes............................................................ S- 3
Class A-2 Notes............................................................ S- 3
Class A-3 Notes............................................................ S- 3
Class A-4 Notes............................................................ S- 3
Class B Notes.............................................................. S- 3
Class B Noteholders........................................................ S- 5
Class B Noteholders' Interest Carryover Shortfall.......................... S-23
Class B Noteholders' Interest Distributable Amount......................... S-23
Class B Noteholders' Monthly Interest Distributable Amount................. S-23
Closing Date............................................................... S- 1
CSFB....................................................................... S-27
Cutoff Date................................................................ S- 3
Distribution Date.......................................................... S- 2
DTC........................................................................ S- 1
Final Scheduled Distribution Date.......................................... S-18
Funding Percentage......................................................... S-25
Funding Period............................................................. S-11
Indenture.................................................................. S-18
Initial Pre-Funded Amount.................................................. S-24
Initial Receivables........................................................ S- 9
Initial Receivables Pool................................................... S-14
Interest Rate.............................................................. S-18
Issuer..................................................................... S- 1
Maximum Negative Carry Amount.............................................. S-25
NFC........................................................................ S- 9
Negative Carry Account..................................................... S-25
Negative Carry Account Initial Deposit..................................... S-25
Negative Carry Amount...................................................... S-25
Noteholders' Prepayment Premium............................................ S-19
Noteholders' Principal Carryover Shortfall................................. S-23
Noteholders' Principal Distributable Amount................................ S-23
Notes...................................................................... S- 2
Owner Trust Agreement...................................................... S- 9
Pre-Funding Account........................................................ S-24
Pre-Funded Amount.......................................................... S-24
Pre-Funded Percentage...................................................... S-19
Principal Distributable Amount............................................. S-23
</TABLE>
S-28
<PAGE>
<TABLE>
<S> <C>
Principal Payment Amount................................................... S-19
Reserve Account Initial Deposit............................................ S-24
Required Negative Carry Account Balance.................................... S-25
S&P........................................................................ S-12
Securities................................................................. S- 2
Specified Reserve Account Balance.......................................... S-24
Starting Receivables Balance............................................... S-11
Subsequent Receivables..................................................... S-11
Subsequent Receivables Pool................................................ S-14
Subsequent Transfer Date................................................... S-11
Total Available Amount..................................................... S-21
TRIP....................................................................... S- 9
Trust...................................................................... S- 1
</TABLE>
S-29
<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- 9
The Receivables Pool....................................................... S- 9
Use of Proceeds............................................................ S-12
The Servicer............................................................... S-13
Weighted Average Life of the Notes......................................... S-14
The Notes.................................................................. S-18
The Transfer and Servicing Agreements...................................... S-20
Certain Federal Income Tax Consequences.................................... S-25
ERISA Considerations....................................................... S-26
Underwriting............................................................... S-26
Legal Opinions............................................................. S-27
Index of Terms............................................................. S-28
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 JANUARY 22, 1998 (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 A PROSPECTUS. 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.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$500,000,000 NAVISTAR FINANCIAL 1997-B OWNER TRUST
$107,000,000 CLASS A-1 5.722% ASSET BACKED NOTES
$94,000,000 CLASS A-2 5.956% ASSET BACKED NOTES
$132,000,000 CLASS A-3 6.200% ASSET BACKED NOTES
$149,500,000 CLASS A-4 6.300% ASSET BACKED NOTES
$17,500,000 CLASS B 6.300% ASSET BACKED NOTES
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
SELLER
NAVISTAR FINANCIAL CORPORATION
SERVICER
PROSPECTUS SUPPLEMENT
UNDERWRITERS OF THE CLASS A NOTES
CREDIT SUISSE FIRST BOSTON
BANCAMERICA ROBERTSON STEPHENS
CHASE SECURITIES INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
J.P. MORGAN & CO.
NATIONSBANC MONTGOMERY SECURITIES, INC.
UNDERWRITER OF THE CLASS B NOTES
CREDIT SUISSE FIRST BOSTON
- -------------------------------------------------------------------------------
