<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
May 24, 1999
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other Jurisdiction of Incorporation)
33-64249 and 333-62445
(Commission File Number)
51-0337491
(I.R.S. Employer Identification No.)
Navistar Financial Retail Receivables Corporation
2850 W. Golf Road
Rolling Meadows, IL 60008
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: (847) 734-4000
Former name or former address, if changed since last report: Not applicable
Exhibit Index appears on Page 4
<PAGE>
Item 5. Other Events
On May 24, 1999, the registrant made available to prospective investors a
series term sheet setting forth a description of the collateral pool and the
proposed structure of $714,764,750.47 aggregate principal amount of Series 1999-
A Asset Backed Notes, Class A-1, Class A-2. Class A-3, Class A-4 and Class B, of
Navistar Financial 1999-A Owner Trust. The series term sheet is attached hereto
as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
Exhibit No. Description
Exhibit 99 Series Term Sheet dated May 24, 1999 with respect to the proposed
issuance of the Series 1999-A Asset Backed Notes, Class A-1,
Class A-2. Class A-3, Class A-4 and Class B, of Navistar
Financial 1999-A Owner Trust
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
NAVISTAR FINANCIAL RETAIL RECEIVABLES
CORPORATION
(Registrant)
Dated: May 24, 1999 By: /s/ R. Wayne Cain
Its: Vice President and Treasurer
<PAGE>
INDEX OF EXHIBITS
Exhibit No Exhibit
Exhibit 99 Series Term Sheet dated May 24, 1999 with respect to the proposed
issuance of the Series 1999-A Asset Backed Notes, Class A-1, Class
A-2. Class A-3, Class A-4 and Class B, of Navistar Financial 1999-A
Owner Trust
<PAGE>
Navistar Financial 1999-A Owner Trust
Navistar Financial Retail Receivables Corporation
Seller
Navistar Financial Corporation
Servicer
Subject to Revision
Term Sheet Dated May 24, 1999
Underwriters of the Class A Notes
Chase Securities Inc.
Banc One Capital Markets, Inc.
Banc of America Securities LLC
Underwriter of the Class B Notes
Chase Securities Inc.
<PAGE>
THE SOLE SOURCE OF PAYMENTS ON THE NOTES IS THE TRUST PROPERTY. THE NOTES ARE
NOT INTERESTS IN, OBLIGATIONS OF, OR INSURED OR GUARANTEED BY THE OWNER TRUSTEE,
NAVISTAR FINANCIAL CORPORATION, NAVISTAR FINANCIAL RETAIL RECEIVABLES
CORPORATION OR ANY OTHER PERSON OR ENTITY.
THIS TERM SHEET CONTAINS STRUCTURAL AND COLLATERAL INFORMATION WITH RESPECT TO
THE NAVISTAR FINANCIAL 1999-A OWNER TRUST. THE INFORMATION CONTAINED IN THIS
TERM SHEET IS PRELIMINARY AND WILL BE SUPERSEDED IN ITS ENTIRETY BY THE
INFORMATION APPEARING IN THE PROSPECTUS SUPPLEMENT RELATING TO THE NAVISTAR
FINANCIAL 1999-A OWNER TRUST (THE "PROSPECTUS SUPPLEMENT") AND THE RELATED
PROSPECTUS (THE "PROSPECTUS"). THE INFORMATION CONTAINED IN THIS TERM SHEET
ADDRESSES ONLY CERTAIN LIMITED ASPECTS OF THE NOTES' CHARACTERISTICS, AND DOES
NOT PURPORT TO PROVIDE A COMPLETE ASSESSMENT THEREOF. THE INFORMATION CONTAINED
HEREIN THEREFORE MAY NOT REFLECT THE IMPACT OF ALL STRUCTURAL CHARACTERISTICS OF
THE NOTES OR ANY CHANGES MADE TO THE STRUCTURE OF THE NOTES AFTER THE DATE
HEREOF. ADDITIONAL INFORMATION WILL BE CONTAINED IN THE PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS. PURCHASERS ARE URGED TO READ BOTH THE PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
ALTHOUGH A REGISTRATION STATEMENT (INCLUDING THE PROSPECTUS) RELATING TO THE
NOTES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS
EFFECTIVE, THE PROSPECTUS SUPPLEMENT HAS NOT BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. SALES OF THE NOTES MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED BOTH THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS
TERM SHEET SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THE NOTES IN ANY STATE OR OTHER
JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES OR OTHER APPLICABLE LAWS
OF ANY SUCH STATE OR OTHER JURISDICTION. THE NOTES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION.
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<PAGE>
$714,764,750.47 Asset Backed Notes
Navistar Financial 1999-A Owner Trust
Navistar Financial Retail Receivables Corporation
Seller
Navistar Financial Corporation
Servicer
Subject to Revision
Term Sheet Dated May 24, 1999
This Term Sheet will be superseded in its entirety by the information appearing
in the Prospectus Supplement and the Prospectus. Capitalized terms used but not
defined herein shall have the meanings specified in the Prospectus Supplement
and the Prospectus. A final Prospectus and Prospectus Supplement may be
obtained by contacting [your sales representative] [Joy Dunphy at (212) 834-
4533] [Jeff Kane at (704) 386-9690] [Evonne Taylor at (312) 732-8270].
Issuer......................... Navistar Financial 1999-A Owner Trust (the
"Trust"), a Delaware common law trust to be
formed by the Seller and the Owner Trustee
pursuant to the Owner Trust Agreement, acting
by and through the Owner Trustee.
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 and, for certain
limited purposes, an officer of the Chase
Manhattan Bank Delaware, as trustees under the
Owner Trust Agreement.
The Notes...................... The Issuer will issue Notes as follows:
Class A-1 ______ % Asset Backed Notes in the
aggregate principal amount of $147,000,000 (the
"Class A-1 Notes").
Class A-2 ______ % Asset Backed Notes in the
aggregate principal amount of $197,000,000 (the
"Class A-2 Notes").
Class A-3 ______ % Asset Backed Notes in the
aggregate principal amount of $200,000,000 (the
"Class A-3 Notes").
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<PAGE>
Class A-4 ______ % Asset Backed Notes in the
aggregate principal amount of $145,745,000 (the
"Class A-4 Notes"; together with the Class A-1
Notes, the Class A-2 Notes and the Class A-3
Notes, the "Class A Notes").
Class B ______ % Asset Backed Notes in the
aggregate principal amount of $25,019,750.47
(the "Class B Notes"; together with the Class A
Notes, the "Notes").
The Class B Notes will be subordinated to the
Class A Notes to the extent described herein
and in the Prospectus Supplement.
The sole source of payments on the Notes is the
Trust Property. The Notes are not interests in,
obligations of, or insured or guaranteed by the
Owner Trustee, the Seller, the Servicer or any
other person or entity.
The Issuer will also issue Certificates (the
"Certificates"), which will not bear interest
but will have certain rights in excess monies
in the Reserve Account and certain other excess
funds, that will initially be held by the
Seller, the Servicer and/or one of their
affiliates.
The Trust Property............. The Trust Property will include a pool of
Retail Notes (the "Receivables"), certain
monies due or received thereunder on and after
May 1, 1999 (the "Cutoff Date") security
interests in the vehicles financed thereby,
certain accounts (including the Reserve
Account), and the proceeds thereof, the
proceeds, if any, of Dealer Liability, NITC
Purchase Obligations and any Guaranties, any
proceeds from claims on certain insurance
policies, the benefits of any lease assignments
and certain rights of the Seller under the
related Purchase Agreement and the related
Custodian Agreement. The Initial Aggregate
Receivables Balance is $714,764,750.47.
Terms of the Notes: The principal terms of the Notes will be as
described below:
A. Interest............... Class A-1 Notes: %
Class A-2 Notes: %
Class A-3 Notes: %
Class A-4 Notes: %
Class B Notes: %
Interest on the Notes will accrue at the
applicable Interest Rate from the Closing Date
or the most recent Distribution Date on which
interest has been paid to but excluding the
next Distribution Date, and will generally be
payable monthly on the 15th day of
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<PAGE>
each month or, if the 15th day is not a
business day, on the next business day,
starting on June 15, 1999 (each, a
"Distribution Date"). Interest on the Class A-1
Notes will be calculated on the basis of the
actual number of days elapsed since the Closing
Date or the preceding Distribution Date divided
by 360. Interest on the Class A-2 Notes, 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
interest due and payable on the Class A Notes
on such Distribution Date has been paid in
full. After the Notes are declared to be due
and payable following the occurrence of an
Event of Default resulting from the failure to
make a payment on the Notes or the insolvency
of the Trust, 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.
B. Principal.............. Subject to the subordination provisions
described in the two following paragraphs, on
each Distribution Date, the Notes will be
payable to the extent of the Principal Payment
Amount as follows: (1) first, 100% of the
Principal Payment Amount to the Class A-1 Notes
until the Class A-1 Notes are paid in full; (2)
thereafter, 96.5% of the Principal Payment
Amount (in the case of the Distribution Date on
which the Class A-1 Notes are paid in full,
96.5% of the remaining 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 (in the case of the Distribution Date on
which the Class A-1 Notes are paid in full,
3.5% of the remaining Principal Payment Amount)
to the Class B Notes until the Class A Notes
are paid in full; and (3) thereafter, 100% of
the Principal Payment Amount (in the case of
the Distribution Date on which the Class A
Notes are paid in full, the remaining Principal
Payment Amount) to the Class B Notes until the
Class B Notes are paid in full. The "Principal
Payment Amount" for each Distribution Date will
generally equal the lesser of (a) the Principal
Distributable Amount for such Distribution Date
and (b) the excess, if any, of the sum of the
Available Amount for such Distribution Date and
available funds on deposit in the Reserve
Account on such Distribution Date (the "Total
Available Amount") over the sum of the Total
Servicing Fee and accrued and unpaid interest
on the Notes due and payable on such
Distribution Date. For a Distribution Date, the
"Principal Distributable Amount" generally will
equal the sum, with respect
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<PAGE>
to the related Monthly Period, of the principal
portion of all payments due on the Receivables,
the principal portion of all prepayments
received in respect of the Receivables, the
principal portion of all Receivables
repurchased by the Seller or purchased by the
Servicer and the principal portion of all
Receivables that became Liquidating
Receivables, and the "Available Amount"
generally will equal (a) the sum, with respect
to the related Monthly Period, of (1) that
portion of all collections on the Receivables
allocable to principal, interest or Prepayment
Surplus, (2) all Liquidation Proceeds to the
extent attributable to principal or interest in
accordance with the Servicer's customary
procedures, (3) that portion of all Monthly
Advances made by the Servicer allocable to
principal or interest due on the Receivables,
(4) the Warranty Payment, the Administrative
Purchase Payment or the Optional Purchase
Proceeds of each Receivable that the Seller
repurchased or the Servicer purchased during
such related Monthly Period to the extent
attributable to principal, accrued interest or
Prepayment Surplus thereon and (5) the
principal portion of all Prepayments minus (b)
that portion of collections retained by the
Servicer in respect of unreimbursed Monthly
Advances and Liquidation Expenses.
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
priorities set forth above, less than 1.0% of
the Initial Aggregate 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
the first sentence in the preceding paragraph.
Also, if an Event of Default occurs and the
Notes are declared to be due and payable, the
Class A Notes will be payable in an amount
equal to 100% of the Principal Payment Amount
(and each class of Class A Notes will be
entitled to ratable repayment of principal on
the basis of their respective unpaid principal
balances) and no principal of the Class B Notes
will be paid on any Distribution Date
thereafter until the Class A Notes are paid in
full. Thereafter, the principal of the Class B
Notes will be payable
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<PAGE>
in an amount equal to 100% of the Principal
Payment Amount on each Distribution Date until
the Class B Notes are paid in full.
Each class of Notes will be payable in full on
the applicable Final Scheduled Distribution
Date in the calendar month set forth below
(however, the actual payment in full of any
class of Notes could occur sooner):
<TABLE>
<CAPTION>
<S> <C>
Class A-1 Notes: June 2000
Class A-2 Notes: February 2002
Class A-3 Notes: April 2003
Class A-4 Notes: October 2005
Class B Notes: October 2005
</TABLE>
C. Redemption............. If the Aggregate Receivables Balance declines
to 10% or less of the Initial Aggregate
Receivables Balance and the Servicer exercises
its option to purchase the Receivables on any
Distribution Date on or after the date on which
the Class A-1 Notes, the Class A-2 Notes and
the Class A-3 Notes have been paid in full, the
Class A-4 Notes and the Class B Notes will be
redeemed in whole, but not in part, at a
redemption price equal to the unpaid principal
amount of those Notes, plus accrued and unpaid
interest thereon.
D. 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.
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 on each Distribution Date: (1) the
Servicing Fee and any unpaid Servicing Fee for
prior Distribution Dates ("Total Servicing
Fee"); (2) interest on the Class A Notes; (3)
interest on the Class B Notes; and (4)
principal on the Notes as described above.
After the Notes are declared to be due and
payable following the occurrence of an Event of
Default resulting from the failure to make a
payment on the Notes or the insolvency of the
Trust, all principal and interest on the Class
A Notes will be paid
-7-
<PAGE>
in full prior to making any further payments on
or with respect to the Class B Notes.
Reserve Account................ On the Closing Date an amount of cash or
eligible investments equal to $28,590,590.02 or
4.00% of the Initial Aggregate Receivables
Balance will be deposited into the Reserve
Account. The Reserve Account will be increased
on each Distribution Date by the deposit in the
Reserve Account of amounts remaining after
payment to the Servicer of the Total Servicing
Fee and deposits to the Distribution Account of
amounts to be distributed 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
holders of the Certificates. The "Specified
Reserve Account Balance" on each Distribution
Date will equal the lesser of (1) the aggregate
outstanding principal balance of the Notes and
(2) the greater of (a) 5.25% (or 10.0% under
certain circumstances described in the
Prospectus Supplement) of the Aggregate
Receivables Balance as of the close of business
on the last day of the related Monthly Period,
and (b) 2.0% of the Initial Aggregate
Receivables Balance.
Funds will be withdrawn from cash in the
Reserve Account on the day preceding each
Distribution Date to the extent that the
Available Amount (after payment of the Total
Servicing Fee) is less than amounts payable on
the Notes.
Tax Status..................... In the opinion of Kirkland & Ellis, special tax
counsel, for federal income tax purposes, the
Notes will be characterized as indebtedness and
the Trust will not be characterized as an
association (or publicly traded partnership)
taxable as a corporation. Each Noteholder by
the acceptance of a Note will agree to treat
the Notes as indebtedness.
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 the 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 Internal Revenue Code.
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<PAGE>
Legal Investment............... The Class A-1 Notes will be eligible securities
for purchase by money market funds under Rule
2a-7 under the Investment Company Act of 1940,
as amended.
Ratings........................ It is a condition to the issuance of the Notes
that the Class A-1 Notes be rated in the
highest rating category for short-term debt
obligations by at least two nationally
recognized rating agencies, the Class A-2,
Class A-3 and Class A-4 Notes be rated in the
highest rating category for long-term debt
obligations by at least one nationally
recognized rating agency, and the Class B Notes
be rated in the "A" category or its equivalent
by at least one nationally recognized rating
agency.
THE RECEIVABLES POOL
The Receivables to be transferred to the Trust on the Closing Date (the
"Receivables Pool") were originated by Navistar Financial Corporation ("NFC").
Certain of the 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 on of the Closing Date for resale to the Seller.
The Receivables were selected randomly for inclusion in the Receivables Pool
from those Retail Notes in NFC's portfolio of owned Retail Notes which satisfied
several criteria, including that each Receivable (a) has a first payment due
date on or before May 31, 1999, (b) has an original term to maturity of 12 to 84
months, (c) has a remaining term to maturity of 12 to 72 months, (d) provides
for finance charges at an APR of no less than 6.00%, (e) as of the Cutoff Date,
was not more than 60 days past due, and (f) satisfies the other criteria set
forth in the Prospectus under the caption "The Receivables Pools."
The composition, distribution by annual percentage rate, distribution by
remaining maturity, distribution by payment terms and geographic distribution of
the Receivables Pool as of the Cutoff Date 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 Receivables Pool
<TABLE>
<CAPTION>
Weighted Average Weighted Weighted
Annual Percentage Initial Aggregate Average Average Average
Rate of Aggregate Original Number of Initial Original Remaining
Receivables Receivables Principal Receivables Receivable Maturity Maturity
(Range) Balance Balance in Pool Balance (Range) (Range)
- ----------------- --------------- --------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
8.677% $714,764,750.47 $755,802,854.41 15,346 $46,576.62 54.39 50.51
(6.09%-24.99%)(1) months months
(15 to 84 (12 to 72
months) months)
</TABLE>
- ------------
(1) Excludes two Receivables with APRs above 24.99%.
-9-
<PAGE>
Distribution by Annual Percentage Rate of the Receivables Pool
<TABLE>
<CAPTION>
Percentage of
Annual Percentage Number of Initial Initial Aggregate
Rate Range Receivables Receivables Balance Receivables Balance
- ----------------- ----------- ------------------- -------------------
<S> <C> <C> <C>
6.00-6.49% 429 $ 24,614,849.94 3.44%
6.50-7.49% 4,755 222,513,522.98 31.13%
7.50-8.49% 3,553 176,807,203.15 24.74%
8.50-9.49% 2,009 103,540,644.39 14.49%
9.50-10.49% 1,541 77,670,829.38 10.87%
10.50-11.49% 934 46,139,045.17 6.46%
11.50-12.49% 531 21,047,091.06 2.94%
12.50-13.49% 487 15,817,010.74 2.21%
13.50-14.49% 511 13,336,924.37 1.87%
14.50-15.49% 254 6,023,942.00 0.84%
15.50-16.49% 151 3,453,624.82 0.48%
16.50-17.49% 46 955,259.96 0.13%
17.50% & Over 145 2,844,802.51 0.40%
Total 15,346 $714,764,750.47 l00.00%
Distribution by Remaining Maturity of the Receivables Pool
Remaining Percentage of
Maturity Number of Initial Initial Aggregate
(Months) Receivables Receivables Balance Receivables Balance
--------- ----------- ------------------- -------------------
<S> <C> <C> <C>
12-24 1,228 $ 24,056,357.37 3.37%
25-36 2,682 88,842,704.13 12.43%
37-48 3,521 162,616,401.57 22.75%
49-60 6,381 367,035,507.62 51.35%
61-66 423 18,470,397.62 2.58%
67 & Over 1,111 53,743,382.16 7.52%
Total 15,346 $714,764,750.47 100.00%
</TABLE>
Distribution by Payment Terms of the Receivables Pool
<TABLE>
<CAPTION>
Percentage of
Initial Aggregate
Type of Receivable Receivables Balance
- ------------------------------ -------------------
<S> <C>
Equal Payment Fully Amortizing 62.95%
Equal Payment Balloon 14.97%
Equal Payment Skip 2.33%
Level Principal Fully Amortizing 4.80%
Level Principal Balloon 11.54%
Level Principal Skip 0.57%
Other 2.84%
Total 100.00%
</TABLE>
The Receivables Pool includes Receivables originated in 48 states and The
District of Columbia. The following table sets forth the percentage of the
Initial Aggregate Receivables Balance in the states with the largest
concentration of Receivables. No other state accounts for more than 2.49%
-10-
<PAGE>
of the Initial Aggregate Receivables Balance. None of the Receivables were
originated in Alaska or Hawaii.
Geographic Distribution of the Receivables Pool
<TABLE>
<CAPTION>
Percentage of Initial
Aggregate Receivables
State(l) Balance
------------ ---------------------
<S> <C>
Illinois 7.81%
Ohio 7.01%
California 6.45%
Texas 6.04%
Florida 5.15%
Arkansas 4.81%
New York 4.60%
Pennsylvania 4.04%
Indiana 3.54%
Minnesota 3.52%
Michigan 3.23%
Wisconsin 2.92%
Missouri 2.84%
Other 38.04%
Total 100.00%
</TABLE>
- ----------------
(1) Based on billing addresses of the obligors on the Receivables.
No single obligor accounts for more than 1.07% of the Initial Aggregate
Receivables Balance. As of the Cutoff Date, approximately 80.50% of the Initial
Aggregate Receivables Balance, constituting 69.57% of the aggregate number of
Receivables, represent Receivables secured by new vehicles. The remainder are
secured by used vehicles.
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 economic conditions affecting
the trucking industry generally, delinquencies and repossessions for 1996, 1997,
1998 and the first three months of 1999 were higher than reported for 1994 and
1995. In particular, as a result of the bankruptcy of one of NFC's largest
obligors, a combined charge of $10.9 million was taken in 1996 by NFC and NITC,
$3.8 million of which was reversed in 1998 by NFC. There can be no assurance
that the delinquency, repossession and net loss experience on the Receivables
Pool will be comparable to that set forth below. Due to rounding, the amounts
shown
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<PAGE>
for NFC and NITC separately in this table may not add to the amount shown for
NFC and NITC combined.
<TABLE>
<CAPTION>
Three Months
Year Ended October 31, Ended January 31,
---------------------------------------------- ------------------
NFC Retail Notes
- ----------------
1994 1995 1996 1997 1998 1998 1999
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
($ in millions)
Gross Balance Outstanding at end of
Period............................. $1,653 $2,073 $2,282 $2,282 $2,481 $2,232 $2,554
Gross Balance Past Due as a
Percentage of Gross Balance
Outstanding at end of Period
31-60 days....................... 0.41% 2.43% 1.99% 2.42% 2.49% 3.49% 3.89%
over 60 days..................... 0.06% 0.09% 0.30% 0.60% 0.61% 0.82% 0.84%
Average Gross Balance of Retail
Notes (13 month average)............ $1,515 $1,809 $2,204 $2,245 $2,339 $2,257 $2,513
Net Losses (recoveries):
NFC.............................. $ 0.6 $ 0.3 $ 5.0 $ 2.1 $ - $ 0.3 $ 0.6
NITC............................. 0.6 0.6 9.5 3.9 9.9 0.2 0.1
------ ------ ------ ------ ------ ------ ------
Combined......................... $ 1.2 $ 0.9 $ 14.5 $ 6.0 $ 9.9 $ 0.5 $ 0.7
Liquidations minus Net Losses........ $ 790 $ 833 $1,002 $1,083 $1,178 $ 308 $ 275
Net Losses (recoveries) as a
Percentage of Liquidations
minus Net Losses:
NFC.............................. 0.08% 0.04% 0.50% 0.19% 0.00% 0.10% 0.22%
NITC............................. 0.07% 0.07% 0.95% 0.36% 0.84% 0.06% 0.04%
------ ------ ------ ------ ------ ------ ------
Combined......................... 0.15% 0.11% 1.45% 0.55% 0.84% 0.16% 0.26%
Net Losses (recoveries) as a
Percentage of Average Gross
Balance (1):
NFC.............................. 0.04% 0.02% 0.23% 0.09% 0.00% 0.05% 0.09%
NITC............................. 0.04% 0.03% 0.43% 0.18% 0.42% 0.04% 0.02%
------ ------ ------ ------ ------ ------ ------
Combined......................... 0.08% 0.05% 0.66% 0.27% 0.42% 0.09% 0.11%
Repossessions as a Percentage of
Average Gross Balance (1).......... 0.97% 0.92% 3.15% 2.01% 2.31% 2.40% 1.92%
</TABLE>
- ----------------
(1) January 31 figures have been annualized.
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
Term Sheet, 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.
-12-
<PAGE>
Reinvestment risk associated with early payment of the Notes will be borne
exclusively by the Noteholders.
The table captioned "Percent of Initial Note Principal Amount of the
Offered 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 (1) the Receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or repurchases, (2) each
scheduled monthly payment on the Receivables is made on the last day of each
month and each month has 30 days, (3) 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), (4) the balance in the Reserve Account on each Distribution
Date is equal to the Specified Reserve Account Balance, and (5) the Servicer
does not exercise 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 a
hypothetical pool ("Assumed Receivables Pool"). The Assumed Receivables Pool has
an assumed Cutoff Date of May 1, 1999, and the first distribution of principal
in respect of the pool is assumed to occur on June 15, 1999. Moreover, the ABS
Table assumes that the Assumed Receivables Pool has the following Initial
Aggregate Receivable Balance and that the Receivables within the pool are a
single Equal Payment Fully Amortizing Receivable that has the following annual
percentage rate, original maturity and remaining maturity:
<TABLE>
<CAPTION>
<S> <C>
Initial Aggregate Receivables Balance.. $714,764,750.47
Annual Percentage Rate................. 8.677%
Original Maturity (In Months).......... 54.39
Remaining Maturity (In Months)......... 50.51
</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 the hypothetical pool 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 6.09% to
30.00%, and only 62.95% of the Receivables (by percentage of Initial Aggregate
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.
-13-
<PAGE>
Percent of Initial Principal Amount of the Offered Notes Remaining at
Various ABS Percentages
<TABLE>
<CAPTION>
Class A-1 Notes Class A-2 Notes
- ------------------------------------------------------------- ---------------------------------------------------------
Distribution Distribution
Date 0.00% 1.00% 1.40% 1.80% Date 0.00% 1.00% 1.40% 1.80%
------------ ------ ------ ------ ----- ------------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% Closing Date 100% 100% 100% 100%
6/15/99 92% 87% 85% 83% 6/15/99 100% 100% 100% 100%
7/15/99 84% 74% 70% 65% 7/15/99 100% 100% 100% 100%
8/15/99 76% 61% 55% 49% 8/15/99 100% 100% 100% 100%
9/15/99 67% 48% 40% 32% 9/15/99 100% 100% 100% 100%
10/15/99 59% 36% 26% 16% 10/15/99 100% 100% 100% 100%
11/15/99 50% 23% 12% 0% 11/15/99 100% 100% 100% 100%
12/15/99 42% 11% 0% 0% 12/15/99 100% 100% 98% 88%
1/15/00 33% 0% 0% 0% 1/15/00 100% 99% 88% 77%
2/15/00 25% 0% 0% 0% 2/15/00 100% 90% 78% 66%
3/15/00 16% 0% 0% 0% 3/15/00 100% 82% 69% 55%
4/15/00 8% 0% 0% 0% 4/15/00 100% 73% 59% 45%
5/15/00 0% 0% 0% 0% 5/15/00 99% 64% 50% 35%
6/15/00 0% 0% 0% 0% 6/15/00 93% 56% 41% 24%
7/15/00 0% 0% 0% 0% 7/15/00 86% 48% 31% 15%
8/15/00 0% 0% 0% 0% 8/15/00 80% 40% 22% 5%
9/15/00 0% 0% 0% 0% 9/15/00 73% 31% 14% 0%
10/15/00 0% 0% 0% 0% 10/15/00 67% 23% 5% 0%
11/15/00 0% 0% 0% 0% 11/15/00 60% 16% 0% 0%
12/15/00 0% 0% 0% 0% 12/15/00 54% 8% 0% 0%
1/15/01 0% 0% 0% 0% 1/15/01 47% 0% 0% 0%
2/15/01 0% 0% 0% 0% 2/15/01 40% 0% 0% 0%
3/15/01 0% 0% 0% 0% 3/15/01 33% 0% 0% 0%
4/15/01 0% 0% 0% 0% 4/15/01 27% 0% 0% 0%
5/15/01 0% 0% 0% 0% 5/15/01 20% 0% 0% 0%
6/15/01 0% 0% 0% 0% 6/15/01 13% 0% 0% 0%
7/15/01 0% 0% 0% 0% 7/15/01 6% 0% 0% 0%
8/15/01 0% 0% 0% 0% 8/15/01 0% 0% 0% 0%
9/15/01 0% 0% 0% 0% 9/15/01 0% 0% 0% 0%
10/15/01 0% 0% 0% 0% 10/15/01 0% 0% 0% 0%
11/15/01 0% 0% 0% 0% 11/15/01 0% 0% 0% 0%
12/15/01 0% 0% 0% 0% 12/15/01 0% 0% 0% 0%
1/15/02 0% 0% 0% 0% 1/15/02 0% 0% 0% 0%
2/15/02 0% 0% 0% 0% 2/15/02 0% 0% 0% 0%
3/15/02 0% 0% 0% 0% 3/15/02 0% 0% 0% 0%
4/15/02 0% 0% 0% 0% 4/15/02 0% 0% 0% 0%
5/15/02 0% 0% 0% 0% 5/15/02 0% 0% 0% 0%
6/15/02 0% 0% 0% 0% 6/15/02 0% 0% 0% 0%
7/15/02 0% 0% 0% 0% 7/15/02 0% 0% 0% 0%
8/15/02 0% 0% 0% 0% 8/15/02 0% 0% 0% 0%
9/15/02 0% 0% 0% 0% 9/15/02 0% 0% 0% 0%
10/15/02 0% 0% 0% 0% 10/15/02 0% 0% 0% 0%
11/15/02 0% 0% 0% 0% 11/15/02 0% 0% 0% 0%
12/15/02 0% 0% 0% 0% 12/15/02 0% 0% 0% 0%
1/15/03 0% 0% 0% 0% 1/15/03 0% 0% 0% 0%
2/15/03 0% 0% 0% 0% 2/15/03 0% 0% 0% 0%
3/15/03 0% 0% 0% 0% 3/15/03 0% 0% 0% 0%
4/15/03 0% 0% 0% 0% 4/15/03 0% 0% 0% 0%
5/15/03 0% 0% 0% 0% 5/15/03 0% 0% 0% 0%
6/15/03 0% 0% 0% 0% 6/15/03 0% 0% 0% 0%
7/15/03 0% 0% 0% 0% 7/15/03 0% 0% 0% 0%
Average Lives to Average Lives to
Maturity (yrs) 0.493 0.317 0.273 0.237 Maturity (yrs) 1.614 1.141 0.996 0.875
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
Class A-3 Notes Class A-4 Notes
----------------------------------------------------- ------------------------------------------------------------
Distribution Distribution
Date 0.00% 1.00% 1.40% 1.80% Date 0.00% 1.00% 1.40% 1.80%
------------- ------ ------ ------ ------ ------------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100% Closing Date 100% 100% 100% 100%
6/15/99 100% 100% 100% 100% 6/15/99 100% 100% 100% 100%
7/15/99 100% 100% 100% 100% 7/15/99 100% 100% 100% 100%
8/15/99 100% 100% 100% 100% 8/15/99 100% 100% 100% 100%
9/15/99 100% 100% 100% 100% 9/15/99 100% 100% 100% 100%
10/15/99 100% 100% 100% 100% 10/15/99 100% 100% 100% 100%
11/15/99 100% 100% 100% 100% 11/15/99 100% 100% 100% 100%
12/15/99 100% 100% 100% 100% 12/15/99 100% 100% 100% 100%
1/15/00 100% 100% 100% 100% 1/15/00 100% 100% 100% 100%
2/15/00 100% 100% 100% 100% 2/15/00 100% 100% 100% 100%
3/15/00 100% 100% 100% 100% 3/15/00 100% 100% 100% 100%
4/15/00 100% 100% 100% 100% 4/15/00 100% 100% 100% 100%
5/15/00 100% 100% 100% 100% 5/15/00 100% 100% 100% 100%
6/15/00 100% 100% 100% 100% 6/15/00 100% 100% 100% 100%
7/15/00 100% 100% 100% 100% 7/15/00 100% 100% 100% 100%
8/15/00 100% 100% 100% 100% 8/15/00 100% 100% 100% 100%
9/15/00 100% 100% 100% 95% 9/15/00 100% 100% 100% 100%
10/15/00 100% 100% 100% 86% 10/15/00 100% 100% 100% 100%
11/15/00 100% 100% 97% 77% 11/15/00 100% 100% 100% 100%
12/15/00 100% 100% 88% 69% 12/15/00 100% 100% 100% 100%
1/15/01 100% 100% 80% 60% 1/15/01 100% 100% 100% 100%
2/15/01 100% 93% 73% 52% 2/15/01 100% 100% 100% 100%
3/15/01 100% 85% 65% 44% 3/15/01 100% 100% 100% 100%
4/15/01 100% 78% 57% 36% 4/15/01 100% 100% 100% 100%
5/15/01 100% 71% 50% 29% 5/15/01 100% 100% 100% 100%
6/15/01 100% 64% 43% 21% 6/15/01 100% 100% 100% 100%
7/15/01 100% 57% 36% 14% 7/15/01 100% 100% 100% 100%
8/15/01 99% 50% 29% 7% 8/15/01 100% 100% 100% 100%
9/15/01 92% 43% 22% 1% 9/15/01 100% 100% 100% 100%
10/15/01 85% 36% 16% 0% 10/15/01 100% 100% 100% 93%
11/15/01 78% 30% 9% 0% 11/15/01 100% 100% 100% 84%
12/15/01 70% 23% 3% 0% 12/15/01 100% 100% 100% 76%
1/15/02 63% 17% 0% 0% 1/15/02 100% 100% 96% 69%
2/15/02 56% 11% 0% 0% 2/15/02 100% 100% 89% 61%
3/15/02 49% 5% 0% 0% 3/15/02 100% 100% 81% 54%
4/15/02 41% 0% 0% 0% 4/15/02 100% 98% 74% 48%
5/15/02 34% 0% 0% 0% 5/15/02 100% 90% 66% 42%
6/15/02 26% 0% 0% 0% 6/15/02 100% 82% 60% 36%
7/15/02 19% 0% 0% 0% 7/15/02 100% 75% 53% 31%
8/15/02 11% 0% 0% 0% 8/15/02 100% 67% 47% 26%
9/15/02 4% 0% 0% 0% 9/15/02 100% 60% 41% 21%
10/15/02 0% 0% 0% 0% 10/15/02 95% 53% 35% 17%
11/15/02 0% 0% 0% 0% 11/15/02 84% 46% 30% 13%
12/15/02 0% 0% 0% 0% 12/15/02 73% 39% 24% 9%
1/15/03 0% 0% 0% 0% 1/15/03 63% 32% 19% 6%
2/15/03 0% 0% 0% 0% 2/15/03 52% 26% 15% 4%
3/15/03 0% 0% 0% 0% 3/15/03 41% 20% 11% 1%
4/15/03 0% 0% 0% 0% 4/15/03 30% 14% 7% 0%
5/15/03 0% 0% 0% 0% 5/15/03 19% 8% 3% 0%
6/15/03 0% 0% 0% 0% 6/15/03 8% 2% 0% 0%
7/15/03 0% 0% 0% 0% 7/15/03 0% 0% 0% 0%
Average Lives to Average Lives to
Maturity (yrs) 2.806 2.251 2.007 1.777 Maturity (yrs) 3.753 3.460 3.241 2.941
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
Class B Notes
==========================================================
Distribution
Date 0.00% 1.00% 1.40% 1.80%
------------ ----- ----- ----- -----
<S> <C> <C> <C> <C>
Closing Date 100% 100% 100% 100%
6/15/99 100% 100% 100% 100%
7/15/99 100% 100% 100% 100%
8/15/99 100% 100% 100% 100%
9/15/99 100% 100% 100% 100%
10/15/99 100% 100% 100% 100%
11/15/99 100% 100% 100% 100%
12/15/99 100% 100% 99% 97%
1/15/00 100% 100% 97% 93%
2/15/00 100% 97% 94% 90%
3/15/00 100% 95% 91% 87%
4/15/00 100% 92% 88% 84%
5/15/00 100% 90% 86% 81%
6/15/00 98% 87% 83% 78%
7/15/00 96% 85% 80% 76%
8/15/00 94% 83% 78% 73%
9/15/00 92% 80% 75% 70%
10/15/00 91% 78% 73% 67%
11/15/00 89% 76% 70% 65%
12/15/00 87% 74% 68% 62%
1/15/01 85% 71% 66% 60%
2/15/01 83% 69% 63% 58%
3/15/01 81% 67% 61% 55%
4/15/01 79% 65% 59% 53%
5/15/01 77% 63% 57% 51%
6/15/01 75% 61% 55% 49%
7/15/01 73% 59% 53% 47%
8/15/01 71% 57% 51% 45%
9/15/01 69% 55% 49% 43%
10/15/01 67% 53% 47% 41%
11/15/01 65% 51% 45% 39%
12/15/01 63% 49% 43% 37%
1/15/02 61% 47% 42% 36%
2/15/02 59% 46% 40% 34%
3/15/02 57% 44% 38% 33%
4/15/02 54% 42% 37% 31%
5/15/02 52% 40% 35% 30%
6/15/02 50% 39% 34% 29%
7/15/02 48% 37% 33% 28%
8/15/02 46% 36% 31% 27%
9/15/02 44% 34% 30% 26%
10/15/02 41% 32% 29% 25%
11/15/02 39% 31% 28% 24%
12/15/02 37% 30% 26% 23%
1/15/03 35% 28% 25% 23%
2/15/03 32% 27% 24% 22%
3/15/03 30% 25% 24% 22%
4/15/03 28% 24% 23% 18%
5/15/03 25% 23% 22% 9%
6/15/03 23% 22% 19% 3%
7/15/03 0% 0% 0% 0%
Average Lives to
Maturity (yrs) 2.945 2.587 2.427 2.237
</TABLE>
-16-
