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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended August 18, 1997
Commission file number 333-07185
BRIDGESTONE/FIRESTONE MASTER TRUST
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 13-3205598
State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
C/O JH MANAGEMENT CORPORATION, ONE INTERNATIONAL PLACE, SUITE 520,
BOSTON, MASSACHUSETTS 02110-2624
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 961-7690
Securities registered pursuant to section 12(g) of the Act:
6.17% Class A Asset Backed Certificates, Series 1996-1
6.49% CLASS B ASSET BACKED CERTIFICATES, SERIES 1996-1
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. /x/ Yes
/ / No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K
PART I
ITEM 1. BUSINESS.
The Bridgestone/Firestone Master Trust (the "Trust") was formed pursuant to a
Pooling and Servicing Agreement as amended through November 1, 1996 as
supplemented by the Series Supplements thereto, among Bridgestone/Firestone,
Inc. Firestone Retail Credit Corporation and The Fuji Bank and Trust Company.
The Trust's only business is to act as a passive trust to permit investment in a
pool of credit card receivables.
ITEM 2. PROPERTIES.
The assets of the Trust include a portfolio of credit card account balances (the
"Receivables).
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The 6.17% Class A Asset Backed Certificates, Series 1996-1 and the 6.49% Class B
Certificates, Series 1996-1 (collectively, the "Certificates") are held and
delivered in book entry form through the facilities of the Depository Trust
Company ("DTC"), a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. All outstanding
Certificates are held by CEDE and Co., the nominee of DTC.
ITEM 6. SELECTED FINANCIAL DATA.
Not Applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Not Applicable.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary data required by Part II, Item 8, are
included in Part IV, as indexed at Item 14 (a)(1).
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
None.
ITEM 11. EXECUTIVE COMPENSATION.
None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of March 1, 1997 100% of the Certificates were held in the name of CEDE and
Co. for beneficial owners.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) (1) Financial Statements:
- Independent Auditors' Report
- Balance Sheet
- Statement of Income
- Statement of Cash Flow
- Statement of Changes of Assets in Trust
- Notes to Financial Statements
(b) Form 8-K Filings:
- May 6, 1997
- June 4, 1997
- July 8, 1997
- August 8, 1997
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
BRIDGESTONE/FIRESTONE MASTER TRUST
(Registrant)
By: Bridgestone/Firestone, Inc., as Servicer of
Bridgestone/Firestone Master Trust
Date: November 14, 1997 By: /S/ TETSUO ANDO
Name: Tetsuo Ando
Title: Chief Financial Officer, Executive
Vice-President and Treasurer
EXHIBIT INDEX
DESCRIPTION PAGE NUMBER
Independent Auditors' Report 6
Balance Sheet 7
Statement of Income 8
Statement of Cash Flow 9
Statement of Changes of Assets in Trust 10
Footnotes to Financial Statements 11
INDEPENDENT AUDITORS' REPORT
BRIDGESTONE/FIRESTONE MASTER TRUST:
We have audited the accompanying balance sheet of the Bridgestone/Firestone
Master Trust as of August 18, 1997, and the related statements of income, cash
flows and changes of assets in trust for the fiscal year then ended. These
financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatememt. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Trust at August 18, 1997, and the
results of its operations and its cash flows for the fiscal year then ended in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
October 30, 1997
Cleveland, Ohio
BRIDGESTONE/FIRESTONE MASTER TRUST
BALANCE SHEEET AS OF AUGSUT 18, 1997
ASSETS
Cash and cash equivalents (Notes 2, 6) $ 790,390
Cash held in escrow (Notes 2, 9) 60,000,000
Receivable from Servicer (Notes 1, 2, 8) 11,459,244
Credit card program receivables (Notes 1, 8) 392,916,333
------------
Total Assets $465,165,967
============
LIABILITIES AND ASSETS IN TRUST
Liabilities:
Accounts payable (Note 2) $ 13,807,139
Assets in Trust:
Investor Certificateholder interest:
Series 1996-1 (Notes 1, 2, 3, 4, 5) 257,150,584
Series 1992-B (Notes 1, 2, 3, 4, 5, 6) 122,899,886
Escrow accounts (Notes 2, 9) 60,000,000
------------
Total Investor Certificateholder interest 440,050,470
Transferor Interest (Notes 1, 4, 5, 7, 8) 7,402,460
B/F Interest (Notes 1, 4, 5) 3,905,898
Total Assets in Trust 451,358,828
------------
Total Liabilities and Assets in Trust $465,165,967
============
BRIDGESTONE/FIRESTONE MASTER TRUST
STATEMENT OF INCOME
INCOME
Finance charges/late fees (Notes 2, 4) $ 81,195,747
Discount option receivables (Note 2) 9,316,644
Recoveries of defaulted receivables (Note 8) 8,398,199
Merchant fees (Note 2) 3,500,000
------------
Total Income 102,410,590
EXPENSES
Servicing fees (Notes 1, 2, 4) 8,530,668
Excess finance charge collections (Notes 2, 3, 4) 72,973,524
------------
Total Expenses 81,504,192
Net Income $ 20,906,398
============
BRIDGESTONE/FIRESTONE MASTER TRUST
STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 20,906,398
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in receivable from Servicer (5,368,540)
Increase in accounts payable 1,674,008
Total adjustments (3,694,532)
------------
Net cash provided by operating activities 17,211,866
NET CASH PROVIDED BY INVESTING ACTIVITIES
Principal reduction in credit card program receivables 49,116,769
CASH FLOWS FROM FINANCING ACTIVITIES Sales of interest
IN TRUST:
Series 1992-B Certificates 3,651,549
Transferor interest 212,239
B/F interest 38,668
---
Sub-total 3,902,456
Trust principal distributions:
Series 1995-A Certificates (2,372,952)
Series 1992-B Certificates (43,331,000)
Transferor interest (7,121,542)
B/F interest (488,625)
Sub-total =============
(53,314,119)
Trust income distributions:
Series 1996-1 Certificates (10,788,743)
Series 1995-A Certificates (3,377,581)
Series 1992-B Certificates (6,953,155)
-------------
Sub-total (21,119,479)
Net cash used in financing activities (70,531,142)
Net change in cash and cash equivalents (4,202,507)
Cash and cash equivalents at beginning of year 4,992,897
-------------
Cash and cash equivalents at end of year $ 790,390
=============
Non-cash financing activity
Refinancing of Series 1992-B and 1995-A
Certificates with Series 1996-1 Certificates $ 256,410,258
BRIDGESTONE/FIRESTONE MASTER TRUST
STATEMENT OF CHANGES OF ASSETS IN TRUST
FISCAL YEAR ENDED AUGUST 18, 1997
INCOME PRINCIPAL
BEGINNING ISSUANCE OF CERTIFS. INCOME DISTRIBUTIONS DISTRIBUTIONS ENDING
ASSETS IN TRUST BALANCE OF CERTS. (NOTE 3) NOTE 2,3,4) (NOTE 2,3,4) (NOTE 3,5,6,7) BALANCE
- ---------------- --------- --------- ----------- ----------- ------------- -------------- --------
Series
1996-1:
Class A -- -- $ 200,000,000 $ 9,632,056 ($ 9,015,056) -- $ 200,617,000
Class B -- -- 28,205,129 1,428,817 (1,337,291) -- 28,296,655
Coll. Int -- -- 10,000,000 468,196 (436,396) -- 10,031,800
Sub. Tr. Int -- -- 18,205,129 -- -- -- 18,205,129
----------- ----------- ----------- ----------- ----------- ----------- -----------
Sub-Total -- -- 256,410,258 11,529,069 (10,788,743) -- 257,150,584
Series
1995-A:
Class A $ 200,140,309 -- (199,200,000) 2,437,272 (3,377,581) -- --
Class B 38,095,238 -- (38,095,238) -- -- -- --
Reserve Acct 2,372,952 -- -- -- -- $ (2,372,952) --
------------ ----------- ----------- ----------- ----------- ----------- -----------
Sub-Total 240,608,499 -- 237,295,238 (3,377,581) (2,372,952) -- (237,295,238)
Series
1992-B:
Class A 150,611,378 $ 3,067,000 (16,056,617) 6,940,057 (6,953,155) (34,332,383) 103,276,280
Class B 29,281,680 584,549 (3,058,403) -- -- (7,184,220) 19,623,606
Reserve Acct 1,814,397 -- -- -- -- (1,814,397) --
------------ ----------- ----------- ----------- ----------- ----------- -----------
Sub-Total 181,707,455 3,651,549 (19,115,020) 6,940,057 (6,953,155) (43,331,000) 122,899,886
Escrow Accts 60,000,000 -- -- -- -- -- 60,000,000
Transferor
Interest:
Non-Sub 10,124,414 211,820 -- -- -- (2,933,774) 7,402,460
Available
Subordination:
1995-A 2,372,952 -- -- -- -- (2,372,952) --
1992-B 1,814,397 419 -- -- -- (1,814,816) --
------------ ----------- ----------- ----------- ----------- ----------- -----------
Sub-Total 14,311,763 212,239 -- -- -- (7,121,542) 7,402,460
B/F Interest 4,355,855 38,668 -- -- -- (488,625) 3,905,898
Total Assets $ 500,983,572 $ 3,902,456 -- $ 20,906,398 ($ 21,119,479) ($ 53,314,119) $ 451,358,828
in Trust ============= ============= ============ ============= ============= ============= =============
BRIDGESTONE/FIRESTONE MASTER TRUST
NOTES TO FINANCIAL STATEMENTS
FISCAL YEAR ENDED AUGUST 18, 1997
1. GENERAL INFORMATION
The Bridgestone/Firestone Master Trust (the "Trust") was established
pursuant to a Pooling and Servicing Agreement (the "PSA") dated as of
November 1, 1992 and amended and restated as of November 1, 1996. Pursuant
to the PSA, Firestone Retail Credit Corporation (the "Transferor") conveys
property to the Trust. The Trust property includes a portfolio of
receivables generated by a private label credit card program established by
Credit First National Association ("CFNA"), along with all monies that come
due on the receivables. CFNA is a nationally chartered credit card bank and
a wholly-owned subsidiary of Bridgestone/Firestone, Inc.
The Trust has no employees. Bridgestone/Firestone, Inc.
("Bridgestone/Firestone" or the "Servicer") services the Trust receivables
and is compensated for its servicing activities. To facilitate its
servicing functions and reduce administrative burdens and expenses, the
Servicer retains physical possession of the documents relating to the
receivables. The Servicer compiles Trust statistics for monthly collections
periods, which go from the 19th calendar day of each month through the 18th
calendar day of the following month. To coincide with these monthly
collection periods, the Trust has adopted a fiscal year of July 19th
through August 18th.
The Trust issues certificates (the "Certificates"), which include Investor
Certificates, the B/F Certificate, and the Exchangeable Transferor
Certificate (all as hereinafter defined). The Fuji Bank and Trust Company
(the "Trustee") serves as trustee for the Trust, and maintains all rights,
title, and interest in the Trust assets for the benefit of Certificate-
holders.
The Investor Certificates comprise those series of certificates which are
issued pursuant to PSA supplements and have multiple classes, some of which
are publicly held. As of August 18, 1997, the Investor Certificates
included the Series 1996-1 Certificates and the Series 1992-B Certificates.
The Series 1996-1 Certificates include (in order of subordination) Class A
Certificates, Class B Certificates, the Collateral Interest, and the
Subordinated Transferor Certificate. The Series 1996-1 Class A and Class B
Certificates are publicly held, the Collateral Interest is uncertificated
and is held by a bank, and the Subordinated Transferor Certificate is held
by the Transferor. The Series 1992-B Certificates include Class A
Certificates and Class B Certificates. The Class A Certificates are
publicly held, and the Class B Certificate is held by the Transferor and is
subordinated to the Class A. The Trust had also issued Series 1995-A, Class
A and Class B Certificates, which were paid in full on November 8, 1996.
The PSA supplements that established these Investor Certificates,
collectively with the PSA, are herein referred to as the "Agreements."
The B/F Certificate and Exchangeable Transferor Certificate represent,
respectively, the interest of Bridgestone/Firestone and the Transferor in
the Trust. These interests are referred to in the Agreements as the "B/F
Interest" and the "Transferor Interest," respectively. The B/F Interest
equals one percent of the aggregate receivables in the Trust. The
Transferor Interest must be at least in an amount such that the sum of the
Transferor Interest, the B/F Interest, and the Transferor Letter of Credit
(as described in Note 9) equals seven percent of the total Trust interests
represented by Investor Certificates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation: The financial statements have been prepared on an
accrual basis of accounting. The preparation of these financial statements
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and cash equivalents: The PSA allows the Trust's cash to be invested
in short-term investments that meet certain normal and reasonable quality
standards as the PSA designates. These short-term investments, which have a
maturity of three months or less, are deemed a cash equivalent. Interest on
such short-term investments is the property of the Transferor and not the
Trust. Cash and cash equivalents as of August 18, 1997, consisted of
$790,390 that the Servicer had deposited to the collection account to pay
interest on the Series 1992-B Class A securities.
Cash held in escrow: The Servicer and Transferor letters of credit
described in Note 9 were drawn down throughout the year ended August 18,
1997. The cash proceeds from the draw down were required to be placed in
escrow for the benefit of holders of Investor Certificates, and are not
available for any other purpose. Cash held in escrow consists of the
$60,000,000 proceeds from the draw down of these letters of credit.
Receivable from Servicer: The receivable from the Servicer as of August 18,
1997, included $8,405,346 of finance charge income for the period from July
19, 1997 through August 18, 1997, that was not deposited to the Trust
collection account until August 29, 1997. This was partially offset by
$790,390 that the Servicer deposited to the collection account to pay
unaccrued interest on the Series 1992-B Certificates. The receivable from
Servicer also includes $3,844,288 of principal collections that were
required to be deposited to the Trust collection account on August 29,
1997. Such principal collections were to adjust the Series 1992-B
Certificates and the B/F Interest to their required amounts, based on the
level of aggregate Trust receivables as of August 18, 1997 (see "Assets in
Trust").
Accounts Payable: Accounts payable consisted of the following:
ACCOUNTS PAYABLE
Servicing fees payable $ 650,983
Excess finance charge collections payable 6,759,758
Other payables 6,396,398
-----------
Accounts payable $13,807,139
===========
Other Payables represent finance charges billed in the current collection
period from July 19, 1997, through August 18, 1997, which were included in
the credit card program receivables balance as of August 18, 1997. These
finance charge billings were collected during the next collection period of
August 19, 1997, through September 18, 1997, and were paid as either
servicing fees, monthly interest on certificates, or excess finance charge
collections.
Assets in Trust: The Assets in Trust included amounts of certificates
outstanding as of August 18, 1997. The Investor Certificates and the B/F
Certificate outstanding as of August 18 were based on receivables as of
July 18. At the end of August, the Servicer adjusted these amounts to their
required levels, based on August 18 receivables.
The Assets in Trust also included monthly interest (as described in Note 3)
on publicly-held classes of Investor Certificates that was accrued and
unpaid as of the balance sheet date. These amounts were added to the face
value of the underlying certificates in the presentation of total Assets in
Trust for each class of Certificates. The amounts of accrued and unpaid
monthly interest as of August 18, 1997 were as follows:
ACCRUED MONTHLY INTEREST
Series 1996-1:
Class A $617,000
Class B 91,526
Collateral Interest 31,800
--------
Sub-total, Series 1996-1 740,326
Series 1992-B Class A 254,280
--------
Accrued monthly interest $994,606
========
Finance charge income: The Servicer allocates the total collections between
finance charge income and principal collections for each collection period.
The allocation to finance charge income in any collection period is an
amount equal to the periodic finance charges and late fees billed on trust
receivables in the preceding collection period, adjusted for accruals of
finance charges on "No Payments for 90 Days" receivables (as discussed
below). Recoveries of defaulted receivables, merchant fees in the amount of
$350,000 per month, and collections of discount option receivables (as
discussed below) are also considered to be finance charge income. All other
collections are deemed to be principal collections. The late fees, merchant
fees, and discount option receivables collections were added to finance
charge income pursuant to the amendment to the PSA dated November 1, 1996.
Periodic finance charges are billed on an account-by-account basis at a
flat rate. The rate can vary by customer, based on industry standards and
competitive conditions. The periodic finance charge is calculated by
multiplying the periodic rate times the average daily account balance. The
credit card program has a "No Payments for 90 Days" policy whereby finance
charges are not billed on receivables for 90 days from their initial
billing date. Accounts that pay in full within 90 days receive no finance
charge billings, while accounts that do not pay in full in 90 days are
billed finance charges retroactively for the 90 day period. The Servicer
accrues estimated finance charges for those receivables that will not pay
in full and will be billed retroactive finance charges. Such finance charge
accruals are included in the calculation of finance charge income.
The Transferor has the option to designate a certain percentage of new
receivables to be discount option receivables. This percentage cannot
exceed six percent, and applies only to receivables that arise after the
date of designation. All collections of discount option receivables are
deemed to be finance charge income. As of October 19, 1996, the Transferor
designated two percent of new receivables to be discount option
receivables.
Servicing Fee: The servicing fee is calculated monthly as 2% of the
aggregate receivables at the start of each monthly collection period.
Income Taxes: No provision for income taxes has been included in these
financial statements because the Trust is not subject to income taxes.
3. INTEREST AND PRINCIPAL PAYMENTS
Monthly interest is passed through to certificateholders on each
distribution date, as defined in the Agreements. The pass-through rates on
the Series 1996-1 Class A and Class B Certificates are 6.17% and 6.49% per
annum, respectively. The pass-through rate on the Series 1996-1 Collateral
Interest is one-month LIBOR plus 27.5 basis points, reset monthly. The
pass-through rates on the Series 1995-A Class A and the Series 1992- B
Class A are short-term rates that were negotiated at the time the
certificates were marketed.
Excess finance charge collections is the excess, if any, of the finance
charge yield on Trust receivables over the sum of the monthly interest at
the pass-through rate and the servicing fee. This excess is distributed to
the Transferor in accordance with the Agreements.
Principal on maturing Investor Certificates can be paid either through
principal collections on Trust receivables or through issuance of new
certificates. The Series 1995-A Certificates and a portion of the Series
1992-B Certificates were paid on November 8, 1996, through the proceeds
from issuance of the Series 1996-1 Certificates. This is as detailed in the
Statement of Changes in Net Assets in Trust under "Refinancing of
Certificates." Other repayments of principal on Series 1992-B Certificates
during the year ended August 18, 1997, were paid from principal collections
on Trust receivables. The gross amounts of such repayments are as detailed
in the Statement of Changes in Net Assets in Trust under "Principal
Distributions."
4. PRIORITIES OF DISTRIBUTION - FINANCE CHARGE INCOME
The total finance charge income, and the amounts to be paid from finance
charge income, are allocated in each collection period to the different
Certificates outstanding during the period. The total finance charge income
is allocated to each series of Investor Certificates and the B/F
Certificate. Defaulted receivables and servicing fees are allocated to each
series of Investor Certificates, the B/F Certificate, and the Exchangeable
Transferor Certificate. The allocations to each series of Investor
Certificates are further allocated to the different classes within each
series. The basis of each of the preceding allocations is the pro-rata
share of interests in the Trust receivables at the start of the collection
period. Monthly interest is allocated to the different classes of Investor
Certificates based on the pass-through rates.
The amounts allocated to each series of Investor Certificates are
distributed monthly in the following priority:
SERIES 1996-1 SERIES 1995-A AND SERIES 1992-B
- --------------------------------------------------------------------------------
Class A monthly interest Class A monthly interest
Class A defaults Class A defaults
Class A servicing fees Class A servicing fees
Class B monthly interest Class B monthly interest
Class B defaults Class B defaults
Class B servicing fees Class B servicing fees
Collateral Interest monthly interest
Collateral Interest defaults
Collateral Interest servicing fees
Subordinated Transferor Interest defaults
Subordinated Transferor Interest servicing fee
Each month, interest is paid to certificateholders, servicing fees are paid
to the Servicer, and defaults are paid to the Transferor and are deemed a
reduction of the Transferor Interest.
If any one series has too small a finance charge allocation to pay the
distributions allocated to it, the shortfall is carried over to future
periods and is reduced by excess finance charge income, if any. Any excess
of finance charge allocated to any one series can be shared with other
series that have a shortfall. Excess finance charge allocations that are
not so shared are remitted to the Transferor.
The allocations and distributions relating to finance charge income for the
year ended August 18, 1997, are as follows:
FINANCE CHARGE ALLOCATIONS
EXCESS TOTAL
FINANCE FINANCE
PASS-THROUGH DEFAULTED SERVICING CHARGE CHARGE
INTEREST RECEIVABLES FEES ALLOCATIONS ALLOCATIONS
--------------- --------------- ------------- -------------- --------------
Series 1996-1 $ 11,529,069 $ 26,794,815 $ 4,273,504 $ 12,794,988 $ 55,392,376
Series 1995-A 2,437,272 5,759,412 1,046,140 787,497 10,030,321
Series 1992-B 6,940,057 18,002,729 2,934,282 8,085,598 35,962,666
Transferor -- 1,189,617 194,117 (1,383,734) --
Bridgestone/Firestone -- 510,399 82,625 432,203 1,025,227
-------------- ------------- ------------- ----------------- ----------------
Total allocations $ 20,906,398 $ 52,256,972 $ 8,530,668 $ 20,716,552 $102,410,590
============== ============= ============= ================== =================
FINANCE CHARGE DISTRIBUTIONS
TOTAL
PASS-THROUGH DEFAULTED SERVICING EXCESS FINANCE CHARGE
INTEREST RECEIVABLES FEES TO TRANSFEROR DISTRIBUTIONS
------------ ------------ ---------- ------------- --------------
Series 1996-1 $ 11,529,069 -- -- -- $ 11,529,069
Series 1995-A 2,437,272 -- -- -- 2,437,272
Series 1992-B 6,940,057 -- -- -- 6,940,057
Transferor -- $ 52,256,972 -- $ 20,716,552 72,973,524
Bridgestone/Firestone -- -- $ 8,530,668 -- 8,530,668
------------ ------------ ------------ ----------- ------------
Total distributions $ 20,906,398 $ 52,256,972 $ 8,530,668 $ 20,716,552 $102,410,590
============ ============ ============ ============ ============
5. PRIORITIES OF DISTRIBUTIONS - PRINCIPAL COLLECTIONS
Principal collections for any collection period are allocated between the
Series 1996-1 Certificates, the Series 1995-A Certificates, the Series
1992-B Certificates, the Exchangeable Transferor Certificate, and the B/F
Certificate based on their relative interests in the Trust receivables
(excluding escrow accounts, reserve accounts, and accrued and unpaid
monthly interest) at the start of the collection period.
If the Series 1996-1 and Series 1995-A Certificates are not in an
amortization period (as defined by the Agreements), any principal
collections distributable to those series is instead distributed to the
Transferor. Neither the Series 1996-1 or Series 1995-A entered an
amortization period during the year ended August 18, 1997. If the amount of
Series 1992-B Certificates maturing on any day exceeds the amount of the
remarketed certificates, the excess is funded through the Series 1992-B
allocation of principal collections. The aggregate amount of such fundings
for the year ended August 18, 1997, is shown as "Principal Distributions"
in the Statement of Changes in Net Assets in Trust.
If a series of Investor Certificates has a shortage of finance charge
income, the principal collections allocated to that series may be used to
cover the shortage. Also, if any series of Investor Certificates is
amortizing and does not have enough principal collections to cover the
amortization, that series can share in any excess principal collections
that are allocated to other Investor Certificate series.
6. RESERVE ACCOUNTS
The Series 1995-A and Series 1992-B Certificates both require a cash
reserve account to be funded if the yield on the Trust receivables falls
below a specified level in any collection period. The Transferor must fund
the reserve account through excess finance charge income up to a level of
one percent of the total invested amount of the Series. The account is held
by the Trustee for the benefit of holders of the Series of Certificates. If
the yield rises above the specified level in a future collection period,
the balance of the reserve account is returned to the Transferor.
As of August 18, 1996, the Series 1995-A and Series 1992-B Reserve Accounts
had balances of $2,372,952 and $1,814,397, respectively. The Series 1995-A
account balance was returned to the Transferor upon payment in full of the
Series 1995-A Certificates. The Series 1992-B Reserve Account balance was
repaid to the Transferor on December 31, 1996, because the yield on the
Trust receivables rose above its specified level.
7. AVAILABLE SUBORDINATION
The Series 1995-A and Series 1992-B Certificates both require that a
portion of the Transferor Interest be subordinated if the yield on the
Trust receivables falls below a specified level in any collection period.
Principal collections allocable to the Transferor must be made available up
to a level of one percent of the total invested amount of the Series. This
available subordinated amount is designated for the benefit of holders of
the Series of Certificates. If the yield rises above the specified level in
a future collection period, the available subordinated amount is no longer
required.
As of August 18, 1996, the Series 1995-A and Series 1992-B available
subordinated amounts were $2,372,952 and $1,814,397, respectively. The
Series 1995-A available subordinated amount was eliminated upon payment in
full of the Series 1995-A Certificates. The Series 1992-B Reserve Account
balance was eliminated on December 31, 1996, because the yield on the Trust
receivables rose above its specified level.
8. DEFAULTS AND ADJUSTMENTS OF RECEIVABLES
Trust receivables are deemed defaulted on the date on which they age to 210
days past due or, if earlier, on the date in which they are deemed
uncollectible per the Servicer's credit guidelines. These guidelines
include a petition of bankruptcy by the obligor of a receivable. The
Transferor is required to repurchase defaulted receivables from the Trust
out of the excess finance charge income that is distributed to the
Transferor. Because the Transferor and not the Trust bears the losses from
defaulted receivables, and because management believes that excess finance
charge collections will be adequate to repay all amounts due to certificate
holders, no allowance for bad debts has been established.
The Transferor is required to deposit cash into the collection account to
reimburse the Trust for any non-cash adjustments to the receivables. Such
adjustments include rebates, refunds, and corrections of unauthorized
charges or billing errors to an obligor. A Transferor Letter of Credit (as
described in Note 9) can be drawn upon if the Transferor fails to make such
cash deposits to cover non-cash adjustments. Because the Transferor and not
the Trust bears the losses from non-cash adjustments of receivables, no
expenses or reserves for these adjustments are included in these financial
statements.
The PSA specifies that any recoveries of defaulted receivables are the
property of the Trust and not the Transferor. Such recoveries are deemed to
be a finance charge collection.
9. SERVICER AND TRANSFEROR LETTERS OF CREDIT
A bank has issued a Servicer Letter of Credit and a Transferor Letter of
Credit in the amounts of $45,000,000 and $15,000,000, respectively. The
Trustee can draw on the Servicer Letter of Credit if the Servicer fails to
make any remittance of collections or other amounts that it is required to
remit under the Agreements. The Trustee can draw on the Transferor Letter
of Credit if the Transferor fails to reimburse the Trust for any non- cash
adjustments to the Trust receivables.
If the bank issuing these letters of credit has less than an A-1+ rating
from Standard & Poors, the letters of credit must be drawn down and the
proceeds placed in escrow accounts for the benefit of holders of Investor
Certificates. These letters of credit were both drawn down for the entire
year ended August 18, 1997.
10. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The credit card program receivables approximate fair value as the weighted
average interest rate on the portfolio is consistent with interest rates
offered on new accounts as of August 18, 1997. All other receivables and
payables approximate fair value due to the short-term maturities of these
instruments.