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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
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ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 1997, OR
TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
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ACT OF 1934 FOR THE TRANSACTION PERIOD FROM ________ TO ________.
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST IV 33-50323
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(Exact name of registrant as Commission
specified in its charter) file number
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST IV
A Delaware Business Trust 38-3082709
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Chase Manhattan Bank (Delaware)
1201 Market Street
Wilmington, Delaware 19801
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(Address of principal executive offices) (Zip Code)
Registrants' telephone number,
including area code (302) 428-3375
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Securities registered pursuant to Section 12 (b) of the Act: (None).
Section 12 (g) of the Act: (None).
Indicate by check mark whether each of the registrants (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No .
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PART I
ITEM 1. BUSINESS
Superior Wholesale Inventory Financing Trust IV (the "Trust" or the "Issuer")
was formed pursuant to a Trust Agreement, dated as of November 20, 1997, between
Wholesale Auto Receivables Corporation and Chase Manhattan Bank (Delaware), as
Owner Trustee. On November 20, 1997, the Trust issued Floating Rate Asset-Backed
Certificates, Class A with an aggregate initial certificate balance of
$174,000,000. On November 20, 1997, the Trust also issued 6.346% Asset-Backed
Term Notes, Series 1997-A and Floating Rate Asset-Backed Term Notes, Series
1997-B in the aggregate principal amount of $500,000,000 and $500,000,000,
respectively, and Floating Rate Asset-Backed Revolving Notes, Series 1997-RN1
and Series 1997-RN2 with a specified maximum balance of $1,170,000,000 less the
then outstanding balance of the 6.346% Asset-Backed Term Notes, Series 1997-A
and $330,000,000, respectively, pursuant to an Indenture, as of November 20,
1997, between the Issuer and The Bank of New York, as Indenture Trustee. For any
further information, refer to Prospectus Supplement dated November 14, 1997.
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Trust was formed pursuant to a trust agreement between Wholesale Auto
Receivables Corporation (the "Seller") and Chase Manhattan Bank (Delaware), as
Owner Trustee for Superior Wholesale Inventory Financing Trust IV. The Trust has
issued the following fixed or floating rate Asset-Backed Notes and Certificates,
and acquired certain eligible wholesale finance receivables from the Seller in
the aggregate amount as shown below in exchange for Asset-Backed Notes and
Asset-Backed Certificates representing undivided interests in the Trust. The
Trust's property includes a pool of wholesale receivables generated in a
portfolio of revolving financing arrangements with dealers to finance
inventories of new and used automobiles and light trucks and collections thereon
and certain other property.
Initial
Date of Wholesale
Sale and Finance
Servicing Sale Asset-Backed Asset-Backed
Trust Agreement Amount Notes Certificates
- ------- ----------- ---------- ------------ ------------
(millions) (millions) (millions)
Superior November 20, $2,174.0 Term Notes $1,000.0 $174.0
Wholesale 1997
Inventory Revolving
Financing Notes $1,000.0
Trust IV
General Motors Acceptance Corporation ("GMAC"), the originator of the wholesale
receivables, continues to service the receivables for the Trust and receives
compensation and fees for such services. Investors receive monthly payments of
interest for each type of note and certificate at a fixed or floating monthly
interest rate.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CROSS REFERENCE SHEET
Exhibit No. Caption Page
- ----------- ------------------------------------------------- ------
-- Superior Wholesale Inventory Financing Trust IV,
Independent Auditors' Report, Financial Statements
and Selected Quarterly Data for the period November
20, 1997 (inception) through December 31, 1997. --
27.1 Financial Data Schedule for Superior Wholesale
Inventory Financing Trust IV (for SEC electronic
filing purposes only). --
INDEPENDENT AUDITORS' REPORT
The Superior Wholesale Inventory Financing Trust IV, its Noteholders and
Certificateholders, Wholesale Auto Receivables Corporation, Chase Manhattan Bank
(Delaware), Owner Trustee, and The Bank of New York, Indenture Trustee:
We have audited the accompanying Statement of Assets, Liabilities and Equity of
the Superior Wholesale Inventory Financing Trust IV as of December 31, 1997, and
the related Statement of Distributable Income for the period November 20, 1997
(date of inception) to December 31, 1997. 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
misstatement. 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.
As described in Note 1 to the financial statements, these financial statements
were prepared on the basis of cash receipts and disbursements, which is a
comprehensive basis of accounting other than generally accepted accounting
principles.
In our opinion, such financial statements present fairly, in all material
respects, the assets, liabilities and equity arising from cash transactions of
the Superior Wholesale Inventory Financing Trust IV at December 31, 1997, and
its distributable income and distributions for the period November 20, 1997
(date of inception) to December 31, 1997, on the basis of accounting described
in Note 1.
s\ DELOITTE & TOUCHE LLP
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DELOITTE & TOUCHE LLP
600 Renaissance Center
Detroit, Michigan
March 11, 1998
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST IV
STATEMENT OF ASSETS, LIABILITIES AND EQUITY
December 31, 1997
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(in millions of dollars)
ASSETS
Receivables (Note 2) .......................... $2,174.0
--------
TOTAL ASSETS .................................. $2,174.0
========
LIABILITIES (NOTES 2 and 3)
Asset-Backed Term Notes ....................... $1,000.0
Asset-Backed Revolving Notes .................. 1,000.0
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TOTAL LIABILITIES ............................. 2,000.0
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EQUITY
Asset-Backed Certificates (NOTES 2 and 3) 174.0
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TOTAL LIABILITIES AND EQUITY .................. $2,174.0
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Reference should be made to the Notes to Financial Statements.
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST IV
STATEMENT OF DISTRIBUTABLE INCOME
Year Ended
December 31, 1997*
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(in millions of dollars)
Distributable Income
Allocable to Interest . . . . . . . . . . $ 6.4
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Distributable Income . . . . . . . . . . . $ 6.4
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Income Distributed . . . . . . . . . . . . $ 6.4
======
* Represents the period November 20, 1997(inception) through December 31, 1997.
Reference should be made to the Notes to Financial Statements.
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST IV
NOTES TO FINANCIAL STATEMENTS
NOTE 1. BASIS OF ACCOUNTING
The financial statements of Superior Wholesale Inventory Financing Trust IV (the
"Trust") are prepared on the basis of cash receipts and cash disbursements. Such
financial statements differ from financial statements prepared in accordance
with generally accepted accounting principles in that interest income and the
related assets are recognized when received rather than when earned and
distributions to Noteholders and Certificateholders are recognized when paid
rather than when the respective obligation is incurred. Certain expenses of the
Trust are paid by Wholesale Auto Receivables Corporation (the "Seller").
NOTE 2. SALE OF NOTES AND CERTIFICATES
On November 20, 1997, the Trust acquired the Seller's right, title and interest
in wholesale finance receivables totaling $2,174.0 million in exchange for two
types of Asset-Backed Notes representing indebtedness of the Trust and
Asset-Backed Certificates representing equity interests in the Trust. The
Asset-Backed Notes include $500.0 million 6.346% Term Notes, Series 1997-A,
$500.0 million Floating Rate Term Notes, Series 1997-B and $1,000.0 million
Floating Rate Revolving Notes (Series 1997-RN1 and Series 1997-RN2 with a
specified maximum balance of $1,170.0 million less the then outstanding balance
of the 6.346% Term Notes, Series 1997-A and $330.0 million, respectively). The
Asset-Backed Certificates totaled $174.0 million. The Trust property includes
certain eligible receivables in accounts included in a pool of accounts, certain
receivables generated under each such accounts from time to time secured by new
and used automobiles and light trucks, certain monies due or received
thereunder, interest rate swaps, basis swaps and certain other property.
NOTE 3. PRINCIPAL AND INTEREST PAYMENTS
In the ordinary course of business, no principal payments will be made on the
Term Notes, Series 1997-A until the commencement of the Index Amortization
Period which is scheduled to commence on October 1, 1998 at which time principal
reductions will be generally made based on a Reference Collateral Pool of
30-year FHLMC Gold 7.50% mortgage participation certificates issued in calendar
year 1995. The Term Notes, Series 1997-B are prepayable at anytime (see Note 6).
During the Revolving Period, the Trust will make payments of principal on, or
additional borrowings (up to the Maximum Revolver Balance) under, the Revolving
Notes on a daily basis.
The then-unpaid principal balance of Term Notes, Series 1997-A and 1997-B will
be payable on November 15, 2004 and April 15, 2002, respectively, and the
then-unpaid principal balance of the Revolving Notes and Certificates will be
payable on November 15, 2004.
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST IV
NOTES TO FINANCIAL STATEMENTS
NOTE 3. PRINCIPAL AND INTEREST PAYMENTS (concluded)
Payments of interest on the Term Notes, Series 1997-A and Series 1997-B,
Revolving Notes, Series 1997-RN1 and Certificates are made on the fifteenth day
of each month or, if any such day is not a Business Day, on the next succeeding
Business Day, (each, a "Distribution Date"), commencing December 15, 1997 (the
"Initial Distribution Date"). Payments of interest on the Revolving Notes,
Series 1997-RN2 are made on the fifteenth day of January, April, July, and
October ("Series 1997-RN2 Quarterly Distribution Date") or, if any such day is
not a Business Day, on the next succeeding Business Day, commencing January 15,
1998.
The Term Notes, Series 1997-A interest rate equals a stated rate of 6.346% for
each Distribution Date. Interest on the Term Notes accrues from, and including,
the most recent Distribution Date to, but excluding, the current Distribution
Date.
The Term Notes, Series 1997-B interest rate equals London Interbank Offering
Rate (LIBOR) plus 14 basis points per annum for each Distribution Date. Interest
on the Term Notes will accrue from, and including, the most recent Distribution
Date to, but excluding, the current Distribution Date. The Term Noteholders
received interest at a weighted average rate of 5.8275% per annum from November
20, 1997 through December 14, 1997.
The Revolving Notes, Series 1997-RN1 interest rate equals LIBOR plus 23 basis
points per annum for each Distribution Date. Interest on the Revolving Notes
accrue for the Collection Period (calendar month) immediately preceding each
Distribution Date. The Revolving Noteholders received interest at a weighted
average rate of 5.9175% per annum from November 20, 1997 through November 30,
1997.
The Revolving Notes, Series 1997-RN2 interest rate equals 3-Month LIBOR plus 20
basis points per annum for each Series 1997-RN2 Quarterly Distribution Date.
Interest on the Revolving Notes accrue for the three Collection Periods (three
calendar months) immediately preceding each Distribution Date. The Revolving
Noteholders accrued interest at a weighted average rate of 6.0750% per annum
from November 20, 1997 through December 31, 1997.
The Certificates interest rate equals LIBOR plus 200 basis points per annum for
each Distribution Date. Interest on the Certificates accrues from, and
including, the most recent Distribution Date to, but excluding, the current
Distribution Date. The Certificateholders received interest at a weighted
average rate of 7.6875% per annum from November 20, 1997 through December 14,
1997.
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST IV
NOTES TO FINANCIAL STATEMENTS
NOTE 4. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Trust is a party to interest rate basis swap contracts. The interest rate
basis swaps, which relate to the Asset-Backed Term Notes, Series 1997-A, and
Series 1997-B; Asset-Backed Certificates; and Asset-Backed Revolving Notes,
Series 1997-RN1 and Series 1997-RN2, are contractual agreements between the
Trust and GMAC to exchange floating interest rate payments (i.e. the Trust pays
Prime and receives LIBOR or 3-Month LIBOR, as the case may be, plus 266 basis
points, 265 basis points, 266 basis points, 266 basis points and 263 basis
points, respectively).
In addition, the interest rate basis swaps will terminate at the time the
respective outstanding principal balance of the Term Notes, Revolving Notes or
the Certificates has been paid in full. In the event that GMAC gives notice that
it has elected not to extend the revolving period of the sale transaction, the
notional amount of the interest rate basis swaps would amortize at the same rate
as the outstanding balance of the related debt and equity obligations.
Market risk is mitigated because the derivatives are used to hedge a portfolio
of underlying debt and equity obligations. Credit risk of the instruments is
limited to payments due from GMAC. The interest rate basis swaps had a positive
fair value of $2.4 million at December 31, 1997. The notional amount of the
interest rate basis swaps approximates the outstanding balance in the
Asset-Backed Notes and Asset-Backed Certificates.
The Trust is also a party to an interest rate swap. The interest rate swap,
which relates to the Asset-Backed Term Notes, Series 1997-A, is a contractual
agreement between the Trust and AIG Financial Products Corp. (the "Interest Rate
Swap Counterparty") and Morgan Stanley Capital Services, Inc. (the "Contingent
Interest Rate Swap Counterparty") to exchange floating for fixed interest rate
payments. Upon the occurrence of a payment default by the Interest Rate Swap
Counterparty, the interest rate swap will not terminate, but rather the
Contingent Interest Rate Swap Counterparty will assume all the rights and
obligations of the Interest Rate Swap Counterparty. In addition, the interest
rate swap will terminate at the time the outstanding principal balance of the
Term Notes, Series 1997-A has been paid in full.
Market risk is mitigated because the derivative is used to hedge an underlying
debt obligation. Credit risk of the instrument is limited to payments due from
the Interest Rate Swap Counterparty and the Contingent Interest Rate Swap
Counterparty. The interest rate swap had a positive fair value of $4.4 million
at December 31, 1997.
The notional amount of the interest rate swap approximates the outstanding
balance in the Term Notes, Series 1997-A.
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST IV
NOTES TO FINANCIAL STATEMENTS
NOTE 5. FEDERAL INCOME TAX
The Trust is classified as a division of the Seller, and therefore is not
taxable as a corporation for federal income tax purposes. Each Noteholder, by
acceptance of a Note agrees to treat the Note as indebtedness in the Trust for
federal, state and local income and franchise tax purposes. The Seller as owner
of the Certificates is the tax owner of the assets in the Trust for federal,
state and local income and franchise tax purposes.
NOTE 6. SUBSEQUENT EVENTS
On February 17, 1998, the Seller declared a Payment Period for the Floating Rate
Asset-Backed Term Notes, Series 1997-B. The outstanding principal balance of
$500.0 million along with interest was paid on March 16, 1998.
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST IV
SUPPLEMENTARY FINANCIAL DATA (unaudited)
SUMMARY OF QUARTERLY DISTRIBUTABLE INCOME
1997 Quarters Interest
- ------------------------------------ -----------------------
(in millions of dollars)
Fourth quarter*..................... $ 6.4
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Total ......................... $ 6.4
=======
* Represents the period November 20, 1997 (inception) through December 31, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) (1) FINANCIAL STATEMENTS.
Included in Part II, Item 8, of Form 10-K.
(a) (2) FINANCIAL STATEMENT SCHEDULES.
All schedules have been omitted because they are not applicable or
because the information called for is shown in the financial
statements or notes thereto.
(a) (3) EXHIBITS (Included in Part II of this report).
-- Superior Wholesale Inventory Financing Trust IV Financial
Statements for the period November 20, 1997 (inception)
through December 31, 1997.
27.1 Financial Data Schedule for Superior Wholesale Inventory
Financing Trust IV (for SEC electronic filing purposes
only).
(b) REPORTS ON FORM 8-K.
No current reports on Form 8-K have been filed by the Trust
from inception through December 31, 1997.
ITEMS 2, 3, 4, 5, 6, 9, 10, 11, 12 and 13 are not applicable and have been
omitted.
SIGNATURE
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Owner Trustee has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST IV
by: Chase Manhattan Bank (Delaware)
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(Owner Trustee, not in its individual
capacity but solely as Owner Trustee
on behalf of the Issuer.)
s\ Dennis Kelly
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Trust Officer
Date: March 23, 1998
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