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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X (ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
-- ACT OF 1934 (FEE REQUIRED)
For the period from January 17, 1996 (date of formation) through
February 1, 1997.
Commission file number 33-99362
World Financial Network National Bank, on behalf
of World Financial Network Credit Card Master Trust
------------------------------------------------------
(Exact name of registrant as specified in its charter)
United States 34-1610866
(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
4590 East Broad Street
Columbus, Ohio 43213
(Address of principal executive offices)
(614) 755-5000
(Phone number)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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 _______ (Not Applicable)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Series 1996-A,
Class A and Class B and Series 1996-B, Class A and Class B Certificates.
Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(c) of the Securities Exchange Act
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.
Yes X No ____
Aggregate market value of voting stock held by nonaffiliates of the
registrant. $ 0
No documents have been incorporated by reference in this Form 10-K.
PART 1
In no action letters issued to a variety of issuers of pass-through securities
representing ownership interests in trusts established by financial and
retailing institutions, whose principal assets are receivables generated under
consumer credit accounts owned by such institutions and transferred to such
trusts, the Division of Corporation Finance has stated that it would not raise
any objection if the servicer of the trust, on behalf of the trust, files its
Annual Report on Form 10-K in accordance with a specified format. See, e.g.,
Sears Credit Account Master Trust II (August 24, 1995), Mercantile Credit Card
Master Trust (August 23, 1995); Banc One Credit Card Master Trust
(May 26, 1995); Household Affinity Credit Card Master Trust I (April 29, 1994);
Sears Credit Account Master Trust I (December 23, 1993); First Deposit Master
Trust (December 23, 1993); Discover Card Trust 1993 B (April 9, 1993); Prime
Credit Master Trust (January 29, 1993); Private Label Credit Card Master Trust
(May 20, 1992); and Chase Manhattan Credit Card Trust 1990-A (March 22, 1991).
The World Financial Network Credit Card Master Trust (the "Trust") was formed
pursuant to a Pooling and Servicing Agreement dated as of January 17, 1996
between World Financial Network National Bank, as transferor and servicer
("WFNNB"), and The Bank of New York, as Trustee. The Trust was formed for the
purpose of acquiring certain trust assets and issuing asset-based certificates
under the Agreement and one or more supplements thereto. The property of the
Trust includes receivables arising under private label credit card programs for
a number of national retail and catalogue entities.
On May 9, 1996, the Trust issued: $445,500,000 6.70% Class A Asset Backed
Certificates, Series 1996-A; $46,750,000 7.00% Class B Asset Backed
Certificates, Series 1996-A; $283,500,000 6.95% Class A Asset Backed
Certificates, Series 1996-B, and $29,750,000 7.20% Class B Asset Backed
Certificates, Series 1996-B. Subsequently, such Certificates were registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended.
WFNNB, on behalf of the Trust, has prepared and filed this Annual Report on
Form 10-K in substantially the form which the Division of Corporation Finance,
in the no action letters referred to above, has stated that it would not
object to.
ITEM 1. BUSINESS
The World Financial Network Credit Card Master Trust (the "Trust") was formed
pursuant to a pooling and servicing agreement dated as of January 17, 1996
(the "Pooling Agreement") between World Financial Network National Bank
(the "Bank"), as transferor (the "Transferor") and as servicer (the "Servicer"),
and the Bank of New York, as trustee (the "Trustee"). The Bank sold to the
Trust approximately $1.3 billion of credit card receivables arising in a
portfolio of consumer open end credit card accounts (the "Trust Portfolio").
The Trust Portfolio includes the private label credit card programs of a number
of national retail and catalogue entities.
The Trust has issued three series of certificates - Series 1996-A,
Series 1996-B and Series 1996-VFC. The Series 1996-A and Series 1996-B
certificates have been distributed to the public. The Series 1996-VFC
certificates have been privately placed. Each outstanding Series includes
one or more classes of certificates as well as certain Collateral Interests.
The Transferor is required under the Pooling Agreement to maintain a minimum
7% interest in the Trust Portfolio (9% November through January)
(the "Transferor's Interest").
The Bank services the receivables pursuant to the Pooling Agreement and is
compensated for acting as the servicer.
ITEM 2. PROPERTIES
There is nothing to report with regard to this item.
ITEM 3. LEGAL PROCEEDINGS
There is nothing to report with regard to this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There is nothing to report with regard to this item.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
To the knowledge of the Bank and the Trust, there is an over the counter market
in the Trust's Series 1996-A and Series 1996-B Certificates, although the
frequency of transactions varies substantially over time.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data has been omitted since the required information is
included in the financial statements.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Trust was formed January 17, 1996 pursuant to the Pooling and Servicing
Agreement between World Financial Network National Bank, as seller
(the "Seller"), Transferor and Servicer and The Bank of New York, as
trustee (the "Trustee"). The Seller sold to the Trust approximately
$1.3 billion of receivables arising from certain proprietary credit card
programs.
The Trust has sold three series of certificates representing an undivided
interest in the Trust Portfolio. In addition, the Trust has sold certain
Collateral Interests in the Trust Portfolio. The Transferor is required
under the Pooling Agreement to maintain a minimum 7% interest in the Trust
Portfolio (9% November through January). The following series of
certificates has been issued by the Trust as of February 1, 1997 (dollars in
thousands):
% of Trust
Description $ Issued Portfolio
-------------------- --------------- --------------
Series 1996 A, Class A $445,500 33.7%
Series 1996 A, Class B $46,750 3.5%
Series 1996 B, Class A $283,500 21.5%
Series 1996 B, Class B $29,750 2.3%
Series 1996-VFC $265,750 20.1%
The Series 1996-A and Series 1996-B certificates have been distributed to the
public under prospectuses dated April 9, 1996.
The Bank is the originator of the receivables and continues to service the
receivables for the Trust and receives a fee for providing such servicing.
Under the Pooling Agreement, new receivables generated under the specified
propriety credit card programs are required to be sold to the Trust on a
daily basis. If there are insufficient new receivables to maintain the
required minimum receivable level in the Trust, principal collections are
retained by the Trust for the benefit of the certificateholders or until new
receivables are available for purchase.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Cross Reference Sheet
- - -------------------------------------------------------------------------------
Caption Page
- - -------------------------------------------------------------------------------
Independent Auditors' Report II-1
Statement of Assets and Liabilities Arising
from Cash Transactions as of February 1,
1997 II-2
Statement of Distributable Income Arising
From Cash Transactions for the period from
January 17, 1996 (date of formation) to
February 1, 1997 II-3
Notes to Financial Statements II-4
INDEPENDENT AUDITORS' REPORT
To the World Financial Network Credit Card Master Trust
We have audited the accompanying statement of assets and liabilities arising
from cash transactions of the World Financial Network Credit Card Master
Trust (the "Trust") as of February 1, 1997, and the related statement of
distributable income arising from cash transactions for the period from
January 17, 1996 (date of formation) to February 1, 1997. These financial
statements are the responsibility of the management of the Trust. Our
responsibility is to express an opinion of 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, these financial statements were prepared on the cash
basis of accounting, 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 and liabilities arising from cash transactions of the
Trust as of February 1, 1997, and its distributable income arising from cash
transactions for the period from January 17, 1996 (date of formation) to
February 1, 1997 on the basis of accounting described in Note 1.
By:/s/ Deloitte & Touch LLP
-----------------------------------
Deloitte & Touche LLP
Columbus, Ohio
May 12, 1997
II-1
WORLD FINANCIAL NETWORK CREDIT CARD MASTER TRUST
- - ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES ARISING FROM CASH TRANSACTIONS
(in thousands of dollars)
As of
Assets February 1, 1997
------ __________________
Cash Available for Distribution $267,739
Credit Card Receivables 1,321,243
----------
TOTAL ASSETS $1,588,982
===========
Liabilities
------------
Income to be Distributed $267,739
Asset-backed Certificates:
Series 1996-A 492,250
Series 1996-B 313,250
Series 1996-VFC 265,750
Collateral Interest 135,321
Transferor's Interest 114,672
--------
TOTAL LIABILITIES $1,588,982
===========
See accompanying Notes to Financial Statements
II-2
WORLD FINANCIAL NETWORK CREDIT CARD MASTER TRUST
- - ------------------------------------------------------------------------------
STATEMENT OF DISTRIBUTABLE INCOME ARISING FROM CASH TRANSACTIONS
(in thousands of dollars)
For The Period From January 17, 1996
(date of formation) to
February 1, 1997
----------------------------
Distributable Income
- - ---------------------
Allocable to Principal $2,562,474
Allocable to Interest 284,478
----------
Total Distributable Income $2,846,952
==========
Income Distributed
- - ------------------
Distribution of Principal to
Purchase New Receivables $2,320,408
Interest Paid on Asset Backed Certificates 62,854
Servicing Fees 20,596
Distribution to Purchase New Receivables
For Amounts Previously Written-Off 76,201
Distribution on Transferor's Interest 99,154
----------
Income Distributed 2,579,213
----------
Excess of Distributable Income over Income
Distributed (Distributed February 17, 1997) $ 267,739
==========
See accompanying Notes to Financial Statements.
II-3
WORLD FINANCIAL NETWORK CREDIT CARD MASTER TRUST
NOTES TO FINANCIAL STATEMENTS
- - -----------------------------
NOTE 1. General Information and Accounting Policies
The World Financial Network Credit Card Master Trust (the "Trust")
was formed pursuant to a pooling and servicing agreement, dated as of
January 17,1996 (the "Pooling Agreement") between World Financial Network
National Bank (the "Bank"), as transferor (the "Transferor") and as servicer
(the "Servicer") of receivables (the "Receivables") arising in a portfolio of
consumer open end credit card accounts (the "Trust Portfolio") and the Bank
of New York, as trustee (the "Trustee"). The Trust Portfolio includes the
private label credit card programs of a number of national retail and catalogue
entities.
The Bank services the receivables pursuant to the Pooling Agreement and is
compensated for acting as the servicer. In order to facilitate its servicing
functions and minimize administrative burdens and expenses, the Bank retains
physical possession of the documents relating to the receivables as custodian
for the Trustee. The Trust has no employees.
The financial statements of the Trust are prepared on a cash basis of
accounting which differs 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 certificateholders are recognized when paid rather than when
the obligation is incurred. The statement of assets and liabilities arising
from cash transactions reflects the amounts to be distributed on
February 17, 1997, which represents the distribution of income received by
the Trust for the period January 1 through January 31, 1997.
NOTE 2. Sale of Certificates
The Trust may issue from time to time asset-backed certificates in one or
more Series, which will consist of one or more classes of certificates,
representing an undivided ownership interest in the Receivables. As of
February 1, 1997 the Trust had issued the following certificates,
representing the indicated undivided interest in the Trust Portfolio:
% of Trust
Description $ Issued Porfolio
- - ------------------------------- --------- -------------
Series 1996 A, Class A $445,500 33.7%
Series 1996 A, Class B $46,750 3.5%
Series 1996 B, Class A $283,500 21.5%
Series 1996 B, Class B $29,750 2.3%
Series 1996-VFC $265,750 20.1%
The Series 1996-A and Series 1996-B certificates were distributed to the
public pursuant to a Prospectus dated April 9, 1996. The Series 1996-VFC class
of certificates has been retained by three conduit banks. Collectively,
holders of all Series are referred to as "Certificateholders."
In addition, certain Collateral Interests were issued by the Trust,
representing a 10.2% interest in the Trust Portfolio. Such Collateral
Interests are held by three banks at February 1, 1997 (the "Collateral
Interestholders"). The Transferor is required to maintain a minimum 7%
(9% November through January) interest in the Trust Portfolio (the
"Transferor's Interest"). The rights of the Collateral Interestholders to
receive distributions are subordinate to the rights of the Class A and B
Certificateholders and the Transferor's Interest.
NOTE 3. Principal and Interest Payment
Collections of principal are used by the Trust to purchase new charge card
receivables on a daily basis.
Collections of finance charges, which includes late fees, non-sufficient
funds check fees and recoveries of amounts previously written-off, are used
to pay interest to the Certificateholders, pay servicing fees and to purchase
new charge card receivables equal to amounts written-off during the month.
Excess finance charge collections, if any, are distributed to the Servicer.
The distribution date is the 15th day of each month (or, if such day is not a
business day, the next following business day).
NOTE 4. Federal Income Taxes
The Trust is not taxable as a corporation for Federal income tax purposes.
Accordingly, no provision for income taxes is reflected in the accompanying
financial statements.
NOTE 5. Supplementary Financial Data (unaudited)
The following is a summary of quarterly distributable income arising from
cash transactions:
(in thousands of dollars):
Servicing Defaulted Transferor's
Quarter Ended Principal Interest Fees Receivables Interest Total
- - ------------- ---------- -------- --------- ----------- ----------- -----
May 4, 1996 $665,464 $10,974 $5,728 $8,988 $51,006 $742,160
August 3, 1996 $621,533 $19,856 $5,277 $21,743 $15,326 $683,735
November 2, 1996 $627,456 $18,858 $5,681 $27,213 $22,608 $701,816
February 1, 1997 $648,021 $19,981 $5,977 $25,716 $19,546 $719,241
--------- ------- ------ ------- -------- ---------
$2,562,474 $69,669 $22,663 $83,660 $108,486 $2,846,952
========== ======= ======= ======= ======== ==========
II-4
NOTE 6: Fair Value of Financial Instruments
The fair value of the Trust's credit card receivables approximate their
carrying value due to the short maturity and average interest rates
approximate current market rates.
The fair value of the asset-backed certificates is estimated to be
$1,325,267,000 (carrying value of $1,321,243,000), based on quoted market
prices or current market rates for similar securities with similar remaining
maturities and interest rates.
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There is nothing to report with regard to this item.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is nothing to report with regard to this item.
ITEM 11. EXECUTIVE COMPENSATION
There is nothing to report with regard to this item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
There is nothing to report with regard to this item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is nothing to report with regard to this item.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
a) Listed below are the documents filed as part of this report:
Ommitted
b) Reports on Form 8-K:
The following current reports on Form 8-K were filed for the fourth
quarter of 1996:
Monthly Report Date of Report
-------------- --------------
November 1996 December 16, 1996
December 1996 January 15, 1996
January 1997 February 17, 1997
c) Omitted
d) Omitted
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Bank, on behalf of the Trust, has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
By: World Financial Network Credit Card
Master Trust
World Financial Network National Bank,
as Servicer
Date: May 19, 1997 By: /s/ Daniel T. Groomes
----------------- ----------------------------------------
Daniel T. Groomes
Vice President Finance