RVO Legal Serv Cert 3rd qtr

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ur51/7D+/1d/4J1st9A1iOC4KnN+gXWjaLpLDeXG859LcMuSHfZdyI0DAAX953S3 vd4GO0FMECNVh5/U6GfZ2w== /in/edgar/work/0000007974-00-500026/0000007974-00-500026.txt : 20001116 0000007974-00-500026.hdr.sgml : 20001116 ACCESSION NUMBER: 0000007974-00-500026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASSOCIATES FIRST CAPITAL CORP CENTRAL INDEX KEY: 0000007974 STANDARD INDUSTRIAL CLASSIFICATION: [6141 ] IRS NUMBER: 060876639 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11637 FILM NUMBER: 768881 BUSINESS ADDRESS: STREET 1: 250 E CARPENTER FWY CITY: IRVING STATE: TX ZIP: 75062 BUSINESS PHONE: 9726524000 MAIL ADDRESS: STREET 1: P O BOX 660237 CITY: DALLAS STATE: TX ZIP: 75266-0237 FORMER COMPANY: FORMER CONFORMED NAME: ASSOCIATES FIRST NATIONAL CORP DATE OF NAME CHANGE: 19720518 10-Q 1 fc10q3.txt AFCC FORM 10Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 ------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 2-44197 -------------------------------------- ASSOCIATES FIRST CAPITAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 06-0876639 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 250 East Carpenter Freeway, Irving, Texas 75062-2729 (Address of principal executive offices) (Zip code) 972-652-4000 (Registrant's telephone number, including area code) Not applicable (Former name, former address and former fiscal year, if changed since last report) 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. Yes..X.. No..... As of September 30, 2000, the registrant had 1,150,000,000 and 144,191,583, respective shares of Class A and Class B Common Stock authorized, 729,191,583 shares of Class A Common Stock issued, of which 728,553,088 shares were outstanding; and no shares of Class B Common Stock were issued or outstanding. PART I - FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS. ASSOCIATES FIRST CAPITAL CORPORATION CONSOLIDATED STATEMENT OF EARNINGS (In Millions, Except Per Share Amounts) (Unaudited)

See notes to consolidated interim financial statements. ASSOCIATES FIRST CAPITAL CORPORATION CONSOLIDATED BALANCE SHEET (Dollars In Millions, Except Per Share Information)

See notes to consolidated interim financial statements. ASSOCIATES FIRST CAPITAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (In Millions) (Unaudited)

See notes to consolidated interim financial statements. ASSOCIATES FIRST CAPITAL CORPORATION NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS NOTE 1 - THE COMPANY Associates First Capital Corporation (the "Company"), a Delaware corporation, is a leading diversified finance organization providing finance, leasing, insurance and related services to consumers and businesses in the United States and internationally. In September 2000, the Company and Citigroup Inc. announced they had entered into a definitive merger agreement. Pursuant to an Agreement and Plan of Merger dated as of October 6, 2000 (the "Agreement"), the Company and Citigroup Inc. have agreed to merge a wholly-owned subsidiary of Citigroup Inc. with and into the Company. Under the Agreement, holders of the Company's common stock will receive 0.7334 shares of Citigroup Inc. common stock for each share of the Company's common stock. The merger is expected to be completed prior to December 31, 2000. Upon consummation of the merger, the Company will become an indirect wholly-owned subsidiary of Citigroup Inc. NOTE 2 - BASIS OF PRESENTATION AND CONSOLIDATION The consolidated interim financial statements include the accounts of the Company and its subsidiaries after elimination of all significant intercompany balances and transactions. These statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Certain prior period financial statement amounts have been reclassified to conform to the current period presentation. In the opinion of management, all adjustments, consisting only of normal, recurring accruals, necessary to present fairly the results of operations and financial position have been made. The financial position and results of operations as of and for any interim period are unaudited and not necessarily indicative of the results of operations for a full year. This Form 10-Q should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. The preparation of these consolidated financial statements in conformity with generally accepted accounting principles requires the use of management estimates. These estimates are subjective in nature and involve matters of judgment. Actual results could differ from these estimates. NOTE 3 - SIGNIFICANT TRANSACTIONS In January 2000, the Company entered into an agreement with KeyCorp, under which the companies jointly manage KeyCorp's credit card program. Additionally, the Company acquired KeyCorp's credit card receivables portfolio with a fair market value of $1.3 billion and intangible assets, primarily related to customer lists and operating agreements, of approximately $350 million for $1.7 billion. In April 2000, the Company acquired Arcadia Financial Ltd. ("Arcadia") for approximately $195 million which approximated the fair value of the intangible assets established in the acquisition. Arcadia had approximately $470 million in senior and subordinated notes at the time of the acquisition. At September 30, 2000, the Company managed approximately $3.0 billion of Arcadia's serviced assets originated and sold with servicing retained prior to the acquisition. In addition, the Company continues to securitize new originations. In July 2000, the Company completed the purchase of approximately $0.6 billion in credit card receivables from Zale Corporation ("Zale") and entered into an operating agreement for Zale's on-going credit card business. In September 2000, the Company acquired a 73% interest (22% of which was transferred to the Company from escrow on October 20, 2000) in Unimat Life Kabushiki Kaisha ("Unimat") for approximately $0.6 billion. The balance sheet reflects the minority interest in equity of consolidated subsidiary. Goodwill and other intangibles were approximately $0.3 billion. At the time of the acquisition, the fair market value of Unimat's net assets was approximately $0.4 billion. The Company expects to acquire the remaining minority interest, as set forth in the purchase agreement, in the first quarter of 2001. All of the transactions described above were accounted for as purchases. The results of operations are included in the consolidated results of the Company from the respective acquisition dates. The allocation of the purchase price for these transactions is based upon preliminary estimates and may be refined as additional information is available. NOTE 4 - EARNINGS PER SHARE Earnings per share on a basic and diluted basis for the periods indicated is calculated as follows (in millions, except per share amounts):

During the nine months ended September 30, 2000 and 1999, the Company declared and paid cash dividends of $0.195 and $0.165 per common share, respectively. NOTE 5 - COMPREHENSIVE INCOME The components of accumulated other comprehensive (loss) income, net of tax, are as follows (in millions):

Comprehensive income, net of tax, for the nine and three-month periods ended September 30, 2000 and 1999 consisted of the following components (in millions):

NOTE 6 - INVESTMENTS IN DEBT AND EQUITY SECURITIES Available-for-sale securities consist of retained securitization interests, notes and preferred stock and other equity securities primarily held by the Company's insurance subsidiaries. The estimated market value at September 30, 2000 and December 31, 1999 was $9.5 billion and $7.1 billion, respectively. The amortized cost at September 30, 2000 and December 31, 1999 was $9.7 billion and $7.3 billion, respectively. Realized gains or losses on sales are included in investment and other income. Unrealized gains or losses are included, net of tax, in other comprehensive income, a component of stockholders' equity. NOTE 7 - FINANCE RECEIVABLES At September 30, 2000 and December 31, 1999, finance receivables consisted of the following (in millions):

In January 2000, the Company announced it would discontinue originating loans for manufactured housing. As a result of this decision, the Company took a pre-tax charge against earnings of approximately $112 million. At September 30, 2000, the Company included such finance receivables and related allowance for losses of $1.6 billion and $0.2 billion, respectively, in other assets as finance receivables held for sale or securitization. During the nine months ended September 30, 2000, the Company securitized and sold home equity, credit card and automobile retail sales finance receivables portfolios totaling $4.4 billion and retained interests in the related securitization trusts totaling $794 million. Pre-tax gains of approximately $90 million were recorded on these transactions. In September 2000, the Company was notified by certain investors in its securitization transactions that such investors intended to exercise put options totaling approximately $2.0 billion during the fourth quarter of 2000. NOTE 8 - ALLOWANCE FOR LOSSES ON FINANCE RECEIVABLES Changes in the allowance for losses on finance receivables during the periods indicated were as follows (in millions):

NOTE 9 - OTHER ASSETS The components of other assets at September 30, 2000 and December 31, 1999 were as follows (in millions):

NOTE 10 - DERIVATIVE FINANCIAL INSTRUMENTS The Company uses derivative financial instruments to hedge specific exposures as part of its risk management program. The Company hedges its yen denominated net investment in its Japanese subsidiaries through the use of forward contracts. Other instruments currently used by the Company are currency swap, interest rate swap, interest rate option, municipal bond and treasury futures and option contracts. All of these instruments are held for purposes other than trading. The Financial Accounting Standards Board has issued new standards for accounting for derivative transactions to become effective in 2001. The Company has not completed its analysis of the impact this pronouncement will have on future operating results. Foreign currency forward exchange agreements have been designated for accounting purposes as hedges of certain of the Company's foreign currency denominated net investments. Under these agreements, the Company is obligated to deliver specific foreign currencies in exchange for United States dollars at varying times over the next year. The aggregate notional amount of these agreements was $5.3 billion and $2.8 billion at September 30, 2000 and December 31, 1999, respectively. The fair value of such agreements at September 30, 2000 and December 31, 1999 would have been an asset of $19.0 million and a liability of $389.0 million, respectively. Foreign currency swap agreements have been designated for accounting purposes as hedges of specific foreign currency exposures under certain debt obligations. Under these agreements, the Company and the agreement counterparties are obligated to exchange specific foreign currencies at varying times over the next four years. The aggregate notional amount of these agreements at September 30, 2000 and December 31, 1999 was $5.6 billion and $5.9 billion, respectively. The fair value of such agreements at September 30, 2000 and December 31, 1999 would have been a liability of $330.0 million and $307.9 million, respectively. Interest rate swap and interest rate option agreements are used by the Company to hedge the effect of interest rate movements on existing debt and anticipated debt and asset securitization transactions. The aggregate notional amount of interest rate swap agreements at September 30, 2000 and December 31, 1999 was $15.8 billion and $9.2 billion, respectively. The fair value of such agreements at September 30, 2000 and December 31, 1999 would have been a liability of $96.1 million and $46.7 million, respectively. The aggregate notional amount of interest rate option agreements was $1.5 billion at September 30, 2000. The fair value of such agreements at September 30, 2000 would have been a liability of $5.2 million. Interest rate swap and interest rate option agreements mature on varying dates over the next 30 years. Treasury futures and option contracts are used to minimize fluctuations in the value of preferred stock investments. The aggregate notional amount of futures and option contracts at September 30, 2000 and December 31, 1999 was $306.5 million and $536.2 million, respectively. The fair value of these contracts at September 30, 2000 and December 31, 1999 would have been a liability of $0.4 million and an asset of $12.4 million, respectively. Such contracts mature on varying dates through 2000. Municipal bond futures are used to minimize fluctuations in the value of municipal bond investments. The aggregate notional amount of municipal bond futures contracts at September 30, 2000 and December 31, 1999 was $261.6 million and $180.1 million, respectively. The fair value of these contracts at September 30, 2000 and December 31, 1999 would have been an asset of $2.7 million and $2.4 million, respectively. Such contracts mature on varying dates through 2000. NOTE 11 - SEGMENT REPORTING The Company is organized into five primary business units: U.S. credit card, U.S. consumer branch, U.S. home equity, commercial and international finance. The U.S. consumer branch and U.S. home equity business units are aggregated into one reportable U.S. consumer finance segment due to their similar operating characteristics. The Company's corporate activities include, among others, managing the operations of its domestic and foreign subsidiaries, accessing the global debt, securitization and capital markets and managing the mix of businesses in its portfolio. The Company fully allocates its corporate activities to its business segments primarily based upon managed receivables. The Company allocates resources to and evaluates the performance of its segments primarily based on total revenue, net interest margin, segment earnings and managed finance receivables adjusted to include the impact of receivables either held for sale or sold with servicing retained ("Managed Basis"). Managed Basis revenue, earnings and receivables information for each of the Company's reportable segments is presented below (in millions):

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The discussion that follows includes amounts reported in the historical financial statements ("Owned Basis") adjusted on a pro forma basis to include certain effects of receivables held for securitization and receivables sold with servicing retained ("Managed Basis"). This presentation excludes the serviced assets of Arcadia originated and sold with servicing retained prior to the acquisition of Arcadia by the Company and the manufactured housing owned finance receivables and serviced assets. On an Owned Basis, the net earnings on the Company's retained securitization interests and receivables held for securitization or sale, as well as gains from subsequent sales in revolving securitization structures, are included in servicing related income in the consolidated statement of earnings. On a Managed Basis, these earnings are reclassified and presented as if the receivables had neither been held for securitization nor sold. The initial gains recorded on securitization transactions are recorded in investment and other income on both an Owned and Managed Basis. Management believes the discussion of Managed Basis information is useful in evaluating the Company's operating performance. The following tables contain selected Managed Basis financial information (in millions):

Net Earnings Net earnings on an owned and managed basis increased for the nine- and three-month periods ended September 30, 2000 over the same periods in the previous year. The principal factors that influenced the changes in the Company's net earnings are described in the sections that follow. Finance Charges Finance charge revenue on a Managed Basis increased for the nine- and three-month periods ended September 30, 2000, compared to the same periods in the prior year, principally as a result of growth in average managed finance receivables outstanding. Finance charge revenue as a percentage of average managed finance receivables ("Finance Charge Ratio") increased to 15.35% and 15.68% for the nine and three-month periods ended September 30, 2000, respectively, from 14.47% and 14.51% for the comparable periods in 1999. The increase in the Finance Charge Ratio principally was due to higher new business yields in response to the rising interest rate environment and a shift in product mix to business activities with higher finance charge rates. Interest Expense Managed Basis interest expense increased to $3.5 billion and $1.2 billion for the nine- and three-month periods ended September 30, 2000, respectively, from $3.1 billion and $1.1 billion for the respective nine- and three-month periods ended September 30, 1999. This increase primarily was due to an increase in average debt outstanding for each of the comparative periods. The increase in average debt outstanding principally resulted from the growth in average net finance receivables. Debt is the primary source of funding to support the Company's growth in net finance receivables. Additionally, the Company's total average borrowing rate increased from 5.48% for the nine months ended September 30, 1999 to 5.82% for the nine months ended September 30, 2000. Net Interest Margin As a result of the factors discussed in the finance charges and interest expense sections above, Managed Basis net interest margin increased to $6.0 billion and $2.1 billion for the nine- and three-month periods ended September 30, 2000, respectively, compared to $5.3 billion and $1.8 billion for the comparable periods in the prior year. The Company's Managed Basis net interest margin expressed as a ratio of average managed finance receivables also improved to 9.69% and 9.97% for the nine and three-month periods ended September 30, 2000, respectively, compared to 9.09% and 9.13% for the comparable periods in the prior year. Investment and Other Income Investment and other income, on a Managed Basis, was $501.4 million and $214.5 million for the nine and three-month periods ended September 30, 2000, respectively, compared to $509.7 million and $144.2 million for the comparable periods in 1999. The increase in investment and other income for the three-month period ended September 30, 2000 as compared to the prior year period primarily relates to an increase in investment and fee related income and securitization gains. The decrease in investment and other income for the nine-month period ended September 30, 2000 as compared to the prior year period primarily relates to the special pre-tax charge related to the write down of the manufactured housing securitization retained interest, the earnings of net assets held for sale and businesses sold during the first quarter of 1999, and the net proceeds on the sale of the Company's recreational vehicle business which were included in investment and other income for the three-month period ended March 31, 1999. This was partially offset by pre-tax gains on securitizations during the nine months ended September 30, 2000. Operating Expenses Nine- and three-month Managed Basis operating expenses for the periods ended September 30, 2000 were higher on a dollar basis than in the corresponding periods in 1999, reflecting growth in the size of the Company and business mix. Operating expenses as a percentage of average managed finance receivables ("Operating Expense Ratio") increased to 5.19% and 5.30% for the nine and three months ended September 30, 2000, respectively, compared to 4.97% and 4.75% for the same periods in the prior year. The increase in the Operating expense ratio for the nine and three months ended September 30, 2000 is primarily the result of a $34 million pre-tax charge relating to change in control features of certain benefit plans of the Company resulting from the merger agreement with Citigroup Inc. and a $25 million charge in the first quarter of 2000 related to the discontinuation of the manufactured housing loan origination business. The Company's efficiency ratio, measured as the ratio of total Managed Basis operating expenses divided by total Managed Basis revenue net of Managed Basis interest expense and insurance benefits paid or provided, adjusted to exclude the $34 million and $25 million pre-tax charge as described above, was 45.3% and 44.3% for the nine and three-month periods ended September 30, 2000, respectively compared to 46.3% and 44.7% for the same periods in the prior year. Provision for Losses The Company's Managed Basis provision for losses increased to $1.9 billion for the first nine months of 2000 from $1.6 billion for the same period in 1999. The provision for losses for the three-month period ended September 30, 2000 increased to $680.2 million from $556.6 million in the prior year period. In both periods, the provision increased as a result of increased credit losses. Total Managed Basis net credit losses from on-going operations, which excludes the Company's Associates Housing Finance ("AHF") unit, as a percentage of average managed finance receivables (the "Loss Ratio") were 2.81% and 2.84% for the nine and three-month periods ended September 30, 2000, respectively, compared to 2.78% and 2.73% for the same periods in 1999. The increase in the Loss Ratio for the three months ended September 30, 2000 was primarily due to higher loss rates in the personal lending and sales finance and truck and truck trailer portfolios. Provision for Income Taxes The estimated effective tax rate for the Company was revised to 36 percent for this year, down from 37 percent that was incorporated in the Company's results for the first half of the year. This revision reflects improved estimates of the Company's tax provisions based on a recent review of its domestic and international tax positions. Financial Condition Managed finance receivables increased $9.5 billion during the nine-month period ended September 30, 2000 to $88.4 billion. The increase in managed finance receivables primarily was the result of the previously described acquisitions and internal growth in the home equity portfolio and personal lending and sales finance portfolios. The Company did not include manufactured housing receivables in total managed receivables because it had discontinued these loan origination operations. The Company will continue to service manufactured housing accounts and report manufactured housing receivables as a component of total managed assets. Composite 60+days contractual delinquency from ongoing operations was 2.58% of managed finance receivables at September 30, 2000, compared to 2.81% at December 31, 1999. This decrease is primarily a result of lower delinquencies in the home equity, personal lending and credit card portfolios. The allowance for losses to net finance receivables declined to 3.14% at September 30, 2000 from 3.16% at December 31, 1999. Composite 60+days contractual delinquency for the Company's AHF unit was 1.97% of managed receivables at September 30, 2000. The loss ratio for the Company's AHF unit was 3.23% of managed receivables for the nine months ended September 30, 2000 compared to 2.28% for the prior year period. Company management believes the allowance for losses at September 30, 2000 is sufficient to provide adequate coverage against losses in its portfolios. Liquidity and Capital Resources Through its asset and liability management function, the Company maintains a disciplined approach to the management of liquidity, capital, interest rate risk and foreign exchange risk. The Company has a formal process for managing its liquidity to ensure that funds are available to meet the Company's commitments. The Company's principal sources of cash are proceeds from the issuance of short- and long-term debt, cash provided from the Company's operations and asset securitizations. Management believes that the Company has available sufficient liquidity to support its operations from a combination of cash provided from operations, external borrowings and asset securitizations. The Company maintains a universal shelf registration statement with remaining capacity of $5.7 billion. A subsidiary of the Company also maintains an effective shelf registration statement for the issuance of debt related securities with remaining capacity of $16.1 billion. A principal strength of the Company is its ability to access the global debt and equity markets in a cost-efficient manner. Continued access to the public and private debt markets is critical to the Company's ability to continue to fund its operations. The Company seeks to maintain a conservative liquidity position and actively manages its liability and capital levels, debt maturities, diversification of funding sources and asset liquidity to ensure that it is able to meet its obligations as they mature. The Company's domestic operations principally are funded through domestic and international borrowings and asset securitizations. The Company's foreign subsidiaries principally are financed through private and public debt borrowings in the transactional currency and fully hedged intercompany borrowings. At September 30, 2000, the Company had short- and long-term debt outstanding of $33.3 billion and $43.9 billion, respectively. Short-term debt principally consists of commercial paper and represents the Company's primary source of short-term liquidity. Long-term debt principally consists of senior unsecured long-term debt issued by the Company's principal domestic operating subsidiary, and to a lesser extent, private and public borrowings made by the Company's foreign subsidiaries. During the nine months ended September 30, 2000 and 1999, the Company raised term debt aggregating $10.8 billion and $9.6 billion, respectively, through public and private offerings. Substantial additional liquidity is available to the Company's operations through established credit facilities in support of its net short- term borrowings. Such credit facilities provide a means of refinancing its maturing short-term obligations as needed. At September 30, 2000, these credit facilities were allocated to provide at least 75% backup coverage of the Company's recurring commercial paper borrowings and utilized uncommitted lines of credit. Under a debt covenant associated with a syndicated credit facility, the Company requires a minimum tangible net worth of $3.5 billion. At September 30, 2000, the Company's tangible net worth, as defined in the syndicated credit facility, was approximately $6.7 billion. The Company has access to other sources of liquidity such as the issuance of alternative forms of capital, the issuance of common and preferred stock and the increased use of asset securitization. The Company's securitization transactions have included the manufactured housing, home equity, credit card and automobile financing related asset-backed classes. The Company has additional asset classes in its portfolio which can be securitized, including asset classes within its foreign operations. Certain debt issues are subject to put or call redemption provisions whereby repayment may be required prior to the maturity date. As applicable, the amount of the option premium received by the Company is deferred and amortized over the expected life. Additionally, the Company has written put options in aggregate of up to $5.3 billion principal amounts of certificates backed by finance receivables which requires it, under certain circumstances, to purchase, upon request of the holder, the securities issued. The Company has recorded a liability of $22 million in connection with these options. In September 2000, the Company was notified by certain investors in its securitization transactions that such investors intended to exercise put options totaling approximately $2.0 billion during the fourth quarter of 2000. In the second quarter of 2000, the Company's board of directors authorized the repurchase of up to 50 million shares of the Company's stock, to be implemented over time and funded through excess capital formation. On Sept. 6, 2000, the Company and Citigroup Inc. announced they entered into a merger agreement as discussed in Note 1 to the consolidated financial statements. Subsequent to the announcement of the Agreement, the Company's board of directors rescinded the authorization to repurchase up to 50 million shares of company stock. No company stock was repurchased under the Company's board of directors initial authorization. As part of its risk management activities, the Company hedges its net investment in its Japanese subsidiaries through the use of forward contracts to hedge the Yen denominated investment. The Financial Accounting Standards Board has issued new standards for accounting for derivative transactions to become effective in 2001. The company has not completed its analysis of the impact this pronouncement will have on future operating results. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Management has no material changes to report from the disclosure set forth in the Company's Form 10-K for the year ended December 31, 1999. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Federal Trade Commission has referred to the Department of Justice its investigation into the pricing practices of Detroit area mortgage brokers doing business with a Company subsidiary in 1995 and 1996. The FTC has asked the Justice Department to consider whether to file a lawsuit against the Company for alleged broker loan pricing disparities based on race. Even if the Justice Department files suit against the Company, the Company does not believe any such suit, even if decided against the Company, would have a material effect on the Company's financial condition or results of operations. In addition, the Company, like many other companies that operate in regulated businesses, is from time to time the subject of various governmental inquiries and investigations. See the Company's Annual Report on Form 10-K for the year ended December 31, 1999 for further information. ITEM 2. CHANGES IN SECURITIES. None to report. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None to report. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None to report. ITEM 5. OTHER INFORMATION. Forward-Looking Statements The Company desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "1995 Act"). The 1995 Act provides a "safe harbor" for forward-looking statements to encourage companies to provide information without fear of litigation so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected. Although the Company does not anticipate that it will make forward-looking statements as a general policy, the Company will make forward-looking statements as required by law or regulation, and from time to time may make such statements with respect to management's estimation of the future operating results and business of the Company. The Company hereby incorporates into this report by reference to its Form 10-K for the year ended December 31, 1999 the cautionary statements found on pages 30-31 of such Form 10-K. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits (12) Computation of Ratio of Earnings to Fixed Charges. (27) Financial Data Schedule. (99) Residual Value Obligation. (b) Reports on Form 8-K During the third quarter ended September 30, 2000, The Company filed a Current Report on Form 8-K as of July 18, 2000 announcing earnings for the second quarter of 2000); and September 6, 2000 (announcing it entered into an agreement to merge with Citigroup). 20 SIGNATURE Pursuant to the requirements 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. November 14, 2000 ASSOCIATES FIRST CAPITAL CORPORATION (registrant) By: /s/ David J. Keller ------------------------------ Executive Vice President and Principal Accounting Officer EX-12 2 fcex123q.txt RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 ASSOCIATES FIRST CAPITAL CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollar Amounts in Millions)

EX-99 3 servicer.htm SERVICER CERTIFICATE RVO Legal Serv Cert 3rd qtr_report

Servicer Certificate

		Residual Value Obligation

	Quarterly certificate for the quarter ended September 30, 2000
	This information below is being disclosed pursuant to the Residual Value Obligation Agreement dated as of April 3, 2000 between Associates First Capital Corporation and the Chase Manhattan Bank, as Trustee. Terms used and not otherwise defined herein have the meaning assigned to them in the Residual Value Agreement.


Securitization Distribution Dates during quarter:			July 17, 2000	August 15, 2000	September 15, 2000

Allocation Dates during quarter:			July 18, 2000	August 16, 2000	September 18, 2000

Payment Date during quarter:					NA

AFCC Amount at beginning of quarter:					$ 471,618,675

AFCC Amount at end of quarter:					$ 459,843,520



On the Payment Date during the quarter:

Accrued RVO Payment Amount as of the immediately preceding Allocation Date:					$ -

Interest accrued on Accrued RVO Payment Amount since immediately preceding
Allocation Date:					$ -

Accrued RVO Payment Amount as of such Payment Date:					$ -

Number of RVO's outstanding as of the applicable record date					N/A

Payment per RVO:					$ -



As of the first Allocation Date during the quarter:

Residual Cash Flow:



	Residual Cash Flow allocated:				$ 11,242,329

	Excess Litigation Reserve allocated:				$ -

RVO Expenses:

	Residual Cash Flow allocated to RVO Expenses:				$ -

	Cumulative RVO Expenses not covered by allocation (to be carried forward):				$ -

Litigation Expenses:

	Residual Cash Flow allocated to Litigation Expenses:				$ 919,927

	Cumulative Litigation Expenses not covered by allocation (to be carried forward):				$ -

AFCC Amount:

	AFCC Amount at end of immediately preceding Allocation Date:				$ 471,618,675

	plus: AFCC Interest added on immediately preceding Securitization Distribution Date:				$ 5,895,233


	less: Residual Cash Flow allocated to AFCC Amount:				$ (10,322,402)

	AFCC Amount after allocation:				$ 467,191,506

Accrued RVO Payment Amount:

	Residual Cash Flow allocated to Accrued RVO Payment Amount on such
	Allocation Date:				$ -

	plus: cumulative Residual Cash Flow allocated to, and cumulative interest
	accrued on, Accrued RVO Payment Amount since most recent Payment Date on which RVO Payments were made:
					$ -

	Accrued RVO Payment Amount on such Allocation Date:				$ -


As of the second Allocation Date during the quarter:

Residual Cash Flow:



	Residual Cash Flow allocated:				$ 18,864,961

	Excess Litigation Reserve allocated:				$ -

RVO Expenses:

	Residual Cash Flow allocated to RVO Expenses:				$ -

	Cumulative RVO Expenses not covered by allocation (to be carried forward):				$ -

Litigation Expenses:

	Residual Cash Flow allocated to Litigation Expenses:				$ -

	Cumulative Litigation Expenses not covered by allocation (to be carried forward):				$ -

AFCC Amount:

	AFCC Amount at end of immediately preceding Allocation Date:				$ 467,191,506

	plus: AFCC Interest added on immediately preceding Securitization				$ 5,839,894

	less: Residual Cash Flow allocated to AFCC Amount:				$ (18,864,961)

	AFCC Amount after allocation:				$ 454,166,439

Accrued RVO Payment Amount:

	Residual Cash Flow allocated to Accrued RVO Payment Amount on such Allocation Date:
					$ -

	plus: cumulative Residual Cash Flow allocated to, and cumulative interest accrued on, Accrued RVO Payment Amount since most recent Payment Date on which RVO Payments were made:

					$ -

	Accrued RVO Payment Amount on such Allocation Date:				$ -


As of the third Allocation Date during the quarter:

Residual Cash Flow:



	Cumulative Residual Cash Flow not covered by allocation (to be carried forward)				$ (1,460,947)

	Residual Cash Flow allocated:				$ -	(1)

	Excess Litigation Reserve allocated:				$ -

RVO Expenses:

	Residual Cash Flow allocated to RVO Expenses:				$ -

	Cumulative RVO Expenses not covered by allocation (to be carried forward):				$ -

Litigation Expenses:

	Residual Cash Flow allocated to Litigation Expenses:				$ -

	Cumulative Litigation Expenses not covered by allocation (to be carried forward):				$ 62,187

AFCC Amount:

	AFCC Amount at end of immediately preceding Allocation Date:				$ 454,166,439

	plus: AFCC Interest added on immediately preceding Securitization Distribution Date:
					$ 5,677,080

	less: Residual Cash Flow allocated to AFCC Amount:				$ -

	AFCC Amount after allocation:				$ 459,843,520

Accrued RVO Payment Amount:

	Residual Cash Flow allocated to Accrued RVO Payment Amount on such
	Allocation Date:				$ -

	plus: cumulative Residual Cash Flow allocated to, and cumulative interest accrued on, Accrued RVO Payment Amount since most recent Payment Date on which RVO Payments were made:
					$ -

	Accrued RVO Payment Amount on such Allocation Date:				$ -

	(1) During the third allocation period, an Event of Default trigger was breached on the 1996-C transaction. This triggeri ncreases the required program spread account balance from 9% to 25% on all transactions. As a result, there was no cash actually released to the Company for this period.

EX-27 4 afccfds.frm FINANCIAL DATA STATEMENT
5 0 MEANS NOT APPLICABLE OR NOT SEPARATELY DISCLOSED. This schedule contains summary financial information extracted from the Company's unaudited consolidated financial statements as of June 30, 2000 and the six months then ended and is qualified in its entirety by reference to such consolidated financial statements. 1,000,000 U.S.DOLLARS 9-MOS Jan-01-2000 Dec-31-1999 Sep-30-2000 1 3,203 9,483 70,828 2,221 0 0 0 0 93,018 0 77,237 0 0 7 10,617 93,018 9,915 9,915 0 8,116 3,664 1,391 3,061 1,799 648 1,151 0 0 0 1,151 1.58 1.58

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