Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 2001 Commission file number 2-80466
| Wells Fargo Financial, Inc. |
| (Exact name of registrant as specified in its charter) |
| Iowa | 42 1186565 |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
| 206 Eighth Street, Des Moines, Iowa | 50309 |
| (Address of principal executive offices) | (Zip Code) |
| Registrant’s telephone number, including area code | (515) 243-2131 |
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 o.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock (without par value): 1,000 shares outstanding as of May 11, 2001.
The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.
PART I. FINANCIAL INFORMATION
WELLS FARGO FINANCIAL, INC.
Consolidated Balance Sheets (Unaudited)
(Thousands of Dollars)
| March 31, 2001 | December 31, 2000 | |
| Assets | ||
| Cash and cash equivalents | $232,068 | $205,036 |
| Securities available-for-sale | 1,283,545 | 1,215,135 |
| Finance receivables | 12,243,490 | 11,417,862 |
| Less allowance for credit losses | 503,074 | 462,555 |
| Finance receivables - net | 11,740,416 | 10,955,307 |
| Notes receivable - affiliates | 662,851 | 505,386 |
| Property and equipment (at cost, less accumulated depreciation of $143,170 for 2001 and $148,042 for 2000) | 64,883 | 63,651 |
| Deferred income taxes | 104,104 | 111,262 |
| Other assets | 600,769 | 520,971 |
| Total assets | $14,688,636 | $13,576,748 |
See accompanying notes to consolidated financial statements.
WELLS FARGO FINANCIAL, INC.
Consolidated Balance Sheets (Unaudited)
(Thousands of Dollars)
| March 31, | December 31, | |
| Liabilities and | ||
| Stockholder’s Equity | 2001 | 2000 |
| Loans payable - short-term: | ||
| Commercial paper | $3,271,645 | $2,973,508 |
| Affiliates | 320,189 | 99,379 |
| Other | 153,894 | 709,988 |
| Unearned insurance premiums and commissions | 140,275 | 139,476 |
| Insurance claims and policy reserves | 35,158 | 34,978 |
| Accrued interest payable | 120,662 | 121,007 |
| Other payables to affiliates | 36,701 | 48,761 |
| Other liabilities | 463,970 | 370,363 |
| Long-term debt: | ||
| Senior | 7,594,704 | 6,968,803 |
| Affiliate | 500,000 | 255,870 |
| Total liabilities | 12,637,198 | 11,722,133 |
| Stockholder’s equity: | ||
| Common stock without par value (authorized 1,000 shares, issued and outstanding 1,000 shares) | 3,855 | 3,855 |
| Additional paid in capital | 442,302 | 312,302 |
| Retained earnings | 1,600,945 | 1,540,902 |
| Accumulated other comprehensive income (loss), net of income taxes | 4,336 | (2,444) |
| Total stockholder’s equity | 2,051,438 | 1,854,615 |
| Total liabilities and stockholder’s equity | $14,688,636 | $13,576,748 |
See accompanying notes to consolidated financial statements.
WELLS FARGO FINANCIAL, INC.
Consolidated Statements of Income (Unaudited)
(Thousands of Dollars)
| Three Months Ended March 31, | ||
| 2001 | 2000 | |
| Income: | ||
| Finance charges and interest | $542,833 | $448,992 |
| Insurance premiums and commissions | 30,340 | 25,648 |
| Other income | 64,253 | 50,473 |
| Total income | 637,426 | 525,113 |
| Expenses: | ||
| Operating expenses | 225,239 | 205,165 |
| Interest and debt expense | 189,764 | 143,545 |
| Provision for credit losses | 108,435 | 77,359 |
| Insurance losses and loss expenses | 11,264 | 13,311 |
| Total expenses | 534,702 | 439,380 |
| Income before income taxes | 102,724 | 85,733 |
| Income taxes | 37,922 | 31,596 |
| Net income | $64,802 | $54,137 |
See accompanying notes to consolidated financial statements.
WELLS FARGO FINANCIAL, INC.
Consolidated Statements of Comprehensive Income
(Unaudited)
(Thousands of Dollars)
| Three Months Ended March 31, | ||
| 2001 | 2000 | |
| Net income | $64,802 | $54,137 |
| Other comprehensive income (loss), before income taxes: | ||
| Unrealized gains (losses) on securities available-for-sale: | ||
| Unrealized gains (losses) arising during the period | 16,206 | (7,511) |
| Reclassification adjustment for net gains included in net income | (2,110) | (2,373) |
| 14,096 | (9,884) | |
| Foreign currency translation adjustment | (2,432) | (183) |
| Other comprehensive income (loss) before income taxes | 11,664 | (10,067) |
| Income tax expense (benefit) related to unrealized gains (losses) on securities available-for-sale | 4,884 | (3,367) |
| Other comprehensive income (loss), net of income taxes | 6,780 | (6,700) |
| Comprehensive income | $71,582 | $47,437 |
See accompanying notes to consolidated financial statements.
WELLS FARGO FINANCIAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
(Thousands of Dollars)
| Three Months Ended March 31, | ||
| 2001 | 2000 | |
| Cash flows from operating activities: | ||
| Net income | $64,802 | $54,137 |
| Adjustments to reconcile net income to net cash flows from operating activities, net of effect of contributed subsidiaries: | ||
| Provision for credit losses | 108,435 | 77,359 |
| Depreciation and amortization | 13,053 | 12,801 |
| Deferred income taxes | 3,721 | (1,928) |
| Other assets | 35,456 | (18,921) |
| Unearned insurance premiums and commissions | 799 | (1,486) |
| Insurance claims and policy reserves | 180 | 640 |
| Accrued interest payable | (345) | (2,980) |
| Other payables to affiliates | (12,060) | 45,957 |
| Other liabilities | 7,969 | (55,810) |
| Net cash provided by operating activities | 222,010 | 109,769 |
| Cash flows from investing activities: | ||
| Finance receivables: | ||
| Principal collected | 2,264,657 | 2,039,323 |
| Receivables originated or purchased | (2,372,766) | (2,197,710) |
| Proceeds from sales of securities | 93,161 | 37,063 |
| Proceeds from maturities of securities | 43,018 | 32,988 |
| Purchases of securities | (193,620) | (62,513) |
| Net additions to property and equipment | (4,714) | (3,655) |
| Net increase in notes receivable – affiliates, net of effect of contributed subsidiaries | (157,465) | (18,829) |
| Cash and cash equivalents of contributed subsidiaries received and subsidiary transferred | (1,567) | 477 |
| Net cash used for acquisition | (324,573) | |
| Other | (50,067) | 57,502 |
| Net cash used by investing activities | (703,936) | (115,354) |
| Cash flows from financing activities: | ||
| Net decrease in loans payable – short term | (37,147) | (400,683) |
| Proceeds from issuance of long term debt: | ||
| Senior | 581,364 | 68,989 |
| Affiliate | 244,130 | 500,000 |
| Repayment of senior long-term debt | (409,389) | (186,545) |
| Capital contribution by parent | 130,000 | |
| Dividend paid | (45,000) | |
| Net cash provided (used) by financing activities | 508,958 | (63,239) |
| Net increase (decrease) in cash and cash equivalents | 27,032 | (68,824) |
| Cash and cash equivalents beginning of period | 205,036 | 178,970 |
| Cash and cash equivalents end of period | $232,068 | $110,146 |
See accompanying notes to consolidated financial statements
WELLS FARGO FINANCIAL, INC.
Consolidated Statements of Stockholder’s Equity (Unaudited)
(Thousands of Dollars)
| Accumulated Other Comprehensive Income (Loss) | ||||||
| Common Stock | Additional Paid In Capital | Retained Earnings | Foreign Currency Translation | Unrealized Gains (Losses) on Securities Available- for-Sale | Total | |
| Balance, December 31, 1999 | $3,855 | $196,697 | $1,407,743 | $(9,575) | $(11,156) | $1,587,564 |
| Comprehensive income (loss): | ||||||
| Net income | 54,137 | 54,137 | ||||
| Other | (183) | (6,517) | (6,700) | |||
| Contributed subsidiaries | 12,427 | (11,168) | 1,259 | |||
| Dividends | (45,000) | (45,000) | ||||
| Balance, March 31, 2000 | $3,855 | $209,124 | $1,405,712 | $(9,758) | $(17,673) | $1,591,260 |
| Balance, December 31, 2000 | $3,855 | $312,302 | $1,540,902 | $(11,220) | $8,776 | $1,854,615 |
| Comprehensive income (loss): | ||||||
| Net income | 64,802 | 64,802 | ||||
| Other | (2,432) | 9,212 | 6,780 | |||
| Capital contribution from parent | 130,000 | 130,000 | ||||
| Transfer of subsidiary | (4,759) | (4,759) | ||||
| Balance, March 31, 2001 | $3,855 | $442,302 | $1,600,945 | $(13,652) | $17,988 | $2,051,438 |
See accompanying notes to consolidated financial statements.
WELLS FARGO FINANCIAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with the accounting policies set forth in Wells Fargo Financial, Inc.’s 2000 Annual Report on Form 10-K, except as described in note 8, and should be read in conjunction with the Notes to Consolidated Financial Statements therein. In the opinion of management, all adjustments (none of which were other than normal recurring accruals) necessary to present fairly the financial statements for the periods presented have been included.
The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year.
1. Principles of Consolidation.
The consolidated financial statements include the accounts of Wells Fargo Financial, Inc. (the “Company”) and subsidiaries (collectively, “Wells Fargo Financial”). Intercompany accounts and transactions are eliminated. The Company is a wholly-owned subsidiary of Wells Fargo Financial Services, Inc. (the “Parent”) which is a wholly-owned subsidiary of Wells Fargo & Company (“Wells Fargo”).
2. Dividend Restrictions.
Certain long-term debt instruments restrict payment of dividends on and acquisitions of the Company’s common stock. In addition, such debt instruments and the Company’s bank credit agreements contain certain requirements as to maintenance of net worth (as defined). Approximately $1,053 million of consolidated stockholder’s equity was unrestricted at March 31, 2001.
3. Other Income.
Income from affiliates was $11.4 million and $8.7 million for the three months ended March 31, 2001 and 2000, respectively.
Interest and dividends from securities available-for-sale and cash equivalents were $19.0 million and $19.9 million for the three months ended March 31, 2001 and 2000, respectively.
WELLS FARGO FINANCIAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
4. Finance Receivables.
Finance receivables are as follows:
| March 31, | December 31, | |
| (In Thousands) | 2001 | 2000 |
| United States consumer finance: | ||
| Loans secured by real estate | $2,676,229 | $2,507,419 |
| Consumer loans | 1,375,377 | 1,460,746 |
| Total loans | 4,051,606 | 3,968,165 |
| Sales finance contracts | 1,229,724 | 1,295,147 |
| Credit cards | 1,123,152 | 1,148,486 |
| Total United States consumer finance | 6,404,482 | 6,411,798 |
| Canadian consumer finance: | ||
| Loans secured by real estate | 83,233 | 85,000 |
| Consumer loans | 429,926 | 452,581 |
| Total loans | 513,159 | 537,581 |
| Sales finance contracts | 444,339 | 497,379 |
| Credit cards | 20,773 | 21,298 |
| Total Canadian consumer finance | 978,271 | 1,056,258 |
| Automobile finance | 3,132,731 | 3,078,026 |
| Leasing | 1,285,030 | 442,665 |
| Other | 442,976 | 429,115 |
| Total finance receivables | $12,243,490 | $11,417,862 |
WELLS FARGO FINANCIAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
5. Allowance for Credit Losses.
The analysis of the allowance for credit losses is as follows:
| Three Months Ended March 31, | ||
| (In Thousands) | 2001 | 2000 |
| Allowance for credit losses beginning of period | $462,555 | $367,712 |
charged to expense | 108,435 | 77,359 |
| Write-offs | (127,519) | (88,525) |
| Recoveries | 20,028 | 15,589 |
contributed or acquired | 39,575 | 9,843 |
end of period | $503,074 | $381,978 |
6. Statements of Consolidated Cash Flows.
The Company and its subsidiaries consider highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Supplemental disclosure of certain cash flow information is presented below:
| Three Months Ended March 31, | ||
| (In Thousands) | 2001 | 2000 |
| Cash paid for: | ||
| Interest | $184,928 | $159,977 |
| Income taxes | 40,423 | 4,310 |
WELLS FARGO FINANCIAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
7. Segment Information.
The Company has four reportable segments: U.S. consumer finance, Canadian consumer finance, automobile finance, and leasing. The Company’s operating segments are determined by product type and geography. U.S. consumer finance operations make loans to individuals and purchase sales finance contracts through 787 consumer finance branches in 47 states, Guam, Saipan, and Puerto Rico. The U.S. consumer finance segment also issues credit cards through two banking subsidiaries. Canadian consumer finance operations make loans to individuals and purchase sales finance contracts through 160 consumer finance branches in the 10 provinces. Automobile finance operations specialize in purchasing sales finance contracts directly from automobile dealers and making loans secured by automobiles through 190 branches in 34 states and Puerto Rico. Leasing operations specialize in financing commercial equipment such as office copiers, telephone systems, health care equipment, small computers, and light industrial equipment. Lease finance receivables are generated primarily from equipment distributors ranging from small independently-owned vendors to large equipment manufacturers. Results from insurance operations are included in the appropriate segment.
Selected financial information for each segment is shown below:
| (In Thousands) | ||||||||||||
| U.S. Consumer Finance | Canadian Consumer Finance | Automobile Finance | Leasing | Other* | Total | |||||||
| Three Months Ended March 31,: | ||||||||||||
| 2001 | 2000 | 2001 | 2000 | 2001 | 2000 | 2001 | 2000 | 2001 | 2000 | 2001 | 2000 | |
| Finance charges and interest | $304,082 | $257,810 | $60,926 | $61,373 | $129,920 | $101,722 | $32,021 | $12,828 | $15,884 | $15,259 | $542,833 | $448,992 |
| Total income | 370,589 | 315,294 | 67,427 | 67,890 | 137,334 | 106,284 | 37,210 | 14,006 | 24,866 | 21,639 | 637,426 | 525,113 |
| Net income | 31,799 | 38,313 | 10,308 | 6,796 | 11,444 | 9,855 | 8,183 | 2,697 | 3,068 | (3,524) | 64,802 | 54,137 |
| Total assets | 8,248,182 | 6,956,338 | 1,066,770 | 1,173,168 | 3,403,378 | 2,381,988 | 1,394,597 | 372,834 | 575,709 | 554,672 | 14,688,636 | 11,439,000 |
| * | Information from other segments below the quantitative threshold are attributable to miscellaneous insurance companies, collection services, operations in Argentina and commercial finance operations including rediscounting. Subsidiaries engaged in multiple peril crop insurance were transferred to another subsidiary of Wells Fargo effective June 1, 2000. |
WELLS FARGO FINANCIAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
8. Recent Accounting Standards.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133 (FAS 133), Accounting for Derivative Instruments and Hedging Activities. In July 1999, the FASB issued FAS 137, Deferral of the Effective Date of FASB Statement No. 133, which defers the effective date for implementation of FAS 133 to no later than January 1, 2001 for the Company’s financial statements. In June 2000, the FASB issued FAS 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment to FAS 133. The Company implemented the statements on January 1, 2001 and there was no material impact on the Company’s financial statements as a result of the implementation.
In September 2000, the FASB issued Statement No. 140 (FAS 140), Accounting for the Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which replaces FAS 125 (of the same title). FAS 140 revises certain standards in the accounting for securitizations and other transfers of financial assets and collateral, and requires certain disclosures relating to securitization transactions and collateral, but it carries over most of FAS 125’s provisions. The collateral and disclosure provisions of FAS 140 were effective for year-end 2000 financial statements. The other provisions of this Statement are effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001; the Company has determined the revised provisions will not have a material impact on the financial statements.
9. Business Combinations.
Effective January 31, 2001, the Company acquired substantially all of the assets and assumed certain liabilities of Conseco Finance Vendor Services Corporation, a leasing company based in Paramus, New Jersey. The acquisition was accounted for as a purchase. The assets and liabilities acquired were recorded at fair value, and the Company’s financial statements contain only the results of operations since the acquisition date. Conseco Finance Vendor Services Corporation had lease receivables outstanding of $825 million and had another $135 million of lease receivables under management at the time of acquisition.
WELLS FARGO FINANCIAL, INC.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Statements made in Management’s Discussion and Analysis may be forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements address management’s present expectations about future performance and involve inherent risks and uncertainties. A number of important factors (some of which are beyond the Company’s control) could cause actual results to differ materially from those in the forward-looking statements. Those factors include the economic environment, competition, products and pricing in the geographic and business areas in which the Company conducts its operations, prevailing interest rates, changes in government regulations and policies affecting financial services companies, credit quality and credit risk management, acquisitions, and integration of acquired businesses.
Wells Fargo Financial’s net income for the first three months of 2001 was $64.8 million compared with $54.1 million for the first three months of 2000. Net income in the first quarter of 2000 included a $4.4 million loss incurred by subsidiaries engaged in multiple peril crop insurance business. On June 1, 2000 these subsidiaries were transferred to another affiliate of Wells Fargo & Company. Excluding these operations, net income increased to $64.8 million for the first three months of 2001 compared with $58.5 million in the first three months of 2000.
Well’s Fargo Financial’s total income (revenue) increased 21% for the first three months ($637.4 million in the first three months of 2001 compared with $525.1 million in the first three months of 2000).
Income from finance charges and interest increased 21% for the first three months ($542.8 million in the first three months of 2001 compared with $449.0 million in the first three months of 2000). Changes in income from finance charges and interest result predominantly from (1) changes in the amount of finance receivables outstanding and (2) changes in the rate of charge on those receivables.
| Three Months Ended March 31, | ||
| Increase in average finance receivables outstanding: | ||
| 2001 | 2000 | |
| U.S. consumer finance | 20% | 15% |
| Canadian consumer finance | 4 | 8 |
| Automobile finance | 43 | 7 |
| Leasing | 159 | 2 |
| Other | 24 | 47 |
| Total | 29 | 12 |
| Rate of charge on finance receivables: | 2001 | 2000 |
| U.S. consumer finance | 18.78% | 19.04% |
| Canadian consumer finance | 23.53 | 24.48 |
| Automobile finance | 16.76 | 18.76 |
| Leasing | 12.81 | 13.32 |
| Other | 14.84 | 18.26 |
| Total | 18.03 | 19.29 |
The increases in income from finance charges and interest were due predominantly to growth in average receivables outstanding. Growth in average receivables for U.S. consumer finance & Canadian consumer finance were due to the purchase of $400 million in credit card receivables on June 30, 2000 and due to regular business activity. Growth in average receivables for automobile finance was due primarily to the purchase of Flagship Credit Corporation on December 20, 2000. The average receivable growth in leasing receivables was due primarily to the purchase of Conseco Finance Vendor Service Corporation on January 31, 2001. Changes in the earned rates of charge were due to changes in prevailing market rates combined with a change in the portfolio mix. The decline in the earned rate of charge for automobile finance was predominately due to the change in portfolio mix as a result of the Flagship purchase. The decline in the earned rate of charge for other finance receivables occurred due to the change in portfolio mix occurring due to the growth of rediscounting operations.
Other income increased 27% ($64.3 million in the first three months of 2001 compared with $50.5 million in the first three months of 2000). The increase in other income was due predominantly to additional fee income originating from the companies acquired in the past year.
Operating expenses increased 10% ($225.2 million in the first three months of 2001 compared with $205.2 million in the first three months of 2000). The increase was due primarily to increases in employee compensation and benefits and other costs relating to business expansion and acquisitions.
Interest and debt expense increased 32% ($189.8 million in the first three months of 2001 compared with $143.5 million in the first three months of 2000). Changes in interest and debt expense result predominantly from (1) changes in the amount of borrowings outstanding and (2) changes in the cost of those borrowings. Average total outstanding borrowings in the first three months of 2001 increased 29% from the first three months of 2000.
| Three Months Ended March 31, | ||
| Costs of funds: | 2001 | 2000 |
| Short-term | 6.11% | 6.15% |
| Long-term | 6.66 | 6.50 |
| Total | 6.49 | 6.40 |
Changes in average debt outstanding generally correspond to changes in average finance receivables outstanding combined with the change in notes receivable - affiliates. Average finance receivables and notes receivable - affiliates increased 30% from the first three months of 2000.
Provision for credit losses increased 40% ($108.4 million in the first three months of 2001 compared with $77.4 million in the first three months of 2000) due to growth of average receivables outstanding. Net write-offs increased 47% in the first three months of 2001. The increase was due primarily to higher write-offs in the Company’s U.S. consumer finance portfolio and due to increased write-offs in the Company’s leasing portfolio (see following table.) This increase was partially offset by improvements in the automobile finance business and the Company’s private label credit card business in Canada.
| Three Months Ended March 31, | ||
| Net write-offs, not annualized, as a percentage of average net receivables outstanding: | 2001 | 2000 |
| U.S. consumer finance | 1.02% | .62% |
| Canadian consumer finance | 1.02 | 1.42 |
| Automobile finance | .75 | .97 |
| Leasing | .58 | .23 |
| Other | .32 | .95 |
| Total | .89 | .78 |
During 2001, the provision for credit losses exceeded net write-offs by $1 million. At March 31, 2001, the Company had an allowance for credit losses of $503.1 million (4.11% of receivables) compared with $462.6 million (4.05% of receivables) at December 31, 2000. There were no material changes in estimation methods and assumptions during 2001 and 2000. Non-accrual finance receivables were $65.7 million at March 31, 2001 compared with $58.0 million at December 31, 2000. In addition, finance receivables outstanding which were more than three payments contractually delinquent and which were still accruing interest were $161.1 million at March 31, 2001 compared with $159.9 million at December 31, 2000. Management believes the allowance for credit losses at March 31, 2001, is adequate to absorb probable losses on existing receivables in the finance receivables portfolio.
Income taxes increased 20% ($37.9 million in the first three months of 2001 compared with $31.6 million in the first three months of 2000). Income before income taxes increased 20% ($102.7 million in the first three months of 2001 compared with $85.7 million in the first three months of 2000.) The effective tax rate was 36.9% for the first three months of 2001 and for the first three months of 2000.
The Company maintains bank lines of credit and revolving credit agreements to provide an alternative source of liquidity to support the Company’s commercial paper borrowings. At March 31, 2001, lines of credit and revolving credit agreements totaling $2,354 million were being maintained at 19 domestic and international banks; the entire amount was available on that date. Additionally, the Company’s bank subsidiaries, Wells Fargo Financial Bank and Wells Fargo Financial National Bank, have access to federal funds borrowings. At March 31, 2001, federal funds availability at the two banks was $794 million.
The Company and a Canadian subsidiary obtain long-term debt capital primarily from the issuance of debt securities to the public through underwriters on a firm-commitment basis and the issuance of debt securities to institutional investors. The Company and a Canadian subsidiary also obtain long-term debt from the issuance of medium-term notes (which have maturities ranging from nine months to 30 years) through underwriters (acting as agent or principal).
The Company anticipates the continued availability of borrowed funds, at prevailing interest rates, to provide for Wells Fargo Financial’s growth in the foreseeable future. Funds are also generated internally from payments of principal and interest on Wells Fargo Financial’s finance receivables.
PART II. OTHER INFORMATION
WELLS FARGO FINANCIAL, INC.
Item 5. Other Information.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of Wells Fargo Financial, Inc. and its subsidiaries for the periods indicated:
| Three Months Ended March 31, 2001 | Years Ended December 31, | ||||
| 2000 | 1999 | 1998 | 1997 | 1996 | |
| 1.53 | 1.58 | 1.78 | 1.72 | 2.00 | 2.11 |
The ratios of earnings to fixed charges have been computed by dividing net earnings plus fixed charges and income taxes by fixed charges. Fixed charges consist of interest and debt expense plus one-third of rentals (which is deemed representative of the interest factor).
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
| Exhibit (12) | Computation of ratios of earnings to fixed charges for the years ended December 31, 2000, 1999, 1998, 1997 and 1996 and the three months ended March 31, 2001. |
(b) Reports on 8-K
No reports on Form 8-K were filed during the quarter for which this report is filed.
S I G N A T U R E S
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.
| WELLS FARGO FINANCIAL, INC. | |
| Date: May 11, 2001 | |
| By /s/ Eric Torkelson | |
| Eric Torkelson | |
| Senior Vice President and Controller | |
| (Principal Accounting Officer) |
