UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 2003
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 1-6155
AMERICAN GENERAL FINANCE CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 35-0416090
(State of Incorporation) (I.R.S. Employer
Identification No.)
601 N.W. Second Street, Evansville, IN 47708
(Address of principal executive offices) (Zip Code)
(812) 424-8031
(Registrant's telephone number, including area code)
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
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Yes No X
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 10-Q
with the reduced disclosure format.
At October 28, 2003, there were 10,160,012 shares of the registrant's
common stock, $.50 par value, outstanding.
2
TABLE OF CONTENTS
Item Page
Part I 1. Financial Statements . . . . . . . . . . . . . . . . 3
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . 13
4. Controls and Procedures . . . . . . . . . . . . . . 28
Part II 1. Legal Proceedings . . . . . . . . . . . . . . . . . 28
6. Exhibits and Reports on Form 8-K . . . . . . . . . . 28
AVAILABLE INFORMATION
The Company files annual, quarterly, and current reports and other
information with the Securities and Exchange Commission (the SEC).
The SEC maintains a website that contains annual, quarterly, and
current reports and other information that issuers (including the
Company) file electronically with the SEC. The SEC's website is
www.sec.gov. Our annual report on Form 10-K for the year ended
December 31, 2002 and our 2003 quarterly reports on Form 10-Q are
available free of charge on our Internet website www.agfinance.com.
The information on the Company's website is not incorporated by
reference into this report. The website addresses listed above are
provided for the information of the reader and are not intended to be
active links.
3
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in thousands)
Revenues
Finance charges $428,003 $417,476 $1,282,100 $1,244,137
Insurance 46,307 47,839 134,687 141,389
Other 63,889 25,484 197,649 83,608
Total revenues 538,199 490,799 1,614,436 1,469,134
Expenses
Interest expense 130,008 134,494 406,452 407,580
Operating expenses 166,393 136,762 496,690 415,383
Provision for finance
receivable losses 80,662 69,482 224,768 210,178
Insurance losses and loss
adjustment expenses 17,438 19,201 52,987 60,994
Total expenses 394,501 359,939 1,180,897 1,094,135
Income before provision for
income taxes 143,698 130,860 433,539 374,999
Provision for Income Taxes 54,165 46,576 157,744 133,475
Net Income $ 89,533 $ 84,284 $ 275,795 $ 241,524
See Notes to Condensed Consolidated Financial Statements.
4
AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 30, December 31,
2003 2002
(Unaudited)
(dollars in thousands)
Assets
Net finance receivables:
Real estate loans $10,058,589 $ 9,313,496
Non-real estate loans 2,818,221 2,905,339
Retail sales finance 1,261,534 1,355,503
Net finance receivables 14,138,344 13,574,338
Allowance for finance receivable losses (453,963) (453,668)
Net finance receivables, less allowance
for finance receivable losses 13,684,381 13,120,670
Investment securities 1,287,783 1,227,156
Cash and cash equivalents 225,019 144,565
Notes receivable from parent 271,289 269,240
Other assets 735,896 639,091
Total assets $16,204,368 $15,400,722
Liabilities and Shareholder's Equity
Long-term debt $ 9,872,731 $ 9,566,256
Short-term debt 3,358,030 3,061,141
Insurance claims and policyholder
liabilities 443,697 472,348
Other liabilities 538,986 453,487
Accrued taxes 41,808 37,562
Total liabilities 14,255,252 13,590,794
Shareholder's equity:
Common stock 5,080 5,080
Additional paid-in capital 951,175 951,175
Accumulated other comprehensive loss (29,481) (68,938)
Retained earnings 1,022,342 922,611
Total shareholder's equity 1,949,116 1,809,928
Total liabilities and shareholder's equity $16,204,368 $15,400,722
See Notes to Condensed Consolidated Financial Statements.
5
AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2003 2002
(dollars in thousands)
Cash Flows from Operating Activities
Net income $ 275,795 $ 241,524
Reconciling adjustments:
Provision for finance receivable losses 224,768 210,178
Depreciation and amortization 140,904 106,513
Deferral of finance receivable origination
costs (49,065) (42,958)
Deferred income tax (benefit) charge (344) 4,017
Origination of real estate loans held for sale (1,751,151) -
Sales and principal collections of real estate
loans held for sale 1,784,238 -
Net gain on sale of finance receivables to
AGFI subsidiary for securitization (20,661) -
Change in other assets and other liabilities 53,666 65,314
Change in insurance claims and policyholder
liabilities (28,651) (30,087)
Change in taxes receivable and payable (184) (41,605)
Other, net 9,617 7,564
Net cash provided by operating activities 638,932 520,460
Cash Flows from Investing Activities
Finance receivables originated or purchased (6,276,487) (5,843,937)
Principal collections on finance receivables 5,172,703 4,513,257
Sale of finance receivables to AGFI subsidiary
for securitization 284,731 -
Acquisition of Wilmington Finance, Inc. (93,189) -
Investment securities purchased (373,595) (506,049)
Investment securities called and sold 305,845 457,858
Investment securities matured 18,375 22,975
Change in notes receivable from parent (2,049) (4,394)
Change in premiums on finance receivables
purchased and deferred charges 943 (59,210)
Other, net (11,444) (8,181)
Net cash used for investing activities (974,167) (1,427,681)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt 1,470,514 2,922,962
Repayment of long-term debt (1,175,650) (1,041,206)
Change in short-term debt 296,889 (851,389)
Capital contribution from parent - 51,700
Dividends paid (176,064) (151,888)
Net cash provided by financing activities 415,689 930,179
Increase in cash and cash equivalents 80,454 22,958
Cash and cash equivalents at beginning of period 144,565 175,492
Cash and cash equivalents at end of period $ 225,019 $ 198,450
See Notes to Condensed Consolidated Financial Statements.
6
AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in thousands)
Net income $ 89,533 $ 84,284 $275,795 $241,524
Other comprehensive gain (loss):
Net unrealized gains (losses):
Investment securities (18,897) 29,024 12,031 34,424
Interest rate swaps 8,092 (80,029) (13,517) (141,453)
Income tax effect:
Investment securities 6,614 (10,807) (4,200) (12,049)
Interest rate swaps (2,831) 28,009 4,731 49,508
Net unrealized losses, net
of tax (7,022) (33,803) (955) (69,570)
Reclassification adjustments
for realized losses
included in net income:
Investment securities 2,022 911 4,320 2,595
Interest rate swaps 15,735 24,851 57,853 80,047
Income tax effect:
Investment securities (708) (319) (1,512) (908)
Interest rate swaps (5,508) (8,697) (20,249) (28,016)
Realized losses included
in net income, net of tax 11,541 16,746 40,412 53,718
Other comprehensive gain (loss),
net of tax 4,519 (17,057) 39,457 (15,852)
Comprehensive income $ 94,052 $ 67,227 $315,252 $225,672
See Notes to Condensed Consolidated Financial Statements.
7
AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2003
Note 1. Principles of Consolidation
American General Finance Corporation will be referred to as "AGFC" or
collectively with its subsidiaries, whether directly or indirectly
owned, as the "Company" or "we". We prepared our condensed
consolidated financial statements using accounting principles
generally accepted in the United States for interim periods. The
statements include the accounts of AGFC and its subsidiaries, all of
which are wholly owned. We eliminated all intercompany items. AGFC
is a wholly owned subsidiary of American General Finance, Inc. (AGFI).
AGFI is an indirect wholly owned subsidiary of American International
Group, Inc. (AIG).
Note 2. Adjustments and Reclassifications
We made all adjustments, consisting only of normal recurring
adjustments, that we considered necessary for a fair statement of the
Company's condensed consolidated financial statements. These
statements should be read in conjunction with the consolidated
financial statements and related notes included in our annual report
on Form 10-K for the year ended December 31, 2002.
To conform to the 2003 presentation, we reclassified certain items in
the prior period.
Note 3. Acquisition
Effective January 1, 2003, we acquired 100% of the common stock of
Wilmington Finance, Inc. (WFI), a majority owned subsidiary of WSFS
Financial Corporation, in a purchase business combination. WFI
originates non-conforming residential real estate loans nationally,
primarily through broker relationships and, to a lesser extent,
directly to consumers, and sells its originated loans to third party
investors with servicing released to the purchaser. WFI also
provides, for a fee, marketing, certain origination processing
services, loan servicing, and related services for a non-subsidiary
affiliate's origination and sale of non-conforming residential real
estate loans. WFI provides the Company with another source of revenue
through its gains on real estate loan sales and servicing fees. The
purchase price was $120.8 million, consisting of $25.8 million for net
assets and $95.0 million for intangibles. The majority of the
tangible assets acquired were real estate loans held for sale. We
included the results of WFI's operations in our financial statements
beginning January 1, 2003, the effective date of the acquisition, and
originally classified the $95.0 million of intangibles as goodwill
pending an independent valuation. We finalized an independent
valuation of the intangibles in second quarter 2003 and reclassified
$40.8 million from goodwill to WFI other intangibles. Goodwill and
WFI other intangibles are both included in other assets. WFI other
intangibles primarily consisted of broker relationships and non-
compete agreements and had an initial weighted-average amortization
period of 9 years.
8
Changes in goodwill by business segment were as follows:
Consumer
Finance Insurance Total
(dollars in thousands)
Balance December 31, 2002 $145,491 $ 12,104 $157,595
Acquisition of WFI 95,000 - 95,000
Reclassification to WFI
other intangibles (40,850) - (40,850)
Balance September 30, 2003 $199,641 $ 12,104 $211,745
WFI other intangibles of $35.1 million at September 30, 2003 are net
of accumulated amortization of $5.7 million recognized during second
and third quarter 2003.
At January 1, 2003, estimated WFI other intangibles amortization
expense for the next five years was as follows:
WFI Other Intangibles
Amortization Expense
(dollars in thousands)
2003 $7,662
2004 7,212
2005 6,087
2006 3,629
2007 3,629
Note 4. Accounting Change
In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45 (FIN 45), "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". FIN 45 elaborates on the disclosures to be
made by a guarantor in its financial statements about its obligations
under certain guarantees that it has issued. It also clarifies that a
guarantor is required to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing
the guarantee. Certain guarantee contracts are excluded from both the
disclosure and recognition requirements of FIN 45, including, among
others, residual value guarantees under capital lease arrangements and
loan commitments. The disclosure requirements of FIN 45 were
effective as of December 31, 2002. The recognition requirements of
FIN 45 are to be applied prospectively to guarantees issued or
modified after December 31, 2002. The adoption of FIN 45 did not have
a material impact on our consolidated results of operations, financial
position, or liquidity.
9
Note 5. Finance Receivables
Components of net finance receivables by type were as follows:
September 30, 2003
Real Non-real Retail
Estate Estate Sales
Loans Loans Finance Total
(dollars in thousands)
Gross receivables $ 9,992,343 $3,116,939 $1,396,087 $14,505,369
Unearned finance charges
and points and fees (133,124) (376,012) (146,386) (655,522)
Accrued finance charges 77,610 37,169 11,849 126,628
Deferred origination costs 17,078 33,161 - 50,239
Premiums, net of discounts 104,682 6,964 (16) 111,630
Total $10,058,589 $2,818,221 $1,261,534 $14,138,344
December 31, 2002
Real Non-real Retail
Estate Estate Sales
Loans Loans Finance Total
(dollars in thousands)
Gross receivables $ 9,224,803 $3,244,413 $1,507,184 $13,976,400
Unearned finance charges
and points and fees (145,039) (431,812) (166,922) (743,773)
Accrued finance charges 77,852 41,006 12,953 131,811
Deferred origination costs 12,447 35,441 - 47,888
Premiums, net of discounts 143,433 16,291 2,288 162,012
Total $ 9,313,496 $2,905,339 $1,355,503 $13,574,338
Note 6. Allowance for Finance Receivable Losses
Changes in the allowance for finance receivable losses were as
follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in thousands)
Balance at beginning of period $449,963 $440,263 $453,668 $438,860
Provision for finance
receivable losses 80,662 69,482 224,768 210,178
Allowance related to sale of
finance receivables to AGFI
subsidiary for securitization - - (2,705) -
Allowance related to net
acquired receivables - 16,804 - 18,001
Charge-offs (86,508) (78,902) (251,463) (238,921)
Recoveries 9,846 9,420 29,695 28,949
Balance at end of period $453,963 $457,067 $453,963 $457,067
10
Note 7. Derivative Financial Instruments
AGFC uses derivative financial instruments in managing the cost of its
debt and is neither a dealer nor a trader in derivative financial
instruments. AGFC has generally limited its use of derivative
financial instruments to interest rate swap agreements. These
interest rate swap agreements are designated and qualify as cash flow
hedges or fair value hedges.
AGFC uses interest rate swap agreements to limit our exposure to
market interest rate risk in the funding of our operations. Most of
our swaps synthetically convert certain short-term or floating-rate
debt to a long-term fixed-rate. The synthetic long-term fixed rates
achieved through interest rate swap agreements are slightly lower than
could have been achieved by issuing comparable fixed-rate, long-term
debt. Additionally, AGFC has swapped fixed-rate, long-term debt to
floating-rate, long-term debt. As an alternative to funding without
these derivative financial instruments, AGFC's interest rate swap
agreements did not have a material effect on the Company's net income
during the nine months ended September 30, 2003 or 2002.
Note 8. Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss were as
follows:
September 30, December 31,
2003 2002
(dollars in thousands)
Net unrealized losses on interest
rate swaps $(70,086) $(98,904)
Net unrealized gains on investment
securities 40,605 29,966
Total $(29,481) $(68,938)
Note 9. Segment Information
We have two business segments: consumer finance and insurance. Our
segments are defined by the type of financial service product offered.
The consumer finance segment makes home equity loans, originates
secured and unsecured consumer loans, extends lines of credit, and
purchases retail sales contracts from, and provides revolving retail
services for, retail merchants. We also purchase, from a non-
subsidiary affiliate, private label receivables under a participation
agreement and real estate loans under a purchase agreement. To
supplement our lending and retail sales financing activities, we
purchase portfolios of real estate loans, non-real estate loans, and
retail sales finance receivables. We also originate real estate loans
through brokers for sale to third party investors. We offer credit
and non-credit insurance to our consumer finance customers. The
insurance segment writes and assumes credit and non-credit insurance
through products that are offered principally by the consumer finance
segment.
11
The following tables display information about the Company's segments
as well as a reconciliation of total segment pretax income to the
condensed consolidated financial statement amounts.
For the three months ended September 30, 2003:
Consumer Total
Finance Insurance Segments
(dollars in thousands)
Revenues:
External:
Finance charges $ 455,886 $ - $ 455,886
Insurance 248 46,059 46,307
Other 31,855 21,245 53,100
Intercompany 23,393 (18,177) 5,216
Pretax income 131,376 24,608 155,984
For the three months ended September 30, 2002:
Consumer Total
Finance Insurance Segments
(dollars in thousands)
Revenues:
External:
Finance charges $ 435,461 $ - $ 435,461
Insurance 241 47,598 47,839
Other (3,947) 21,019 17,072
Intercompany 19,475 (18,868) 607
Pretax income 113,660 22,831 136,491
For the nine months ended September 30, 2003:
Consumer Total
Finance Insurance Segments
(dollars in thousands)
Revenues:
External:
Finance charges $1,368,660 $ - $1,368,660
Insurance 693 133,994 134,687
Other 82,683 64,171 146,854
Intercompany 67,324 (53,058) 14,266
Pretax income 397,205 66,984 464,189
For the nine months ended September 30, 2002:
Consumer Total
Finance Insurance Segments
(dollars in thousands)
Revenues:
External:
Finance charges $1,305,289 $ - $1,305,289
Insurance 760 140,629 141,389
Other (10,793) 65,976 55,183
Intercompany 57,904 (56,154) 1,750
Pretax income 364,271 65,893 430,164
12
Reconciliations of total segment pretax income to the condensed
consolidated financial statement amounts were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in thousands)
Pretax income:
Segments $155,984 $136,491 $464,189 $430,164
Corporate (10,232) (3,769) (19,562) (48,832)
Adjustments (2,054) (1,862) (11,088) (6,333)
Consolidated pretax
income $143,698 $130,860 $433,539 $374,999
Adjustments for pretax income include realized gains (losses) and
certain other investment revenue, pension expense, interest expense
due to releveraging of debt, and provision for finance receivable
losses due to redistribution of amounts provided for the allowance for
finance receivable losses.
Note 10. Legal Contingencies
AGFC and certain of its subsidiaries are parties to various lawsuits
and proceedings, including certain purported class action claims,
arising in the ordinary course of business. In addition, many of
these proceedings are pending in jurisdictions, such as Mississippi,
that permit damage awards disproportionate to the actual economic
damages alleged to have been incurred. Based upon information
presently available, we believe that the total amounts that will
ultimately be paid arising from these lawsuits and proceedings will
not have a material adverse effect on our consolidated results of
operations or financial position. However, the continued occurrences
of large damage awards in general in the United States, including
large punitive damage awards that bear little or no relation to actual
economic damages incurred by plaintiffs in some jurisdictions, create
the potential for an unpredictable judgment in any given suit.
13
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
REPORT OF MANAGEMENT'S RESPONSIBILITY
The Company's management is responsible for the integrity and fair
presentation of our condensed consolidated financial statements and
all other financial information presented in this report. We prepared
our condensed consolidated financial statements using accounting
principles generally accepted in the United States (GAAP). We made
estimates and assumptions that affect amounts recorded in the
financial statements and disclosures of contingent assets and
liabilities.
The Company's management is responsible for establishing and
maintaining an internal control structure and procedures for financial
reporting. These systems are designed to provide reasonable assurance
that assets are safeguarded from loss or unauthorized use, that
transactions are recorded according to GAAP under management's
direction and that financial records are reliable to prepare financial
statements. We support the internal control structure with careful
selection, training and development of qualified personnel. The
Company's employees are subject to AIG's Code of Conduct designed to
assure that all employees perform their duties with honesty and
integrity. We do not allow loans to executive officers. The systems
include a documented organizational structure and policies and
procedures that we communicate throughout the Company. Our internal
auditors report directly to AIG to strengthen independence. They
continually monitor the operation of our internal controls and report
their findings to the Company's management and AIG's internal audit
department. We take prompt action to correct control deficiencies and
address opportunities for improving the system. The Company's
management assesses the adequacy of our internal control structure
quarterly. Based on these assessments, management has concluded that
the internal control structure and the procedures for financial
reporting have functioned effectively and that the condensed
consolidated financial statements fairly present our consolidated
financial position and the results of our operations for the periods
presented.
14
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q and our other publicly available
documents may include, and the Company's officers and representatives
may from time to time make, statements which may constitute "forward-
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are not historical
facts but instead represent only our belief regarding future events,
many of which are inherently uncertain and outside of our control.
These statements may address, among other things, the Company's
strategy for growth, product development, regulatory approvals, market
position, financial results and reserves. The Company's actual
results and financial condition may differ, possibly materially, from
the anticipated results and financial condition indicated in these
forward-looking statements. The important factors, many of which are
outside of our control, which could cause the Company's actual results
to differ, possibly materially, include, but are not limited to, the
following:
* changes in general economic conditions, including the interest
rate environment in which we conduct business and the
financial markets through which we access capital;
* changes in the competitive environment in which we operate,
including the demand for our products, customer responsiveness
to our distribution channels and the formation of business
combinations among our competitors;
* the effectiveness of our credit risk scoring models in
assessing the risk of customer unwillingness or inability to
repay;
* shifts in collateral values, contractual delinquencies, credit
losses and the levels of unemployment and personal
bankruptcies;
* changes in laws or regulations that affect our ability to
conduct business or the manner in which we conduct business,
such as licensing requirements, pricing limitations or
restrictions on the method of offering products;
* the costs and effects of any litigation or governmental
inquiries or investigations that are determined adversely to
the Company;
* changes in accounting standards or tax policies and practices
and the application of such new policies and practices to the
manner in which we conduct business;
* our ability to integrate the operations of our acquisitions
into our businesses;
* changes in our ability to attract and retain employees or key
executives to support our businesses; and
* natural events and acts of God such as fires or floods
affecting our branches or other operating facilities.
Readers are also directed to other risks and uncertainties discussed
in other documents we file with the Securities and Exchange
Commission. We are under no obligation to (and expressly disclaim any
such obligation to) update or alter any forward-looking statement,
whether written or oral, that may be made from time to time, whether
as a result of new information, future events or otherwise.
15
CRITICAL ACCOUNTING POLICIES
Our Credit Strategy and Policy Committee evaluates our finance
receivable portfolio monthly. The Credit Strategy and Policy
Committee exercises its judgment, based on quantitative analyses and
each committee member's experience in the consumer finance industry,
when determining the amount of the allowance for finance receivable
losses. If its review concludes that an adjustment is necessary, we
charge or credit this adjustment to expense through the provision for
finance receivable losses. We consider this estimate to be a critical
accounting estimate that affects the net income of the Company in
total and the pretax operating income of our consumer finance business
segment. We document the adequacy of the allowance for finance
receivable losses and the analysis of the trends in credit quality
considered by the Credit Strategy and Policy Committee to support its
conclusions.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any material off-balance sheet arrangements as defined
by Securities and Exchange Commission rules.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Our sources of funds include operations, issuances of long-term debt,
short-term borrowings in the commercial paper market, borrowings from
banks under credit facilities, and sales of finance receivables for
securitizations. AGFC has also historically received capital
contributions from its parent to support finance receivable growth and
maintain targeted leverage.
In second quarter 2003, AGFC began issuing long-term debt under a
retail note program. These senior, unsecured notes are sold by
brokers to individual investors for a minimum investment of $1,000 and
increments of $1,000.
Also in second quarter 2003, a consolidated special purpose subsidiary
of AGFI purchased $266.8 million of real estate loans from seven
subsidiaries of AGFC.
16
Principal sources and uses of cash were as follows:
Nine Months Ended
September 30,
2003 2002
(dollars in millions)
Principal sources of cash:
Operations $ 638.9 $ 520.5
Net issuance of debt 591.8 1,030.4
Sale of finance receivables to
AGFI subsidiary for securitization 284.7 -
Capital contribution - 51.7
Total $1,515.4 $1,602.6
Principal uses of cash:
Net originations and purchases
of finance receivables $1,103.8 $1,330.7
Dividends paid 176.1 151.9
Total $1,279.9 $1,482.6
We believe that our overall sources of liquidity will continue to be
sufficient to satisfy our foreseeable operational requirements and
financial obligations. The principal risk factors that could decrease
our sources of liquidity are delinquent payments from our customers
and an inability to access capital markets. The principal factors
that could increase our cash needs are significant increases in net
originations and purchases of finance receivables. We intend to
mitigate liquidity risk factors by continuing to operate the Company
within the following strategies:
* maintain a finance receivable portfolio comprised mostly of
real estate loans, which generally represent a lower risk of
customer non-payment;
* originate and monitor finance receivables with our proprietary
credit risk management system;
* maintain an investment securities portfolio of predominantly
investment grade, liquid securities; and
* maintain a capital structure appropriate to our asset base.
Consistent execution of our business strategies should result in
continued profitability, strong credit ratings, and investor
confidence. These results should allow continued access to capital
markets for issuances of our commercial paper and long-term debt. At
September 30, 2003, we had $2.8 billion of long-term debt securities
registered under the Securities Act of 1933 that had not yet been
issued from an initial $5.75 billion. We also maintain committed bank
credit facilities and the ability to sell a portion of our finance
receivables for securitization to provide additional sources of
liquidity for needs potentially not met through other funding sources.
17
Capital Resources
September 30,
2003 2002
Amount Percent Amount Percent
(dollars in millions)
Long-term debt $ 9,872.8 65% $ 8,185.6 60%
Short-term debt 3,358.0 22 3,727.3 28
Total debt 13,230.8 87 11,912.9 88
Equity 1,949.1 13 1,671.0 12
Total capital $15,179.9 100% $13,583.9 100%
Net finance receivables $14,138.3 $12,885.6
Debt to equity ratio 6.79x 7.13x
Debt to tangible equity ratio 7.49x 7.49x
Reconciliations of equity to tangible equity were as follows:
September 30,
2003 2002
(dollars in millions)
Equity $ 1,949.1 $ 1,671.0
Goodwill (211.7) (157.6)
Accumulated other comprehensive loss 29.5 77.5
Tangible equity $ 1,766.9 $ 1,590.9
Our capital varies primarily with the level of net finance
receivables. The increase in total capital at September 30, 2003 when
compared to September 30, 2002 was greater than our finance receivable
growth for the same period due to capital required to support the
acquisition of WFI and its operations. The capital mix of debt and
equity is based primarily upon maintaining leverage that supports
cost-effective funding.
We issue a combination of fixed-rate debt, principally long-term, and
floating-rate debt, principally short-term. AGFC obtains our fixed-
rate funding through public issuances of long-term debt with
maturities generally ranging from three to ten years. Most floating-
rate funding is through AGFC sales and refinancing of commercial paper
and through AGFC issuance of long-term, floating-rate debt.
Commercial paper, with maturities ranging from 1 to 270 days, is sold
to banks, insurance companies, corporations, and other accredited
investors. At September 30, 2003, short-term debt included $2.8
billion of commercial paper. AGFC also sells extendible commercial
notes with initial maturities of up to 90 days, which may be extended
by AGFC to 390 days. At September 30, 2003, short-term debt included
$560.9 million of extendible commercial notes.
AGFC has paid dividends to (or received capital contributions from)
AGFI to manage our leverage of debt to tangible equity (equity less
goodwill and accumulated other comprehensive income) to a 7.5 to 1
target. Certain AGFC financing agreements effectively limit the
amount of dividends AGFC may pay. These agreements have not prevented
AGFC from managing its capital to targeted leverage.
18
Liquidity Facilities
We maintain credit facilities to support the issuance of commercial
paper and to provide an additional source of funds for operating
requirements. At September 30, 2003, AGFC had committed credit
facilities totaling $3.0 billion, including a facility under which
AGFI is an eligible borrower for up to $300.0 million. The annual
commitment fees for the facilities currently average 0.07% and are
based upon AGFC's long-term credit ratings.
At September 30, 2003, AGFC and certain of its subsidiaries also had
uncommitted credit facilities (including shared uncommitted facilities
with AGFI) totaling $50.0 million which could be increased depending
upon lender ability to participate its loans under the facilities.
Available borrowings under all facilities are reduced by any
outstanding borrowings. There were no amounts outstanding at
September 30, 2003 or September 30, 2002. AGFC guarantees its
subsidiary borrowings under uncommitted credit facilities. AGFC does
not guarantee any borrowings of AGFI.
ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION
Net Income
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Net income $ 89.5 $ 84.3 $275.8 $241.5
Amount change $ 5.2 $ 44.2 $ 34.3 $ 61.1
Percent change 6% 110% 14% 34%
Return on average
assets (annualized) 2.25% 2.44% 2.33% 2.38%
Return on average
equity (annualized) 18.41% 21.23% 19.23% 20.44%
Ratio of earnings to
fixed charges 2.03x 1.89x
See Note 9. of the Notes to Condensed Consolidated Financial
Statements for information on the results of the Company's business
segments.
19
Factors that specifically affected the Company's operating results
were as follows:
Finance Charges
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Finance charges $ 428.0 $ 417.5 $ 1,282.1 $ 1,244.1
Amount change $ 10.5 $ (3.5) $ 38.0 $ (4.8)
Percent change 3% (1)% 3% -%
Average net receivables $13,758.2 $12,051.2 $13,589.9 $11,798.2
Yield 12.36% 13.77% 12.61% 14.09%
Finance charges changed due to the following:
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Increase in average
net receivables $ 49.9 $ 19.2 $ 163.7 $ 28.7
Decrease in yield (39.4) (22.7) (125.7) (33.5)
Total $ 10.5 $ (3.5) $ 38.0 $ (4.8)
Average net receivables by type and growth in average net receivables
when compared to the same periods for the previous year were as
follows:
Three Months Ended September 30,
2003 2002
Amount Growth Amount Growth
(dollars in millions)
Real estate loans $ 9,674.4 $1,717.9 $ 7,956.5 $ 805.5
Non-real estate loans 2,821.4 32.3 2,789.1 (108.1)
Retail sales finance 1,262.4 (43.2) 1,305.6 (78.2)
Total $13,758.2 $1,707.0 $12,051.2 $ 619.2
Percent change 14% 5%
Nine Months Ended September 30,
2003 2002
Amount Growth Amount Growth
(dollars in millions)
Real estate loans $ 9,478.6 $1,799.6 $ 7,679.0 $ 537.2
Non-real estate loans 2,827.8 43.9 2,783.9 (122.7)
Retail sales finance 1,283.5 (51.8) 1,335.3 (41.7)
Total $13,589.9 $1,791.7 $11,798.2 $ 372.8
Percent change 15% 3%
20
In 2002, the low interest rate environment caused significant
increases in both originations and liquidations of our real estate
loans. However, we took advantage of the record real estate loan
refinancings that occurred in the market in general and acquired
$843.5 million of real estate loan portfolios from third party
originators during the fourth quarter of 2002.
Yield by type and changes in yield in basis points (bp) when compared
to the same periods for the previous year were as follows:
Three Months Ended September 30,
2003 2002
Yield Change Yield Change
Real estate loans 9.51% (147) bp 10.98% (87) bp
Non-real estate loans 21.23 (14) 21.37 (28)
Retail sales finance 14.37 (16) 14.53 14
Total 12.36 (141) 13.77 (87)
Nine Months Ended September 30,
2003 2002
Yield Change Yield Change
Real estate loans 9.73% (150) bp 11.23% (64) bp
Non-real estate loans 21.35 (33) 21.68 11
Retail sales finance 14.61 (13) 14.74 65
Total 12.61 (148) 14.09 (51)
Yield decreased for the three and nine months ended September 30, 2003
when compared to the same periods in 2002 primarily reflecting a lower
real estate loan yield resulting from the low interest rate
environment.
Insurance Revenues
Insurance revenues were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Earned premiums $ 45.3 $ 47.2 $132.5 $139.8
Commissions 1.0 0.6 2.2 1.6
Total $ 46.3 $ 47.8 $134.7 $141.4
Amount change $(1.5) $(0.5) $(6.7) $(5.2)
Percent change (3)% (1)% (5)% (4)%
Earned premiums decreased for the three and nine months ended
September 30, 2003 when compared to the same periods in 2002 due to
the release of premiums resulting from the termination of a
reinsurance agreement and lower premium volume. Premium volume
decreased due to customers purchasing fewer non-credit insurance
products.
21
Other Revenues
Other revenues were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Net gain on sale of real
estate loans held for
sale $ 21.4 $ - $ 74.3 $ -
Investment revenue 19.9 20.2 60.8 64.3
Net gain on sale of
finance receivables to
AGFI subsidiary for
securitization - - 20.7 -
Service fee income from
a non-subsidiary
affiliate 12.4 0.7 13.5 2.5
Net interest income on
real estate loans held
for sale 4.4 - 13.6 -
Interest revenue - notes
receivable from AGFI 3.6 3.9 10.3 12.1
Writedowns on real estate
owned (1.9) (2.2) (5.8) (6.5)
Net gains on real estate
owned sales 0.6 0.9 1.8 2.4
Other 3.5 2.0 8.4 8.8
Total $ 63.9 $ 25.5 $ 197.6 $ 83.6
Amount change $ 38.4 $ (1.4) $ 114.0 $ 0.8
Percent change 151% (5)% 136% 1%
Average invested assets $1,306.2 $1,257.3 $1,298.6 $1,246.4
Adjusted portfolio yield 6.36% 6.40% 6.34% 6.81%
Net realized losses
on investments $ (2.0) $ (0.9) $ (4.3) $ (2.6)
Other revenues increased for the three and nine months ended September
30, 2003 when compared to the same periods in 2002 primarily due to
the acquisition of WFI in first quarter 2003 which resulted in net
gain on sale of real estate loans held for sale, higher service fee
income from a non-subsidiary affiliate, and net interest income on
real estate loans held for sale in 2003. The increase in other
revenues for the nine months ended September 30, 2003 when compared to
the same period in 2002 also reflected net gain on sale of finance
receivables to a subsidiary of AGFI for securitization.
Effective July 1, 2003, WFI and a non-subsidiary affiliate entered
into an agreement whereby, for a fee, WFI provides marketing, certain
origination processing services, loan servicing, and related services
for the affiliate's origination and sale of non-conforming residential
real estate loans. These WFI service activities have supplanted much
of WFI's origination and sales activity and are anticipated to do so
going forward. As a result, net gain on sale of real estate loans
held for sale and net interest income on real estate loans held for
sale were lower for the three months ended September 30, 2003 when
compared to the three months ended June 30, 2003. However, service
22
fee income from the non-subsidiary affiliate was higher for the three
months ended September 30, 2003 when compared to the three months
ended June 30, 2003.
Interest Expense
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Interest expense $ 130.0 $ 134.5 $ 406.5 $ 407.6
Amount change $ (4.5) $ (19.1) $ (1.1) $ (70.2)
Percent change (3)% (12)% -% (15)%
Average borrowings $12,877.5 $11,058.6 $12,799.0 $10,856.8
Borrowing cost 4.01% 4.86% 4.24% 5.01%
Interest expense changed due to the following:
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Decrease in borrowing
cost $(26.6) $(29.2) $(74.1) $(91.3)
Increase in average
borrowings 22.1 10.1 73.0 21.1
Total $ (4.5) $(19.1) $ (1.1) $(70.2)
Average borrowings by type and changes in average borrowings when
compared to the same periods for the previous year were as follows:
Three Months Ended September 30,
2003 2002
Amount Change Amount Change
(dollars in millions)
Long-term debt $ 9,430.1 $2,323.4 $ 7,106.7 $633.2
Short-term debt 3,447.4 (504.5) 3,951.9 34.9
Total $12,877.5 $1,818.9 $11,058.6 $668.1
Percent change 16% 6%
Nine Months Ended September 30,
2003 2002
Amount Change Amount Change
(dollars in millions)
Long-term debt $ 9,314.3 $2,465.8 $ 6,848.5 $ 927.4
Short-term debt 3,484.7 (523.6) 4,008.3 (469.2)
Total $12,799.0 $1,942.2 $10,856.8 $ 458.2
Percent change 18% 4%
23
AGFC issued $3.2 billion of long-term debt during the last twelve
months. The proceeds of these long-term debt issuances were used to
support finance receivable growth and to refinance maturing debt.
Borrowing cost by type and changes in borrowing cost in basis points
when compared to the same periods for the previous year were as
follows:
Three Months Ended September 30,
2003 2002
Rate Change Rate Change
Long-term debt 4.51% (136) bp 5.87% (75) bp
Short-term debt 2.69 (36) 3.05 (168)
Total 4.01 (85) 4.86 (105)
Nine Months Ended September 30,
2003 2002
Rate Change Rate Change
Long-term debt 4.78% (132) bp 6.10% (59) bp
Short-term debt 2.79 (35) 3.14 (226)
Total 4.24 (77) 5.01 (112)
Federal Reserve actions lowered the federal funds rate 50 basis points
in November 2002 and 25 basis points in June 2003 which resulted in
lower short-term debt rates and lower rates on floating-rate long-term
debt for 2003. Federal Reserve actions from 2001 through June 2003
created the lowest interest rate environment in 45 years and resulted
in lower long-term debt rates as new issuances were at substantially
lower rates than long-term debt being refinanced.
Operating Expenses
Operating expenses were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Salaries and benefits $101.6 $ 77.4 $299.2 $233.6
Other 64.8 59.4 197.5 181.8
Total $166.4 $136.8 $496.7 $415.4
Amount change $ 29.6 $ 0.6 $ 81.3 $11.2
Percent change 22% -% 20% 3%
Operating expenses
(annualized) as a
percentage of average
net receivables 4.84% 4.54% 4.87% 4.69%
24
Salaries and benefits increased for the three and nine months ended
September 30, 2003 when compared to the same periods in 2002 primarily
due to the addition of approximately 500 WFI employees in first
quarter 2003, competitive compensation, and rising benefit costs. The
increase in operating expenses as a percentage of average net
receivables for the three and nine months ended September 30, 2003
when compared to the same periods in 2002 reflected increased
operating expenses due to the acquisition of WFI. In addition, WFI
originations are classified as real estate loans held for sale, which
are included in other assets and not in net finance receivables.
Provision for Finance Receivable Losses
At or for the
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Provision for finance
receivable losses $80.7 $69.5 $224.8 $210.2
Amount change $11.2 $ 4.6 $ 14.6 $ 19.3
Percent change 16% 7% 7% 10%
Net charge-offs $76.7 $69.5 $221.8 $210.0
Charge-off ratio 2.25% 2.34% 2.18% 2.39%
Charge-off coverage 1.48x 1.64x 1.54x 1.63x
60 day+ delinquency $536.3 $494.6
Delinquency ratio 3.70% 3.72%
Allowance for finance
receivable losses $454.0 $457.1
Allowance ratio 3.21% 3.55%
Net charge-offs by type and changes in net charge-offs when compared
to the same periods for the previous year were as follows:
Three Months Ended September 30,
2003 2002
Amount Change Amount Change
(dollars in millions)
Real estate loans $16.8 $ 4.8 $12.0 $(0.3)
Non-real estate loans 49.7 3.3 46.4 3.4
Retail sales finance 10.2 (0.9) 11.1 1.5
Total $76.7 $ 7.2 $69.5 $ 4.6
Nine Months Ended September 30,
2003 2002
Amount Change Amount Change
(dollars in millions)
Real estate loans $ 43.7 $ 7.3 $ 36.4 $ 1.0
Non-real estate loans 145.1 4.2 140.9 18.9
Retail sales finance 33.0 0.3 32.7 5.2
Total $221.8 $11.8 $210.0 $ 25.1
25
Charge-off ratios by type and changes in charge-off ratios in basis
points when compared to the same periods for the previous year were as
follows:
Three Months Ended September 30,
2003 2002
Ratio Change Ratio Change
Real estate loans 0.70% 8 bp 0.62% (6) bp
Non-real estate loans 7.04 36 6.68 74
Retail sales finance 3.23 (17) 3.40 63
Total 2.25 (9) 2.34 8
Nine Months Ended September 30,
2003 2002
Ratio Change Ratio Change
Real estate loans 0.62% (2) bp 0.64% (2) bp
Non-real estate loans 6.83 9 6.74 115
Retail sales finance 3.41 16 3.25 59
Total 2.18 (21) 2.39 23
The decrease in total charge-off ratio for the three and nine months
ended September 30, 2003 when compared to the same periods in 2002
reflected a higher proportion of average net receivables that are real
estate loans.
Delinquency by type and changes in delinquency when compared to the
same period for the previous year were as follows:
September 30,
2003 2002
Amount Change Amount Change
(dollars in millions)
Real estate loans $327.2 $44.4 $282.8 $49.8
Non-real estate loans 169.3 (2.5) 171.8 16.8
Retail sales finance 39.8 (0.2) 40.0 3.4
Total $536.3 $41.7 $494.6 $70.0
Delinquency ratios by type and changes in delinquency ratios in basis
points when compared to the same period for the previous year were as
follows:
September 30,
2003 2002
Ratio Change Ratio Change
Real estate loans 3.27% - bp 3.27% (1) bp
Non-real estate loans 5.43 - 5.43 62
Retail sales finance 2.86 18 2.68 36
Total 3.70 (2) 3.72 15
26
The delinquency ratio at September 30, 2003 decreased when compared to
September 30, 2002 reflecting a higher proportion of net finance
receivables that are real estate loans, partially offset by the sale
of real estate loans to a subsidiary of AGFI for securitization in
second quarter 2003.
Our Credit Strategy and Policy Committee evaluates our finance
receivable portfolio monthly to determine the appropriate level of the
allowance for finance receivable losses. We believe the amount of the
allowance for finance receivable losses is the most significant
estimate we make. In our opinion, the allowance is adequate to absorb
losses inherent in our existing portfolio. The decrease in the
allowance for finance receivable losses at September 30, 2003 when
compared to September 30, 2002 was due to the net result of the
following:
* decrease to the allowance for finance receivable losses of
$9.4 million during fourth quarter 2002 resulting from the
final determination of allowance for finance receivable losses
for a third quarter 2002 purchase business combination;
* net increases to the allowance for finance receivable losses
through the provision for finance receivable losses during the
period totaling $9.0 million (these increases were in response
to our increased delinquency and net charge-offs and the
levels of both unemployment and personal bankruptcies in the
United States); and
* decrease to the allowance for finance receivable losses during
second quarter 2003 of $2.7 million resulting from the sale of
finance receivables to a subsidiary of AGFI for
securitization.
The allowance as a percentage of net finance receivables declined in
2003 reflecting purchases of higher quality real estate loans during
the last twelve months.
Charge-off coverage, which compares the allowance for finance
receivable losses to net charge-offs (annualized), decreased for the
three and nine months ended September 30, 2003 when compared to the
same periods in 2002 reflecting higher net charge-offs.
Insurance Losses and Loss Adjustment Expenses
Insurance losses and loss adjustment expenses were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Claims incurred $18.2 $19.4 $60.3 $62.7
Change in benefit
reserves (0.8) (0.2) (7.3) (1.7)
Total $17.4 $19.2 $53.0 $61.0
Amount change $(1.8) $(2.3) $(8.0) $(4.7)
Percent change (9)% (11)% (13)% (7)%
27
The decline in insurance losses and loss adjustment expenses for the
three and nine months ended September 30, 2003 when compared to the
same periods in 2002 reflected the release of benefit reserves
resulting from the termination of a reinsurance agreement, lower
premium volume of our non-credit life products, and decreases in
claims paid.
Provision for Income Taxes
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in millions)
Provision for income
taxes $ 54.2 $ 46.6 $157.7 $133.5
Amount change $ 7.6 $ 24.6 $ 24.2 $ 32.3
Percent change 16% 112% 18% 32%
Pretax income $143.7 $130.9 $433.5 $375.0
Effective income
tax rate 37.69% 35.59% 36.39% 35.59%
Provision for income taxes increased for the three and nine months
ended September 30, 2003 when compared to the same periods in 2002 due
to higher taxable income and higher effective income tax rate.
Asset/Liability Management
We manage anticipated cash flows of our assets and liabilities,
principally our finance receivables and debt, in an effort to reduce
the risk associated with unfavorable changes in interest rates not met
by favorable changes in finance charge yields of our finance
receivables. We fund finance receivables with a combination of fixed-
rate and floating-rate debt and equity. Management determines the mix
of fixed-rate and floating-rate debt based, in part, on the nature of
the finance receivables being supported.
We limit our exposure to market interest rate increases by fixing
interest rates that we pay for term periods. The primary means by
which we accomplish this is by issuing fixed-rate debt. To supplement
fixed-rate debt issuances, AGFC also alters the nature of certain
floating-rate funding by using interest rate swap agreements to
synthetically create fixed-rate, long-term debt, thereby limiting our
exposure to market interest rate increases. Additionally, AGFC has
swapped fixed-rate, long-term debt to floating-rate, long-term debt.
Including the effect of interest rate swap agreements that effectively
fix floating-rate debt or float fixed-rate debt, our floating-rate
debt represented 41% of our average borrowings for the three months
and nine months ended September 30, 2003 compared to 35% for the three
months ended September 30, 2002 and 33% for the nine months ended
September 30, 2002.
28
Item 4. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures
The conclusions of our principal executive officer and principal
financial officer about the effectiveness of the Company's
disclosure controls and procedures based on their evaluation of
these controls and procedures as of September 30, 2003 are as
follows:
The Company's disclosure controls and procedures are designed to
ensure that information required to be disclosed by the Company
is recorded, processed, summarized and reported within required
timeframes. The Company's disclosure controls and procedures
include controls and procedures designed to ensure that
information required to be disclosed is accumulated and
communicated to the Company's management, including its principal
executive officer and principal financial officer, as appropriate
to allow timely decisions regarding required disclosure.
The Company's management, including its principal executive
officer and principal financial officer, assesses the adequacy of
our disclosure controls and procedures as of the end of each
quarter. Based on these assessments, the Company's principal
executive officer and principal financial officer have concluded
that the disclosure controls and procedures have functioned
effectively and that the condensed consolidated financial
statements fairly present our consolidated financial position and
the results of our operations for the periods presented.
(b) Changes in internal control over financial reporting
There was no change in the Company's internal control over
financial reporting, that occurred during the three months ended
September 30, 2003, that has materially affected, or is
reasonably likely to materially affect, the Company's internal
control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
See Note 10. of the Notes to Condensed Consolidated Financial
Statements in Part I of this Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibits are listed in the Exhibit Index beginning on page 30
herein.
(b) Reports on Form 8-K.
No Current Reports on Form 8-K were filed during the third
quarter of 2003.
29
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.
AMERICAN GENERAL FINANCE CORPORATION
(Registrant)
Date: October 28, 2003 By /s/ Donald R. Breivogel, Jr.
Donald R. Breivogel, Jr.
Senior Vice President and Chief
Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
30
Exhibit Index
Exhibit
(12) Computation of Ratio of Earnings to Fixed Charges
(31.1) Rule 13a-14(a)/15d-14(a) Certifications
(31.2) Rule 13a-14(a)/15d-14(a) Certifications
(32) Section 1350 Certifications