SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended 0-23961
December 31, 1998 Commission file number
- --------------------
METRIS MASTER TRUST
Metris Receivables, Inc., as Transferor
(Exact name of registrant as specified in its charter)
Delaware 41-1810301
(State of Incorporation) (I.R.S. Employer Identification No.)
600 South Highway 169, Suite 300, St. Louis Park, Minnesota 55426
(Address of principal executive offices)
(612) 525-5077
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
6.45% Asset Backed Certificates, Series 1996-1, Class A
6.80% Asset Backed Certificates, Series 1996-1, Class B
6.87% Asset Backed Certificates, Series 1997-1, Class A
7.11% Asset Backed Certificates, Series 1997-1, Class B
Floating Rate Asset Backed Certificates, Series 1997-2, Class A
Floating Rate Asset Backed Certificates, Series 1997-2, Class B
Securities not registered under the Act:
Floating Rate Asset Backed Securities, Series 1998-2, Class A
Floating Rate Asset Backed Securities, Series 1998-3, Class A
The Registrant has no voting stock or class of common stock outstanding as of
the date of this 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 and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
The aggregate principal amount of Certificates held by non affiliates as of
December 31, 1998 was approximately $2,746,366,667.
TABLE OF CONTENTS
PART I
Page
Item 1. Business...................................................3
Item 2. Properties.................................................3
Item 3. Legal Proceedings..........................................3
Item 4. Submission of Matters to a Vote of Security Holders........4
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters........................................4
Item 6. Selected Financial Data....................................4
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................4
Item 8. Financial Statements and Supplementary Data................4
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure........................4
PART III
Item 10. Directors and Executive Officers of the Registrant.........4
Item 11. Executive Compensation.....................................4
Item 12. Security Ownership of Certain Beneficial
Owners and Management......................................5
Item 13. Certain Relationships and Related Transactions.............5
PART IV
Item 14. Exhibits, Financial Statement Schedules....................5
and Reports on Form 8-K
Signatures............................................................6
<PAGE>
PART I
The Metris Master Trust (the "Trust" or the "Registrant") was
originated by Metris Receivables, Inc. f/k/a Fingerhut Financial
Services Receivables Inc. (the "Transferor"), as Transferor under the
Pooling and Servicing Agreement dated as of May 26, 1995, amended and
restated July 30, 1998, as amended (the P&S Agreement") by and among
the Transferor, Direct Merchants Credit Card Bank, National
Association, as servicer (the "Servicer") and The Bank of New York
(Delaware), as trustee. The P&S is supplemented by various series
supplements providing for the issuance of certificates in varying
series. The Series 1996-1 Supplement dated as of April 23, 1996 to the
P&S Agreement provided for the issuance of the Asset Backed
Certificates, Series 1996-1 (the "Series 1996-1 Certificates"). The
Series 1997-1 Supplement dated as of May 8, 1997 to the P&S Agreement
provided for the issuance of another series of Asset Backed
Certificates, (the "Series 1997-1 Certificates"). The Series 1997-2
Supplement dated as of November 20, 1997 to the P&S Agreement provided
for another series of Asset Backed Certificates (the "Series 1997-2
Certificates"). The Series 1998-2 Supplement dated as of December 4,
1998 to the P&S Agreement provided for another series of Asset Backed
Securities (the "Series 1998-2 Securities"). The Series 1998-3
Supplement dated as of December 4, 1998 to the P&S Agreement provided
for another series of Asset Backed Securities (the "Series 1998-3
Securities"). Hereafter, Series 1996-1 Certificates, Series 1997-1
Certificates, Series 1997-2 Certificates, Series 1998-2 Securities, and
Series 1998-3 Securities are collectively referred to as the
"Securities." The Securities represent interests in the Trust only and
do not represent interests in or obligations of Metris Receivables
Inc., Direct Merchants Credit Card Bank, National Association, Metris
Companies Inc. or any affiliate thereof. There are four classes of
Securities in Series 1996-1, 1997-1 & 1997-2. Class A and Class B are
registered pursuant to Section 12(g), Class C is privately held and the
Transferor holds Class D. There are two classes of Securities in Series
1998-2 & 1998-3. Class A is to be registered pursuant to Section 12(g)
within 120 days after December 31, 1998, and the Transferor holds Class
B. The Transferor has retained the transferor's interest in the Trust.
The Registrant has prepared this Form 10-K in reliance upon
various no-action letters issued by the Securities and Exchange
Commission (the "Commission") to other trusts which are substantially
similar to the Trust. Items designated herein as "Not Applicable" have
been omitted as a result of this reliance.
Item 1. Business
Not Applicable
Item 2. Properties
The Trust's sole asset is a pool of credit card receivables
originated or acquired by Direct Merchants Credit Card Bank, National
Association.
Item 3. Legal Proceedings
Metris Receivables, Inc. is not aware of any material pending
litigation involving the Registrant, the Trustee, the
Seller, or the Servicer with respect to the Securities or the
Registrant's Property.
Item 4. Submission of Matters to a Vote of Security Holders
No vote or consent of holders of any Class A or Class B
Securities was solicited for any purpose during the year ended December
31, 1998.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholders
Matters
Each Class of the Securities representing investors' interests
in the Trust is represented by a single Security of such Class
registered in the name of Cede & Co. ("Cede"), the nominee of The
Depository Trust Company. To the best knowledge of the Registrant,
there is no established public trading market for the Securities.
Item 6. Selected Financial Data
.........Not applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
.........Not applicable.
Item 8. Financial Statements and Supplementary Data
Not applicable.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
.........None.
PART III
Item 10. Directors and Executive Officers of the Registrant
.........Not applicable.
Item 11. Executive Compensation
.........Not applicable.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The Securities representing investors' interests in the Trust
are represented by a single Security registered in the name of Cede,
the nominee of DTC, and an investor holding an interest in the Trust is
not entitled to receive a Security representing such interest except in
certain limited circumstances. Accordingly, Cede is the sole holder of
record of Securities, which it holds on behalf of brokers, dealers,
banks and other direct participants in the DTC system. Such direct
participants may hold Securities for their own accounts or for the
accounts of their customers. The name and address of Cede is :
Cede & Co.
c/o The Depository Trust Company
Seven Hanover Square
New York, New York 10004
The Seller is not aware of any Schedules 13D or 13G filed with
the Commission in respect of the Securities.
Item 13. Certain Relationships and Related Transactions
.........Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements: Not Applicable
2. Financial Statement Schedules: Not Applicable
3. See Exhibit 99 below
(b) The following reports on Form 8-K were filed during the fourth
fiscal quarter of 1998.
Date of Report Items Covered
October 20, 1998 Securityholders' Statement with
November 20, 1998 respect to distributions made
December 21, 1998 during such months
(c) Exhibit 99
99.1 Annual Servicer's Certificate dated March 12, 1999.
99.2 Supplementary Metris Master Trust
99.3 Independent Public Accountants Review of Agreed Upon
Procedures
(d) Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on this 12th day of
March, 1999.
METRIS MASTER TRUST
METRIS RECEIVABLES, INC.
(Registrant)
By: /s/ Paul T. Runice
------------------------------------------
Paul T. Runice
Senior Vice President and Treasurer
Metris Receivables, Inc.,
as Transferor
<PAGE>
INDEX TO EXHIBITS
Exhibit Description of
Number Exhibit
99.1 Annual Servicer's Certificate
99.2 Supplementary Master Trust Data
99.3 Independent Public Accountant's Review of Agreed
Upon Procedures
Exhibit 99.1
ANNUAL SERVICER'S CERTIFICATE
METRIS RECEIVABLES, INC.
METRIS MASTER TRUST
The undersigned, a duly authorized representative of Direct Merchants
Credit Card Bank, National Association, as Servicer pursuant to the Pooling and
Servicing Agreement dated as of May 26, 1995, amended and restated July 30,
1998, as amended (the "Pooling and Servicing Agreement"), by and among Metris
Receivables, Inc. (the "Transferor"), Direct Merchants Credit Card Bank,
National Association, as Servicer and The Bank of New York (Delaware), as
trustee (the "Trustee") does hereby certify that:
1. Direct Merchants Credit Card Bank, National Association, is Servicer
under the Pooling and Servicing Agreement.
2. The undersigned is duly authorized pursuant to the Pooling and
Servicing Agreement to execute and deliver this Certificate to the Trustee.
3. This Certificate is delivered pursuant to Section 3.5 of the Pooling
and Servicing Agreement.
4. A review of the activities of the Servicer during the period from
January 1, 1998 until December 31, 1998 was conducted under my supervision.
5. Based on such review, the Servicer has, to the best of my knowledge,
fully performed all of its obligations under the Pooling and Servicing Agreement
throughout such period and no default in the performance of such obligations has
occurred or is continuing except as set forth in paragraph 6 below.
6. The following is a description of each default in the performance of
the Servicer's obligations under the provisions of the Pooling and Servicing
Agreement, including any Supplement, known to me to have been made during such
period which sets forth in detail (i) the nature of each such default, (ii) the
action taken by the Servicer, if any, to remedy each such default and (iii) the
current status of each such default:
None.
IN WITNESS WHEREOF, the undersigned has duly executed this certificate
on March 12, 1999.
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION
/s/ Jean Benson
Name: Jean Benson
Title: Chief Financial Officer
Exhibit 99.2
SUPPLEMENTARY METRIS MASTER TRUST DATA
SERIES 1997-1
1. The total amount distributed during 1998 stated on the basis of an
original principal amount of $1,000 per Certificate:
Class A $394.2500000
Class B $67.9999995
Class C $62.8613004
2. The amount of such distribution allocable to Certificate Principal
stated on the basis of an original principal amount of $1,000 per
Certificate:
Class A $333.3333333
Class B $0
Class C $0
3. The amount of such distribution allocable to Certificate Interest
stated on the basis of an original principal amount of $1,000 per
Certificate:
Class A $60.9166667
Class B $67.9999995
Class C $62.8613004
4. The amount of Principal Collections received in the Collection Account
during the period from January 1, 1998 to December 31, 1998 and
allocated in respect of the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates,
respectively:
Class A $283,859,876.40
Class B $47,949,303.45
Class C $27,399,602.00
Class D $24,323,272.33
--------------
$383,532,054.18
5. The amount of Finance Charge Collections processed during the period
from January 1, 1998 to December 31, 1998 and allocated in respect of
the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, respectively:
Class A $125,396,673.79
Class B $22,082,261.54
Class C $12,618,435.10
Class D $11,199,742.26
--------------
$171,297,112.69
6. The aggregate amount of the:
Principal Receivables $3,945,002,736.77
Invested Amount $561,866,666.67
Class A Invested Amount $379,866,666.67
Class B Invested Amount $87,500,000.00
Class C Invested Amount $50,000,000.00
Class D Invested Amount $44,500,000.00
Floating Allocation Percentage 14.2424912%
Class A Floating Allocation Percentage 9.6290596%
Class B Floating Allocation Percentage 2.2179959%
Class C Floating Allocation Percentage 1.2674262%
Class D Floating Allocation Percentage 1.1280094%
each as of the end of the day on December 31, 1998.
7. The aggregate outstanding balance of Receivables which are:
Current $3,514,458,422.82
30 Days to 59 Days $294,361,012.24
60 Days to 89 Days $99,840,093.60
90 Days and Over $217,319,707.94
as of the end of the day on December 31, 1998.
8. The aggregate Investor Default Amount for the
period from January 1, 1998 to December 31, 1998. $80,107,797.11
9. The aggregate amount of Class A Investor Charge-offs, Class B Investor
Charge-Offs, Class C Investor Charge-offs and Class D Investor
Charge-offs for the period from January 1, 1998 to December 31, 1998.
Class A $0
Class B $0
Class C $0
Class D $0
10. The amount of the Servicing Fee for the period
from January 1, 1998 to December 31, 1998 $13,591,276.72
11. The Class A Pool Factor, the Class B Pool Factor and the Class C Pool Factor
as of December 31, 1998.
Class A Pool Factor 0.6666667
Class B Pool Factor 1.0000000
Class C Pool Factor 1.0000000
12. The amount of Reallocated Class B Principal Collections, Reallocated
Class C Principal Collections and Reallocated Class D Principal
Collections for the period from January 1, 1998 to December 31, 1998.
Class B 0
Class C 0
Class D 0
13. The aggregate amount of funds in the Excess Funding
Account and the Pre-Funding Account at December 31,1998. None
14. Whether a Class C Trigger Event has occurred and if so the Specified Class C
Reserve Amount at December 31, 1998.
Reserve Amount $35,000,000.00
Reserve Account Balance $20,959,126.36
<PAGE>
SUPPLEMENTARY METRIS MASTER TRUST DATA
SERIES 1997-1
1. The total amount distributed during 1998 stated on the basis of an
original principal amount of $1,000 per Certificate:
Class A $68.7000000
Class B $71.1000000
Class C $64.8890779
2. The amount of such distribution allocable to Certificate Principal
stated on the basis of an original principal amount of $1,000 per
Certificate:
Class A $0
Class B $0
Class C $0
3. The amount of such distribution allocable to Certificate Interest
stated on the basis of an original principal amount of $1,000 per
Certificate:
Class A $68.7000000
Class B $71.1000000
Class C $64.8890779
4. The amount of Principal Collections received in the Collection Account
during the period from January 1, 1998 to December 31, 1998 and
allocated in respect of the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates,
respectively:
Class A $337,700,094.27
Class B $58,224,154.21
Class C $39,592,424.84
Class D $30,147,878.14
--------------
$465,664,551.46
5. The amount of Finance Charge Collections processed during the period
from January 1, 1998 to December 31, 1998 and allocated in respect of
the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, respectively:
Class A $155,522,213.57
Class B $26,814,174.78
Class C $18,233,638.82
Class D $13,880,399.39
--------------
$214,450,426.56
6. The aggregate amount of the:
Principal Receivables $3,945,002,736.77
Invested Amount $850,000,000.00
Class A Invested Amount $616,250,000.00
Class B Invested Amount $106,250,000.00
Class C Invested Amount $72,250,000.00
Class D Invested Amount $55,250,000.00
Floating Allocation Percentage 21.5462461%
Class A Floating Allocation Percentage 15.6210285%
Class B Floating Allocation Percentage 2.6932808%
Class C Floating Allocation Percentage 1.8314309%
Class D Floating Allocation Percentage 1.4005060%
each as of the end of the day on December 31,1998.
7. The aggregate outstanding balance of Receivables which are:
Current $3,514,458,422.82
30 Days to 59 Days $294,361,012.24
60 Days to 89 Days $99,840,093.60
90 Days and Over $217,319,707.94
as of the end of the day on December 31, 1998.
8. The aggregate Investor Default Amount for the
period from January 1,1998 to December 31,
1998 $100,455,000.97
9. The aggregate amount of Class A Investor Charge-offs, Class B Investor
Charge-offs, Class C Investor Charge-offs and Class D Investor
Charge-offs for the period from January 1, 1998 to December 31, 1998.
Class A $0
Class B $0
Class C $0
Class D $0
10. The amount of Servicing Fee for the period from
January 1, 1998 to December 31, 1998 $17,000,000.00
11. The Class A Pool Factor, the Class B Pool Factor and the Class C Pool Factor
as of December 31, 1998:
Class A Pool Factor 1.0000000
Class B Pool Factor 1.0000000
Class C Pool Factor 1.0000000
12. The amount of Reallocated Class B Principal Collections, Reallocated
Class C Principal Collections and Reallocated Class D Principal
Collections for the period from January 1, 1998 to December 31,1998.
Class B 0
Class C 0
Class D 0
13. The aggregate amount of funds in the Excess Funding Account and the
Pre-Funding Account at
December 31, 1998. None
14. Whether a Class C Trigger Event has occurred and if so the Specified Class C
Reserve Amount at December 31, 1998.
Reserve Amount $42,500,000.00
Reserve Account Balance $24,793,348.24
<PAGE>
SUPPLEMENTARY METRIS MASTER TRUST DATA
SERIES 1997-2
1. The total amount distributed during 1998 stated on the basis of an
original principal amount of $1,000 per Certificate:
Class A $58.2988000
Class B $60.6307444
Class C $66.9168556
2. The amount of such distribution allocable to Certificate Principal
stated on the basis of an original amount of $1,000 per Certificate:
Class A $0
Class B $0
Class C $0
3. The amount of such distribution allocable to Certificate Interest
stated on the basis of an original principal amount of $1,000 per
Certificate:
Class A $58.2988000
Class B $60.6307444
Class C $66.9168556
4. The amount of Principal Collections received in the Collection Account
during the period from January 1, 1998 to December 31, 1998 and
allocated in respect of the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates,
respectively:
Class A $249,336,377.92
Class B $55,621,191.99
Class C $53,703,219.87
Class D $24,818,340.49
--------------
$383,479,130.27
5. The amount of Finance Charge Collections processed during the period
from January 1, 1998 to December 31, 1998 and allocated in respect of
the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, respectively:
Class A $114,827,760.05
Class B $25,615,423.44
Class C $24,732,132.93
Class D $11,426,399.17
--------------
$176,601,715.59
6. The aggregate amount of the:
Principal Receivables $3,945,002,736.77
Invested Amount $700,000,000.00
Class A Invested Amount $455,000,000.00
Class B Invested Amount $101,500,000.00
Class C Invested Amount $98,000,000.00
Class D Invested Amount $45,500,000.00
Floating Allocation Percentage 17.7439674%
Class A Floating Allocation Percentage 11.5335788%
Class B Floating Allocation Percentage 2.5728753%
Class C Floating Allocation Percentage 2.4841554%
Class D Floating Allocation Percentage 1.1533579%
each as of the end of the day on December 31, 1998.
7. The aggregate outstanding balance of Receivables which are:
Current $3,514,458,422.82
30 Days to 59 Days $294,361,012.24
60 Days to 89 Days $99,840,093.60
90 Days and Over $217,319,707.94
as of the end of the Day December 31,1998.
8. The aggregate Investor Default Amount
for the period from January 1, 1998 to
December 31, 1998. $82,725,679.11
9. The aggregate amount of Class A Investor Charge-offs, Class B Investor
Charge-offs, Class C Investor Charge-offs and Class D Investor
Charge-offs for the period from January 1, 1998 to December 31, 1998.
Class A $0
Class B $0
Class C $0
Class D $0
10. The amount of the Servicing Fee for the period from January 1, 1998 to
December 31, 1998. $14,000,000.00
11. The Class A Pool Factor, the Class B Pool Factor and the Class C
Pool Factor as of December 31, 1998:
Class A Pool Factor 1.000
Class B Pool Factor 1.000
Class C Pool Factor 1.000
12. The amount of Reallocated Class B Principal Collections, Reallocated
Class C Principal Collections and Reallocated Class D Principal
Collections for the period from January 1, 1998 to December 31, 1998.
Class B 0
Class C 0
Class D 0
13. The aggregate amount of funds in the Excess
Funding Account and the Pre-Funding Account
at December 31, 1998 None
14. Whether a Class Trigger Event has occurred and if so the Specified
Class C Reserve Amount at December 31, 1998.
Reserve Amount $17,500,000.00
Reserve Account Balance $0.00
<PAGE>
SUPPLEMENTARY METRIS MASTER TRUST DATA
SERIES 1998-2
1. The total amount distributed during 1998 stated on the basis of an
original principal amount of $1,000 per Security:
Class A $7.7321528
2. The amount of such distribution allocable to Security Principal stated
on the basis of an original principal amount of $1,000 per Security:
Class A $0
3. The amount of such distribution allocable to Security Interest stated
on the basis of an original principal amount of $1,000 per Security:
Class A $7.7321528
4. The amount of Principal Collections received in the Collection Account
during the period from December 4, 1998 to December 31, 1998 and
allocated in respect of the Class A Securities and the Class B
Securities, respectively:
Class A $21,414,696.57
Class B $2,117,937.05
-------------
$23,532,633.62
5. The amount of Finance Charge Collections processed during the period
from December 4, 1998 to December 31, 1998 and allocated in respect of
the Class A Securities and the Class B Securities, respectively:
Class A $9,345,131.58
Class B $924,243.78
-----------
$10,269,375.36
6. The aggregate amount of the:
Principal Receivables $3,945,002,736.77
Invested Amount $549,450,550.00
Class A Invested Amount $500,000,000.00
Class B Invested Amount $49,450,550.00
Floating Allocation Percentage 13.9277609%
Class A Floating Allocation Percentage 12.6742624%
Class B Floating Allocation Percentage 1.2534985%
each as of the end of the day on December 31, 1998.
7. The aggregate outstanding balance of Receivables which are:
Current $3,514,458,422.82
30 Days to 59 Days $294,361,012.24
60 Days to 89 Days $99,840,093.60
90 Days and Over $217,319,707.94
as of the end of the day on December 31,1998.
8. The aggregate Investor Default Amount for the
period from December 4, 1998 to December 31,
1998 $4,817,078.02
9. The aggregate amount of Class A Investor Charge-offs and Class B
Investor Charge-offs for the period from December 4, 1998 to
December 31, 1998.
Class A $0
Class B $0
10. The amount of the Servicing Fee for the period from
December 4, 1998 to December 31, 1998 $842,992.62
11. The Class A Pool Factor as of December 31, 1998:
Class A Pool Factor 1.000
12. The amount of Redirected Class B Principal Collections for the period
from December 4, 1998 to December 31, 1998.
Class B $0
13. The aggregate amount of funds in the Excess Funding Account and the
Pre-Funding Account at December 31, 1998. None
14. Policy Claim Amount for the period from December 4, 1998
to December 31, 1998. None
<PAGE>
SUPPLEMENTARY METRIS MASTER TRUST DATA
SERIES 1998-3
1. The total amount distributed during 1998 stated on the basis of an
original principal amount of $1,000 per Security:
Class A $7.8627083
2. The amount of such distribution allocable to Security Principal stated
on the basis of an original amount of $1,000 per Security:
Class A $0
3. The amount of such distribution allocable to Security Interest stated
on the basis of an original principal amount of $1,000 per Security:
Class A $7.8627083
4. The amount of Principal Collections received in the Collection Account
during the period from December 4, 1998 to December 31, 1998 and
allocated in respect of the Class A Securities and the Class B
Securities, respectively:
Class A $21,414,696.57
Class B $2,117,937.05
-------------
$23,532,633.62
5. The amount of Finance Charge Collections processed during the period
from December 4, 1998 to December 31, 1998 and allocated in respect of
the Class A Securities and the Class B Securities, respectively:
Class A $9,345,131.58
Class B $924,243.78
-----------
$10,269,375.36
6. The aggregate amount of the:
Principal Receivables $3,945,002,736.77
Invested Amount $549,450,550.00
Class A Invested Amount $500,000,000.00
Class B Invested Amoutn $49,450,550.00
Floating Allocation Percentage 13.9277609%
Class A Floating Allocation Percentage 12.6742624%
Class B Floating Allocation Percentage 1.2534985%
each as of the end of the day on December 31, 1998.
7. The aggregate outstanding balance of Receivables which are:
Current $3,514,458,422.82
30 Days to 59 Days $294,361,012.24
60 Days to 89 Days $99,840,093.60
90 Days and Over $217,319,707.94
as of the end of the day on December 31, 1998.
8. The aggregate Investor Default Amount for the
period from December 4, 1998 to December 31, 1998 $4,817,078.02
9. The aggregate amount of Class A Investor Charge-offs and Class B
Investor Charge-offs for the period from December 4, 1998
to December 31, 1998.
Class A $0
Class B $0
10. The amount of the Servicing Fee for the period
from December 4, 1998 to December 31, 1998. $842,992.62
11. The Class A Pool Factor as of December 31, 1998:
Class A Pool Factor 1.000
12. The amount of Redirected Class B Principal Collections for the period
from December 4, 1998 to December 31, 1998.
Class B $0
13. The aggregate amount of funds in the Excess Funding Account and the
Pre-Funding Account at December 31,
1998. None
14. Policy Claim Amount for the period from
December 4, 1998 to December 31, 1998. None
Independent Accountants' Report
on Applying Agreed-Upon Procedures
March 19, 1999
Direct Merchants Credit Card Bank, N.A.
Paul Runice, Senior Vice President, Treasurer
Interchange Tower, Suite 300
600 South Highway 169
St. Louis Park, Minnesota 55426
Bank of New York (Delaware)
Cheryl Laser
101 Barclay Street
New York, New York 10286
MBIA Insurance Corporation
William Cody
113 King Street
Armonk, New York 10504
Moody's Investors Services
Compliance Department
99 Church Street
New York, New York 10007
Standard & Poor's Ratings Group
Compliance Department
25 Broadway
New York, New York 10004-1064
Fitch IBCA
Nancy Stroker, Executive VP Corporate Finance
One State Street Plaza
New York, New York 10004
Ladies and Gentlemen:
Pursuant to Section 3.6(a) and 3.6(b) of the Amended and Restated Pooling and
Servicing Agreement dated as of July 30, 1998 among Metris Receivables Inc., as
Transferor; Direct Merchants Credit Card Bank, N.A. (DMCCB, N.A.), as Servicer;
Bank of New York (Delaware), as Trustee; MBIA Insurance Corporation, as
Enhancement Provider; and Moody's Investors Services, Standard & Poor's Ratings
Group, and Fitch IBCA, as the Rating Agencies; (collectively, the Specified
Users) we have applied the agreed-upon procedures enumerated below, to selected
Metris Master Trust (the Master Trust) Daily Reports and Settlement Statements
prepared by DMCCB, N.A. during the period from January 1, 1998 to December 31,
1998 (the Period). We understand that the Daily Reports and Settlement
Statements are prepared in accordance with requirements described in the
Agreement and the relevant Series Supplements. We have performed these
procedures solely to assist the Specified Users in evaluating the Servicer's
compliance with these requirements.
This agreed-upon procedures engagement was performed in accordance with
standards established by the American Institute of Certified Public Accountants.
The sufficiency of these procedures is solely the responsibility of the
Specified Users of the report. Consequently, we make no representation regarding
the sufficiency of the procedures described below either for the purpose for
which this report has been requested or for any other purpose. Capitalized terms
used herein without definition will have meanings ascribed to them in the
Pooling and Servicing Agreement.
Unless otherwise indicated, the following conventions have been adopted in
presenting our procedures and findings:
The term "compared" means compared to and found to be in agreement with,
unless otherwise noted. Such compared amounts and percentages are deemed
to be in agreement if differences are attributable to rounding or if
differences are less than $1,000.
The term "recomputed" means calculated and found the amount so calculated
to be in agreement with, unless otherwise noted. Such recomputed amounts
and percentages are deemed to be in agreement if differences are
attributable to rounding or if differences are less than $1,000.
We have performed the following procedures:
Section 3.6 (a)
1. For five haphazardly selected days (the Five Days) within the Period, we
obtained the Daily Report and compared sales, cash advances, payments,
interest income, charge-offs, miscellaneous charges and adjustments amounts
set forth on the Daily Report with corresponding amounts set forth in the
Servicer's accounts receivable reports and recomputed the mathematical
accuracy of the amounts and percentages within the Daily Report.
2. For the Five Days, we compared the cash transfers indicated on the Daily
Reports to entries on the relevant Master Trust bank statements.
3. For three haphazardly selected fiscal month ends (the Three Months) in the
Period, we compared the aggregate customer balances in the "30-59 day
delinquent" and "90-119 day delinquent" categories as reflected on the
monthly Settlement Statements for the Three Months to the corresponding
amounts set forth in the Servicer's accounts receivable aging reports for
such month ends.
4. For five haphazardly selected weekly periods (the Five Weeks), we compared
beginning and end of week total receivables balances on the Servicer's
accounts receivable reports with the corresponding balances on the
corresponding Daily Reports and recomputed each Daily Report's beginning
and ending Principal Receivables balances and Finance Charge Receivables
balances, based on the information contained in such Daily Reports, for
each of the days within the Five Weeks.
5. For the Five Days, we recomputed the daily allocation of Principal and
Finance Charge Collections to each series issued under the Agreement based
upon information appearing on the Daily Report.
6. For one monthly Settlement Statement in the period, we compared the amounts
and percentages appearing therein to the information appearing in the
corresponding Daily Reports or the reports which are the source of such
amounts and percentages or recomputed such percentages to the extent they
were derived from such information.
Section 3.6 (b)
7. For four haphazardly selected monthly Settlement Statements in the Period,
we compared amounts and percentages appearing therein to the information
appearing in the corresponding Daily Reports or other reports which are the
source of such amounts and percentages or recomputed such percentages to
the extent they were derived from such information.
The above stated agreed-upon procedures were performed with no exceptions other
than those noted at Exhibit I, except to the extent a noted exception has caused
additional related amounts or percentages to be incorrect. We have not included
such amounts or percentages in Exhibit I.
Management of DMCCB, N.A. has represented to us that the Daily and Monthly
Reports provided to us are the same as those provided to the Trustee.
We were not engaged to, and did not, perform an examination, the objective of
which would be the expression of an opinion on the servicing records.
Accordingly, we do not express such an opinion. Had we performed additional
procedures, other matters might have come to our attention that would have been
reported to you.
This report is intended solely for the use of the Specified Users and is not
intended to be and should not be used by anyone other than these Specified
Users.
(continued)
Exhibit I
Exception Report
1. Series 1996-1 sum of Class A, Class B, Class C and Class D Total
Collections per the July 21, 1998 Daily Report does not agree to
the recomputation performed by us as follows:
Amount per Daily Report Amount as recomputed
$ 381,936.66 $ 1,356,667.93
2. Series 1996-1, 1997-1 and 1997-2 Class D beginning invested amounts per the
September 8, 1998 Daily Report do not agree to the Class D ending invested
balance on the September 4, 1998 Daily Report as follows:
September 8, September 4,
1998 Daily Report 1998 Daily Report
----------------- -----------------
1996-1 $ 43,412,956.76 $ 43,646,743.94
1997-1 $ 53,853,866.17 $ 54,154,128.55
1997-2 $ 43,995,729.61 $ 44,351,386.07
3. Series 1998-1 Class A Invested Amount During CI A-Paydown reported on the
September 8, 1998 Daily report does not agree to the internal Daily
Allocation Worksheet as follows:
Amount per
Amount per Daily Report Daily Allocation Worksheet
$ 570,000,000.00 $ 580,000,000.00
4. Finance Charge Collections on the Series 1998-1, August 1998 Settlement
Statements for Class A, Class B, Class C, Class D and in total do not agree
to the internal Daily Allocation Worksheet as follows:
Amount per Amount per
Settlement Statement Daily Allocation Worksheet
Class A $ 12,595,659.85 12,270,716.81
Class B $ 1,245,777.05 1,213,638.48
Class C $ 2,135,627.27 2,080,532.33
Class D $ 1,110,694.13 1,082,040.42
Total $ 17,087,758.30 16,646,928.03
<PAGE>
Exhibit I
5. Series 1996-1 Class A Certificate Amount on the August 1998 Settlement
Statement does not agree to the August 31, 1998 Daily Report as follows:
Certificate Amount Certificate Amount
per Settlement Statement per Daily Report
$ 483,466,666.67 $ 518,000,000.00
6. Series 1995-1, 1996-1, 1997-1 and 1997-2 Receivable Delinquencies on the
April 1998 Settlement Statements do not agree to the recomputation from the
internal Accounts Receivable reports as follows:
Amount per Amount per
Settlement Statement Accounts Receivable reports
Current $ 2,595,852,072.74 $ 2,595,643,072.72
90 Days and Over $ 157,578,079.71 $ 157,787,079.73
7. Series 1996-1 Class A Pool Factor on the August 1998 Settlement Statement
does not agree to recomputation as follows:
Amount per
Settlement Statement Amount as recomputed
1.0000% 0.9333%
8. Series 1997-1 Specified Class C Reserve Amount on the August 1998
Settlement Statement does not agree to recomputation as follows:
Amount per
Settlement Statement Amount as recomputed
$ 0 $ 21,250,000.00
9. Series 1997-1 Class C Reserve Account Balance on the August 1998 Settlement
Statement does not agree to the internal Cascade report as follows:
Amount per
Settlement Statement Amount per Cascade report
$ 0 $ 21,250,000.00
<PAGE>
Exhibit I
10. Series 1997-2 Class B Invested Amount (beginning) on the September 1998
Settlement Statement did agree to the Daily Report as follows:
Amount per Amount per
Settlement Statement Daily Report
`blank' $ 101,500,000.00
