SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) October 5, 1998
METRIS COMPANIES INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 41-1849591
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
600 South Highway 169, Suite 1800, St. Louis Park MN 55426
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (612) 525-5020
N/A
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
This Report is made to file a press release issued by
the Registrant on October 5, 1998.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
20.1 Press release dated October 5, 1998.
SIGNATURES
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.
METRIS COMPANIES INC.
Date: October 6, 1998 By:\s\ Z. Jill Barclift
Name: Z. Jill Barclift
Title: Vice President, General Counsel
EXHIBIT INDEX
The following exhibit is filed herewith:
Exhibit No.
20.1 Press release dated October 5, 1998.
Investor Relations
Alfred A. Galgano
Director, Investor Relations
(612) 593-4820
(612) 593-4733 (fax)
Metris Web Site Address
www.metriscompanies.com
METRIS RECONFIRMS COMMITMENT TO PRUDENT ACCOUNTING
ST. LOUIS PARK, Minn. (October 5, 1998) - Metris Companies
Inc. (NASDAQ:MTRS) today reconfirmed the Company's commitment to prudent
accounting.
The Securities and Exchange Commission staff ("SEC Staff") recently
changed its position regarding revenue recognition on fee-based services for
which a full refund period exists. The SEC Staff concluded that no revenue
should be recognized until the expiration of the refund period. The Company
has changed its revenue recognition policy to reflect the SEC Staff's new
position as of September 30, 1998.
Previously, in accordance with generally accepted accounting principles, the
Company had recognized a portion of the revenues and expenses associated with
such services during the refund period. The adoption of the SEC Staff's change
will have the effect of delaying the recognition of revenues on such services
until after the expiration of the refund period.
The change in revenue recognition will also result in a corresponding
change in the recognition of certain direct-response advertising costs.
Following generally accepted accounting principles, the Company is required
to defer such costs as revenue is recognized. The estimated cumulative net
impact of the change in recognition of revenues and expenses, in net income,
is $68,000, as of September 30, 1998, and will have no impact on earnings per
share.
The SEC Staff is currently deliberating accounting for direct-response
advertising costs. Generally accepted accounting principles currently require
qualifying direct-response advertising costs be deferred and amortized as
revenue is recognized. One of the changes currently being considered by the
SEC Staff would be to require that such costs be expensed as incurred. If
the Company were required to adopt such a change, as of September 30, 1998,
the estimated, cumulative, one-time, non-cash decrease to net income,
resulting from such a change in accounting principles, would be $14.1
million, or $0.70 per share.
The Company's previous accounting policies followed generally accepted
accounting principles. The adoption of the changes and potential changes
discussed above will generally require the Company to recognize revenues
later and expenses earlier for certain of its fee-based services. Excluding
the potential cumulative, one-time, non-cash impact of the proposed
accounting change in expense recognition, the Company is comfortable with the
consensus of analyst earnings estimates for the fourth quarter of 1998, of
$0.74 per share, and the 1999 full-year consensus estimate of $3.46 per share.
The Company's independent auditors, KPMG Peat Marwick, LLP, concur
with the Company that its current accounting policies are in accordance with
generally accepted accounting principles.
"The fundamental economic value and cash flow of our fee-based services
continues to be strong, and is not affected by the proposed accounting
change," said Ronald N. Zebeck, President and Chief Executive Officer of
Metris. "I am confident that our accounting polices remain prudent and our
products and services continue to provide value to our customers. Our
growth and profitability have not come at the expense of our basic business
philosophies, and I am confident that Metris will continue to deliver high
quality earnings."
Metris Companies Inc. is an information-based direct marketer of consumer
credit products and fee-based services to moderate income consumers. Based in
St. Louis Park, Minn., Metris also has operations in Tulsa, Okla.; Baltimore,
Maryland; Champaign, Illinois and Phoenix, Arizona and currently employs
approximately 1,600 people.
Visit Metris on the internet at www.metriscompanies.com.
This press release contains forward-looking statements. These statements
include statements regarding intent, belief or current expectations of the
Company and its management. You are cautioned that any such forward-looking
statements are not guarantees of future performance and involve a number of
risks and uncertainties that may cause the Company's actual results to differ
materially from the results discussed in the forward-looking statements.
Among the factors that could cause actual results to differ materially from
those indicated by such forward-looking statements are: the Company's limited
operating history as a stand-alone entity; the Company's limited experience
with respect to originating and servicing credit card accounts, including
limited delinquency, default and loss experience; the lack of seasoning of
its credit card portfolio, which makes the predictability of delinquency and
loss levels more difficult; risks associated with unsecured credit
transactions, particularly to moderate income consumers; risks associated with
acquired portfolios; interest rate risks; dependence on the securitization of
the Company's credit card loans or the capital markets to fund operations;
general economic conditions affecting consumer income, which may increase
consumer bankruptcies, defaults and delinquencies; state and federal laws and
regulations, including consumer and debtor protection laws; and the highly
competitive industry in which the Company operates. Each of these factors is
more fully discussed in Exhibit 99 to the Company's Annual Report on Form
10-K, for the fiscal year ended December 31, 1997. Reference to this
Cautionary Statement or Exhibit 99 in the context of a forward-looking
statement or statements shall be deemed to be a statement that any one or
more of these factors may cause actual results to differ materially from
those anticipated in such forward-looking statement or statements.
