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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): July 12, 1996
GREEN TREE FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 01-08916 41-1807858
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(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1100 Landmark Towers, 345 St. Peter Street, Saint Paul, Minnesota 55102-1639
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(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 293-3400
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 1. Changes in Control of Registrant.
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Not applicable.
ITEM 2. Acquisition or Disposition of Assets.
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Not applicable
ITEM 3. Bankruptcy or Receivership.
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Not applicable
ITEM 4. Changes in Registrant's Certifying Accounting.
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Not applicable
ITEM 5. Other Events.
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In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, Green Tree Financial
Corporation (the "Company") is hereby filing a cautionary statement
identifying factors that could cause the actual results of the Company
to differ materially from historical results or from any results
expressed or implied by forward-looking statements made by or on behalf
of the Company.
ITEM 6. Resignations of Registrant's Directors.
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Not applicable
ITEM 7. Financial Statements and Exhibits.
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(a) Financial statements of businesses acquired.
Not applicable
(b) Pro forma financial information.
Not applicable
2
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(c) Exhibits.
The following is filed herewith. The exhibit numbers correspond
with Item 601(b) of Regulation S-K.
Exhibit No. Description
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99 Cautionary statement under the safe harbor
provisions of the Private Securities
Litigation Reform Act of 1995.
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 hereunto duly authorized.
Date: July 12, 1996 GREEN TREE FINANCIAL
CORPORATION
By: /s/ Joel H. Gottesman
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Joel H. Gottesman
Senior Vice President and
General Counsel
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
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Number Page
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<C> <S> <C>
99 Cautionary statement under the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. 5
</TABLE>
4
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Exhibit 99
CAUTIONARY STATEMENT UNDER THE
SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Green Tree Financial Corporation (the "Company") is filing this Form 8-K in
order to obtain the benefits of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995 (the "Securities Litigation Reform
Act"). Certain written and oral statements made by the Company, or by its
officers, directors or employees acting on its behalf, that are not historical
fact constitute "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements may involve
factors that could cause the actual results of the Company to differ materially
from historical results or from any results expressed or implied by such
forward-looking statements. The Company cautions the public not to place
undue reliance on forward-looking statements, which may be based on
assumptions and anticipated events that do not materialize. The Company does
not undertake, and the Securities Litigation Reform Act specifically relieves
the Company from, any obligation to update any forward-looking statements.
Factors that may cause actual results to differ from historical results or
from any results expressed or implied by forward-looking statements include the
following:
Economic Conditions. The Company is affected by consumer demand for
manufactured housing, home improvements, consumer products and other products
which it finances. A material decline in demand for these goods and services
would result in a reduction in the volume of loans originated or purchased by
the Company. A national or regional economic slowdown or recession could
increase the risk of defaults and credit losses which could have an adverse
effect on the Company's financial performance and on the performance of the
Company's securitized loan pools.
Capital Resources. The Company's business requires continued access to the
capital markets for the purchase, warehousing and sale of contracts.
Historically, the most important sources of liquidity for the Company have been
its ability to raise short-term funds in the commercial paper markets and sell
contracts in the secondary markets through loan securitizations and sales of
GNMA certificates. Adverse conditions in these capital markets could make it
more expensive to warehouse its contracts prior to sale or more difficult for
the Company to sell contracts in a timely manner or on terms favorable to the
Company.
In addition to the commercial paper markets, the Company relies on a
revolving line of credit with a group of banks and master repurchase agreements
with certain investment banking firms to help meet the Company's short-term
funding needs between sales of its contracts and loan production. The bank line
has a three year term ending April 15, 1999. The master repurchase agreements
are not committed facilities and generally provide for annual terms that are
extended each quarter by mutual agreement of the parties for an additional
annual term based upon receipt of updated quarterly financial information from
the Company. The Company believes that these agreements will continue to be
available or will be able to be replaced; however no assurance can be given as
to such availability or the prospective terms and conditions of such agreements
or replacements.
Interest Rate Fluctuations. The Company's income depends on its ability to
earn greater interest on the contracts it originates or purchases than the
interest cost to finance or sell the contracts. Interest rates in the markets
served by the Company generally rise or fall with interest rates as a whole.
Most of the contracts acquired by the Company and loans made by the Company are
fixed-rate obligations of the purchasers and borrowers. The profitability of a
particular securitization may be reduced if interest rates increase
substantially before contracts held by the Company are securitized or otherwise
financed.
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The Company in the normal course of certain of its businesses makes short-
term interest rate commitments and has short-term exposure to interest rate
increases prior to securitization. Depending on the future length of such
interest rate commitments and the frequency of securitizations, such exposure
could have an adverse impact on earnings performance. The Company continuously
monitors interest rate levels and has employed prefunding strategies to mitigate
the impact of changes in interest rates prior to securitization of its contracts
and loans.
Defaults and Prepayments. Prior to the sale of contracts and loans through
securitization, the risk of default and prepayment is minimal due in large part
to the frequency of securitizations. After completion of the sale of contracts
and loans, defaults and prepayments may have an adverse impact on the Company's
financial performance, if actual credit losses and prepayments differ materially
from estimates made by the Company at the time of each sale.
In connection with each sale of closed-end contracts and loans, the Company
records the related excess servicing rights receivable, which represents cash
expected to be received by the Company over the life of the securitization
contracts. In initially valuing its excess servicing rights receivable, the
Company establishes an allowance for expected credit losses under the recourse
provisions with investors/owners of contracts or investor certificates. The
Company also estimates the amounts that will not be collected as a result of
prepayments. The allowance for losses and the rate of prepayment are calculated
on the basis of historical experience and management's best estimates. The
Company believes that the default, prepayment and interest rate assumptions used
in calculating the excess servicing rights receivable are those which market
participants would use for similar instruments. Actual default and prepayment
experience are reviewed quarterly. Actual defaults may differ from the Company's
estimates as a result of general and regional economic conditions, and actual
rates of prepayment may vary as a result of prevailing interest rates or obligor
mobility, both of which may have a material impact on the Company's earnings and
upon the performance of the Company's securitized loan pools.
Competition. The financial services industry is highly competitive.
Increased competition in the markets served by the Company could negatively
affect the Company's market share and could exert downward pressure on interest
rates on contracts purchased by the Company or loans made by the Company.
In addition, competition in the wholesale lending markets which the Company
serves could cause a reduction in the wholesale loan portfolio serviced by the
Company. Any material reduction in the wholesale lending portfolio could cause
the Company to be required to pay off certain of its revolving securitizations
prior to maturity and would necessitate finding alternative sources of financing
for those business lines. No assurance can be given as to the availability or
the terms of any alternative financing source.
Regulatory Changes. The Company's business is subject to federal and state
regulations which, among other things, require the Company to maintain various
licenses and qualifications; require specific disclosures to borrowers; define
the rights of the holder of a contract to repossess and sell collateral; and
limit interest rates and fees that can be charged on contracts. Changes in
existing laws and regulations or in the interpretation thereof, or the
introduction of new laws and regulations, could adversely affect the Company's
operations and the performance of the Company's securitized loan pools.
