Item 1. Business
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 US Bank, National Association, a national banking association, as trustee (the "Trustee") (the Trustee is a successor trustee to The Bank of New York (the "Prior Trustee") pursuant to an Agreement of Resignation, Appointment and Acceptance dated as of December 11, 2000 among the Transferor, the Servicer, the Prior Trustee and the Trustee). The P&S Agreement is supplemented by various series supplements providing for the issuance of securities in varying series. Publicly registered and outstanding series securities existing as of December 31, 2000 are identified on the cover page to this Form 10-K. Hereafter, Series 1997-1 Certificates, Series 1997-2 Certificates, Series 1998-3 Securities, Series 1999-1 Securities, Series 1999-2 Securities, Series 1999-3 Securities, Series 2000-1 Securities, Series 2000-2 Securities, and Series 2000-3 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.
During 2000, the Series 1996-1 and Series 1998-2 securities were paid in full and are no longer outstanding.
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 2.
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.
Item 3. Legal Proceedings
The Transferor is not aware of any material pending litigation involving the Registrant or the Trustee with respect to the Securities or the Registrant's Property. The Transferor is aware that the Servicer is a party to various legal proceedings resulting from the ordinary business activities relating to its operations. In July 2000 an Amended Complaint was filed in Hennepin County Court in Minneapolis, Minnesota against Metris Companies Inc., ("MCI"), Metris Direct, Inc. ("MDI") and the Servicer. The complaint seeks damages in unascertained amounts and purports to be a class action on behalf of all cardholders who were issued a credit card by Direct Merchants Bank and were allegedly assessed fees or charges that the cardholder did not authorize. Specifically, the complaint alleges violations of the Minnesota Prevention of Consumer Fraud Act, the Minnesota Deceptive Trade Practices Act and breach of contract. An answer to the Complaint was filed in August 2000. To date, the complaint has not been certified as a class action claim. MCI, MDI and the Servicer believe there are numerous substantive legal defenses to these claims and are prepared to vigorously defend the case. There can be no assurance that defense or resolution of these matters will not have a material adverse effect on MCI's, MDI's or the Servicer's financial position.
Item 4.
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, 2000.
PART II
Item 5.
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., 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.
Item 6. Selected Financial Data
Not applicable.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Not applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data
Not applicable.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Not applicable.
Item 11.
Item 11. Executive Compensation
Not applicable.
Item 12.
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 & Co., 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 & Co. 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 & Co. 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.
Item 13. Certain Relationships and Related Transactions
Not applicable.
PART IV
Item 14.
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 2000 below
(b) The following reports on Form 8-K were filed during the fourth fiscal quarter of 2000.
Date of Report Items Covered October 20, 2000 5 & 7 November 20, 2000 5 & 7 December 18, 2000 5 & 7
(c) Exhibit 2000 2000.1 Annual Servicer's Certificate dated March 23, 2001. 2000.2 Supplementary Metris Master Trust Data 2000.3 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 30th day of March, 2001.
METRIS MASTER TRUST METRIS RECEIVABLES, INC. (Registrant)
By:/s/ Ralph A. Than Ralph A. Than Senior Vice President and Treasurer Metris Receivables, Inc., as Transferor
INDEX TO EXHIBITS
Exhibit Description of Number Exhibit
2000.1 Annual Servicer's Certificate
2000.2 Supplementary Master Trust Data
2000.3 Independent Public Accountant's Review of Agreed Upon Procedures
Exhibit 2000.1
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 US Bank National Association, a national banking association, 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, 2000 until December 31, 2000 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 23, 2001.
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION, as Servicer
/s/ Ralph A. Than Name: Ralph A. Than Title: Treasurer, Cashier
Exhibit 2000.3
Independent Accountants' Report on Applying Agreed-Upon Procedures
March 9, 2001
Direct Merchants Credit Card Bank, N.A. Attn: Ralph Than, Assistant Treasurer/Cashier 10900 Wayzata Boulevard Minnetonka, MN 55305
US Bank Trust National Association Eve Kaplan 180 East Fifth Street St. Paul, MN 55101
MBIA Insurance Corporation Attn: William Cody 113 King Street Armonk, New York 10504
Moody's Investors Services Attn: Compliance Department 99 Church Street New York, New York 10007
Standard & Poor's Ratings Group Attn: Compliance Department 55 Water Street New York, New York 10041
Fitch IBCA Attn: 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 (the "Agreement") among Metris Receivables, Inc., as Transferor; Direct Merchants Credit Card Bank, N.A. (DMCCB, N.A.), as Servicer; US Bank Trust National Association, 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, 2000 to December 31, 2000 (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 Agreement or relevant Series Supplements
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.
Accounts Receivable Reports mean computer reports that are used to prepare the Daily and Monthly Reports.
Monthly Report, Settlement Statement, Certificateholder's Statement, and Securityholder's Statement all represent the monthly reports for which agreed-upon procedures were applied. These descriptions are used interchangeably.
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 information and use of the Specified Users and is not intended to be and should not be used by anyone other than these Specified Users.
Exhibit I
Exception Report
1. The Required Reserve Account Amount on 1998-2 Certificateholder's Statements did not agree with the amount recomputed as follows:
Amount per Certificateholder's Amount as Statement Recomputed ---------------------- -------------------------
June $0 $2,500,000 August $0 $2,500,000
2. The Available Reserve Account on the 1998-2 Certificateholder's Statement did not recompute as follows:
Amount per Certificateholder's Amount as Statement Recomputed ---------------------- -------------------------
August $0 $2,500,000 September $0 $2,500,000 October $0 $2,500,000
3. The Covered Amount on the 1998-2 Certificateholder's Statement did not recompute as follows:
Amount per Certificateholder's Amount as Statement Recomputed ---------------------- ------------------------
September $0 $1,644,636.48 October $0 $3,087,083.33
4. Two Receivable Delinquencies items on the Certificateholder's Statement for all Series in June did not agree with the Servicer's Accounts Receivable Report as follows:
Amount per Amount per Certificateholder's Accounts Receivable Statement Report ---------------------- -------------------------
90 + days $306,041,562.68 $306,059,189.79 Current $4,917,916,247.50 $4,917,898,620.39
5. The Average Net Portfolio Yield on the 1998-1 Certificateholder's Statement did not recompute as follows:
Amount per Certificateholder's Amount as Statement Recomputed ---------------------- -------------------------
August 14.0223% 16.0258%
6. Finance Charge Collections on the "Revised" August 2000-2 Certificateholder's Statement did not agree with Servicer's Accounts Receivable Report as follows:
Amount per Amount per Certificateholder's Accounts Receivable Statement Report ---------------------- -------------------------
Class A $11,471,585.17 $11,662,672.36 Class B $1,741,985.80 $1,771,002.82 Class C $3,781,362.86 $3,844,350.67
7. The Number of New Accounts Added to the Trust for all Certificateholder's Statement did not agree with the Servicer's Accounts Receivable Report as follows:
Amount per Amount per Certificateholder's Accounts Receivable Statement Report ---------------------- -------------------------
October 0 277,806
8. The Minimum Base Rate on the 1998-1 Certificateholder's Statement did not recompute as follows:
Amount per Certificateholder's Amount as Statement Recomputed ---------------------- -------------------------
September 9.1492% 9.1498%
9. The following items on the August 17th Daily Report did not agree with the Servicer's Accounts Receivable Report.
Amount per Amount per Accounts Receivable Daily Report Report ---------------------- -----------------------
Principle Collections $ 10,000,000 $ 10,799,672.64 Dilution $ 500,000 $ 318,021.36 New Receivables $ 12,000,000 $ 18,358,787.27 Defaults $ 900,000 $ 1,233,957.91 Finance Charge Collections $ 5,000,000 $ 4,913,966.82 Ending Balance $5,624,484,709.85 $5,629,891,843.92
10. The following items on the August 18th Daily Report did not agree with the Servicer's Accounts Receivable Report:
Amount per Amount per Accounts Receivable Daily Report Report ---------------------- ----------------------- Principle Collections $12,069,174.09 $11,269,501.45 Dilution $126,609.85 $308,586.65 New Receivables $24,583,612.46 $18,224,825.19 Defaults $1,051,984.89 $718,026.98 Finance Charge Collections $5,246,804.39 $5,332,837.57 Beginning Balance $5,624,484,709.85 $5,629,891,843.92