Capital One 2003 Annual Report Download - page 108
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The Corporation believes that it has meritorious defenses with respect to this case and intends to defend the case
vigorously. At the present time, management is not in a position to determine whether the resolution of this case
will have a material adverse effect on either the consolidated financial position of the Corporation or the
Corporation’s results of operations in any future reporting period.
Other Pending and Threatened Litigation
In addition, the Company is also commonly subject to various pending and threatened legal actions relating to the
conduct of its normal business activities. In the opinion of management, the ultimate aggregate liability, if any,
arising out of any such pending or threatened legal actions will not be material to the consolidated financial
position or results of operations of the Company.
Note Q
Related Party Transactions
In the ordinary course of business, executive officers and directors of the Company may have consumer loans
issued by the Company. Pursuant to the Company’s policy, such loans are issued on the same terms as those
prevailing at the time for comparable loans to unrelated persons and do not involve more than the normal risk of
collectibility.
Note R
Off-Balance Sheet Securitizations
Off-balance sheet securitizations involve the transfer of pools of consumer loan receivables by the Company to
one or more third-party trusts or qualified special purpose entities in transactions which are accounted for as sales
in accordance with SFAS 140. Certain undivided interests in the pool of consumer loan receivables are sold to
investors as asset-backed securities in public underwritten offerings or private placement transactions. The
proceeds from off-balance sheet securitizations are distributed by the trusts to the Company as consideration for
the consumer loan receivables transferred. Each new off-balance sheet securitization results in the removal of
consumer loan principal receivables equal to the sold undivided interests in the pool from the Company’s
consolidated balance sheet (“off-balance sheet loans”), the recognition of certain retained residual interests and a
gain on the sale. The remaining undivided interests in principal receivables of the pool, as well as the billed
finance charge and fee receivables related to the Company’s undivided interest in the principal receivables, are
retained by the Company and recorded as consumer loans on the consolidated balance sheet. The amounts of the
remaining undivided interests fluctuate as the accountholders make principal payments and incur new charges on
the selected accounts. The amount of retained consumer loan receivables was $8.3 billion and $6.1 billion as of
December 31, 2003 and 2002, respectively.
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