** **

**Form 10-Q**

 

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C.  20549**

 

**Quarterly Report Pursuant to Section 13 or15(d)of the Securities Exchange Act of 1934**

 
| **For Quarter Ended** | **June  30, 2002** | **Commission file number** | **2-80466** |
|-----------------------|--------------------|----------------------------|-------------|

** **

** **

| **Wells Fargo Financial, Inc.**                                  |
|------------------------------------------------------------------|
| (Exact name of  registrant as specified in its charter)          |
|                                                             |   |   |
| **Iowa**                                                         |   | **42  1186565** |
| (State or other  jurisdiction of  incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
|                                                             |   |   |
| **206  Eighth Street, Des Moines, Iowa**                         |   | **50309** |
| (Address of principal  executive offices)                        |   | (Zip Code) |
|                                                             |   |   |
| Registrant’s telephone number, including area code          |   | (515) 243-2131 |

 

 

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.      Yes         ý       No        o

 

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date.  Common Stock (without par value):  1,000 shares outstanding as of August 12,2002.

 

The registrant meets the conditions set forth in General InstructionH(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduceddisclosure format.

 

 

----

 

PART I.  FINANCIAL INFORMATION

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated BalanceSheets (Unaudited)

 

(Thousands of Dollars)

 
|                                                                                                       |   | **June 30,2002** |       | **December  31,2001** |   |
|------------------------------------------------------------------------------------------------------------|--------|------------------|------------|-----------------------|--------|
| Assets                                                                                                     |   |             |       |                  |   |
|                                                                                                       |   |             |       |                  |   |
| Cash and cash  equivalents                                                                                 |   | $                | 199,837    |                  | $      | 260,038 |   |
|                                                                                                       |   |             |       |                  |   |
| Securities  available-for-sale                                                                             |   | 1,450,448        |       | 1,377,148             |   |
|                                                                                                       |   |             |       |                  |   |
| Finance  receivables                                                                                       |   | 14,834,934       |       | 13,433,569            |   |
|                                                                                                       |   |             |       |                  |   |
| Less allowance  for credit losses                                                                          |   | 584,315          |       | 521,948               |   |
|                                                                                                       |   |             |       |                  |   |
| Finance  receivables - net                                                                                 |   | 14,250,619       |       | 12,911,621            |   |
|                                                                                                       |   |             |       |                  |   |
| Notes receivable  - affiliates                                                                             |   | 609,479          |       | 636,588               |   |
|                                                                                                       |   |             |       |                  |   |
| Property and  equipment (at cost, less accumulated depreciation of $94,840 for 2002 and  $87,299 for 2001) |   | 124,074          |       | 94,017                |   |
|                                                                                                       |   |             |       |                  |   |
| Deferred income  taxes                                                                                     |   | 74,571           |       | 62,290                |   |
|                                                                                                       |   |             |       |                  |   |
| Goodwill                                                                                                   |   | 343,995          |       | 335,990               |   |
|                                                                                                       |   |             |       |                  |   |
| Other assets                                                                                               |   | 236,526          |       | 231,570               |   |
|                                                                                                       |   |             |       |                  |   |
| Total assets                                                                                               |   | $                | 17,289,549 |                  | $      | 15,909,262 |   |

 

See accompanying notes to consolidated financial statements.

 

2

----

 
|                                                                                            |   | **June 30,  2002** |       | **December  31,  2001** |   |
|-------------------------------------------------------------------------------------------------|--------|--------------------|------------|-------------------------|--------|
| Liabilities and Stockholder’s Equity                                                       |   |               |       |                    |   |
|                                                                                            |   |               |       |                    |   |
| Loans payable -  short-term:                                                                    |   |               |       |                    |   |
| Commercial paper                                                                                |   | $                  | 4,021,638  |                    | $      | 4,067,707 |   |
| Affiliates                                                                                      |   | 46,600             |       | 64,600                  |   |
| Other                                                                                           |   | 113,416            |       | 93,742                  |   |
| Unearned  insurance premiums and commissions                                                    |   | 134,460            |       | 133,465                 |   |
| Insurance claims  and policy reserves                                                           |   | 34,430             |       | 34,635                  |   |
| Accrued interest  payable                                                                       |   | 131,120            |       | 131,752                 |   |
| Other  liabilities                                                                              |   | 483,928            |       | 426,876                 |   |
| Long-term debt:                                                                                 |   |               |       |                    |   |
| Senior                                                                                          |   | 8,901,022          |       | 8,145,636               |   |
| Affiliate                                                                                       |   | 1,200,000          |       | 700,000                 |   |
|                                                                                            |   |               |       |                    |   |
| Total  liabilities                                                                              |   | 15,066,614         |       | 13,798,413              |   |
|                                                                                            |   |               |       |                    |   |
| Stockholder’s  equity:                                                                     |   |               |       |                    |   |
| Common stock  without par value (authorized 1,000 shares, issued and outstanding 1,000  shares) |   | 3,855              |       | 3,855                   |   |
| Additional paid  in capital                                                                     |   | 442,302            |       | 442,302                 |   |
| Retained  earnings                                                                              |   | 1,761,858          |       | 1,657,815               |   |
| Accumulated  other comprehensive income, net of income taxes                                    |   | 14,920             |       | 6,877                   |   |
|                                                                                            |   |               |       |                    |   |
| Total  stockholder’s equity                                                                |   | 2,222,935          |       | 2,110,849               |   |
|                                                                                            |   |               |       |                    |   |
| Total liabilities  and stockholder’s equity                                                |   | $                  | 17,289,549 |                    | $      | 15,909,262 |   |

 

See accompanying notes to consolidated financial statements.

 

3

----

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated Statementsof Income (Unaudited)

 

(Thousands of Dollars)

 
|                                |   | **Quarter  Ended June 30,** |    | **Six Months  Ended June 30,** |   |
|-------------------------------------|--------|-----------------------------|---------|--------------------------------|--------|
|                                |   | **2002**                    |    | **2001**                       |   | **2002** |   | **2001** |   |
| Income:                             |   |                        |    |                           |   |   |   |   |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Finance charges  and interest       |   | $                           | 577,827 |                           | $      | 548,612 |   | $ | 1,139,956 |   | $ | 1,091,445 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Insurance premiums  and commissions |   | 29,179                      |    | 29,984                         |   | 58,364 |   | 60,324 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Other income                        |   | 70,670                      |    | 66,901                         |   | 145,649 |   | 131,154 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Total income                        |   | 677,676                     |    | 645,497                        |   | 1,343,969 |   | 1,282,923 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Expenses:                           |   |                        |    |                           |   |   |   |   |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Operating  expenses                 |   | 234,815                     |    | 222,397                        |   | 473,454 |   | 438,728 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Goodwill  amortization              |   |                        |    | 9,431                          |   |   |   | 18,339 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Interest and  debt expense          |   | 159,480                     |    | 178,925                        |   | 311,595 |   | 368,689 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Provision for  credit losses        |   | 158,773                     |    | 120,606                        |   | 298,835 |   | 229,041 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Insurance losses  and loss expenses |   | 12,948                      |    | 9,884                          |   | 24,358 |   | 21,148 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Total expenses                      |   | 566,016                     |    | 541,243                        |   | 1,108,242 |   | 1,075,945 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Income before  income taxes         |   | 111,660                     |    | 104,254                        |   | 235,727 |   | 206,978 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Income taxes                        |   | 41,524                      |    | 39,475                         |   | 86,684 |   | 77,397 |   |
|                                |   |                        |    |                           |   |   |   |   |   |
| Net income                          |   | $                           | 70,136  |                           | $      | 64,779 |   | $ | 149,043 |   | $ | 129,581 |   |

 

See accompanying notes to consolidated financial statements.

 

4

----

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated Statementsof Comprehensive Income (Unaudited)

 

(Thousands of Dollars)

 
|                                                                                                 |   | **Quarter Ended June 30,** |   | **Six Months Ended June 30,** |   |
|------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|-------------------------------|--------|
|                                                                                                 |   | **2002**                   |   | **2001**                      |   | **2002** |   | **2001** |   |
|                                                                                                 |   |                       |   |                          |   |   |   |   |   |
| Net income                                                                                           |   | $                          | 70,136 |                          | $      | 64,779 |   | $ | 149,043 |   | $ | 129,581 |   |
|                                                                                                 |   |                       |   |                          |   |   |   |   |   |
| Other  comprehensive income (loss), before income taxes:                                             |   |                       |   |                          |   |   |   |   |   |
| Unrealized gains  (losses) on securities available-for-sale:                                         |   |                       |   |                          |   |   |   |   |   |
| Unrealized gains  (losses) arising during the period                                                 |   | 20,943                     |   | (3,148                        | )      | 4,455 |   | 13,058 |   |
| Reclassification  adjustment for net losses (gains) included in net income                           |   | 6,847                      |   | 840                           |   | 2,357 |   | (1,270 | ) |
|                                                                                                 |   |                       |   |                          |   |   |   |   |   |
|                                                                                                 |   | 27,790                     |   | (2,308                        | )      | 6,812 |   | 11,788 |   |
|                                                                                                 |   |                       |   |                          |   |   |   |   |   |
| Foreign currency  translation adjustment                                                             |   | 3,792                      |   | 2,101                         |   | 3,648 |   | (331 | ) |
|                                                                                                 |   |                       |   |                          |   |   |   |   |   |
|                                                                                                 |   |                       |   |                          |   |   |   |   |   |
| Other  comprehensive income (loss) before income taxes                                               |   | 31,582                     |   | (207                          | )      | 10,460 |   | 11,457 |   |
|                                                                                                 |   |                       |   |                          |   |   |   |   |   |
| Income tax  expense (benefit) related to unrealized gains (losses) on securities  available-for-sale |   | 9,575                      |   | (879                          | )      | 2,417 |   | 4,005 |   |
| Other  comprehensive income, net of income taxes                                                     |   | 22,007                     |   | 672                           |   | 8,043 |   | 7,452 |   |
|                                                                                                 |   |                       |   |                          |   |   |   |   |   |
| Comprehensive  income                                                                                |   | $                          | 92,143 |                          | $      | 65,451 |   | $ | 157,086 |   | $ | 137,033 |   |

 

See accompanying notes toconsolidated financial statements.

 

5

----

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated Statementsof Cash Flows (Unaudited)

(Thousands of Dollars)

 
|                                                                                                                          |   | **Six Months  Ended June 30,** |    |
|-------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|
|                                                                                                                          |   | **2002**                       |    | **2001** |   |
| Cash flows from  operating activities:                                                                                        |   |                           |    |   |   |
| Net income                                                                                                                    |   | $                              | 149,043 |   | $ | 129,581 |   |
| Adjustments to  reconcile net income to net cash flows from operating activities, net of  effect of contributed subsidiaries: |   |                           |    |   |   |
| Provision for  credit losses                                                                                                  |   | 298,835                        |    | 229,041 |   |
| Depreciation and  amortization                                                                                                |   | 8,463                          |    | 26,660 |   |
| Deferred income  taxes                                                                                                        |   | (12,680                        | )       | 3,892 |   |
| Other assets                                                                                                                  |   | (8,108                         | )       | 43,645 |   |
| Unearned  insurance premiums and commissions                                                                                  |   | 995                            |    | 380 |   |
| Insurance claims  and policy reserves                                                                                         |   | (205                           | )       | (65 | ) |
| Accrued interest  payable                                                                                                     |   | (632                           | )       | 8,157 |   |
| Other payables  to affiliates                                                                                                 |   | 15,271                         |    | (8,376 | ) |
| Other  liabilities                                                                                                            |   | 41,755                         |    | (47,210 | ) |
|                                                                                                                          |   |                           |    |   |   |
| Net cash  provided by operating activities                                                                                    |   | 492,737                        |    | 385,705 |   |
|                                                                                                                          |   |                           |    |   |   |
| Cash flows from  investing activities:                                                                                        |   |                           |    |   |   |
| Finance  receivables:                                                                                                         |   |                           |    |   |   |
| Principal  collected                                                                                                          |   | 5,281,213                      |    | 4,697,127 |   |
| Receivables  originated or purchased                                                                                          |   | (6,640,245                     | )       | (5,254,036 | ) |
| Proceeds from  sales of securities                                                                                            |   | 352,125                        |    | 189,726 |   |
| Proceeds from  maturities of securities                                                                                       |   | 59,809                         |    | 71,884 |   |
| Purchases of  securities                                                                                                      |   | (481,378                       | )       | (326,154 | ) |
| Net additions to  property and equipment                                                                                      |   | (37,878                        | )       | (12,970 | ) |
| Net decrease in  notes receivable – affiliates, net of effect of contributed subsidiaries                                |   | 27,109                         |    | 30,428 |   |
| Cash and cash  equivalents of subsidiary transferred                                                                          |   |                           |    | (1,567 | ) |
| Net cash used  for acquisitions                                                                                               |   | (280,756                       | )       | (324,573 | ) |
| Other                                                                                                                         |   | 42,907                         |    | (28,963 | ) |
|                                                                                                                          |   |                           |    |   |   |
| Net cash used by  investing activities                                                                                        |   | (1,677,094                     | )       | (959,098 | ) |
|                                                                                                                          |   |                           |    |   |   |
| Cash flows from  financing activities:                                                                                        |   |                           |    |   |   |
| Net decrease in  loans payable – short term                                                                              |   | (44,395                        | )       | (267,780 | ) |
| Proceeds from issuance  of long term debt:                                                                                    |   |                           |    |   |   |
| Senior                                                                                                                        |   | 1,498,199                      |    | 1,081,364 |   |
| Affiliate                                                                                                                     |   | 500,000                        |    | 244,130 |   |
| Repayment of  senior long-term debt                                                                                           |   | (784,648                       | )       | (512,375 | ) |
| Capital  contribution by parent                                                                                               |   |                           |    | 130,000 |   |
| Dividends paid                                                                                                                |   | (45,000                        | )       | (60,000 | ) |
|                                                                                                                          |   |                           |    |   |   |
| Net cash  provided by financing activities                                                                                    |   | 1,124,156                      |    | 615,339 |   |
|                                                                                                                          |   |                           |    |   |   |
| Net (decrease)  increase in cash and cash equivalents                                                                         |   | (60,201                        | )       | 41,946 |   |
|                                                                                                                          |   |                           |    |   |   |
| Cash and cash  equivalents beginning of period                                                                                |   | 260,038                        |    | 205,036 |   |
|                                                                                                                          |   |                           |    |   |   |
| Cash and cash  equivalents end of period                                                                                      |   | $                              | 199,837 |   | $ | 246,982 |   |

 

See accompanying notes toconsolidated financial statements.

 

6

----

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated Statementsof Stockholder’s Equity (Unaudited)

 

(Thousands of Dollars)

 
|                              |   |               |   |                              |   |                   |   | **Accumulated Other  Comprehensive Income (Loss)** |      |                                                                |   |
|-----------------------------------|--------|--------------------|--------|-----------------------------------|--------|------------------------|--------|----------------------------------------------------|-----------|---------------------------------------------------------------------|--------|
|                              |   | **Common   Stock** |   | **Additional   Paid In  Capital** |   | **Retained  Earnings** |   | **Foreign   Currency  Translation**                |      | **Unrealized Gains  (Losses) on  Securities  Available-  for-Sale** |   | **Total** |   |
|                              |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Balance,  December 31, 2000       |   | $                  | 3,855  |                              | $      | 312,302                |   | $                                                  | 1,540,902 |                                                                | $      | (11,220 | ) | $ | 8,776 |   | $ | 1,854,615 |   |
|                              |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Comprehensive  income (loss):     |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Net income                        |   |               |   |                              |   | 129,581                |   |                                               |      |                                                                |   | 129,581 |   |
| Other                             |   |               |   |                              |   |                   |   | (331                                               | )         | 7,783                                                               |   | 7,452 |   |
|                              |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Capital  contribution from parent |   |               |   | 130,000                           |   |                   |   |                                               |      |                                                                |   | 130,000 |   |
|                              |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Dividends                         |   |               |   |                              |   | (60,000                | )      |                                               |      |                                                                |   | (60,000 | ) |
|                              |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Transfer of  subsidiary           |   |               |   |                              |   | (4,759                 | )      |                                               |      |                                                                |   | (4,759 | ) |
|                              |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Balance, June  30, 2001           |   | $                  | 3,855  |                              | $      | 442,302                |   | $                                                  | 1,605,724 |                                                                | $      | (11,551 | ) | $ | 16,559 |   | $ | 2,056,889 |   |
|                              |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Balance,  December 31, 2001       |   | $                  | 3,855  |                              | $      | 442,302                |   | $                                                  | 1,657,815 |                                                                | $      | (14,335 | ) | $ | 21,212 |   | $ | 2,110,849 |   |
|                              |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Comprehensive  income:            |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Net income                        |   |               |   |                              |   | 149,043                |   |                                               |      |                                                                |   | 149,043 |   |
| Other                             |   |               |   |                              |   |                   |   | 3,648                                              |      | 4,395                                                               |   | 8,043 |   |
|                              |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Dividends                         |   |               |   |                              |   | (45,000                | )      |                                               |      |                                                                |   | (45,000 | ) |
|                              |   |               |   |                              |   |                   |   |                                               |      |                                                                |   |   |   |
| Balance, June  30, 2002           |   | $                  | 3,855  |                              | $      | 442,302                |   | $                                                  | 1,761,858 |                                                                | $      | (10,687 | ) | $ | 25,607 |   | $ | 2,222,935 |   |

 

See accompanying notes to consolidated financialstatements.

 

7

----

 

WELLS FARGO FINANCIAL,INC.

 

Notes to ConsolidatedFinancial Statements (Unaudited)

 

The accompanying unaudited consolidated financial statements and noteshave been prepared in accordance with the accounting policies set forth inWells Fargo Financial, Inc.’s 2001 Annual Report on Form 10-K, except asdescribed in note 8, and should be read in conjunction with the Notes toConsolidated Financial Statements therein. In the opinion of management, all adjustments (none of which were otherthan normal recurring accruals) necessary to present fairly the financialstatements for the periods presented have been included.  The results of operations for interim periodsare not necessarily indicative of the results to be expected for the entireyear.

 

1.             Principlesof Consolidation.

 

The consolidated financial statements include the accounts of WellsFargo Financial, Inc. (the “Company”) and subsidiaries (collectively, “WellsFargo Financial”).  Intercompanyaccounts and transactions are eliminated. The Company is a wholly-owned subsidiary of Wells Fargo FinancialServices, Inc. (the “Parent”) which is a wholly-owned subsidiary of Wells Fargo& Company (“Wells Fargo”).

 

2.             DividendRestrictions.

 

Certain long-term debt instruments restrict payment of dividends on andacquisitions of the Company’s common stock. In addition, such debt instruments and the Company’s bank credit agreementscontain certain requirements as to maintenance of net worth (as defined).  Approximately $956.4 million of consolidatedstockholder’s equity was unrestricted at June 30, 2002.

 

3.             OtherIncome.

 

Income from affiliates was $16.0 million and $8.5 million for thequarters ended June 30, 2002 and 2001, respectively, and $26.6 million and$19.9 million for the six months ended June 30, 2002 and 2001, respectively.

 

Interest and dividends from securities available-for-sale and cashequivalents were $20.0 million and $20.1 million for the quarters ended June30, 2002 and 2001, respectively, and $39.3 million and $39.1 million for thesix months ended June 30, 2002 and 2001, respectively.

 

8

----

 

4.             FinanceReceivables.

 

Finance receivables are as follows:

 
| **(In Thousands)**                    |   | **June 30,  2002** |       | **December  31,  2001** |   |
|---------------------------------------|--------|--------------------|------------|-------------------------|--------|
|                                  |   |               |       |                    |   |
| United States  consumer finance:      |   |               |       |                    |   |
| Real estate -  secured loans          |   | $                  | 3,492,791  |                    | $      | 2,984,226 |   |
| Consumer loans                        |   | 1,460,996          |       | 1,483,055               |   |
|                                  |   |               |       |                    |   |
| Total loans                           |   | 4,953,787          |       | 4,467,281               |   |
|                                  |   |               |       |                    |   |
| Sales finance  contracts              |   | 1,104,559          |       | 1,228,396               |   |
| Credit cards                          |   | 1,477,406          |       | 1,341,039               |   |
|                                  |   |               |       |                    |   |
| Total United  States consumer finance |   | 7,535,752          |       | 7,036,716               |   |
|                                  |   |               |       |                    |   |
| Canadian  consumer finance:           |   |               |       |                    |   |
| Real estate -  secured loans          |   | 109,753            |       | 90,919                  |   |
| Consumer loans                        |   | 491,489            |       | 461,668                 |   |
|                                  |   |               |       |                    |   |
| Total loans                           |   | 601,242            |       | 552,587                 |   |
|                                  |   |               |       |                    |   |
| Sales finance  contracts              |   | 626,062            |       | 585,725                 |   |
| Credit cards                          |   | 26,684             |       | 24,494                  |   |
|                                  |   |               |       |                    |   |
| Total Canadian  consumer finance      |   | 1,253,988          |       | 1,162,806               |   |
|                                  |   |               |       |                    |   |
| Automobile  finance                   |   | 3,753,988          |       | 3,375,101               |   |
|                                  |   |               |       |                    |   |
| Leasing                               |   | 1,277,381          |       | 1,290,658               |   |
|                                  |   |               |       |                    |   |
| Other                                 |   | 1,013,825          |       | 568,288                 |   |
|                                  |   |               |       |                    |   |
| Total finance  receivables (1)        |   | $                  | 14,834,934 |                    | $      | 13,433,569 |   |

 

----

(1)          Outstanding receivable balances at June 30, 2002 andDecember 31, 2001 are net of unearned income, including net deferred fees, of$2.40 billion and $2.25 billion, respectively. Non-accrual finance receivables were $62.6 million at June 30, 2002compared with $76.0 million at December 31, 2001.  In addition, finance receivables outstanding which were more thanthree payments contractually delinquent and which were still accruing interestwere $161.5 million at June 30, 2002 compared with $172.4 million at December31, 2001.

 

9

----

 

5.                                       Allowance for Credit Losses.

 

The analysis of the allowance for credit losses is as follows:

 
|                                                  |   | **Quarter  Ended June 30,** |    | **Six Months  Ended June 30,** |   |
|-------------------------------------------------------|--------|-----------------------------|---------|--------------------------------|--------|
| **(In Thousands)**                                    |   | **2002**                    |    | **2001**                       |   | **2002** |   | **2001** |   |
|                                                  |   |                        |    |                           |   |   |   |   |   |
| Allowance for  credit losses beginning of period      |   | $                           | 533,900 |                           | $      | 503,074 |   | $ | 521,948 |   | $ | 462,555 |   |
|                                                  |   |                        |    |                           |   |   |   |   |   |
| Provision for  credit losses charged to expense       |   | 158,773                     |    | 120,606                        |   | 298,835 |   | 229,041 |   |
|                                                  |   |                        |    |                           |   |   |   |   |   |
| Write-offs                                            |   | (135,684                    | )       | (132,909                       | )      | (284,332 | ) | (260,428 | ) |
|                                                  |   |                        |    |                           |   |   |   |   |   |
| Recoveries                                            |   | 24,009                      |    | 19,079                         |   | 47,620 |   | 39,107 |   |
|                                                  |   |                        |    |                           |   |   |   |   |   |
| Allowance  related to business combinations and other |   | 3,317                       |    |                           |   | 244 |   | 39,575 |   |
|                                                  |   |                        |    |                           |   |   |   |   |   |
| Allowance for  credit losses end of period            |   | $                           | 584,315 |                           | $      | 509,850 |   | $ | 584,315 |   | $ | 509,850 |   |

 

6.                                       Statements of Consolidated Cash Flows.

 

The Company and its subsidiaries consider highlyliquid debt instruments purchased with an original maturity of three months orless to be cash equivalents. Supplemental disclosure of certain cash flow information is presentedbelow:

 
|                |   | **Quarter  Ended June 30,** |    | **Six Months  Ended June 30,** |   |
|---------------------|--------|-----------------------------|---------|--------------------------------|--------|
| **(In  Thousands)** |   | **2002**                    |    | **2001**                       |   | **2002** |   | **2001** |   |
|                |   |                        |    |                           |   |   |   |   |   |
| Cash paid for:      |   |                        |    |                           |   |   |   |   |   |
| Interest            |   | $                           | 154,234 |                           | $      | 162,494 |   | $ | 317,103 |   | $ | 347,422 |   |
| Income taxes        |   | 60,260                      |    | 26,204                         |   | 70,090 |   | 66,627 |   |
|                     |        |                             |         |                                |        |  |  |  |  |  |  |  |  |

 

10

----

 

7.             SegmentInformation.

 

The Company has four reportable segments: U.S. consumer finance,Canadian consumer finance, automobile finance, and leasing.  The Company’s operating segments aredetermined by product type and geography. U.S. consumer finance operations make loans to individuals and purchasesales finance contracts through 769 consumer finance branches in 47 states,Guam, Saipan, and Puerto Rico.  The U.S.consumer finance segment also issues credit cards through two bankingsubsidiaries.  Canadian consumer financeoperations make loans to individuals and purchase sales finance contractsthrough 161 consumer finance branches in the 10 provinces.  Automobile finance operations specialize inpurchasing sales finance contracts directly from automobile dealers and makingloans secured by automobiles through 188 branches in 34 states and Puerto Rico.  Leasing operations specialize in financingcommercial equipment such as office copiers, telephone systems, health careequipment, small computers, and light industrial equipment.  Lease finance receivables are generatedprimarily from equipment distributors ranging from small independently-ownedvendors to large equipment manufacturers. Results from insurance operations are included in the appropriatesegment.

 

Selected financial information for each segment is shown below:

 
| **(In  Thousands)**           |   |                        |    |                            |   |                    |   |     |   |     |   |     |   |
|-------------------------------|--------|-----------------------------|---------|---------------------------------|--------|-------------------------|--------|----------|--------|----------|--------|----------|--------|
|                          |   | **U.S.  Consumer  Finance** |    | **Canadian  Consumer  Finance** |   | **Automobile  Finance** |   |
| **Quarter Ended  June 30,:**  |   | **2002**                    |    | **2001**                        |   | **2002**                |   | **2001** |   | **2002** |   | **2001** |   |
|                          |   |                        |    |                            |   |                    |   |     |   |     |   |     |   |
| Finance charges  and interest |   | $                           | 313,422 |                            | $      | 304,548                 |   | $        | 67,472 |     | $      | 60,815   |   | $ | 145,831 |   | $ | 130,065 |   |
| Total income                  |   | 371,602                     |    | 369,737                         |   | 74,890                  |   | 67,940   |   | 154,384  |   | 138,133  |   |
| Net income                    |   | 12,256                      |    | 32,360                          |   | 14,180                  |   | 9,408    |   | 26,877   |   | 15,311   |   |
|                               |        |                             |         |                                 |        |                         |        |          |        |          |        |          |        |  |  |  |  |  |  |

 
| **Six Months  Ended  June 30,:** |   |      |    |      |   |      |   |      |    |      |   |      |   |
|----------------------------------|--------|-----------|---------|-----------|--------|-----------|--------|-----------|---------|-----------|--------|-----------|--------|
|                             |   |      |    |      |   |      |   |      |    |      |   |      |   |
| Finance charges  and interest    |   | $         | 627,655 |      | $      | 608,630   |   | $         | 131,426 |      | $      | 121,741   |   | $ | 282,958 |   | $ | 259,985 |   |
| Total income                     |   | 756,986   |    | 740,326   |   | 145,114   |   | 135,367   |    | 299,687   |   | 275,467   |   |
| Net income                       |   | 55,426    |    | 64,159    |   | 25,710    |   | 19,716    |    | 41,369    |   | 26,755    |   |
| Total assets                     |   | 9,385,571 |    | 8,226,148 |   | 1,549,279 |   | 1,236,999 |    | 3,973,967 |   | 3,471,367 |   |
|                                  |        |           |         |           |        |           |        |           |         |           |        |           |        |  |  |  |  |  |  |

 
| **(In  Thousands)**           |   |        |   |       |   |      |   |     |   |     |   |     |   |
|-------------------------------|--------|-------------|--------|------------|--------|-----------|--------|----------|--------|----------|--------|----------|--------|
|                          |   | **Leasing** |   | **Other*** |   | **Total** |   |
| **Quarter Ended  June 30,:**  |   | **2002**    |   | **2001**   |   | **2002**  |   | **2001** |   | **2002** |   | **2001** |   |
|                          |   |        |   |       |   |      |   |     |   |     |   |     |   |
| Finance charges  and interest |   | $           | 35,725 |       | $      | 37,411    |   | $        | 15,377 |     | $      | 15,773   |   | $ | 577,827 |   | $ | 548,612 |   |
| Total income                  |   | 51,024      |   | 45,037     |   | 25,776    |   | 24,650   |   | 677,676  |   | 645,497  |   |
| Net income                    |   | 11,855      |   | 6,440      |   | 4,968     |   | 1,260    |   | 70,136   |   | 64,779   |   |
|                               |        |             |        |            |        |           |        |          |        |          |        |          |        |  |  |  |  |  |  |

 
| **Six Months Ended  June 30,:** |   |      |   |      |   |    |   |    |   |       |   |       |   |
|---------------------------------|--------|-----------|--------|-----------|--------|---------|--------|---------|--------|------------|--------|------------|--------|
|                            |   |      |   |      |   |    |   |    |   |       |   |       |   |
| Finance charges  and interest   |   | $         | 72,753 |      | $      | 69,432  |   | $       | 25,164 |       | $      | 31,657     |   | $ | 1,139,956 |   | $ | 1,091,445 |   |
| Total income                    |   | 96,539    |   | 82,247    |   | 45,643  |   | 49,516  |   | 1,343,969  |   | 1,282,923  |   |
| Net income                      |   | 20,645    |   | 14,623    |   | 5,893   |   | 4,328   |   | 149,043    |   | 129,581    |   |
| Total assets                    |   | 1,386,065 |   | 1,373,595 |   | 994,667 |   | 538,719 |   | 17,289,549 |   | 14,846,828 |   |
|                                 |        |           |        |           |        |         |        |         |        |            |        |            |        |  |  |  |  |  |  |

 

----

*                 Information from other segments below the quantitativethreshold are attributable to miscellaneous insurance companies, collectionservices, operations in Argentina (2001 only) and commercial finance operationsincluding rediscounting.

 

11

----

 

8.             RecentAccounting Standards.

 

In June 2001, the Financial Accounting Board (FASB) issued StatementNo. 142 (FAS 142), Goodwill and Other Intangible Assets.

 

FAS 142 eliminates amortization of goodwill associated with business combinationscompleted after June 30, 2001.  Duringthe transition period from July 1, 2001 through December 31, 2001, goodwillassociated with business combinations completed prior to July 1, 2001,continued to be amortized through the income statement.  Effective January 1, 2002, goodwillamortization ceased.

 

As required by the statement, goodwill was assessed for impairment atthe reporting unit level by applying a fair-value-based test during the firstquarter of 2002.  The Company determinedno goodwill impairment had occurred in its reporting units.

 

“Adjusted Earnings” - FAS142 Transitional Disclosure

 

Under FAS 142, effectiveJanuary 1, 2002 amortization of goodwill was discontinued.  For comparability, the table

below reconciles the Company’s reported earnings to “adjusted”earnings, which exclude goodwill amortization.

 
|                              |   | **June 30, 2001**  |   | **September 30, 2001** |   |
|-----------------------------------|--------|--------------------|--------|------------------------|--------|
| **(In Thousands)**                |   | **Quarter  ended** |   | **Six months  ended**  |   | **Quarter  ended** |   | **Nine months  ended** |   |
|                              |   |               |   |                   |   |   |   |   |   |
| Net income                        |   |               |   |                   |   |   |   |   |   |
| Reported net income               |   | $                  | 64,779 |                   | $      | 129,581 |   | $ | 67,568 |   | $ | 197,149 |   |
| Goodwill amortization, net of tax |   | 6,527              |   | 12,722                 |   | 6,516 |   | 19,238 |   |
| Adjusted net income               |   | $                  | 71,306 |                   | $      | 142,303 |   | $ | 74,084 |   | $ | 216,387 |   |

 
|                              |   | **2001**           |   | **2001**        |   | **2000**        |   | **December 31,**

**1999** |    |
|-----------------------------------|--------|--------------------|--------|-----------------|--------|-----------------|--------|----------------------------|---------|
| **(In Thousands)**                |   | **Quarter  ended** |   | **Year  ended** |   | **Year  ended** |   | **Year  ended**            |    |
|                              |   |               |   |            |   |            |   |                       |    |
| Net income                        |   |               |   |            |   |            |   |                       |    |
| Reported net income               |   | $                  | 67,668 |            | $      | 264,817         |   | $                          | 241,054 |   | $ | 265,361 |   |
| Goodwill amortization, net of tax |   | 6,318              |   | 25,556          |   | 18,932          |   | 21,093                     |    |
| Adjusted net income               |   | $                  | 73,986 |            | $      | 290,373         |   | $                          | 259,986 |   | $ | 286,454 |   |

 

12

----

 

9.             Goodwill.

 

The changes in thecarrying amount of goodwill for the quarter and six months ended June 30, 2002,respectfully, are as follows:

 
| **(In  Thousands)**                      |   | **U.S.  Consumer Finance** |   | **Canadian   Consumer Finance** |   | **Automobile  Finance** |   | **Leasing** |    | **Other** |   | **Total** |   |
|------------------------------------------|--------|----------------------------|--------|---------------------------------|--------|-------------------------|--------|-------------|---------|-----------|--------|-----------|--------|
| Quarter ended  June 30, 2002             |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
|                                     |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
| Balance as of  March 31, 2002            |   | $                          | 12,894 |                            | $      | 33,784                  |   | $           | 178,815 |      | $      | 110,417   |   | $ | 6,333 |   | $ | 342,243 |   |
|                                     |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
| Purchase  accounting adjustment          |   |                       |   |                            |   |                    |   |        |    | (4        | )      | (4        | )      |
|                                     |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
| Foreign currency  translation adjustment |   |                       |   | 1,756                           |   |                    |   |        |    |      |   | 1,756     |   |
|                                     |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
| Balance as of  June 30, 2002             |   | $                          | 12,894 |                            | $      | 35,540                  |   | $           | 178,815 |      | $      | 110,417   |   | $ | 6,329 |   | $ | 343,995 |   |
|                                     |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
| Six months ended  June 30, 2002          |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
|                                     |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
| Balance as of  December 31, 2001         |   | $                          | 12,894 |                            | $      | 33,864                  |   | $           | 178,815 |      | $      | 110,417   |   | $ |   | $ | 335,990 |   |
|                                     |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
| Goodwill  acquired (1)                   |   |                       |   |                            |   |                    |   |        |    | 6,333     |   | 6,333     |   |
|                                     |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
| Purchase  accounting adjustment          |   |                       |   |                            |   |                    |   |        |    | (4        | )      | (4        | )      |
|                                     |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
| Foreign currency  translation adjustment |   |                       |   | 1,676                           |   |                    |   |        |    |      |   | 1,676     |   |
|                                     |   |                       |   |                            |   |                    |   |        |    |      |   |      |   |
| Balance as of  June 30, 2002             |   | $                          | 12,894 |                            | $      | 35,540                  |   | $           | 178,815 |      | $      | 110,417   |   | $ | 6,329 |   | $ | 343,995 |   |

 

----

(1)  The additional goodwill resulted from thepurchase of the rediscount operations of Washington Mutual Bank, FA onMarch 28, 2002.

 

13

----

 

WELLS FARGO FINANCIAL,INC.

 

Management’s Discussionand Analysisof Financial Condition and Results of Operations

 

*Statementsmade in Management’s Discussion and Analysis may be forward-looking and aremade pursuant to the safe harbor provisions of the Private SecuritiesLitigation Reform Act of 1995. Forward-looking statements address management’s present expectationsabout future performance and involve inherent risks and uncertainties.  A number of important factors (some of whichare beyond the Company’s control) could cause actual results to differmaterially from those in the forward-looking statements.  Those factors include the economicenvironment, competition, products and pricing in the geographic and businessareas in which the Company conducts its operations, prevailing interest rates,changes in government regulations and policies affecting financial servicescompanies, credit quality and credit risk management, acquisitions, andintegration of acquired businesses.*

 

The discussion and analysis that follows, therefore, is limited to adiscussion of the first six months as a whole and does not include a separatediscussion of the second quarter unless otherwise noted.

 

Wells Fargo Financial’s net income for the first six months of 2002 was$149.0 million compared with $129.6 million for the first six months of2001.  Wells Fargo Financial adopted FAS142, Goodwill and Other Intangible Assets, effective January 1, 2002.  Accordingly, goodwill amortization ceased.  Net income in the first six months of 2001included $12.7 million of goodwill amortization (net of tax).  Excluding amortization of goodwill, netincome for the first six months of 2002 was $149.0 compared with $142.3 millionfor the first six months of 2001.

 

Well’s Fargo Financial’s total income (revenue) increased 5% for thefirst six months ($1,344.0 million in the first six months of 2002 comparedwith $1,282.9 million in the first six months of 2001).

 

Income from finance charges and interest increased 4% for the first sixmonths ($1,140.0 million in the first six months of 2002 compared with $1,091.4million in the first six months of 2001). Changes in income from finance charges and interest result predominantlyfrom (1) changes in the amount of finance receivables outstanding and (2) changesin the rate of charge on those receivables. In total, average financereceivables outstanding in the first six months of 2002 increased 14% from thefirst six months of 2001; average U.S. consumer finance receivables outstandingincreased 11%, average Canadian consumer finance receivables outstandingincreased 15%, average automobile finance receivables outstanding increased11%, average leasing finance receivables outstanding increased 11%, and averageother finance receivables outstanding increased 75%.

 
|                                   |   | **2002** |   | **2001** |   |
|----------------------------------------|--------|----------|--------|----------|--------|
| Rate of charge on finance receivables: |   |     |   |     |   |
|                                   |   |     |   |     |   |
| U.S. consumer  finance                 |   | 17.53    | %      | 18.87    | %      |
| Canadian  consumer finance             |   | 22.39    |   | 23.84    |   |
| Automobile  finance                    |   | 16.27    |   | 16.62    |   |
| Leasing                                |   | 11.49    |   | 12.20    |   |
| Other                                  |   | 6.54     |   | 14.38    |   |
| Total                                  |   | 16.46    |   | 17.92    |   |

 

14

----

 

The increase in income from finance charges and interest was due togrowth in average receivables outstanding. Growth in average receivables for U.S. consumer finance, Canadianconsumer finance and automobile finance was due to regular businessactivity.  The increase in averageleasing finance receivables was due primarily to the purchase of ConsecoFinance Vendor Services Corporation on January 31, 2001.  The majority of the increase in otheraverage receivables was due to significant receivable growth of therediscounting operations.  Changes inthe earned rates of charge were due to changes in prevailing market ratescombined with a change in portfolio mix. The decline in the earned rate of charge for other finance receivablesoccurred due to the change in portfolio mix occurring due to the growth ofrediscounting operations and the transfer of the Company’s operations inArgentina to its parent during December 2001.

 

Other income increased 11% ($145.6 million in the first six months of2002 compared with $131.2 million in the first six months of 2001).  The increase in other income was due to anincrease in income from affiliates and due to additional fee income originatingfrom the leasing acquisition in the prior year.

 

Operating expenses increased 8% ($473.5 million in the first six monthsof 2002 compared with $438.7 million in the first six months of 2001).  The increase was due primarily to increasesin employee compensation and benefits and other costs relating to businessexpansion and acquisitions.

 

Interest and debt expense decreased 15% ($311.6 million in the firstsix months of 2002 compared with $368.7 million in the first six months of2001).  Changes in interest and debtexpense result predominantly from (1) changes in the amount of borrowingsoutstanding and (2) changes in the cost of those borrowings.  Average total outstanding borrowings in thefirst six months of 2002 increased 18% from the first six months of 2001.

 
|            |   | **Six Months  Ended June 30,** |   |
|-----------------|--------|--------------------------------|--------|
|            |   | **2002**                       |   | **2001** |   |
| Costs of funds: |   |                           |   |   |   |
| Short-term      |   | 2.09                           | %      | 5.60 | % |
| Long-term       |   | 5.97                           |   | 6.54 |   |
| Total           |   | 4.73                           |   | 6.26 |   |

 

Changes in average debt outstanding generally correspond to changes inaverage finance receivables outstanding combined with the change in notesreceivable - affiliates.  Averagefinance receivables and notes receivable - affiliates increased 14% from thefirst six months of 2002.

 

Provision for credit losses increased 30% ($298.8 million in the firstsix months of 2002 compared with $229.0 million in the first six months of2001).  In the second quarter of 2002,Wells Fargo Financial adopted a new loss recognition policy for consumer loansand sales finance contracts in its U.S. consumer finance stores.  Previously, losses in this part of the U.S.consumer finance portfolio were determined using a combination of recency andcontractual delinquency.  The new policyis based on contractual delinquency. The change increased the provision for losses by approximately $20million.  The Company expects theadditional losses will be recognized as write-offs in the third quarter of2002.

 

Net write-offs increased 7% ($236.7 million in the first six months of2002 compared with $221.3 million in the first six months of 2001).  The increase was due primarily to higher write-offsin the Company’s Canadian consumer finance, automobile, and leasing portfolios(see following table).  This increasewas partially offset by improvements in the U.S. consumer finance business andother finance businesses.

 

15

----

 
|                                                                                     |   | **Six Months  Ended June 30,** |   |
|------------------------------------------------------------------------------------------|--------|--------------------------------|--------|
|                                                                                     |   | **2002**                       |   | **2001** |   |
| Net write-offs,  not annualized, as a percentage of average net receivables outstanding: |   |                           |   |   |   |
|                                                                                     |   |                           |   |   |   |
| U.S. consumer  finance                                                                   |   | 1.92                           | %      | 2.17 | % |
| Canadian  consumer finance                                                               |   | 2.14                           |   | 2.04 |   |
| Automobile  finance                                                                      |   | 1.60                           |   | 1.35 |   |
| Leasing                                                                                  |   | 1.25                           |   | 1.11 |   |
| Other                                                                                    |   | .31                            |   | 1.30 |   |
| Total                                                                                    |   | 1.71                           |   | 1.82 |   |

 

Through June 30, 2002, the provision for credit losses exceeded netwrite-offs by $62.1 million.  Asdiscussed previously, provision expense during the second quarter of 2002includes the effect of a new loss recognition policy for consumer loans, ofapproximately $20 million.  AtJune 30, 2002, the Company had an allowance for credit losses of $584.3million (3.94% of receivables) compared with $521.9 million (3.89% ofreceivables) at December 31, 2001. Non-accrual finance receivables were $62.6 million at June 30, 2002compared with $76.0 million at December 31, 2001.  In addition, finance receivables outstanding which were more thanthree payments contractually delinquent and which were still accruing interestwere $161.5 million at June 30, 2002 compared with $172.4 million at December31, 2001.  The process of determiningthe allowance for credit losses is a critical accounting policy of the Company.  The process requires subjective and complexjudgements by management. Assumptions about economic conditions, unemploymentrates, and projected write-offs are factors considered when evaluating theallowance for losses.  Managementbelieves that the allowance for credit losses at June 30, 2002, is adequate toabsorb probable losses on existing receivables in the finance receivablesportfolio.  However, no assurance can begiven that the Company will not, in any particular period, sustain creditlosses that are sizeable in relation to the amount reserved, or that subsequentevaluations of the portfolio, in light of the factors then prevailing,including economic conditions and the ongoing examination process by theCompany, will not require significant increases in the allowance for losses.

 

Income taxes increased 12% ($86.7 million in the first six months of2002 compared with $77.4 million in the first six months of 2001).  Income before income taxes increased 14%($235.7 million in the first six months of 2002 compared with $207.0 million inthe first six months of 2001.)  Theeffective tax rate was 36.8% for the first six months of 2002 and 37.4% for thefirst six months of 2001.

 

The Company maintains bank lines of credit and revolving creditagreements to provide an alternative source of liquidity to support theCompany’s commercial paper borrowings. At June 30, 2002, lines of credit and revolving credit agreementstotaling $2,764 million were being maintained at 19 domestic and internationalbanks; the entire amount was available on that date.  Additionally, the Company’s bank subsidiaries, Wells FargoFinancial Bank and Wells Fargo Financial National Bank, have access to federalfunds borrowings.  At June 30, 2002,federal funds availability at the two banks was $557 million.

 

The Company and a Canadian subsidiary obtain long-term debt capitalprimarily from the issuance of debt securities to the public throughunderwriters on a firm-commitment basis and the issuance of debt securities toinstitutional investors.  The Companyand a Canadian subsidiary also obtain long-term debt from the issuance ofmedium-term notes (which have maturities ranging from nine months to 30 years)through underwriters (acting as agent or principal).

 

The Company anticipates the continued availability of borrowed funds,at prevailing interest rates, to provide for Wells Fargo Financial’s growth inthe foreseeable future.  Funds are alsogenerated internally from payments of principal and interest on Wells FargoFinancial’s finance receivables.

 

 

16

----

 

PART II.  OTHER INFORMATION

 

WELLS FARGO FINANCIAL,INC.

 

## *Item 5. Other Information.*

 

RATIOS OF EARNINGS TOFIXED CHARGES

 

The following table sets forth the ratios of earnings to fixed chargesof Wells Fargo Financial, Inc. and its subsidiaries for the periods indicated:

 
| **Six Months**

**Ended**

**June 30, 2002** |                          |   |     |   |     |   |     |   |     |   |   |
|----------------------------------------------|-------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|--------|
|                                         | **Years  Ended December 31,** |   |
|                                         | **2001**                      |   | **2000** |   | **1999** |   | **1998** |   | **1997** |   |
| 1.74                                         |                          | 1.61   |     | 1.58   |     | 1.78   |     | 1.72   |     | 2.00   |   |

 

The ratios of earnings to fixed charges have been computed by dividingnet earnings plus fixed charges and income taxes by fixed charges.  Fixed charges consist of interest and debtexpense plus one-third of rentals (which is deemed representative of theinterest factor).

 

*Item6.  Exhibits and Reports on Form 8-K.*

 

(a)  Exhibits:

 
| Exhibit (12)   |   | Computation of ratios of  earnings to fixed charges for the years ended December  31, 2001, 2000,  1999, 1998  |   |
|----------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|
|           |   | and 1997 and the six  months ended June 30, 2002.                                                                   |   |
|           |   |                                                                                                                |   |
| Exhibit (99.1) |   | Certification of Periodic  Financial Report by Chief Executive Officer Pursuant to 18 U.S.C. § 1350.           |   |
|           |   |                                                                                                                |   |
| Exhibit (99.2) |   | Certification of Periodic  Financial Report by Chief Financial Executive Officer Pursuant to 18 U.S.C. § 1350. |   |

 

(b)  Reports on 8-K

 

No reports on Form 8-K were filed during the quarter for which thisreport is filed.

 

S I G N A T U R E S

 

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 theundersigned thereunto duly authorized.

 
|                        | WELLS FARGO FINANCIAL,  INC. |                                  |
|-----------------------------|------------------------------|---------------------------------------|
|                        |                         |                                  |   |
| Date:  August 12, 2002 |                         |                                  |   |
|                        |                         |                                  |   |
|                        | By                           | /s/ Eric  Torkelson                   |   |
|                        |                         | Eric Torkelson                        |   |
|                        |                         | Senior Vice  President and Controller |   |
|                        |                         | (Principal  Accounting Officer)       |   |

 

17

----