SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1998
Commission file number 1-13300
CAPITAL ONE FINANCIAL CORPORATION ASSOCIATE SAVINGS PLAN
2980 Fairview Park Drive
Suite 1300
Falls Church, Virginia 22042-4525
-----------------------------
CAPITAL ONE FINANCIAL CORPORATION
2980 Fairview Park Drive
Suite 1300
Falls Church, Virginia 22042-4525
Financial Statements and Exhibits
(a) Financial Statements
The Capital One Financial Corporation Associate Savings Plan (the "Plan") became
effective as of January 1, 1995. Filed as a part of this report on Form 11-K are
the audited financial statements of the Plan as of December 31, 1998 and 1997.
(b) Exhibit
(1) Consent of Independent Auditors
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
CAPITAL ONE FINANCIAL
CORPORATION ASSOCIATE
SAVINGS PLAN
---------------------
(Name of Plan)
By: /s/David M. Willey
------------------
Name:David M. Willey
on behalf of the Benefits
Committee, as Plan
Administrator
Dated: June 29, 1999
Financial Statements
and Supplemental Schedules
Capital One Financial Corporation
Associate Savings Plan
Years Ended December 31, 1998 and 1997
with Report of Independent Auditors
Capital One Financial Corporation Associate Savings Plan
Financial Statements
and Supplemental Schedules
Years Ended December 31, 1998 and 1997
Contents
Report of Independent Auditors.................................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits, with Fund Information.........2
Statements of Changes in Net Assets Available for Benefits,
with Fund Information.........................................................4
Notes to Financial Statements..................................................6
Supplemental Schedules
Schedule of Assets Held for Investment Purposes...............................11
Schedule of Reportable Transactions...........................................12
Report of Independent Auditors
Benefits Committee
Capital One Financial Corporation
We have audited the accompanying statements of net assets available for benefits
of Capital One Financial Corporation Associate Savings Plan ("Plan") as of
December 31, 1998 and 1997, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for purposes of additional
analysis and are not a required part of the financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The Fund Information in the statement of net assets available
for benefits and the statement of changes in net assets available for benefits
is presented for purposes of additional analysis rather than to present the net
assets available for benefits and the changes in net assets available for
benefits of each fund. The supplemental schedules and Fund Information have been
subjected to auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ERNST & YOUNG LLP
Washington, D.C.
June 25, 1999
Capital One Financial Corporation Associate Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
Fund Information
------------------------------------------------
Capital American
One Express Trust American
Pooled Money Express Trust
Company Market Equity Index
Stock Fund Fund II Fund II
-----------------------------------------------
Assets
Investments, at fair value:
Units of Capital One Pooled
Company
Stock Fund .............. $ 60,034,430
Shares of registered
investment
companies ............... -- $ 14,152,910 $ 14,817,046
Participant notes
receivable ..............
-----------------------------------------------
Total investments ....... 60,034,430 14,152,910 14,817,046
Receivables:
Employer's
contributions ...... 518,438 598,217 258,885
Participants'
contributions ...... 185 545 3
Accrued income ....... 53,374
-----------------------------------------------
Total receivables ....... 518,623 652,136 258,888
Cash and cash
equivalents .......... 335,094 71,159 148,036
-----------------------------------------------
Total assets ............ 60,888,147 14,876,205 15,223,970
-----------------------------------------------
Liabilities
Administrative expenses
payable .............. -- 49,681 --
-----------------------------------------------
Net assets available for
benefits ............. $ 60,888,147 $ 14,826,524 $ 15,223,970
-----------------------------------------------
---------------------------------------------------
IDS Y IDS Y
(American IDS Y (American
Express) (American Express)
Federal Income Express) Stock
Fund Mutual Fund Fund
---------------------------------------------------
Assets
Investments, at fair value:
Units of Capital One Pooled
Company
Stock Fund ..............
Shares of registered
investment
companies ............... $ 3,311,161 $ 2,540,444 $ 7,495,353
Participant notes
receivable ..............
-----------------------------------------------
Total investments ....... 3,311,161 2,540,444 7,495,353
Receivables:
Employer's
contributions ...... 45,694 71,563 129,646
Participants'
contributions ...... 40 139 54
Accrued income .......
-----------------------------------------------
Total receivables ....... 45,734 71,702 129,700
Cash and cash
equivalents .......... -- -- --
-----------------------------------------------
Total assets ............ 3,356,895 2,612,146 7,625,053
-----------------------------------------------
Liabilities
Administrative expenses
payable .............. -- -- --
-----------------------------------------------
Net assets available for
benefits ............. $ 3,356,895 $ 2,612,146 $ 7,625,053
-----------------------------------------------
-----------------------------------------------
AIM Templeton Baron
Constellation Foreign Asset
Fund Fund Fund
-----------------------------------------------
Assets
Investments, at fair value:
Units of Capital One Pooled
Company
Stock Fund .............. -- -- --
Shares of registered
investment
companies ............... $ 10,127,899 $ 2,804,237 $ 446,120
Participant notes
receivable ..............
-----------------------------------------------
Total investments ....... 10,127,899 2,804,237 446,120
Receivables:
Employer's
contributions ...... 190,425 76,974 22,058
Participants'
contributions ...... 28 3 28
Accrued Income
-----------------------------------------------
Total receivables ....... 190,453 76,977 22,086
Cash and cash
equivalents .......... -- -- --
-----------------------------------------------
Total assets ............ 10,318,352 2,881,214 468,206
-----------------------------------------------
Liabilities
Administrative expenses
payable .............. -- -- --
-----------------------------------------------
Net assets available for
benefits ............. $ 10,318,352 $ 2,881,214 $ 468,206
-----------------------------------------------
-----------------------------------------------
Davis
New York
Venture Participant
(Class A) Notes Total
-----------------------------------------------
Assets
Investments, at fair value:
Units of Capital One Pooled
Company
Stock Fund .............. -- -- $ 60,034,430
Shares of registered
investment
companies .............. $ 426,249 -- 56,121,419
Participant notes
receivable .............. $ 4,230,131 4,230,131
-----------------------------------------------
Total investments ....... 426,249 4,230,131 120,385,980
Receivables:
Employer's
contributions ...... 23,878 -- 1,935,778
Participants'
contributions ...... 28 1,053
Accrued Income 53,374
-----------------------------------------------
Total receivables ....... 23,906 -- 1,990,205
Cash and cash
equivalents .......... -- -- 554,289
-----------------------------------------------
Total assets ............ 450,155 4,230,131 122,930,474
Liabilities
Administrative expenses
payable .............. -- -- 49,681
-----------------------------------------------
Net assets available for
benefits ............. $ 450,155 $ 4,230,131 $122,880,793
See accompanying notes.
Capital One Financial Corporation Associate Savings Plan
Statement of Net Assets Available for Benefits,
with Fund Information
December 31, 1997
Fund Information
-------------------------------------------------------------------
American
Capital Express American IDS Y
One Trust Express (American IDS Y
Pooled Money Trust Express) (American
Company Market Equity Index Federal Express)
Stock Fund Fund II Fund II Income Fund Mutual Fund
-------------------------------------------------------------------
Assets
Investments, at fair value:
Units of Capital One Pooled Company Stock Fund $21,795,608 -- -- -- --
Shares of registered investment companies .... -- $10,220,258 $ 9,181,548 $ 1,641,552 $ 1,483,047
Participant notes receivable ................. -- -- -- -- --
-------------------------------------------------------------------
Total investments ............................... 21,795,608 10,220,258 9,181,548 1,641,552 1,483,047
Receivables:
Employer's contributions ..................... 290,641 396,276 201,992 35,510 62,821
Participants' contributions .................. 107,182 53,562 71,316 12,054 19,673
Accrued income ............................... -- 43,671 -- -- --
-------------------------------------------------------------------
Total receivables ............................... 397,823 493,509 273,308 47,564 82,494
Cash and cash equivalents ....................... -- 2,542 -- -- --
-------------------------------------------------------------------
Total assets .................................... 22,193,431 10,716,309 9,454,856 1,689,116 1,565,541
-------------------------------------------------------------------
Liabilities
Administrative expenses payable ............ -- 37,641 -- -- --
-------------------------------------------------------------------
Net assets available for benefits ............... $22,193,431 $10,678,668 $ 9,454,856 $ 1,689,116 $ 1,565,541
===================================================================
--------------------------------------------------------------------------------
IDS Y
(American
Express) AIM Templeton
Stock Constellation Foreign Participant
Fund Fund Fund Notes Total
-----------------------------------------------------------------------
Assets
Investments, at fair value:
Units of Capital One Pooled Company Stock Fund -- -- -- -- $21,795,608
Shares of registered investment companies .... $ 5,353,113 $ 7,944,122 $ 2,246,183 -- 38,069,823
Participant notes receivable ................. -- -- -- $ 2,679,032 2,679,032
-----------------------------------------------------------------------
Total investments ............................... 5,353,113 7,944,122 2,246,183 2,679,032 62,544,463
Receivables:
Employer's contributions ..................... 118,103 203,987 88,409 -- 1,397,739
Participants' contributions .................. 40,976 75,635 32,411 -- 412,809
Accrued income ............................... -- -- -- -- 43,671
-----------------------------------------------------------------------
Total receivables ............................... 159,079 279,622 120,820 -- 1,854,219
Cash and cash equivalents ....................... -- -- -- -- $ 2,542
-----------------------------------------------------------------------
Total assets .................................... 5,512,192 8,223,744 2,367,003 2,679,032 64,401,224
-----------------------------------------------------------------------
Liabilities
Administrative expenses payable ............ -- -- -- -- 37,641
-----------------------------------------------------------------------
Net assets available for benefits ............... $ 5,512,192 $ 8,223,744 $ 2,367,003 $ 2,679,032 $ $64,363,583
=======================================================================
See accompanying notes.
4
Capital One Financial Corporation Associate Savings Plan
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year Ended December 31, 1998
Fund Information
-----------------------------------------------
Capital American
One Express Trust American
Pooled Money Express Trust
Company Market Equity Index
Stock Fund Fund II Fund II
-----------------------------------------------
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation) in
fair value of investments ......... $ 29,219,337 $ 14 $ 2,942,944
Interest ............................ 928 239 --
Dividends ........................... 148,841 578,418 --
-----------------------------------------------
29,369,106 578,671 2,942,944
Contributions:
Employer's .......................... 3,894,580 2,620,435 2,221,547
Participants' ....................... 3,380,590 950,096 2,057,048
Rollovers ........................... 1,124,641 175,772 504,554
-----------------------------------------------
8,399,811 3,746,303 4,783,149
-----------------------------------------------
Total additions ......................... 37,768,917 4,324,974 7,726,093
Deductions from net assets attributed to:
Benefits paid to participants ......... (1,745,666) (1,487,562) (479,305)
Administrative expenses ............... -- (178,556) --
-----------------------------------------------
Total deductions ........................ (1,745,666) (1,666,118) (479,305)
Net increase (decrease) prior to
interfund transfers ................... 36,023,251 2,658,856 7,246,788
Interfund transfers, net ............... 2,671,465 1,489,000 (1,477,674)
-----------------------------------------------
Net increase (decrease) ................. 38,694,716 4,147,856 5,769,114
Net assets available for benefits:
Beginning of year ....................... 22,193,431 10,678,668 9,454,856
-----------------------------------------------
End of year ............................. $ 60,888,147 $ 14,826,524 $ 15,223,970
===============================================
---------------------------------------------------------------------------------
IDS Y IDS Y
IDS Y (American (American
(American Express Express AIM
Express) Federal Mutual Stock Constellation Templeton
Income Fund Fund Fund Fund Foreign Fund
---------------------------------------------------------------------------------
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation) in
fair value of investments ......... $ (26,727) $ (134,643) $ 539,272 $ 1,297,478 $ (442,887)
Interest ............................ -- -- -- -- --
Dividends ........................... 164,854 329,172 606,404 246,138 268,838
---------------------------------------------------------------------------------
138,127 194,529 1,145,676 1,543,616 (174,049)
Contributions:
Employer's .......................... 357,082 598,073 1,167,419 1,955,196 835,618
Participants' ....................... 288,381 498,701 1,009,535 1,793,148 799,574
Rollovers ........................... 203,561 247,366 335,128 168,302 67,779
---------------------------------------------------------------------------------
849,024 1,344,140 2,512,082 3,916,646 1,702,971
---------------------------------------------------------------------------------
Total additions ......................... 987,151 1,538,669 3,657,758 5,460,262 1,528,922
Deductions from net assets attributed to:
Benefits paid to participants ......... (77,595) (101,134) (223,229) (552,047) (113,534)
Administrative expenses ............... -- -- -- -- --
---------------------------------------------------------------------------------
Total deductions ........................ (77,595) (101,134) (223,229) (552,047) (113,534)
Net increase (decrease) prior to
interfund transfers ................... 909,556 1,437,535 3,434,529 4,908,215 1,415,388
Interfund transfers, net ............... 758,223 (390,930) (1,321,668) (2,813,607) (901,177)
---------------------------------------------------------------------------------
Net increase (decrease) ................. 1,667,779 1,046,605 2,112,861 2,094,608 514,211
Net assets available for benefits:
Beginning of year ....................... 1,689,116 1,565,541 5,512,192 8,223,744 2,367,003
---------------------------------------------------------------------------------
End of year ............................. $ 3,356,895 $ 2,612,146 $ 7,625,053 $ 10,318,352 $ 2,881,214
=================================================================================
----------------------------------------------------------------
Davis
Baron New York
Asset Venture Participant
Fund (Class A) Notes Total
----------------------------------------------------------------
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation) in
fair value of investments ......... 44,021 19,977 -- $ 33,458,786
Interest ............................ -- -- $ 290,869 292,036
Dividends ........................... 349 7,361 -- 2,350,375
----------------------------------------------------------------
44,370 27,338 290,869 36,101,197
Contributions:
Employer's .......................... 44,640 46,015 -- 13,740,605
Participants' ....................... 44,555 44,183 -- 10,865,811
Rollovers ........................... 80,350 18,378 -- 2,925,831
----------------------------------------------------------------
169,545 108,576 -- 27,532,247
----------------------------------------------------------------
Total additions ......................... 213,915 135,914 290,869 63,633,444
Deductions from net assets attributed to:
Benefits paid to participants ......... (2,900) (3,480) (151,226) (4,937,678)
Administrative expenses ............... -- -- -- (178,556)
----------------------------------------------------------------
Total deductions ........................ (2,900) (3,480) (151,226) (5,116,234)
Net increase (decrease) prior to
interfund transfers ................... 211,015 132,434 139,643 58,517,210
Interfund transfers, net ............... 257,191 317,721 1,411,456
----------------------------------------------------------------
Net increase (decrease) ................. 468,206 450,155 1,551,099 58,517,210
Net assets available for benefits:
Beginning of year ....................... -- -- 2,679,032 64,363,583
----------------------------------------------------------------
End of year ............................. $ 468,206 $ 450,155 $ 4,230,131 $ 122,880,793
================================================================
See accompanying notes.
Capital One Financial Corporation Associate Savings Plan
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year Ended December 31, 1997
Fund Information
----------------------------------------------------------------------------
Capital One American American (American
Pooled Express Trust Express Express)
Company Signet Money Trust Federal
Stock Stock Market Equity Index Income Fund
Fund Pooled Fund Fund II Fund II
----------------------------------------------------------------------------
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation) in fair value
of investments .............................. $ 7,050,683 $ 1,761,316 -- $ 1,743,505 $ 19,111
Interest .................................... 1,208 -- $ 18,064 -- 17
Dividends ................................... 112,900 47,206 385,261 -- 68,449
----------------------------------------------------------------------------
7,164,791 1,808,522 403,325 1,743,505 87,577
Contributions:
Employer's .................................. 2,288,892 -- 2,432,529 1,453,419 268,261
Participants' ............................... 1,776,664 -- 921,620 1,357,883 210,747
Rollovers ................................... 74,461 -- 173,568 163,251 11,267
----------------------------------------------------------------------------
4,140,017 -- 3,527,717 2,974,553 490,275
Total additions ................................ 11,304,808 1,808,522 3,931,042 4,718,058 577,852
Deductions from net assets attributed to:
Benefits paid to participants ............... (811,273) (162,651) (769,566) (319,056) (53,088)
Administrative expenses ..................... -- -- (151,201) -- --
----------------------------------------------------------------------------
Total deductions ............................... (811,273) (162,651) (920,767) (319,056) (53,088)
Net increase (decrease) prior to interfund
transfers ...................................... 10,493,535 1,645,871 3,010,275 4,399,002 524,764
Interfund transfers, net ...................... (32,577) (4,258,480) 1,540,952 880,297 301,155
----------------------------------------------------------------------------
Net increase (decrease) ........................ 10,460,958 (2,612,609) 4,551,227 5,279,299 825,919
Net assets available for benefits:
Beginning of year ........................... 11,732,473 2,612,609 6,127,441 4,175,557 863,197
----------------------------------------------------------------------------
End of year ................................. $ 22,193,431 -- $ 10,678,668 $ 9,454,856 $ 1,689,116
============================================================================
----------------------------------------------------------------------------
IDS Y IDS Y
(American (American
Express) Express) AIM Templeton
Mutual Stock Constellation Foreign Participant
Fund Fund Fund Fund Notes
----------------------------------------------------------------------------
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation) in fair value
of investments .............................. $ (50,070) $ 193,513 $ 153,142 $ (188,738 --
Interest .................................... -- -- -- -- $ 168,265
Dividends ................................... 196,734 735,823 562,179 230,571 --
----------------------------------------------------------------------------
146,664 929,336 715,321 41,833 168,265
Contributions:
Employer's .................................. 358,384 836,427 1,625,877 574,758 --
Participants' ............................... 309,149 703,951 1,528,205 578,575 --
Rollovers ................................... 64,794 114,858 170,477 70,775 --
----------------------------------------------------------------------------
732,327 1,655,236 3,324,559 1,224,108 --
Total additions ................................ 878,991 2,584,572 4,039,880 1,265,941 168,265
Deductions from net assets attributed to:
Benefits paid to participants ............... (39,400) (225,927) (307,652) (62,149) (277,196)
Administrative expenses ..................... -- -- -- -- --
----------------------------------------------------------------------------
Total deductions ............................... (39,400) (225,927) (307,652) (62,149) (277,196)
Net increase (decrease) prior to interfund
transfers ...................................... 839,591 2,358,645 3,732,228 1,203,792 (108,931)
Interfund transfers, net ...................... 356,921 183,259 (201,434) 319,413 910,494
----------------------------------------------------------------------------
Net increase (decrease) ........................ 1,196,512 2,541,904 3,530,794 1,523,205 801,563
Net assets available for benefits:
Beginning of year ........................... 369,029 2,970,288 4,692,950 843,798 1,877,469
----------------------------------------------------------------------------
End of year ................................. $ 1,565,541 $ 5,512,192 $ 8,223,744 $ 2,367,003 $ 2,679,032
============================================================================
------------
Total
------------
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation) in fair value
of investments .............................. $ 10,682,462
Interest .................................... 187,554
Dividends ................................... 2,339,123
------------
13,209,139
Contributions:
Employer's .................................. 9,838,547
Participants' ............................... 7,386,794
Rollovers ................................... 843,451
------------
18,068,792
Total additions ................................ 31,277,931
Deductions from net assets attributed to:
Benefits paid to participants ............... (3,027,958)
Administrative expenses ..................... (151,201)
------------
Total deductions ............................... (3,179,159)
Net increase (decrease) prior to interfund
transfers ...................................... 28,098,772
Interfund transfers, net ......................
------------
Net increase (decrease) ........................ 28,098,772
Net assets available for benefits:
Beginning of year ........................... 36,264,811
------------
End of year ................................. $ 64,363,583
============
See accompanying notes.
Capital One Financial Corporation Associate Savings Plan
Notes to Financial Statements
December 31, 1998
Note 1--Description of Plan
Effective January 1, 1995, Capital One Financial Corporation (the "Corporation")
established and adopted the Capital One Financial Corporation Associate Savings
Plan (the "Plan") for the benefit of its eligible associates. American Express
Trust Company (the "Trustee") serves as the administrator and trustee for the
Plan and its assets.
Through a November 12, 1998 amendment to the Plan effective January 1, 1999, all
employees of Summit Acceptance Corporation (a Texas corporation which was
acquired by the Corporation on July 31, 1998) who were eligible participants of
the Summit 401(k) Savings Plan (the "Summit Plan"), became eligible participants
in the Plan. Additionally, the Plan accepted the transfer of all assets and
liabilities attributable to participants of the Summit Plan, effective January
1, 1999. At December 31, 1998 the net assets in the Summit Plan approximated
$850,000.
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
General
The Plan is a defined contribution plan covering substantially all associates of
the Corporation and can provide a benefit for disability, death, termination or
retirement. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
Contributions
Each year, participants may contribute 1% to 15% of pre-tax annual compensation,
as defined in the Plan. Such contributions may be pre-tax dollars, or a
combination of pre- and after-tax dollars. Participants may also contribute
amounts representing distributions from other qualified plans ("rollover
contributions"). The Corporation contributes 50% of the first 6% of the
participant's annual compensation that a participant contributes to the Plan.
The Corporation contributes 3% of participants' eligible salaries, regardless of
participation in the Plan. Additional amounts equal to 3% of the participants'
eligible salaries for those participants making pre-tax contributions to the
Plan at year end may be contributed at the option of the Corporation's Board of
Directors.
Note 1--Description of Plan (continued)
Participant Accounts
Each participant's account is credited with the participant's contributions and
allocations of the Corporation's contributions and Plan earnings. Allocations
are based upon the number of units of the Plan in each participant's account.
Forfeited balances of terminated participants' nonvested accounts are used to
pay administrative expenses of the Plan, to the extent available. Plan expenses
in excess of forfeitures, if any, are absorbed by the Corporation. Excess
forfeitures, if any, are applied as employer contributions made in advance, and
reduce the Corporation's future contributions. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
Vesting
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Corporation's contribution portion of their accounts
plus actual earnings thereon is based on years of continuous service. A
participant is 100% vested after two years of service.
Investment Options
Upon enrollment in the Plan, a participant may direct employer and employee
contributions in any of ten investment options. Participants generally may
change their investment options at any time. Investment options are described
below.
Capital One Pooled Company Stock Fund - Monies are invested by the
Trustee in a unitized trust fund which invests in shares of the
Corporation's common stock. The Trustee shall also be permitted to
invest in short-term temporary investments, including pooled funds
which bear interest at market rates.
American Express Trust Money Market Fund II - Monies are invested
primarily in short-term debt securities.
American Express Trust Equity Index Fund II - Ninety percent of the
monies held by this fund are invested in common stock and the balance
is invested in S&P 500 stock index futures.
IDS Y (American Express) Federal Income Fund - Monies are invested in
U.S. government agency securities.
IDS Y (American Express) Mutual Fund - Monies are invested in common
stocks and senior securities, such as bonds and preferred stocks.
Note 1--Description of Plan (continued)
IDS Y (American Express) Stock Fund - Monies are invested in large
capitalization, blue chip stocks and investment grade bonds.
AIM Constellation Fund - Monies are invested in the common stock of
primarily small and medium-sized companies.
Templeton Foreign Fund - Monies are invested primarily in the common
stock of companies outside the U.S.
Baron Asset Fund - Monies are invested in common stocks of small and
medium-sized companies.
Davis New York Venture (A) - Monies are invested in common stocks of
medium to large-sized companies.
Cash and Cash Equivalents
Cash and cash equivalents represent contributions received from plan
participants not yet invested in participant-designated investment funds by the
Trustee. Cash balances are the result of timing differences between contribution
date and trade date.
Participant Notes Receivable
Participants may elect to borrow from their fund accounts a minimum of $1,000;
up to a maximum of the lesser of $50,000, or 50% of their vested account
balance. Loan transactions are treated as a transfer from (to) the investment
fund to (from) the loan fund. Loan terms range from 1 to 5 years or up to 10
years for the purchase of a primary residence. The loans are secured by the
balance in the participant's account and bear interest at a rate commensurate
with local prevailing rates as determined by the Benefits Committee. Principal
and interest are paid ratably through monthly payroll deductions.
Payment of Benefits
On termination of service, a participant may elect to receive an amount equal to
the vested value of his or her account through a lump-sum distribution or equal,
or nearly equal, payments made at least annually for a period not to exceed 15
years. If the participant has invested in the Capital One pooled fund, he or she
may elect to receive distributions of whole shares of common stock with
fractional shares paid in cash.
Note 2--Summary of Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Valuation and Income Recognition
The Plan's investments are stated at fair value. Units in the Capital One Pooled
Company Stock Fund are valued based upon the stock price at the last reported
sales price on the last business day of the plan year. The shares of registered
investment companies are valued at quoted market prices, which represent the net
asset values of shares held by the Plan as of year-end. Money market funds and
participant notes receivable are valued at cost, which approximates fair value.
Purchases and sales of securities are recorded based on the trade date. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
Reclassifications
Certain prior year amounts have been reclassified to conform to the 1998
presentation.
Note 3--Investments
The fair values of the following individual investments represented 5% or more
of the Plan's net assets as of December 31, 1998 or 1997:
December 31,
1998 1997
----------- -----------
Capital One Pooled Company Stock Fund $60,034,430 $21,795,608
American Express Trust Money Market Fund II 14,152,910 10,220,258
American Express Trust Equity Index Fund II 14,817,046 9,181,548
AIM Constellation Fund 10,127,899 7,944,122
IDS Y (American Express) Stock Fund 7,495,353 5,353,113
Note 4--Plan Termination
Although it has not expressed any intent to do so, the Corporation has the right
to terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100% vested in their accounts.
Note 5--Tax Status
The Internal Revenue Service ruled on April 10, 1997 that the Plan qualifies
under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the
related trust is not subject to tax under present income tax law. Once
qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The Benefits Committee is not aware of any course of
action or events that have occurred that might adversely affect the Plan's
qualified status.
Note 6--Transactions with Parties-in-Interest
During 1998 and 1997, certain Plan investments included shares of mutual funds
managed by American Express. In addition, the Plan had invested $60,034,430 and
$21,795,608, at fair value, in the Capital One Pooled Company Stock Fund as of
December 31, 1998 and 1997, respectively.
Supplemental Schedules
Capital One Financial Corporation Associate Savings Plan
Schedule of Assets Held for Investment Purposes
December 31, 1998
Units/ Fair
Shares Cost value
--------------------------------------------------
Capital One Pooled Company Stock Fund 1,288,016 $30,291,522 $ 60,034,430
Registered Investment Companies:
American Express Trust Money Market Fund II 14,152,910 14,152,910 14,152,910
American Express Trust Equity Index Fund II 446,216 11,146,643 14,817,046
IDS Y (American Express) Federal Income Fund 656,325 3,349,165 3,311,161
IDS Y (American Express) Mutual Fund 195,059 2,717,405 2,540,444
IDS Y (American Express) Stock Fund 281,252 6,882,455 7,495,353
AIM Constellation Fund 331,845 8,803,044 10,127,899
Templeton Foreign Fund 334,236 3,249,294 2,804,237
Baron Asset Fund 8,827 384,501 446,120
Davis New York Venture (Class A) 17,043 392,841 426,249
----------- ------------
51,078,258 56,121,419
Participant Notes 4,230,131 4,230,131 4,230,131
----------- ------------
Total $85,599,911 $120,385,980
=========== ============
Capital One Financial Corporation Associate Savings Plan
Schedule of Reportable Transactions
Year Ended December 31, 1998
Purchase Selling Net gain
Description of assets Units/Share price price Cost Fair value (loss)
- ------------------------------------------- ---------- ----------- ----------- ----------- ---------- -----------
Category (iii) - series of transactions in excess of 5 percent of plan assets:
American Express Trust Money Market Fund II 16,551,002 $16,551,002
American Express Trust Money Market Fund II 12,534,406 $12,534,406 $12,534,406 $12,534,406
Capital One Pooled Company Stock Fund 616,453 21,473,150
Capital One Pooled Company Stock Fund 329,437 12,480,287 4,324,814 12,480,287 $8,155,473
American Express Trust Equity Index Fund II 240,917 6,985,733
American Express Trust Equity Index Fund II 149,369 4,291,366 3,027,030 4,291,366 1,264,336
IDS Y (American Express) Stock Fund 136,402 3,527,069
IDS Y (American Express) Stock Fund 77,507 1,999,127 1,774,329 1,999,127 224,798
IDS Y (American Express) Federal Income Fund 664,358 3,390,287
IDS Y (American Express) Federal Income Fund 336,551 1,713,336 1,692,291 1,713,336 21,045
AIM Constellation Fund 173,477 4,784,013
AIM Constellation Fund 149,735 4,094,790 3,780,857 4,094,790 313,933
Participant Notes 3,014,053 3,014,053
Participant Notes 1,357,173 1,357,173 1,357,173 1,357,173
Templeton Foreign Fund 350,991 3,419,983
Templeton Foreign Fund 245,162 2,437,406 2,646,945 2,437,406 (209,539)
All transactions were made on the market.
There were no category (i), (ii) or (iv) reportable transactions during 1998.
EXHIBITS INDEX
Exhibit
Number Description Page Number
- ------- ----------- -----------
23 Consent of Independent Auditors
Exhibit 23
Consent of Independent Auditorson Program
We consent to the incorporation by reference in the following Registration
Statements of our report dated June 25, 1999, with respect to the financial
statements and schedules of the Capital One Financial Corporation Associate
Savings Plan included in this Annual Report (Form 11-K) for the year ended
December 31, 1998:
Registration Statement
Number Form Description
- ---------------------- -------- ----------------------------
33-80263 Form S-8 Marketing and Management
Services Agreement
33-86874 Form S-8 Employee Stock Purchase Plan
33-86876 Form S-8 Employee Savings Plan
33-86986 Form S-8 1994 Stock Incentive Plan
33-91790 Form S-8 1995 Non-Employee Directors
Stock Incentive Plan
33-97032 Form S-8 Amendment to 1994 Stock
Incentive Plan
33-99748 Form S-3 Dividend Reinvestment and
Stock Purchase Plan
333-3580 Form S-3 Debt Securities, Preferred Stock
and Common Stock in the
amount of $200 million
333-42853 Form S-8 1994 Stock Incentive Plan
333-45453 Form S-8 Associate Savings Plan
333-51639 Form S-8 1994 Stock Incentive Plan,
Tier 5 Special Option Program
333-51637 Form S-8 1994 Stock Incentive Plan
333-57317 Form S-8 1994 Stock Incentive Plan,
1998 Special Option Program
333-58577 Form S-3 Debt Securities, Preferred Stock
and Common Stock in the
amount of $500 million
333-60831 Form S-3 Acquisition of Summit
Acceptance Corporation
333-70305 Form S-8 1994 Stock Incentive Plan,
Supplemental Special
Option Program
333-78067 Form S-8 1994 Stock Incentive Plan
333-78383 Form S-8 1994 Stock Incentive Plan,
1999 Performance-Based Option
Program and Supplemental
Special Option Program
333-78609 Form S-8 1999 Stock Incentive Plan
333-78635 Form S-8 1999 Non-Employee Directors Stock
Incentive Plan
\s\ERNST & YOUNG LLP
Washington, D.C.
June 25, 1999
