GMAC Offers New Data on Lease Trust

In a new disclosure included in its 2001 annual report, General Motors Acceptance Corp., General Motors' (GM Quote) finance company, said it earned $650 million of pretax income from an off-balance sheet entity set up to buy car leases from GM franchised dealers.

The entity, named Central Originating Lease Trust, or COLT, was disclosed Monday in a 10-K filing of GMAC's 2001 financials with the Securities and Exchange Commission. COLT deserves closer scrutiny because of its sizable impact on GMAC earnings. In particular, the structure may have been used to help bring forward income on car leases, currently a difficult business for all auto financers.

GMAC said it couldn't make anyone available for comment about COLT on Monday, though this column agreed to follow up with an executive on Tuesday if one is made available. TheStreet.com recently did a special report on GM and GMAC. GM stock rose 43 cents Monday to $61.14, which is 70% above its 52-week low.

Because Enron's collapse was partially based on toxic deals with off balance sheet entities that were poorly disclosed, many companies have rushed out details of their unconsolidated structures to reassure investors that they have nothing similar. While very few firms have revealed anything like Enron's partnerships, the extra disclosure has given interesting insight into how some companies use off balance sheet entities to goose earnings. ...