SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File No. 0-21979
HOUSEHOLD CONSUMER LOAN TRUST 1996-1
(Exact name of Registrant as specified in Department
of the Treasury, Internal Revenue Service Form SS-4)
HOUSEHOLD FINANCE CORPORATION
(Administrator of the Trust)
(Exact name as specified in Administrator's charter)
DELAWARE 36-3670374
(State or other jurisdiction of (I.R.S. Employer
incorporation of Administrator) Identification Number of
Registrant)
2700 SANDERS ROAD, PROSPECT HEIGHTS, ILLINOIS 60070
(Address of principal executive offices of (Zip Code)
Administrator)
Administrator's telephone number including area code (847)564-5000
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
The aggregate principal amount of the Notes held by non-affiliates
of the Administrator as of December 31, 1998 was approximately
$774.6 million.
<PAGE>
INTRODUCTORY NOTE
Household Consumer Loan Trust 1996-1 (the "Issuer") is the
issuer of Household Consumer Loan Asset-Backed Notes, Series 1996-1
(the "Notes") were issued pursuant to an indenture, dated as of
March 1, 1996 between the Issuer and The Bank of New York, as
indenture trustee. The Notes were secured by a participation
interest (the "Series 1996-1 Participation") in certain consumer
loan receivables held by Household Consumer Loan Deposit Trust I
(the "Deposit Trust"). The Deposit Trust was formed pursuant to a
Pooling and Servicing Agreement, dated as of September 1, 1995, by
and among Household Consumer Loan Corporation, as Seller (the
"Seller"), Household Finance Corporation, as servicer (the
Servicer") and The Chase Manhattan Bank, N. A., as deposit trustee
(the "Deposit Trustee").
The Issuer was formed pursuant to a Trust Agreement, dated as
of March 1, 1996 (the "Trust Agreement") between the Seller and The
Chase Manhattan Bank (USA), as owner trustee (the "Owner Trustee").
In addition to the Notes, pursuant tot he Trust Agreement, the
Issuer also issued the Household Consumer Loan Asset-Backed
Certificates, Series 1996-1 (the "Certificates") which were not
registered under the Securities Act of 1933, as amended.
On behalf of the Issuer Household Finance Corporation, as
Administrator, has prepared this Form 10-K in reliance upon various
no-action letters issued by the Securities and Exchange Commission
(the "Commission") to other trusts which are substantially similar
to the Issuer. Items designated herein as "Not Applicable" have
been omitted as a result of this reliance.
<PAGE>
PART I
Item 1. Business.
Not Applicable.
Item 2. Properties.
Not Applicable.
Item 3. Legal Proceedings.
The Servicer is not aware of any material pending legal
proceedings involving either the Registrant, the Trustee,
the Seller or the Servicer with respect to the Notes or
the Registrant's property.
Item 4. Submission of Matters to a Vote of Security Holders.
No vote or consent of the holders of the Notes (the
"Noteholders") was solicited for any purpose during the
year ended December 31, 1998.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
To the best knowledge of the Administrator, there is no
established public trading market for the Notes. As of
February 26, 1999, there were 7 Class A Noteholders and
3 Class B Noteholders, some of whom may be holding Notes
for the accounts of others.
Item 6. Selected Financial Data.
Not Applicable.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Not Applicable.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
Not Applicable.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Not Applicable.
Item 11. Executive Compensation.
Not Applicable.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth (i) the name and address
of each entity owning more than 5% of the outstanding
principal amount of the Class A or the Class B Notes;
(ii) the principal amount of Notes owned by each and
(iii) the percent that the principal amount of Notes
owned represents of the outstanding principal amount of
the Class A or the Class B Notes. The information set
forth in the table is based upon information obtained by
the Administrator from the Trustee and from The
Depository Trust Company as of February 26, 1999. The
Administrator is not aware of any Schedules 13D or 13G
filed with the Securities and Exchange Commission in
respect of the Notes.
<PAGE>
Amount Owned
All dollar amounts are
in thousands
Name and Address Principal Percent
Class A Noteholders
Bank of New York $ 50,000 7.83
925 Patterson Plank Road
Secaucus, NJ 07094
Bankers Trust Company $168,900 26.46
c/o BT Services Tennessee Inc.
648 Grassmere Park Road
Nashville, TN 37211
Chase Manhattan Bank $305,000 47.78
4 New York Plaza - 13th Floor
New York, NY 10004
State Street Bank & Trust Company $ 90,000 14.10
Global Corp. Action Dept. JAB5W
P. O. Box 1631
Boston, MA 02105-1631
<PAGE>
Amount Owned
All dollar amounts are
in thousands
Name and Address Principal Percent
Class B Noteholders
Bankers Trust Company $ 85,000 62.39
c/o BT Services Tennessee Inc.
648 Grassmere Park Road
Nashville, TN 37211
Chase Manhattan Bank $ 51,244 37.61
4 New York Plaza - 13th Floor
New York, NY 10004
Item 13. Certain Relationships and Related Transactions.
None or Not Applicable.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) List the following documents filed as a part of the
report:
(1) Financial Statements
Not Applicable.
(2) Financial Statement Schedules
Not Applicable.
(3) The Administrator, on behalf of the Issuer,
is obligated to prepare, and has so prepared,
an Annual Statement for the year 1998, and the
Independent Public Accountants are required to
prepare an Annual Report as to Compliance for
such year. Copies of said documents are or
will be filed as exhibits to this Form 10-K
when they are available.
(b) The Registrant filed the following current reports
on Form 8-K for the fourth quarter of 1998:
Date of Reports Items Covered
October 14, 1998 Item 7. - Statement to
November 13, 1998 Noteholders with respect
December 14, 1998 to the distributions on October
14 and 15, 1998, November 13
and 16, 1998, and December 14
and 15, 1998.
(c) (1) Exhibit 99. Copy of Annual Statement for the
year ended December 31, 1998.
(2) Exhibit 99.1. Copy of Annual Report as to
Compliance for the year ended December 31,
1998.
(d) Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Servicer has duly caused this
report to be signed on behalf of the Household Consumer Loan Trust
1996-1 by the undersigned, thereunto duly authorized.
HOUSEHOLD FINANCE CORPORATION,
as Administrator of and on behalf of the
HOUSEHOLD CONSUMER LOAN TRUST 1996-1
(Registrant)
Date: March 4, 1999 By: /s/John W. Blenke
John W. Blenke
Assistant Secretary
U:\WP\HFS088\10K\HCL96-1<PAGE>
Exhibit Index
Exhibit No. Exhibit Page No.
99 Copy of Annual Statement 10
for the year ended
December 31, 1998
99.1 Copy of Annual Report as to 11
Compliance for the year
ended December 31, 1998
Household Finance Corporation
Household Consumer Loan Corporation
Household Consumer Loan Trust 1996-1
*********************************************
Original Principal Class A 638,400,000.00
Number of Class A Bonds (000's) 638,400.00
Original Principal Class B 136,244,640.00
Number of Class B Bond (000's) 136,244.64
Distribution Date Total 1998
Days
CLASS A
Principal Distribution 145,903,977.33
Principal Payment Factor (per 1,000 Bond) 228.546330401
Interest Distribution 17,526,156.76
Interest Payment Factor (per 1,000 Bond) 27.453253073
CLASS B
Principal Distribution 0.00
Principal Payment Factor (per 1,000 Bond) 0.000000000
Interest Distribution 8,591,996.34
Interest Payment Factor (per 1,000 Bond) 63.063004444
Independent Accountants' Report on Applying Agreed-Upon Procedures
To Household Finance Corporation:
We have performed procedures enumerated below in items A. and B. in
conjunction with Section 3.06 of the Pooling and Servicing Agreement,
dated September 1, 1995, as supplemented (the "Agreement").
A.We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements of Household Finance
Corporation (the "Servicer") and subsidiaries as of December 31, 1998,
and have issued our report thereon dated January 20, 1999. We have not
audited any financial statements of the Servicer as of any date or for
any period subsequent to December 31, 1998, or performed any audit
procedures subsequent to the date of our report on those statements.
In connection with our audit, nothing came to our attention that caused
us to believe that the Servicer was not in compliance with any of the
terms, covenants, provisions, or conditions in Sections 3.01, 3.02,
3.04, 3.09, 3.10, 4.02, 4.03, 4.04, and 8.08 (to the extent such
sections are applicable to Household Finance Corporation as Servicer)
of the Agreement, or Sections 3, 4.08, 4.09, 4.11, and 4.12, (to the
extent such sections are applicable to Household Finance Corporation as
Servicer) of the Series 1995-1, Series 1996-1, Series 1996-2, Series
1997-1, Series 1997-2, Series 1997-A, and Series 1998-B Supplements in
conjunction with the servicing of revolving unsecured consumer lines of
credit owned by the Household Consumer Loan Deposit Trust I insofar as
they relate to accounting matters. It should be noted, however, that
our audit was not directed primarily toward obtaining knowledge of such
noncompliance.
As a part of our audit, we obtained an understanding of the Servicer's
internal control structure over the Servicer's entire revolving
unsecured consumer lines of credit portfolio, including those loans
serviced under the Agreement, and the related Supplements, to the
extent considered necessary in order to assess control risk as required
by generally accepted auditing standards. The purpose of our
consideration of the internal control structure, which includes the
accounting systems, was to determine the nature, timing, and extent of
the auditing procedures necessary for expressing an opinion on the
financial statements. Such audit procedures, however, were not
performed in order to express a separate opinion on the Household
Consumer Loan Deposit Trust I.
Our audit disclosed no exceptions or errors in records relating to
revolving unsecured consumer lines of credit serviced by the Servicer
that, in our opinion, Section 3.06 of the Agreement required us to
report.
B. We have performed the procedure described in the following
paragraph, which was agreed to by the management of the Servicer,
and the Chase Bank of Texas National Association, formerly known as
the Texas Commerce Bank as Trustee (together, the "Specified
Users"), with respect to Section 3.06 of the Agreement, in
conjunction with the servicing of revolving unsecured consumer lines
of credit owned by the Household Consumer Loan Deposit Trust I.
This agreed-upon procedure was performed in accordance with
standards established by the American Institute of Certified Public
Accountants. The sufficiency of the procedure is solely the
responsibility of the Specified Users of the report. Consequently,
we make no representation regarding the sufficiency of the procedure
described below either for the purpose for which this report has
been requested or for any other purpose.
The procedure and associated findings are as follows:
From the Monthly Servicer's Certificates prepared by the
Servicer between January, 1998 and December, 1998, we selected the
following months and performed the following procedure:
We have compared the mathematical calculation of each amount
set forth in the Monthly Servicer's Certificates to the
Servicer's accounting records for the months of May, 1998,
and September, 1998, for Series 1995-1, Series 1996-1, Series
1996-2, Series 1997-1, Series 1997-2, Series 1997-A and for
the month of September for Series 1998-B and found them to be
in agreement. Our comparisons were based on records provided
to us by the Servicer and the methodology set forth in the
Agreement.
With respect to the procedure performed in item B. above, we were not
engaged to, and did not, perform an audit, the objective of which would
be the expression of an opinion on the Monthly Servicer's Certificates
described above. Accordingly, we do not express such an opinion. Had
we been engaged to perform additional procedures, other matters might
have come to our attention that would have been reported to you.
This report is intended solely for the information and use of the
Specified Users and should not be used for any other purpose.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 24, 1999
