<PAGE> 1
Prospectus
HOUSEHOLD INTERNATIONAL, INC.
Common Stock
$1 Par Value
_______________
Pursuant to the Household International Long-Term Executive
Incentive Compensation Plan (the "Incentive Plan"), shares of
Common Stock ($1 par value) of Household International, Inc. (the
"Stock") or options therefore may be awarded from time to time. As
of the date of this Prospectus, 5,958,148 shares of Stock are
available for issuance under the Incentive Plan.
The Stock is listed on the New York and Chicago Stock Exchange.
The trading symbol of the Stock is "HI".
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
_______________
The date of this Prospectus is March 3, 1994
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TABLE OF CONTENTS
Page
Introductory Statement ................................... 2
Available Information .................................... 2
Long-Term Executive Incentive Compensation Plan .......... 3
Federal Income Tax Consequences of the Incentive Plan..... 8
Other Important Information .............................. 9
Preferred Share Purchase Rights .......................... 11
Incorporation of Certain Documents by Reference .......... 12
Legal Opinions ........................................... 12
Experts .................................................. 13
INTRODUCTORY STATEMENT
In this Prospectus, Household International, Inc. is referred
to as "Household" or the "Corporation". The address of Household's
principal executive office is 2700 Sanders Road, Prospect Heights,
Illinois 60070 (Telephone: 708-564-5000). A copy of the
Corporation's latest Annual Report to Shareholders will be
delivered to all employees who have not previously received a copy
and have been granted stock options or other awards under the
Incentive Plan. The Corporation will promptly send, without
charge, an additional Annual Report and/or a copy of the Incentive
Plan in effect to any employee at his or her request.
Additional updating information with respect to the securities
and the Plan covered herein may be provided in the future to plan
participants by means of appendices to this Prospectus.
AVAILABLE INFORMATION
Household is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and in accordance therewith files reports and other information
with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
the Commission's Regional Offices at Northwestern Atrium Center,
500 West Madison Street, Chicago, Illinois 60661; and Seven World
Trade Center, New York, New York 10048. Copies of such material
can also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, reports, proxy statements and
other information concerning Household can be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005 and the Chicago Stock Exchange, 440 South
LaSalle Street, Chicago, Illinois 60605 on which the Stock and
certain other securities of the Corporation are listed.
Household will provide without charge to each person to whom
this Prospectus is delivered, on the written or oral request of
such person, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents) and
such additional information pertaining to the Incentive Plan and
its administration, as desired. See "Introductory Statement" and
"Incorporation of Certain Documents by Reference". Requests should
be directed to: Household International, Inc., 2700 Sanders Road,
Prospect Heights, IL 60070, Attention: Office of the Secretary
(Telephone: 708-564-6989).
LONG-TERM EXECUTIVE INCENTIVE COMPENSATION PLAN
General
The Incentive Plan was initially approved by the shareholders
of Household on May 8, 1984, on the recommendation of Household's
Board of Directors, and has periodically been amended by the Board
at various times thereafter. The purpose of the Incentive Plan is
to further the long-term growth of Household by strengthening its
ability to attract and retain key employees and by providing
additional motivation and incentives for the performance of key
employees. Selected employees of Household and its subsidiaries
may be chosen to receive awards under the Incentive Plan.
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The Incentive Plan is administered by the Compensation
Committee of the Board of Directors whose members are ineligible to
participate in the Incentive Plan. The Compensation Committee
determines which employees will receive awards and the amounts,
types, and terms of such awards, and is also authorized to
interpret the Incentive Plan, to establish rules and regulations
thereunder, and to make all other determinations necessary or
advisable for administering the Incentive Plan. Committee members
hold their position at the discretion of the Board. The address of
the Compensation Committee is 2700 Sanders Road, Prospect Heights,
Illinois 60070.
The Compensation Committee may grant any type of award
permitted under the terms of the Incentive Plan, which at the
present time includes stock options (including "incentive stock
options"), Stock Appreciation Rights, Performance Unit Awards,
Performance Share Awards, and Restricted Stock Rights. The
specific terms of any award, including vesting provisions, if any,
shall be determined by the Compensation Committee and set forth in
the notice and the agreement for such award (the "Grant"), which
Grant shall constitute a part of this Prospectus. On May 8, 1991
the shareholders of Household approved certain amendments to the
Incentive Plan, including an increase in the number of shares
available for issuance under the Incentive Plan. As of the date of
this Prospectus, Household may issue up to 5,958,148 shares (as
adjusted for a 100% stock dividend effective October 15, 1993) of
its Stock pursuant to the Incentive Plan, which may consist of
either authorized and unissued shares, treasury shares or stock
purchased by Household, or an agent thereof, in the open market.
If any award granted under the Incentive Plan terminates or lapses
for any reason, any shares of Stock subject to such award will
again be available for the grant of an award.
Stock options and other awards issued under the Incentive Plan
may be adjusted due to changes in the capital structure of
Household. For example, as a result of Household's spin-off of
three manufacturing subsidiaries, the awards issued pursuant to the
Incentive Plan that were outstanding on that date were adjusted to
preserve the aggregate value and appreciation of the Stock to that
date. In addition, on September 14, 1993 Household's Board of
Directors authorized a 2-for-1 stock split in the form of a 100%
stock dividend on its Stock. All outstanding grants as of the
September 30, 1993 record date were adjusted to prevent dilution of
the existing rights by doubling the number of shares subject to
each grant and by decreasing the option price for each grant to
one-half the option price at the time the grant was awarded.
Options and Stock Appreciation Rights
Under the Incentive Plan the Compensation Committee may grant
any type of option to purchase shares of Stock that is permitted by
law at the time of grant. Under current law the Compensation
Committee may grant non-statutory options and also "incentive stock
options" ("ISO's") pursuant to Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"); however, as of the date of
this Prospectus, no ISO's have been granted by Household. No
option will be exercisable less than one year nor more than ten
years and one day from the date of grant; provided, however, the
Compensation Committee may extend the expiration date of an option
to no more than 15 years from the date of the grant. The option
price per share will not be less than the fair market value of one
share of Stock on the date of grant. Options granted to date are
exercisable at the rate of 25% of the shares under option on or
after each of the first, second, third, and fourth anniversaries of
the date of grant, on a cumulative basis, and must generally be
exercised in units of 25 shares. Also, after one year from the
date of grant, 100% of the shares under option may be exercised:
(a) on the last day of employment in the case of an employee who is
eligible to begin receiving payments under a pension plan of
Household or a subsidiary upon his or her retirement, or (b) if so
determined by the Compensation Committee during the employee's
active employment. Payment for shares purchased through options
may be made in cash or, at the discretion of the Compensation
Committee, in shares of Stock or a combination of cash and Stock.
Employees who are awarded stock options, including previously
granted options, may also be awarded stock appreciation rights
("SARs") related to part or all of the option shares. In exchange<PAGE>
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for the surrender of the right to exercise the related option, an
SAR granted in tandem with an option will entitle the employee to
payment of an amount equal to the appreciation in value of the
surrendered option. The Compensation Committee may also grant SARs
which are not issued in tandem with options. Each such "stand-
alone" SAR will be granted at a price equal to at least 100% of the
fair market value of a share of Stock on the date of grant and will
entitle the holder, upon exercise, to payment of an amount equal to
the difference between the issue price of the "stand-alone" SAR and
the fair market value on the date of exercise of a share of Stock.
Such "stand-alone" SARs may not be exercised less than one year nor
more than ten years and one day from the date of grant. In payment
for the exercise of SARs, employees will receive cash, shares of
Stock, or a combination of cash and Stock. When granting SARs, the
Compensation Committee may establish a maximum appreciation value
payable under an SAR.
During the lifetime of an employee, options and SARs issued
under the Incentive Plan may be exercised only by the employee and
may not be transferred except by will or the laws of descent and
distribution. Upon termination of employment, all rights under the
Incentive Plan terminate except as follows, or as otherwise
reflected in the Grant:
(1) in the event of termination of employment of an
employee and the employee is retirement-eligible under the
terms of a pension plan of Household or a subsidiary, the
option or SAR may be exercised within five years of the date
of termination of employment;
(2) in the event of termination of employment due to
permanent and total disability of the employee and the
employee is not retirement-eligible under the terms of a
pension plan of Household or a subsidiary, the option or SAR
may be exercised within twelve months following the date of
such termination of employment;
(3) in the event of death during employment, the option
or SAR may be exercised by the executor, administrator, or
other personal representative of the employee within five
years succeeding death if such employee was retirement-
eligible under the terms of a pension plan of Household or a
subsidiary, or twelve months if such employee was not
retirement-eligible under the terms of a pension plan of
Household or a subsidiary;
(4) in the event of termination of employment other than
as set forth in (1), (2) or (3) above, the option or SAR may
be exercised within three months following the date of
termination; and
(5) in the event of death of the employee following
termination of employment, the option or SAR may be exercised
by the executor, administrator, or other personal
representative of the holder, notwithstanding the time period
specified in (1), (2), (3) or (4) above, within a) twelve
months following death or b) the remainder of the period in
which the employee was entitled to exercise the option or SAR,
whichever period is longer.
In all such cases, however, the option or SAR may not be exercised
after the expiration of the original term of such option or SAR
and, except as previously noted, may only be exercised to the
extent it was exercisable on the date of termination of employment.
Also, if the Compensation Committee determines that the termination
is for cause, the option or SAR will not under any circumstances be
exercisable following termination of employment.
Performance Unit Awards and Performance Share Awards
The Incentive Plan authorizes the Compensation Committee to
grant Performance Unit Awards and Performance Share Awards. Upon
granting such awards the Compensation Committee will establish a
performance period over which the performance of a holder of a
Performance Unit Award or Performance Share Award will be measured.
The Compensation Committee will also establish maximum and minimum
performance target levels (subject to such later revisions as the
Committee deems appropriate to reflect significant, unforeseen
events or changes). Each Performance Unit will have an initial<PAGE>
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value of $100 per unit, and each Performance Share will initially
represent one share of Stock. The value of Performance Units and
the number of shares of Stock represented by Performance Shares may
increase or decrease depending on the extent to which the holder of
such award achieves the performance targets set by the Compensation
Committee. Determination of the amount to be paid to the holder of
a Performance Unit Award or Performance Share Award will be based
on his or her achievement of performance targets for such
performance period. Payment for such awards may be made in cash,
shares of Stock, or a combination thereof and will be paid in a
lump sum or in installments as prescribed by the Compensation
Committee. Recipients receiving their payments on a deferred basis
may, at the discretion of the Compensation Committee, receive
interest on deferred cash payments and dividends on deferred
payments of Stock.
In the event of death, disability, or retirement under the
terms of a pension plan of Household or a subsidiary, the recipient
or his estate will be entitled to receive the Performance Unit
Award or Performance Share Award prorated on the basis of the
number of elapsed months in the performance period and the
performance targets achieved, unless the Compensation Committee
adopts a contrary rule. At the Compensation Committee's
discretion, Performance Unit Awards, Performance Share Awards,
stock options, and/or SARs may be granted in tandem, but the
exercise or payout of any such tandem award will automatically
cancel the corresponding units of such award.
Restricted Stock Rights
The Incentive Plan also authorizes the Compensation Committee
to grant Restricted Stock Rights ("RSRs"). RSRs entitle an
executive to receive a stated number of shares of Stock if the
executive remains continuously employed by Household for the time
period (the "restricted period") specified by the Compensation
Committee. However, the Compensation Committee in its sole
discretion may specify other restrictions to be satisfied for
shares of Stock to be issued pursuant to a RSR, or accelerate the
payment of Stock prior to the termination of the restricted period
if the holder of the RSR achieves certain performance levels
established at the time the RSR is granted by the Compensation
Committee. A holder of RSRs will not be entitled to any of the
rights of a holder of Stock prior to the payment of such shares;
however, at the discretion of the Compensation Committee, Household
will pay an amount in cash equal to the cash dividends declared on
Stock for each share of Stock subject to an RSR. In the event of
termination of employment due to death or disability, the holder of
the RSR or his estate will be entitled to receive the number of
shares subject to the RSR prorated on the basis of the number of
full months in the restricted period.
Change-in-Control
In order to protect employees of Household and its
subsidiaries who have been granted awards under the Incentive Plan,
if (i) any person becomes the beneficial owner, directly or
indirectly, of Stock representing twenty percent (20%) or more of
the total voting power of Household's then outstanding Stock, or
(ii) a tender offer is made for thirty percent (30%) or more of the
outstanding Stock, which tender offer has not been approved by the
Board of Directors of Household (both (i) or (ii) being deemed a
"Change-in-Control"), then the Compensation Committee, in its sole
discretion, may:
(a) accelerate the time period for exercising or realizing
any award under the Incentive Plan, notwithstanding any
minimum holding period set forth in the Incentive Plan or
the grant of the award;
(b) provide for the purchase of all awards outstanding under
the Incentive Plan by Household;
(c) make such adjustments to awards granted under the
Incentive Plan, including the granting of additional
awards, as deemed appropriate; and
(d) cause all outstanding awards under the Incentive Plan to
be assumed by any successor to Household.
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In addition, if any participant in the Incentive Plan has
his/her position materially changed (as defined in the Incentive
Plan) within twenty-four months after a Change-in-Control, said
participant shall be deemed to be involuntarily terminated without
cause from Household and shall be entitled to receive payment for
awards under the Incentive Plan previously granted to him/her in
accordance with the terms of the Incentive Plan.
FEDERAL INCOME TAX CONSEQUENCES OF THE INCENTIVE PLAN*
Under present federal income tax laws, awards of Stock under
the Incentive Plan will have the following tax consequences:
Generally, the recipient of a non-statutory stock option under
the Incentive Plan will realize no income for federal income tax
purposes upon the grant of such stock option. However, at the time
the employee exercises a non-statutory stock option, he/she will
realize income, taxable as personal service income, to the extent
that the fair market value of the shares acquired pursuant to the
option, as of the exercise date, exceeds the stock option price.
Household will be entitled to a corresponding deduction for federal
income tax purposes in the year in which the stock option is
exercised. The fair market value of the shares of Stock acquired
pursuant to the option on the exercise date will be the cost basis
for such shares to the employee. The employee will be required to
provide funds to the Corporation to cover the necessary withholding
of taxes.
In lieu of providing cash to the Corporation to pay
withholding tax liability upon exercises of stock options, an
employee may authorize the Corporation to withhold shares to be
issued pursuant to the option exercise in payment for such tax
liability. Alternatively, an employee can tender Stock owned by
him/her prior to the exercise of the option in payment of the tax
withholding amount due; however, use of such shares may result in
the recognition of gain or loss to the employee for tax purposes on
such shares delivered to Household to satisfy the employee's tax
liability. Shares withheld or otherwise delivered to Household in
payment for withholding tax liabilities will be valued at their
fair market value as of the date on which the amount of tax to be
withheld is determined. Elections to have shares withheld to
satisfy withholding tax obligations are irrevocable.
If an employee is awarded an SAR, a Performance Unit Award, a
Performance Share Award, or RSR, the grant of such award is not
taxable for federal income tax purposes at the time of grant to the
employee. However, at the time he/she exercises an SAR or receives
payment for a Performance Unit, Performance Share Award, or an RSR,
the employee will realize income, taxable as personal service
income, to the extent of the cash or fair market value of the
property received. Household will be entitled to a corresponding
deduction for federal income tax purposes in the year in which such
award is exercised or such payment is received. The employee will
be required to provide funds to the Corporation covering the
necessary withholding of taxes.
_________________
* Tax consequences for non-U.S. employees are normally determined
by tax rules not described herein.
OTHER IMPORTANT INFORMATION
The following information applies to the Incentive Plan:
The Incentive Plan is not qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended, and is not subject
to any of the provisions of the Employee Retirement Income Security
Act of 1974, as amended.
Stock acquired as a result of options granted pursuant to the
Incentive Plan may be acquired from the Corporation. The
Corporation shall not charge any fee, commission or other charge
for any of the costs or expenses incurred in issuing such Stock.
All payments for Stock to be purchased pursuant to the Incentive
Plan shall be made to the Corporation prior to said Stock's
issuance. Other than the Grant pursuant to the Incentive Plan,
Household is not required to provide any report to any participant
on a regular basis detailing said participant's interest in the
Incentive Plan.<PAGE>
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In certain instances special rules with respect to the
purchase or sale of Stock and tax withholding will apply to holders
of stock options who are subject to Section 16(b) of the Exchange
Act (the "Section 16 Officers"). Prior to the exercise of any
stock option granted pursuant to the Incentive Plan, the Section 16
Officer should consult with the Section 16 Compliance Coordinators
in the Office of the Secretary of the Corporation.
There are generally no restrictions on resale of the Stock
acquired pursuant to the Plans except for employees who are deemed
to be "affiliates" of the Corporation or Section 16 Officers. An
affiliate may resell the securities acquired under the Plan either
pursuant to a registration statement or pursuant to Rule 144 or
another applicable exemption under the Securities Act of 1933, as
amended (the "Securities Act"). For purposes of reselling, an
affiliate is defined as a control person or one who, directly or
indirectly, has the power to direct or cause the direction of the
management and policies of the Corporation. Under Section 16 of
the Exchange Act, any profit realized by a Section 16 Officer of
the Corporation through the purchase and sale or any sale and
purchase of any equity security of the Corporation within a period
of six months might be recoverable by the Corporation regardless of
the intention of said officer entering into the transaction. For
purposes of Section 16 of the Exchange Act, the exercise of a stock
option is not a purchase. Provided the Section 16 Officer has held
the option for at least six months, any sale of the Stock acquired
pursuant to the exercise of that option will not be matched against
the option price. However, such a sale will be matched against any
other purchase (except for additional grants of options pursuant to
the Plan) of Stock six months prior to and six months after the
date of said sale. If an employee believes that he or she may be
an affiliate of the Corporation, or subject to the provisions of
Section 16 of the Exchange Act, an attorney should be consulted to
determine what steps should be taken to accomplish any such resale
under the federal securities laws.
In case of corporate changes affecting the Stock, the
Incentive Plan, or awards granted thereunder, the Board of
Directors of Household or an authorized committee may make
appropriate adjustments to such awards in order to prevent dilution
or enlargement of rights and in the aggregate number or remaining
number of shares which may be issued under the Incentive Plan (if
any) to reflect any change or changes affecting the Stock of the
Corporation, such as stock dividends, stock splits, or similar
changes.
The Board of Directors or the Compensation Committee of
Household may from time to time amend the Incentive Plan or awards
granted thereunder except that the Board or Compensation Committee
may not, without stockholder approval, change the option price of
any option or increase the number of shares of Stock under the
Incentive Plan (except as permitted pursuant to the preceding
paragraph) or make any other amendment which is required by law to
be approved by Household's stockholders. The Incentive Plan is of
an indefinite duration. The Board may terminate the Incentive Plan
at any time by resolution, but such resolution shall not affect
awards previously granted under the Incentive Plan.
PREFERRED SHARE PURCHASE RIGHTS
Each share of Stock issued pursuant to the Incentive Plan
entitles the holder to a Preferred Share Purchase Right (a
"Right"), as set forth in a Rights Agreement (as amended) between
Household and Harris Trust and Savings Bank, as Rights Agent. Each
Right entitles the registered holder to purchase from Household
one-hundredth of a share of a series of Preferred Stock designated
Series A Junior Participating Preferred Stock (the "Junior
Preferred Stock") at a price of $100 per one-hundredth of a share.
The Rights are not exercisable until ten days after any person
acquires 20% of Household's issued and outstanding Stock or makes
an offer for 30% of Household's issued and outstanding Stock. If
Household is acquired in a merger or other business combination,
each Right will entitle its holder to purchase at the $100 exercise
price that number of shares of Stock of the surviving company which
would have a market value of two times the exercise price. In the
event that Household were the surviving corporation in the merger
and its Stock were not changed, proper provision would be made so<PAGE>
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that each holder of a Right would thereafter have the right to
receive upon exercise that number of shares of Household's Junior
Preferred Stock (or a new series of Household's preferred stock
having the same rights, privileges and preferences as the Junior
Preferred Stock) having a market value of two times the exercise
price of the Right. The Junior Preferred Stock purchasable upon
exercise of the Rights will be nonredeemable and subordinate to
other series of Household's preferred stock. The Rights to
purchase Junior Preferred Stock of Household expire as of August
31, 1994. The above summary of the Rights and Junior Preferred
Stock does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement (as amended) and to
the Certificate of Designation, Preference and Rights of the Junior
Preferred Stock, copies of which have been filed with the
Commission. Copies of such documents may also be obtained from
Household's Office of the Secretary. See "Available Information".
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are
incorporated herein by reference:
(a) The Corporation's latest annual report filed pursuant to
Section 13(a) or 15(d) of the Exchange Act or the latest prospectus
filed pursuant to Rule 424(b) under the Securities Act which
contains, either directly or by incorporation by reference, audited
financial statements for the Corporation's latest fiscal year for
which such statements have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d)
of the Exchange Act since the end of the fiscal year covered by the
annual report or prospectus incorporated pursuant to (a) above.
(c) The Corporation's definitive proxy statement or
information statement, if any, filed pursuant to Section 14 of the
Exchange Act in connection with the latest annual meeting of its
shareholders, and any definitive proxy or information statements so
filed in connection with any subsequent special meetings of its
shareholders.
(d) The description of any class of securities to be offered
herein which is contained in any registration statement filed under
Section 12 of the Exchange Act, including any amendments or reports
filed for the purpose of updating such description.
All reports and other documents subsequently filed by the
Corporation pursuant to Sections 13, 14 and 15(d) of the Exchange
Act, prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or
which deregisters all securities remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from
the date of the filing of such reports and documents.
LEGAL OPINIONS
The validity of the Stock to be issued pursuant to the
Incentive Plan will be passed upon by John W. Blenke, Assistant
General Counsel and Secretary of Household. As of the date of this
Prospectus, Mr. Blenke is a full-time employee and an officer of
the Corporation, a participant in the Incentive Plan, and owns, and
holds employee stock options to purchase shares of Stock.
EXPERTS
The financial statements and schedules of the Corporation and
its subsidiaries incorporated by reference in this Prospectus to
the extent and for the periods indicated in its reports, have been
audited by Arthur Andersen & Co., independent public accountants,
and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving such reports.
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