<PAGE> 1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: October 1, 1995
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HOUSEHOLD INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-8198 36-3121988
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation Number)
2700 Sanders Road, Prospect Heights, Illinois 60070
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 708/564-5000
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Item 5. Other Events
Effective October 1, 1995, Household Group, Inc. ("HGI"),
a wholly-owned subsidiary of Household International, Inc.
("Household"), sold for cash and stock all the capital
stock of its wholly-owned subsidiary, Alexander Hamilton
Life Insurance Company of America ("AHLIC") to Jefferson-
Pilot Corporation ("JP"). Prior to the closing of this
transaction, Household removed from AHLIC and retained all
business, related assets and liabilities pertaining to
AHLIC's credit life, accident and health, periodic payment
and corporate-owned life insurance products so that
effectively only the individual life and annuity product
lines ("Transferred Business") were transferred to JP
pursuant to this transaction. At September 30, 1995,
assets related to the Transferred Business totaled
approximately $6 billion and consisted primarily of
investment securities. The purchase price for the
Transferred Business is $575 million plus the net earnings
of AHLIC from January 1, 1995 to the closing date, subject
to a limitation on such earnings as to the attainment of
a minimum statutory net worth by AHLIC as agreed to by the
parties.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Unaudited pro forma consolidated statement of income
of Household International, Inc. and Subsidiaries for
the nine months ended September 30, 1995 and the
unaudited pro forma consolidated balance sheet as of
September 30, 1995 for Household International, Inc.
and Subsidiaries giving effect to the pro forma
adjustments related to the sale of Alexander Hamilton
Life Insurance of America as described in Item 5
hereof and certain other transactions and events as
described below. The unaudited pro forma consolidated
statement of income of Household International, Inc.
and Subsidiaries for the year ended December 31, 1994
was included in the Current Report on Form 8-K dated
August 9, 1995.
<PAGE>
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The following tables present the historical unaudited consolidated
statement of income for Household International, Inc. and Subsidiaries
("Household") for the nine months ended September 30, 1995 and the
historical unaudited consolidated balance sheet for Household as of
September 30, 1995 and the unaudited pro forma consolidated statement
of income for the nine months ended September 30, 1995 and the
unaudited pro forma consolidated balance sheet as of September 30,
1995 for Household. The pro forma financial statements give effect
to the pro forma adjustments related to the sale of the universal life
and annuity product lines of Alexander Hamilton Life Insurance Company
of America ("AHLIC") as described herein. The pro forma financial
statements also give effect to other transactions and events that
individually do not represent a significant portion of a business but
which nonetheless entered into the results shown for the nine months
ended September 30, 1995. The transactions and events also included
in the pro forma adjustments presented below are:
- - the exit from the domestic first mortgage servicing business in the
second quarter of 1995;
- - the sales of consumer banking operations in California, Maryland
and Virginia in the second quarter of 1995;
- - the sales of consumer banking operations in Ohio and Indiana in the
third quarter of 1995.
The pro forma consolidated statement of income for the nine months
ended September 30, 1995 was prepared assuming the sales of the
selected product lines of AHLIC and the other sold or exited
businesses described above took place on January 1, 1995. The pro
forma adjustments to the pro forma consolidated balance sheet as of
September 30, 1995 assume that the sale of the product lines of AHLIC
occurred on September 30, 1995. Household does not anticipate that
the sales of the Transferred Business will have a significant effect
on results of operations. Household does not expect to incur material
charges or credits as a result of these transactions on an ongoing
basis and has not reflected such in the pro forma consolidated
financial statements below.
For purposes of preparing the pro forma financial statements,
Household has assumed the cash proceeds from the sale of the product
lines of AHLIC have been used to decrease senior and senior
subordinated debt. The pro forma consolidated financial statements
presented below do not purport to represent what the results of
operations or financial position would have been had the pro forma
adjustments occurred on the dates referred to above or to be
indicative of the future results of operations or financial position
of Household. The pro forma adjustments are based on available
information and certain assumptions that Household believes are
reasonable. <PAGE>
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Household International, Inc. and Subsidiaries
Pro Forma Unaudited Consolidated Statements of Income
Nine Months Ended September 30, 1995
In millions except per share data.
<TABLE>
<CAPTION>
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Historical Household
Household Pro Forma Other International
International Adjustments Adjustments Pro Forma
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<S> <C> <C> <C> <C>
Finance income $2,147.5 $2,147.5
Interest income from noninsurance
investment securities 104.9 $ 2.8 <F1> 107.7
Interest expense 1,181.6 $ (70.7) <F2> 71.4 <F3> 1,182.3
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Net interest margin 1,070.8 70.7 (68.6) 1,072.9
Provision for credit losses on
owned receivables 569.7 569.7
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Net interest margin after provision
for credit losses 501.1 70.7 (68.6) 503.2
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Securitization income 633.4 633.4
Insurance premiums and contract
revenues 262.2 (93.0) <F2> 169.2
Investment income 423.3 (299.5) <F2> 123.8
Fee income 139.1 (7.7) <F2> 131.4
Other income 189.4 (126.3) <F2> 63.1
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Total other revenues 1,647.4 (526.5) 1,120.9
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Salaries and fringe benefits 420.9 (34.6) <F2> 386.3
Other operating expenses 809.0 (109.4) <F2> 699.6
Policyholders' benefits 416.6 (255.6) <F2> 161.0
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Total costs and expenses 1,646.5 (399.6) 1,246.9
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Income before income taxes 502.0 (56.2) (68.6) 377.2
Income taxes 181.1 (29.5) <F4> (24.0) <F4> 127.6
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Net income $ 320.9 $ (26.7) $(44.6) $ 249.6
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Primary earnings per share $ 3.02 $ 2.30
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Fully diluted earnings per share $ 3.01 $ 2.29
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Average shares outstanding:
Primary 98.8 98.8
Fully diluted 99.1 99.1
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Explanation of pro forma adjustments:
<FN>
<F1> Represents investment income for the nine months ended September 30, 1995 on proceeds received in the form
of preferred stock from the sale of certain product lines of AHLIC.
<F2> Represents the reduction of income and expenses related to certain businesses for the nine months ended
September 30, 1995 had the following sales of assets and liabilities or exit from businesses taken place
on January 1, 1995:
Sale of certain product lines of AHLIC
Sales of consumer bank branches in California, Virginia, Maryland, Ohio and Indiana
Exit from domestic first mortgage servicing business
<F3> Represents (a) increase in interest expense resulting from the replacement of deposit funding with other
funding sources net of (b) reduction of interest expense for the nine months ended September 30, 1995 from
use of cash proceeds from the sale of certain product lines of AHLIC to reduce senior and senior
subordinated debt.
<F4> Represents the net effect of the pro forma adjustments at statutory income tax rates, adjusted for the tax
impact of sales of consumer banking operations.
</FN>
/TABLE
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Household International, Inc. and Subsidiaries
Pro Forma Unaudited Consolidated Balance Sheet
At September 30, 1995
In millions.
<TABLE>
<CAPTION>
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Historical Household
Household Pro Forma International
International Adjustments Pro Forma
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<S> <C> <C> <C>
ASSETS
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Cash $ 457.7 $ (4.7) <F1>
525.0 <F2>
(525.0) <F3> $ 453.0
Investment securities 8,693.3 (5,657.6) <F1>
50.0 <F2> 3,085.7
Receivables, net 22,959.4 22,959.4
Deferred insurance policy acquisition costs 468.1 (450.1) <F1> 18.0
Acquired intangibles 480.9 480.9
Properties and equipment 438.6 (16.6) <F1> 422.0
Real estate owned 148.7 148.7
Other assets 1,327.2 (59.3) <F1> 1,267.9
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Total assets $34,973.9 $(6,138.3) $28,835.6
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Debt:
Deposits $ 5,453.7 $ 5,453.7
Commercial paper, bank and other borrowings 6,731.7 6,731.7
Senior and senior subordinated debt (with
original maturities over one year) 11,153.9 $ (525.0) <F3> 10,628.9
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Total debt 23,339.3 (525.0) 22,814.3
Insurance policy and claim reserves 6,978.2 (5,538.6) <F1> 1,439.6
Other liabilities 1,819.9 (74.7) <F1> 1,745.2
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Total liabilities 32,137.4 (6,138.3) 25,999.1
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Company obligated mandatorily redeemable
preferred securities in trust 75.0 75.0
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Preferred stock 205.0 205.0
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Common shareholders' equity:
Common stock 115.9 115.9
Additional paid-in capital 394.7 394.7
Retained earnings 2,601.6 2,601.6
Foreign currency translation adjustments (127.8) (127.8)
Unrealized gain on investments, net 6.4 6.4
Common stock in treasury (434.3) (434.3)
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Total common shareholders' equity 2,556.5 2,556.5
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Total liabilities and shareholders' equity $34,973.9 $(6,138.3) $28,835.6
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Explanation of pro forma adjustments:
<FN>
<F1> Represents the assets and liabilities of the sold product lines of AHLIC at September 30, 1995.
<F2> Represents the proceeds from sale of certain product lines of AHLIC (estimated for purposes of these
statements to be $525 million of cash and $50 million of preferred stock).
<F3> Represents use of cash proceeds on sale of certain product lines of AHLIC to reduce debt.
</FN>
</TABLE>
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SIGNATURE
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Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
HOUSEHOLD INTERNATIONAL, INC.
(Registrant)
By: /s/ David A. Schoenholz
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David A. Schoenholz
Senior Vice President -
Chief Financial Officer
and on behalf of
Household International, Inc.
Dated: December 18, 1995
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