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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: January 25, 1996
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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 847/564-5000
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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 sale date, assets related
to the Transferred Business totaled approximately $6.1
billion and consisted primarily of investment securities.
The purchase price for the Transferred Business was $575
million.
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 year ended December 31, 1995 giving effect to the
pro forma adjustments related to the sale of Alexander
Hamilton Life Insurance Company 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.
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The following table presents the historical unaudited consolidated
statement of income for Household International, Inc. and Subsidiaries
("Household") for the year ended December 31, 1995 and the unaudited
pro forma consolidated statement of income for the year ended December
31, 1995 for Household, giving 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 year ended December 31, 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 sale of substantially all first mortgage loans and deposits of
the Canadian trust operation in the fourth quarter of 1995.
The pro forma consolidated statement of income for the year ended
December 31, 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. 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 outstanding debt. The pro
forma financial statements also assume that deposits from sold
consumer banking operations have been replaced with bank and other
borrowings. The pro forma consolidated financial statements presented
below do not purport to represent what the results of operations 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 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
Year Ended December 31, 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 $2,878.8 $2,878.8
Interest income from noninsurance
investment securities 123.4 $ 2.8 (1) 126.2
Interest expense 1,557.1 $ (70.7)(2) 71.4 (3) 1,557.8
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Net interest margin 1,445.1 70.7 (68.6) 1,447.2
Provision for credit losses on
owned receivables 761.3 761.3
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Net interest margin after provision
for credit losses 683.8 70.7 (68.6) 685.9
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Securitization income 873.6 873.6
Insurance premiums and contract
revenues 322.1 (93.0)(2) 229.1
Investment income 470.2 (299.5)(2) 170.7
Fee income 196.4 (7.7)(2) 188.7
Other income 279.9 (195.3)(2) 84.6
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Total other revenues 2,142.2 (595.5) 1,546.7
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Salaries and fringe benefits 545.6 (34.6)(2) 511.0
Occupancy and equipment expense 222.1 (11.2)(2) 210.9
Other marketing expenses 359.5 (2.0)(2) 357.5
Other servicing and
administrative expenses 470.6 (96.2)(2) 374.4
Policyholders' benefits 474.5 (263.1)(2) 211.4
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Total costs and expenses 2,072.3 (407.1) 1,665.2
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Income before income taxes 753.7 (117.7) (68.6) 567.4
Income taxes 300.5 (82.3)(4) (24.0)(4) 194.2
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Net income $ 453.2 $ (35.4) $ (44.6) $ 373.2
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Primary earnings per share $ 4.31 $ 3.50
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Fully diluted earnings per share $ 4.30 $ 3.49
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Average shares outstanding:
Primary 99.0 99.0
Fully diluted 99.3 99.3
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</TABLE>
Explanation of pro forma adjustments:
(1) Represents investment income from January 1, 1995 to October 1, 1995
on proceeds received in the form of preferred stock from the sale of
certain product lines of AHLIC.
(2) Represents the reduction of income and expenses related to certain
businesses for the year ended December 31, 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
Sale of substantially all of the Canadian trust operation.
(3) Represents (a) increase in interest expense resulting from the
replacement of deposit funding with other funding sources net of
(b) reduction of interest expense from January 1, 1995 to
October 1, 1995 from use of cash proceeds from the sale of certain
product lines of AHLIC to reduce outstanding debt.
(4) Represents the net effect of the pro forma adjustments at statutory
income tax rates, adjusted for the additional tax impact of sales
of consumer banking operations and certain product lines of AHLIC.
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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.
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(Registrant)
By: /s/ David A. Schoenholz
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David A. Schoenholz
Executive Vice President -
Chief Financial Officer
and on behalf of
Household International, Inc.
Dated: February 14, 1996
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