<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: January 25, 1996
----------------
HOUSEHOLD INTERNATIONAL, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-8198 36-3121988
- --------------- ----------- --------------
(State or other (Commission (IRS Employer
jurisdiction of File Identification
incorporation) Number) Number)
2700 Sanders Road, Prospect Heights, Illinois 60070
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 564-5000
--------------
<PAGE>
<PAGE> 2
Item 5. Other Events
Press Release pertaining to the financial results of
Household International, Inc. for the quarter and year
ended December 31, 1995. Said release is filed as an
exhibit hereto.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Not Applicable
(b) Pro forma financial information.
Not Applicable
(c) Exhibits.
No. Exhibit
--- -------
27 Financial Data Schedule.
99 Press Release titled "Household Reports
Quarterly and Full Year Records" dated
January 25, 1996.
<PAGE>
<PAGE> 3
Signature
---------
Pursuant to the requirements 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/ Susan E. Casey
-----------------------------
Susan E. Casey
Assistant Secretary
Dated: January 25, 1996
----------------
<PAGE>
<PAGE> 4
Exhibit Index
-------------
Exhibit
No. Exhibit
- ------- -------
27 Financial Data Schedule.
99 Press Release titled "Household
Reports Quarterly and Full Year Records"
dated January 25, 1996.
C:\ELINK\FILING\I8K296.AS1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SUMMARY FINANCIAL INFORMATION OF THE COMPANY AND ITS
SUBSIDIARIES IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION
AND FINANCIAL STATEMENTS PREVIOUSLY FILED WITH THE SECURITIES &
EXCHANGE COMMISSION.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 270,400
<SECURITIES> 4,639,500
<RECEIVABLES> 21,732,100
<ALLOWANCES> 1,177,400
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 865,700
<DEPRECIATION> 474,000
<TOTAL-ASSETS> 29,218,800
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,277,900
<COMMON> 115,200
0
205,000
<OTHER-SE> 2,650,700
<TOTAL-LIABILITY-AND-EQUITY> 29,218,800
<SALES> 0
<TOTAL-REVENUES> 5,144,400
<CGS> 0
<TOTAL-COSTS> 2,072,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 761,300
<INTEREST-EXPENSE> 1,557,100
<INCOME-PRETAX> 753,700
<INCOME-TAX> 300,500
<INCOME-CONTINUING> 453,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 453,200
<EPS-PRIMARY> 4.31
<EPS-DILUTED> 4.30
<FN>
<F1>FINANCIAL STATEMENTS OF THE COMPANY WERE PREPARED IN ACCORDANCE WITH
FINANCIAL INSTITUTION INDUSTRY STANDARDS. ACCORDINGLY, THE COMPANY'S
BALANCE SHEETS WERE NON-CLASSIFIED.
</FN>
</TABLE>
<PAGE> 1
For Release: Immediately
Contact: Celeste M. Murphy
Director - Investor Relations
847/564-7568, or home: 847/295-5588
Howard J. Adamski
Director - Financial Relations
847/564-6054, or home: 847/291-1467
HOUSEHOLD REPORTS QUARTERLY AND FULL YEAR RECORDS:
FOURTH QUARTER NET INCOME UP 19%, EPS UP 21%;
FULL YEAR INCOME AND EPS UP 23%
PROSPECT HEIGHTS, IL, January 25, 1996 -- Household International (NYSE:
HI) today reported that net income increased 19 percent to $132.3 million for
the fourth quarter of 1995, compared with $111.0 million for the 1994 fourth
quarter. Fully diluted earnings per share rose 21 percent to $1.29, compared
with $1.07 a year earlier. Fourth quarter records were set for both net
income and earnings per share.
Household said full-year net income and earnings per share also
increased to record levels. Full year net income of $453.2 million and
earnings per share of $4.30 were both 23 percent higher than 1994.
William F. Aldinger, chief executive officer and president of Household,
said "We finished the year with a strong quarter, which benefited from
seasonal growth and higher fee income from our credit card business. Our core
receivables were 19 percent higher than a year ago. The focus on our core
products helped improve our net interest margin by 21 basis points in the
quarter and 30 basis points over the prior year quarter. Our efficiency ratio
improved to 50 percent in the fourth quarter and helped drive our record
performance."
Mr. Aldinger continued, "We made significant progress in 1995 in
focusing on our higher return businesses and improving our efficiency. Return
on owned assets improved to 1.34 percent in 1995, a 24 percent increase over
1994's ratio of 1.08 percent and was 1.78 percent during the last quarter of
the year. Return on shareholders' equity increased to 17.4 percent for 1995
from 16 percent for 1994. We expect continuing improvement in our business
in 1996 as a result of the full effect of actions taken this year."
Mr. Aldinger concluded, "We saw increases in our delinquency and
chargeoff ratios during the fourth quarter due to a slowing economy and the
changing mix of our portfolio to more unsecured loans. Losses due to personal
bankruptcies increased in the quarter in the Visa/MasterCard portfolio. The
increases were expected and consistent with our outlook for 1996."
During the fourth quarter the company sold the bulk of its individual
life and annuity products lines of Alexander Hamilton, its life insurance
subsidiary. Assets sold, principally investment securities, totaled $6.1
billion. Household retained its credit life insurance business. During the
fourth quarter, the company also sold its owned and serviced first mortgage
portfolios and deposits of its Canadian Trust operations. This sale will
allow the Canadian operation to focus on its higher return consumer finance
operation and follows the sale of the company's domestic traditional first
mortgage business earlier in 1995. Owned first mortgages sold in the fourth
quarter totaled $825 million. The combination of gains on sale and lost
operating income from the businesses sold did not significantly impact income
in the quarter.
The company said its managed core portfolio of credit cards, home equity
loans and other unsecured consumer loans were up 31 percent, on an annualized
basis, in the seasonally strong fourth quarter. In the fourth quarter, the
company acquired two credit card portfolios totalling $570 million in
receivables. Compared to the prior year, credit card loans were up 22
percent, other unsecured loans increased 24 percent and home equity loans
increased 11 percent.
The company's managed net interest margin was 6.69 percent versus 6.39
percent a year ago and 6.48 percent for the third quarter this year. The
sequential increase was primarily due to product mix changes.
Operating expenses totaled $368 million in the quarter, compared with
$464 million in the year-ago quarter and $404 million in the third quarter of
1995. The 21 percent year-over-year decrease was driven by the sales of<PAGE>
<PAGE> 2
certain businesses and workforce reductions in the core businesses. The
number of employees at December 31 was down 16 percent from a year ago.
Due to the company's focus on improving efficiency and seasonally
stronger revenues in the fourth quarter, the company's efficiency ratio
improved to 49.8 percent, compared to 53.2 percent in the third quarter. In
the year-ago quarter the efficiency ratio was 58.6 percent. For the year, the
efficiency ratio was 53.9 percent, better than the company's previously stated
1995 goal of 55 percent.
Due to the insignificance and liquidating nature of the remaining
individual life insurance business, the company stopped reporting separate
life insurance results. Also, in the fourth quarter, the company reclassified
other secured products from consumer receivables to commercial loans. These
loans represent liquidating portfolios of smaller income property loans that
are now being managed as part of the company's liquidating commercial
business. All prior total credit quality ratios have been restated to reflect
this reclassification. Reported individual product line statistics and total
consumer credit quality trends are unimpacted by this change.
At year-end, two-months-and-over consumer delinquency was 3.46 percent
of managed consumer receivables, compared with 3.26 percent in the third
quarter and 3.11 percent a year ago. Over half of the 20 basis point
increase over the prior quarter related to higher first mortgage delinquency
due to the effect of selling the Canadian first mortgage portfolio, which had
lower delinquency. In addition, shifting the domestic portfolio to a third
party servicer resulted in temporarily higher delinquency on the transferred
portfolio. The remaining increase was in merchant participation and unsecured
loans, while Visa/MasterCard delinquency declined slightly. The increase in
total delinquency was consistent with the company's expectations. The ratio
of reserves to managed receivables equaled 3.22 percent at year-end, up from
2.87 percent at September 30, 1995 and 2.67 percent a year ago. Total
reserves to total nonperforming loans were 111 percent, compared with 105
percent at the end of the third quarter, and 104 percent a year ago. At
year-end, the company's shareholders' equity as a percent of managed assets
equaled 6.74 percent, up from 5.39 percent a year earlier.
Annualized consumer net chargeoffs as a percent of average managed
consumer receivables were 3.28 percent for the quarter, up from 2.97 percent
in the prior quarter and 2.70 percent a year ago. The primary factors
contributing to the 31 basis point increase over the prior quarter were higher
personal bankruptcies in the Visa/MasterCard portfolio (12 bps), the change in
portfolio mix away from traditional first mortgage products including the sale
of the Canadian portfolio (9 bps) and lower recoveries of previously charged
off merchant participation accounts (6 bps). The full-year consumer chargeoff
ratio increased from 2.84 percent in 1994 to 2.95 percent in 1995. The
increases for the full year and fourth quarter were within expectations and
consistent with the company's outlook for 1996.
Household International, through its subsidiaries, is a major provider
of consumer financial services in the United States, Canada and the United
Kingdom. Its primary businesses include HFC, the nation's oldest consumer
finance company, and Household Bank, one of the largest issuers of private
label and general purpose credit cards in the United States, including The GM
CardTM.
# # #
<PAGE>
<PAGE> 3
HOUSEHOLD INTERNATIONAL, INC.
Fourth Quarter Financial Highlights
Household International, Inc. and Subsidiaries
All dollar amounts other than per share data are stated in millions.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Percent
Three months ended December 31 1995 1994 Change
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Managed interest margin and other revenues* $ 1,081.7 $1,004.6 7.7%
Managed provision for credit losses* 404.2 273.5 47.8
Salaries and fringe benefits 124.7 159.6 (21.9)
Other operating expenses 243.2 304.8 (20.2)
Policyholders' benefits 57.9 120.5 (52.0)
Income taxes** 119.4 35.2 239.2
- ---------------------------------------------------------------------------------
Net income $ 132.3 $ 111.0 19.2%
=================================================================================
Earnings per common share:
Primary $ 1.29 $ 1.07 21.0%
Fully diluted 1.29 1.07 21.0
Average number of common shares
outstanding (in millions):
Primary 99.5 97.2 2.4
Fully diluted 99.5 97.6 1.9
Dividends declared per common share $ 0.34 $ 0.315 7.9
Return on average common shareholders' equity 19.6% 19.2% 2.1
Return on average owned assets 1.78% 1.25% 42.4%
=================================================================================
</TABLE>
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, Dec. 31,
1995 1995 1994
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets $29,218.8 $34,973.9 $34,338.4
Receivables managed 36,616.7 35,396.9 33,050.7
Assets pending sale -- -- 398.3
Deposits 4,708.8 5,453.7 8,439.0
Trust originated preferred securities 75.0 75.0 --
Convertible preferred stock -- -- 2.6
Preferred stock 205.0 205.0 320.0
Common shareholders' equity*** 2,690.9 2,556.5 2,200.4
Book value per common share*** $ 27.70 $ 26.08 $ 22.78
Total shareholders' equity as a percent of
managed assets*** 6.74% 5.96% 5.39%
Number of common shares outstanding (in millions):
Primary 99.1 99.5 97.4
Fully diluted 99.1 100.0 97.5
- ---------------------------------------------------------------------------------
* To aid analysis, interest margin and other revenues and provision for credit losses
are presented on a pro forma managed basis as if receivables securitized and sold
with limited recourse were held in portfolio.
** The effective tax rate for the three months ended December 31, 1995 and 1994 was
47.4 percent and 24.1 percent, respectively. Tax expense for these periods
included the one-time impact of the sale of the company's individual life and
annuity business in 1995 and its Australian operations in 1994.
*** At December 31 and September 30, 1995, equity included positive adjustments of
$94.3 million and $6.4 million, respectively, related to FAS 115 which marks
certain investment securities to market. At December 31, 1994, equity included a
negative adjustment of $103.6 million.
/TABLE
<PAGE>
<PAGE> 4
HOUSEHOLD INTERNATIONAL, INC.
Full Year Financial Highlights
Household International, Inc. and Subsidiaries
All dollar amounts other than per share data are stated in millions.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Percent
Year ended December 31 1995 1994 Change
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Managed interest margin and other revenues $ 4,097.1 $3,723.6 10.0%
Managed provision for credit losses 1,271.1 969.8 31.1
Salaries and fringe benefits 545.6 656.6 (16.9)
Other operating expenses 1,052.2 1,104.5 (4.7)
Policyholders' benefits 474.5 464.4 2.2
Income taxes* 300.5 160.7 87.0
- ---------------------------------------------------------------------------------
Net income $ 453.2 $ 367.6 23.3%
=================================================================================
Earnings per common share:
Primary $ 4.31 $ 3.52 22.4%
Fully diluted 4.30 3.50 22.9
Average number of common shares
outstanding (in millions):
Primary 99.0 96.3 2.8
Fully diluted 99.3 97.2 2.2
Dividends declared per common share $ 1.31 $ 1.23 6.5
Return on average common shareholders' equity 17.4% 16.0% 8.8
Return on average owned assets 1.34% 1.08% 24.1%
=================================================================================
* The effective tax rate for the year ended December 31, 1995 and 1994 was 39.9
percent and 30.4 percent, respectively. Tax expense for these periods included the
one-time impact of the sale of the company's individual life and annuity business
and consumer banking operations in 1995 and its Australian operation in 1994.
/TABLE
<PAGE>
<PAGE> 5
DECEMBER 31, 1995
RECEIVABLES ANALYSIS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
% Change from Prior:
MANAGED PORTFOLIO ($ MILLIONS) 12/31/95 9/30/95 12/31/94 Qtr. Year
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The combination of receivables owned and receivables which have been sold to public and private investors with
limited recourse.
Home equity (1) $ 8,810.1 $ 8,761.7 $ 7,940.2 0.6 % 11.0 %
Visa/MasterCard (2) 13,343.1 11,662.9 11,100.2 14.4 20.2
Merchant participation 4,446.2 4,148.0 3,433.1 7.2 29.5
Other unsecured 6,660.8 6,273.4 5,378.2 6.2 23.8
- -------------------------------------------------------------------------------------------------------------------
Core products 33,260.2 30,846.0 27,851.7 7.8 19.4
- -------------------------------------------------------------------------------------------------------------------
First mortgage (1) 2,066.9 3,042.9 3,364.2 (32.1) (38.6)
Commercial 1,289.6 1,508.0 1,834.8 (14.5) (29.7)
- -------------------------------------------------------------------------------------------------------------------
Managed portfolio $36,616.7 $35,396.9 $33,050.7 3.4 % 10.8 %
===================================================================================================================
RECEIVABLES (% OF MANAGED PORTFOLIO)
- -------------------------------------------------------------------------------------------------------------------
Home equity 24.1 % 24.8 % 24.0 %
Visa/MasterCard 36.4 32.9 33.6
Merchant participation 12.1 11.7 10.4
Other unsecured 18.2 17.7 16.3
- -------------------------------------------------------------------------------------------------------------------
Core products 90.8 87.1 84.3
- -------------------------------------------------------------------------------------------------------------------
First mortgage 5.7 8.6 10.2
Commercial 3.5 4.3 5.5
- -------------------------------------------------------------------------------------------------------------------
RECEIVABLES ($ MILLIONS)
- -------------------------------------------------------------------------------------------------------------------
First mortgage (1) $ 2,066.9 $ 3,042.9 $ 3,364.2 (32.1)%(38.6)%
Home equity (1) 4,148.2 4,244.4 2,865.6 (2.3) 44.8
Visa/MasterCard 5,512.0 5,534.3 4,788.9 (0.4) 15.1
Merchant participation 3,696.2 3,398.0 2,564.9 8.8 44.1
Other unsecured 5,019.2 5,018.0 5,137.2 0.0 (2.3)
Commercial 1,289.6 1,508.0 1,834.8 (14.5) (29.7)
- -------------------------------------------------------------------------------------------------------------------
Total owned receivables 21,732.1 22,745.6 20,555.6 (4.5) 5.7
- -------------------------------------------------------------------------------------------------------------------
Accrued finance charges 381.6 335.3 305.0 13.8 25.1
Credit loss reserve for owned receivables (720.4) (667.8) (546.0) 7.9 31.9
Unearned credit insurance premiums and
claims reserves (159.9) (135.6) (122.2) 17.9 30.9
Amounts due and deferred from consumer
receivable sales 1,067.7 1,031.1 922.4 3.5 15.8
Reserve for receivables serviced with
limited recourse (457.0) (349.2) (336.5) 30.9 35.8
- -------------------------------------------------------------------------------------------------------------------
Total owned receivables, net 21,844.1 22,959.4 20,778.3 (4.9) 5.1
- -------------------------------------------------------------------------------------------------------------------
Receivables serviced with limited
recourse:
Home equity (1) 4,661.9 4,517.3 5,074.6 3.2 (8.1)
Visa/MasterCard 7,831.1 6,128.6 6,311.3 27.8 24.1
Merchant participation 750.0 750.0 868.2 0.0 (13.6)
Other unsecured 1,641.6 1,255.4 241.0 30.8 +100.0
- -------------------------------------------------------------------------------------------------------------------
Total receivables serviced with
limited recourse 14,884.6 12,651.3 12,495.1 17.7 19.1
- -------------------------------------------------------------------------------------------------------------------
Total managed receivables, net $36,728.7 $35,610.7 $33,273.4 3.1 % 10.4 %
===================================================================================================================
(1) Certain home equity receivables have been reclassified from first mortgage receivables at December 31,1994.
These receivables were $126.6 and $168.4 million for owned and serviced with limited recourse, respectively.
(2) Visa and MasterCard are registered trademarks of VISA USA, Inc. and MasterCard International, Incorporated,
respectively.
/TABLE
<PAGE>
<PAGE> 6
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Three Months Ended: % Change from Prior:
CONSOLIDATED - OWNED BASIS ($ MILLIONS) 12/31/95 9/30/95 12/31/94 Qtr. Year
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Finance income $ 731.3 $ 752.3 $ 696.7 (2.8)% 5.0 %
Interest income from noninsurance
investment securities 18.5 19.8 41.2 (6.6) (55.1)
Interest expense 375.5 404.1 364.1 (7.1) 3.1
- -------------------------------------------------------------------------------------------------------------------
Net interest margin 374.3 368.0 373.8 1.7 0.1
Provision for credit losses on owned
receivables 191.6 188.2 104.6 1.8 83.2
- -------------------------------------------------------------------------------------------------------------------
Net interest margin after provision for
credit losses 182.7 179.8 269.2 1.6 (32.1)
- -------------------------------------------------------------------------------------------------------------------
Securitization income 240.2 201.1 189.6 19.4 26.7
Insurance premiums and contract revenues 59.9 87.8 85.9 (31.8) (30.3)
Investment income 46.9 145.5 126.3 (67.8) (62.9)
Fee income 57.3 48.3 56.6 18.6 1.2
Other income 90.5 58.0 3.5 56.0 +100.0
- -------------------------------------------------------------------------------------------------------------------
Total other revenues 494.8 540.7 461.9 (8.5) 7.1
- -------------------------------------------------------------------------------------------------------------------
Salaries and fringe benefits 124.7 134.1 159.6 (7.0) (21.9)
Occupancy and equipment 52.0 53.5 63.2 (2.8) (17.7)
Other marketing expenses 91.4 86.9 91.5 5.2 (0.1)
Other servicing and administrative expenses 99.8 129.8 150.1 (23.1) (33.5)
Policyholders' benefits 57.9 133.7 120.5 (56.7) (52.0)
- -------------------------------------------------------------------------------------------------------------------
Total costs and expenses 425.8 538.0 584.9 (20.9) (27.2)
- -------------------------------------------------------------------------------------------------------------------
Income before income taxes 251.7 182.5 146.2 37.9 72.2
Income taxes 119.4 47% 63.9 35% 35.2 24% 86.9 +100.0
- -------------------------------------------------------------------------------------------------------------------
Net income $ 132.3 $ 118.6 $ 111.0 11.6 % 19.2 %
===================================================================================================================
Efficiency ratio (1) 49.8 % 53.2 % 58.6 %
===================================================================================================================
(1) Normalized to exclude the impact of nonrecurring items.
MANAGED BASIS INCOME STATEMENT - CONSOLIDATED
Securitizations and sales of consumer receivables are an important source of liquidity and capital management for the
company. The Company continues to service the securitized receivables after such receivables are sold, and retains
a limited recourse obligation. Securitizations impact the classification of revenues and expenses in the income
statement. Net interest margin, non-interest income such as interchange fee income and provision for credit losses
related to receivables sold are reported net in securitization and servicing fee income.
To aid in analysis, the following table shows the pro forma impact on income statement classifications assuming the
receceivables securitized and sold were instead held in portfolio. This pro forma analysis does not adjust the
results to reflect the differences between the company's accounting policies for receivables held in portfolio and
receivables sold and serviced with limited recourse. Accordingly, net income on a pro forma managed basis equals
net income on a historical owned basis.
</TABLE>
<PAGE>
<PAGE> 7
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED 12/31/95 As Managed
($ MILLIONS) Reported Adjustments Basis
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net interest margin $ 374.3 $ 239.4 $ 613.7
Provision for credit losses 191.6 212.6 404.2
- ------------------------------------------------------------------------------------------
Net interest margin after provision for
credit losses 182.7 26.8 209.5
- ------------------------------------------------------------------------------------------
Securitization income 240.2 (240.2) 0.0
Insurance premiums and contract revenues 59.9 0.0 59.9
Investment income 46.9 0.0 46.9
Fee income 57.3 213.4 270.7
Other income 90.5 0.0 90.5
- ------------------------------------------------------------------------------------------
Total other revenues 494.8 (26.8) 468.0
- ------------------------------------------------------------------------------------------
Total costs and expenses 425.8 0.0 425.8
- ------------------------------------------------------------------------------------------
Income before income taxes 251.7 0.0 251.7
Income taxes 119.4 0.0 119.4
- ------------------------------------------------------------------------------------------
Net income $ 132.3 $ 0.0 $ 132.3
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
MANAGED BASIS INCOME STATEMENT Three months ended: % Change from Prior:
($ MILLIONS) 12/31/95 (2) 9/30/95 (2) 12/31/94 (2) Qtr. Year
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Finance income $ 1,177.7 13.4 % $ 1,165.8 13.3 % $ 1,069.2 13.0 % 1.0 % 10.1 %
Interest income from noninsurance
investment securities 18.5 5.2 19.8 5.7 41.2 5.4 (6.6) (55.1)
Interest expense 582.5 6.6 592.5 6.7 534.6 6.5 (1.7) 9.0
- ---------------------------------------------------------------------------------------------------------------------
Net interest margin 613.7 6.7 % 593.1 6.5 % 575.8 6.4 % 3.5 6.6
Provision for credit losses 404.2 357.3 273.5 13.1 47.8
- ---------------------------------------------------------------------------------------------------------------------
Net interest margin after provision for
credit losses 209.5 235.8 302.3 (11.2) (30.7)
- ---------------------------------------------------------------------------------------------------------------------
Insurance premiums and contract revenues 59.9 87.8 85.9 (31.8) (30.3)
Investment income 46.9 145.5 126.3 (67.8) (62.9)
Fee income 270.7 193.4 213.1 40.0 27.0
Other income 90.5 58.0 3.5 56.0 +100.0
- -------------------------------------------------------------------------------------------------------------------
Total other revenues 468.0 484.7 428.8 (3.4) 9.1
- -------------------------------------------------------------------------------------------------------------------
Total costs and expenses 425.8 538.0 584.9 (20.9) (27.2)
- -------------------------------------------------------------------------------------------------------------------
Income before income taxes 251.7 182.5 146.2 37.9 72.2
Income taxes 119.4 63.9 35.2 86.9 +100.0
- -------------------------------------------------------------------------------------------------------------------
Net income $ 132.3 $ 118.6 $ 111.0 11.6 % 19.2 %
===================================================================================================================
Average managed receivables $35,257.9 $35,193.5 $32,994.8 0.2 % 6.9 %
Average noninsurance investments 1,420.3 1,390.9 3,032.7 2.1 (53.2)
- -------------------------------------------------------------------------------------------------------------------
Average managed interest-earning assets $36,678.2 $36,584.4 $36,027.5 0.3 % 1.8 %
===================================================================================================================
(2) % Columns: comparison to appropriate earning assets, annualized.
</TABLE>
<PAGE>
<PAGE> 8
CREDIT QUALITY/CREDIT LOSS RESERVES
<TABLE>
<CAPTION>
In the fourth quarter, the company reclassified other secured products from consumer receivables to commercial loans.
These loans represent liquidating portfolios of smaller income property loans that are now being managed as part of
the company's liquidating commercial business. All prior total credit quality ratios have been restated to reflect
this reclassification. Reported individual product line statistics and total consumer credit quality trends are
unimpacted by this change.
($ millions) 12/31/95 9/30/95 12/31/94
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TWO-MONTHS-AND-OVER CONTRACTUAL DELINQUENCY
As a percent of managed consumer receivables, excludes commercial.
- ------------------------------------------------------------------------------------------
First mortgage 3.29 % 2.16 % 1.81 %
Home equity 3.24 3.14 2.83
Visa/MasterCard 2.22 2.29 2.25
Merchant participation 4.51 4.25 4.53
Other unsecured 5.60 5.10 5.19
- ------------------------------------------------------------------------------------------
Total 3.46 % 3.26 % 3.11 %
==========================================================================================
As previously published 3.62 % 3.40 % 3.11 %
==========================================================================================
QUARTER-TO-DATE CHARGEOFFS, NET OF RECOVERIES
As a percent of average managed consumer receivables, annualized, excludes commercial.
- ------------------------------------------------------------------------------------------
First mortgage 0.47 % 0.32 % 0.26 %
Home equity 0.95 1.12 1.00
Visa/MasterCard 4.67 4.24 3.96
Merchant participation 5.14 4.63 3.84
Other unsecured 3.46 3.45 3.61
- ------------------------------------------------------------------------------------------
Total 3.28 % 2.97 % 2.70 %
==========================================================================================
As previously published 3.26 % 2.92 % 2.65 %
==========================================================================================
NONPERFORMING ASSETS
- ------------------------------------------------------------------------------------------
Nonaccrual managed receivables $ 768.5 $ 711.0 $ 581.5
Accruing managed receivables 90 or
more days delinquent 267.2 233.6 228.2
Renegotiated commercial loans 21.2 22.0 41.8
- ------------------------------------------------------------------------------------------
Total nonperforming managed receivables 1,056.9 966.6 851.5
Real estate owned 136.5 148.7 182.8
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Total nonperforming assets $ 1,193.4 $ 1,115.3 $ 1,034.3
==========================================================================================
Managed credit loss reserves as a percent
of nonperforming managed receivables 111.4 % 105.2 % 103.6 %
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CREDIT LOSS RESERVES
- ------------------------------------------------------------------------------------------
Reserves for owned receivables at
beginning of quarter $ 667.8 $ 661.1 $ 633.6
Provision for credit losses - owned 191.6 188.2 104.6
Owned receivables - chargeoffs, net of
recoveries (193.6) (186.1) (153.3)
Credit loss reserves on receivables
purchased, net 59.6 - - - (30.6)
Other, net (5.0) 4.6 (8.3)
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Reserves for owned receivables at end
of quarter 720.4 667.8 546.0
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Credit loss reserves for receivables
serviced with limited recourse at
beginning of quarter 349.2 296.1 241.5
Provision for credit losses 212.6 169.1 168.9
Chargeoffs, net of recoveries (104.6) (115.9) (75.6)
Other, net (0.2) (0.1) 1.7
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<PAGE> 9
Credit loss reserves for receivables
serviced with limited recourse at
end of quarter 457.0 349.2 336.5
- ------------------------------------------------------------------------------------------
Total credit loss reserves at end of
quarter $ 1,177.4 $ 1,017.0 $ 882.5
==========================================================================================
Credit loss reserves
Owned $ 720.4 3.31 %(3)$ 667.8 2.94 %(3)$ 546.0 2.66 %(3)
Serviced with limited recourse 457.0 3.07 349.2 2.76 336.5 2.69
- ------------------------------------------------------------------------------------------------------
Total managed credit loss reserves $ 1,177.4 3.22 % $ 1,017.0 2.87 % $ 882.5 2.67 %
======================================================================================================
(3) % Columns: comparisons to appropriate receivables
</TABLE>
