<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 number 1-8198
------
HOUSEHOLD INTERNATIONAL, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3121988
- ------------------------ -----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
2700 Sanders Road, Prospect Heights, Illinois 60070
- -------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant'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 [ ]
At July 31, 1998, there were 492,408,398 shares of registrant's
common stock outstanding.
<PAGE>
<PAGE> 2
HOUSEHOLD INTERNATIONAL, INC. AND SUBSIDIARIES
Table of Contents
PART I. Financial Information Page
----
Item 1. Financial Statements
Condensed Consolidated Statements of Operations
(Unaudited) - Three Months and Six Months
Ended June 30, 1998 and 1997 2
Condensed Consolidated Balance Sheets -
June 30, 1998 (Unaudited) and December 31, 1997 3
Condensed Consolidated Statements of Cash Flows
(Unaudited) - Six Months Ended
June 30, 1998 and 1997 4
Financial Highlights 5
Notes to Interim Condensed Consolidated Financial
Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
PART II. Other Information
Item 1. Legal Proceedings 26
Item 4. Submission of Matters to a Vote of Security Holders 26
Item 6. Exhibits and Reports on Form 8-K 28
Signature 29
<PAGE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Household International, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
- -----------------------------------------------------------
All amounts, except per share data, are stated in millions.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Finance income $1,372.6 $1,239.2 $2,686.2 $2,512.6
Other interest income 11.1 18.8 26.4 30.0
Interest expense 616.8 574.3 1,229.0 1,154.1
-------- -------- -------- --------
Net interest margin 766.9 683.7 1,483.6 1,388.5
Provision for credit losses on owned
receivables 391.6 351.0 780.9 729.5
-------- -------- -------- --------
Net interest margin after provision for
credit losses 375.3 332.7 702.7 659.0
-------- -------- -------- --------
Securitization income 394.2 422.2 813.5 788.4
Insurance revenues 117.8 111.3 237.3 222.6
Investment income 38.5 39.9 78.4 85.1
Fee income 145.0 119.7 292.3 238.6
Other income 40.1 61.6 127.8 227.6
Gain on sale of Beneficial Canada - - 189.4 -
-------- -------- -------- --------
Total other revenues 735.6 754.7 1,738.7 1,562.3
-------- -------- -------- --------
Salaries and fringe benefits 264.4 264.6 540.6 517.3
Occupancy and equipment expense 82.5 79.2 167.6 163.9
Other marketing expenses 99.0 98.8 202.0 213.6
Other servicing and administrative expenses 187.6 179.0 381.5 391.1
Amortization of acquired intangibles
and goodwill 44.8 37.1 87.2 73.9
Policyholders' benefits 55.3 65.1 118.9 134.9
Merger and integration related costs 1,000.0 - 1,000.0 -
-------- -------- -------- --------
Total costs and expenses 1,733.6 723.8 2,497.8 1,494.7
-------- -------- -------- --------
Income (loss) before income taxes (622.7) 363.6 (56.4) 726.6
Income taxes (benefit) (121.1) 125.0 87.4 255.8
-------- -------- -------- --------
Net income (loss) $ (501.6) $ 238.6 $ (143.8) $ 470.8
======== ======== ======== ========
Earnings (loss) per common share:
Net income (loss) $ (501.6) $ 238.6 $ (143.8) $ 470.8
Preferred dividends (4.1) (4.2) (8.3) (8.7)
-------- -------- -------- --------
Earnings (loss) available to
common shareholders $ (505.7) $ 234.4 $ (152.1) $ 462.1
======== ======== ======== ========
Average common shares 489.4 457.4 487.5 457.2
Average common and common equivalent
shares - 465.9 - 465.7
-------- -------- -------- --------
Basic earnings (loss) per common share $ (1.03) $ .51 $ (.31) $ 1.01
Diluted earnings (loss) per common share (1.03) .50 (.31) .99
-------- -------- -------- --------
Dividends declared per common share .15 .15 .30 .26
-------- -------- -------- --------
</TABLE>
See notes to interim condensed consolidated financial statements.
<PAGE>
<PAGE> 4
Household International, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
- -------------------------------------
In millions, except share data.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
June 30, December 31,
1998 1997
- -----------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Cash $ 364.7 $ 534.3
Investment securities 3,436.6 2,898.6
Receivables, net 40,227.8 38,337.6
Acquired intangibles and goodwill, net 1,908.9 1,798.4
Properties and equipment, net 445.1 538.7
Real estate owned 224.2 212.8
Other assets 2,895.0 2,496.6
--------- ---------
Total assets $49,502.3 $46,817.0
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Debt:
Deposits $ 1,780.1 $ 2,344.2
Commercial paper, bank and other borrowings 11,356.7 10,666.1
Senior and senior subordinated debt (with
original maturities over one year) 25,740.3 23,736.2
--------- ---------
Total debt 38,877.1 36,746.5
Insurance policy and claim reserves 1,324.5 1,382.6
Other liabilities 2,608.4 2,074.4
--------- ---------
Total liabilities 42,810.0 40,203.5
--------- ---------
Company obligated mandatorily redeemable
preferred securities of subsidiary trusts* 375.0 175.0
--------- ---------
Preferred stock 264.5 264.5
--------- ---------
Common shareholders' equity:
Common stock, $1.00 par value, 750,000,000
shares authorized (increased as of
May 13, 1998); 541,420,354 and 536,870,946
shares issued at June 30, 1998
and December 31, 1997, respectively 541.4 536.9
Additional paid-in capital 1,572.5 1,423.5
Retained earnings 4,666.4 4,978.6
Foreign currency translation adjustments (160.0) (176.5)
Unrealized gain on investments, net 27.3 8.8
Less common stock in treasury, 50,668,222 and
51,519,429 shares at June 30, 1998 and
December 31, 1997, respectively, at cost (594.8) (597.3)
--------- ---------
Total common shareholders' equity 6,052.8 6,174.0
--------- ---------
Total liabilities and shareholders' equity $49,502.3 $46,817.0
========= =========
</TABLE>
* As described in note 9 to the financial statements, the sole
assets of the three trusts are Junior Subordinated Deferrable
Interest Notes issued by Household International, Inc. in March
1998, June 1996 and June 1995, bearing interest at 7.25, 8.70
and 8.25 percent, respectively, with principal balances of
$206.2, $103.1 and $77.3 million, respectively, and due December
31, 2037, June 30, 2036 and June 30, 2025, respectively.
See notes to interim condensed consolidated financial statements.
<PAGE>
<PAGE> 5
Household International, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- -----------------------------------------------------------
In millions.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Six months ended June 30 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS
Net income (loss) $ (143.8) $ 470.8
Adjustments to reconcile net income to cash
provided by operations:
Provision for credit losses on owned receivables 780.9 729.5
Merger and integration related costs 1,000.0 -
Insurance policy and claim reserves (66.9) 13.8
Depreciation and amortization 155.8 147.2
Net realized (gains) losses from sales of assets (189.8) (64.6)
Other, net (598.9) 8.4
--------- ----------
Cash provided by operations 937.3 1,305.1
--------- ----------
INVESTMENTS IN OPERATIONS
Investment securities:
Purchased (802.8) (753.1)
Matured 300.6 219.7
Sold 453.0 497.0
Short-term investment securities, net change (455.7) 9.8
Receivables:
Originations, net (13,640.4) (13,702.9)
Purchases and related premiums (2,248.0) (435.1)
Sold 13,221.1 15,907.0
Purchase capital stock of Transamerica Financial
Services Holding Company - (1,065.0)
Properties and equipment purchased (49.6) (32.8)
Properties and equipment sold 21.3 6.1
---------- ----------
Cash increase (decrease) from investments in operations (3,200.5) 650.7
---------- ----------
FINANCING AND CAPITAL TRANSACTIONS
Short-term debt and demand deposits, net change 233.3 (564.9)
Time certificates, net change (125.1) (267.4)
Senior and senior subordinated debt issued 5,620.1 5,026.6
Senior and senior subordinated debt retired (2,742.5) (4,020.5)
Prepayment of debt (890.6) -
Repayment of Transamerica Financial Services Holding
Company debt - (2,795.0)
Policyholders' benefits paid (53.3) (74.5)
Cash received from policyholders 31.8 102.9
Shareholders' dividends (105.0) (88.2)
Shareholders' dividends - pooled affiliate (61.8) (55.5)
Redemption of preferred stock - (55.0)
Purchase of treasury stock (9.8) -
Treasury stock activity - pooled affiliate (11.0) (63.3)
Issuance of common stock 13.3 1,006.6
Issuance of company obligated mandatorily redeemable
preferred securities of subsidiary trusts 200.0 -
---------- ----------
Cash increase (decrease) from financing and
capital transactions 2,099.4 (1,848.2)
---------- ----------
Effect of exchange rate changes on cash (5.8) 9.1
---------- ----------
Increase (decrease) in cash (169.6) 116.7
Cash at January 1 534.3 518.8
---------- ----------
Cash at June 30 $ 364.7 $ 635.5
========== ==========
Supplemental cash flow information:
Interest paid $ 1,115.9 $ 1,138.7
---------- ----------
Income taxes paid 213.0 229.3
---------- ----------
</TABLE>
See notes to interim condensed consolidated financial statements.<PAGE>
<PAGE> 6
Household International, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
All dollar amounts are stated in millions.
- --------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income excluding merger costs and
Beneficial Canada gain
Household $ 201.9 $ 150.3 $ 372.2 $ 281.8
Beneficial 47.5 88.3 116.5 189.0
-------- -------- -------- --------
Total net income excluding merger costs
and Beneficial Canada gain 249.4 238.6 488.7 470.8
Merger and integration related costs (751.0) - (751.0) -
Beneficial Canada gain - - 118.5 -
-------- -------- -------- --------
Net income (loss) (501.6) 238.6 (143.8) 470.8
======== ======== ======== ========
Diluted earnings (loss) per common share (1.03) .50 (.31) .99
======== ======== ======== ========
Diluted earnings per common share excluding
merger costs and Beneficial Canada gain .49 .50 .96 .99
======== ======== ======== ========
Pro forma pre-merger diluted earnings per
common share excluding merger costs and
Beneficial Canada gain <F1>
Household .61 .49 1.12 .92
======== ======== ======== ========
Beneficial .81 1.61 2.02 3.41
======== ======== ======== ========
Net interest margin and other revenues <F2> 1,447.2 1,373.3 3,103.4 2,815.9
-------- -------- -------- --------
Return on average common shareholders' equity <F3> 14.7% 19.6% 14.7% 19.7%
-------- -------- -------- --------
Return on average owned assets <F3> 2.00 2.14 1.99 2.10
-------- -------- -------- --------
Managed basis efficiency ratio, normalized <F4> 39.1 41.3 39.8 42.0
-------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
All dollar amounts are stated in millions.
- --------------------------------------------------------------------------------------------------------
June 30, December 31,
1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total assets:
Owned $49,502.3 $46,817.0
Managed 72,083.8 71,295.5
--------- ---------
Receivables:
Owned $40,699.4 $38,682.0
Serviced with limited recourse 22,581.5 24,478.5
--------- ---------
Managed $63,280.9 $63,160.5
========= =========
Total shareholders' equity as a percent 13.52% 14.13%
--------- ---------
Total shareholders' equity as a percent of managed assets <F5> 9.28 9.28
--------- ---------
<FN>
<F1> Calculated based on average common and common equivalent shares outstanding for the
respective companies for the periods presented prior to the merger.
<F2> Policyholders' benefits have been netted against other revenues.
<F3> Annualized. Excludes merger and integration related costs and the Beneficial Canada gain.
<F4> Ratio of normalized operating expenses to managed net interest margin and other revenues
less policyholders' benefits. Excludes merger and integration related costs and the Beneficial
Canada gain.
<F5> Total shareholders' equity at June 30, 1998 and December 31, 1997 includes common shareholders'
equity, preferred stock and company obligated mandatorily redeemable preferred securities of
subsidiary trusts.
</FN>
</TABLE>
See notes to interim condensed consolidated financial statements.<PAGE>
<PAGE> 7
Household International, Inc. and Subsidiaries
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
- --------------------------
The accompanying unaudited condensed consolidated financial
statements of Household International, Inc. ("Household") and its
subsidiaries have been prepared in accordance with generally
accepted accounting principles for interim financial information.
Additionally, these financial statements have been prepared in
accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. Certain prior period
amounts have been reclassified to conform with the current period's
presentation. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the
three and six months ended June 30, 1998 should not be considered
indicative of the results for any future quarters or the year
ending December 31, 1998. Household and its subsidiaries may also
be referred to in this Form 10-Q as "we," "us" or "our." These
financial statements should be read in conjunction with the
supplemental consolidated financial statements for the year ended
December 31, 1997 contained in Household's Current Report on
Form 8-K dated June 30, 1998.
On March 10, 1998, the Board of Directors approved a three-for-one
split of our common stock effected in the form of a dividend,
issued on June 1, 1998, to shareholders of record as of May 14,
1998. The split was subject to shareholder approval to increase
authorized shares which was received on May 13, 1998. Accordingly,
all common share and per common share data in these interim
condensed consolidated financial statements includes the effect of
our stock split.
2. HOUSEHOLD MERGER WITH BENEFICIAL CORPORATION
- -------------------------------------------------
On June 30, 1998, Household completed its merger with Beneficial
Corporation ("Beneficial"), a consumer finance holding company
headquartered in Wilmington, Delaware. Beneficial's total assets
were $16.1 billion and common shareholders' equity was $2.0 billion
on the date of the merger, excluding the impact of the merger and
integration related costs. Each outstanding share of Beneficial
common stock was converted into 3.0666 shares of Household's common
stock, resulting in the issuance of approximately 168.4 million
common shares to the former Beneficial shareholders. Each share of
Beneficial $5.50 Convertible Preferred Stock was converted into the
number of shares of Household common stock the holder would have
been entitled to receive in the merger had the holder converted his
or her shares of Beneficial $5.50 Convertible Preferred Stock into
shares of Beneficial common stock immediately prior to the merger.
Additionally, each other share of preferred stock of Beneficial
outstanding immediately prior to the merger has been converted into
one share of a newly created series of preferred stock of Household
with terms substantially similar to those of existing Beneficial
preferred stock. The merger was accounted for as a pooling of
interests and therefore, these interim condensed consolidated
financial statements include the results of operations, financial
position, and changes in cash flows of Beneficial for all periods
presented.<PAGE>
<PAGE> 8
The separate results of operations for Household and Beneficial
were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
In millions. 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net interest margin and other
revenues <F1>
Household $ 984.2 $ 875.2 $1,915.7 $1,790.8
Beneficial 463.0 498.1 1,187.7 1,025.1
-------- ------- -------- --------
Total $1,447.2 $1,373.3 $3,103.4 $2,815.9
======== ======== ======== ========
Net income (loss)
Household $ 201.9 $ 150.3 $ 372.2 $ 281.8
Beneficial 47.5 88.3 116.5 189.0
Merger and integration
related costs (751.0) - (751.0) -
Beneficial Canada gain - - 118.5 -
-------- -------- -------- --------
Total $ (501.6) $ 238.6 $ (143.8) $ 470.8
======== ======== ======== ========
<FN>
<F1> Policyholders' benefits have been netted against other revenues.
</FN>
</TABLE>
In connection with the merger, we incurred pre-tax merger and
integration related costs of approximately $1 billion ($751 million
after-tax) in the quarter. These costs included approximately $305
million in lease exit costs, $50 million in fixed asset write-offs
related to closed facilities, $255 million in severance and change
in control payments, $230 million in asset writedowns to reflect
modified business plans, $75 million in investment banking fees,
$25 million in legal and other expenses, and $60 million in
prepayment premiums related to debt.
The following table summarizes the activity in the merger and
restructuring reserve for the three months ended June 30, 1998:
<TABLE>
<CAPTION>
- --------------------------------------------------------------
Three Months Ended
In millions. June 30, 1998
- --------------------------------------------------------------
<S> <C>
Balance at beginning of period -
Establishment of reserve $1,000.0
Cash payments (113.7)
Non-cash items (249.5)
--------
Balance on June 30, 1998 $ 636.8
========
</TABLE>
3. BUSINESS DIVESTITURES
- --------------------------
On April 28, 1998, the sale of Beneficial's German operations was
completed. An after-tax loss of $27.8 million was recorded in the
fourth quarter of 1997. This loss was recorded after consideration
of a $31.0 million tax benefit, primarily generated by the expected
utilization of capital losses to cover the expected loss associated
with disposing of the German operations. No additional losses were
realized in 1998 as a result of the sale.
On March 2, 1998, the sale of Beneficial's Canadian operations was
completed. An after-tax gain of $118.5 million was recorded upon
consummation of the transaction.
<PAGE>
<PAGE> 9
4. INVESTMENT SECURITIES
- --------------------------
Investment securities consisted of the following:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
In millions. June 30, 1998 December 31, 1997
- ---------------------------------------------------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE INVESTMENTS
Marketable equity securities $ 69.0 $ 72.5 $ 129.0 $ 132.5
Corporate debt securities 1,613.5 1,648.8 1,581.8 1,600.5
U.S. government and federal
agency debt securities 623.6 626.4 390.3 380.5
Other 1,050.1 1,051.0 745.8 746.5
-------- -------- -------- --------
Subtotal 3,356.2 3,398.7 2,846.9 2,860.0
Accrued investment income 37.9 37.9 38.6 38.6
-------- -------- -------- --------
Total investment securities $3,394.1 $3,436.6 $2,885.5 $2,898.6
======== ======== ======== ========
</TABLE>
5. RECEIVABLES
- ----------------
Receivables consisted of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
June 30, December 31,
In millions. 1998 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C>
First mortgage $ 328.0 $ 396.6
Home equity 16,317.1 13,786.2
Auto finance 537.2 487.5
MasterCard/Visa 7,051.3 6,874.7
Private label 8,252.2 9,356.9
Other unsecured 7,437.5 6,823.1
Commercial 776.1 957.0
--------- ---------
Total owned receivables 40,699.4 38,682.0
Accrued finance charges 548.1 536.7
Credit loss reserve for owned receivables (1,757.2) (1,642.1)
Unearned credit insurance premiums and
claims reserves (477.3) (452.3)
Amounts due and deferred from
receivables sales 2,077.7 2,094.2
Reserve for receivables serviced with
limited recourse (862.9) (880.9)
--------- ---------
Total owned receivables, net 40,227.8 38,337.6
Receivables serviced with limited recourse 22,581.5 24,478.5
--------- ---------
Total managed receivables, net $62,809.3 $62,816.1
========= =========
</TABLE>
<PAGE>
<PAGE> 10
The outstanding balance of receivables serviced with limited
recourse consisted of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
June 30, December 31,
In millions. 1998 1997
- --------------------------------------------------------------------
<S> <C> <C>
Home equity $ 4,403.7 $ 6,038.6
Auto finance 700.7 395.9
MasterCard/Visa 12,195.2 12,337.0
Private label 927.9 1,025.0
Other unsecured 4,354.0 4,682.0
--------- ---------
Total $22,581.5 $24,478.5
========= =========
</TABLE>
The combination of receivables owned and receivables serviced with
limited recourse, which we consider our managed portfolio, is shown
below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
June 30, December 31,
In millions. 1998 1997
- --------------------------------------------------------------------
<S> <C> <C>
First mortgage $ 328.0 $ 396.6
Home equity 20,720.8 19,824.8
Auto finance 1,237.9 883.4
MasterCard/Visa 19,246.5 19,211.7
Private label 9,180.1 10,381.9
Other unsecured 11,791.5 11,505.1
Commercial 776.1 957.0
--------- ---------
Total $63,280.9 $63,160.5
========= =========
</TABLE>
The amounts due and deferred from receivables sales were $2,077.7
million at June 30, 1998 and $2,094.2 million at December 31, 1997.
The amounts due and deferred included unamortized securitization
assets and funds set up under the recourse requirements for certain
sales totaling $2,104.5 million at June 30, 1998 and $2,082.3
million at December 31, 1997. It also included net customer
payments owed by us to the securitization trustee of $52.3 million
at June 30, 1998 and $11.7 million at December 31, 1997. In
addition, we have subordinated interests in certain transactions,
which were recorded as receivables, of $1,250.1 million at June 30,
1998 and $1,098.1 million at December 31, 1997. We have agreements
with a "AAA"-rated third party who will insure us for up to $21.2
million in losses relating to certain securitization transactions.
We maintain credit loss reserves under the recourse requirements
for receivables serviced with limited recourse which are based on
estimated probable losses under those requirements. The reserves
totaled $862.9 million at June 30, 1998 and $880.9 million at
December 31, 1997 and represents our best estimate of probable
losses on receivables serviced with limited recourse.
<PAGE>
<PAGE> 11
6. CREDIT LOSS RESERVES
- -------------------------
An analysis of credit loss reserves for the three and six months
ended June 30 was as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
In millions. 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Credit loss reserves for owned
receivables at beginning
of period $1,725.6 $1,438.4 $1,642.1 $1,398.4
Provision for credit losses 391.6 351.0 780.9 729.5
Chargeoffs (417.7) (356.0) (820.2) (717.3)
Recoveries 40.7 54.4 83.3 95.0
Portfolio acquisitions, net 17.0 68.6 71.1 50.8
-------- -------- -------- --------
TOTAL CREDIT LOSS RESERVES FOR
OWNED RECEIVABLES AT JUNE 30 1,757.2 1,556.4 1,757.2 1,556.4
-------- -------- -------- --------
Credit loss reserves for
receivables serviced with
limited recourse at beginning
of period 847.4 767.6 880.9 710.6
Provision for credit losses 295.4 229.6 556.9 478.7
Chargeoffs (312.1) (273.4) (626.5) (478.0)
Recoveries 23.2 12.9 42.0 22.8
Other, net 9.0 .6 9.6 3.2
-------- -------- -------- --------
TOTAL CREDIT LOSS RESERVES FOR
RECEIVABLES SERVICED WITH
LIMITED RECOURSE AT JUNE 30 862.9 737.3 862.9 737.3
-------- -------- -------- --------
TOTAL CREDIT LOSS RESERVES FOR
MANAGED RECEIVABLES AT JUNE 30 $2,620.1 $2,293.7 $2,620.1 $2,293.7
======== ======== ======== ========
</TABLE>
7. INCOME TAXES
- -----------------
The effective tax rate for the first six months of 1998 was 35.7
percent excluding merger and integration related costs. The
inclusion of this item resulted in a $249 million net tax benefit
for the first six months of 1998. The effective tax rate was 35.2
percent in the year-ago period. The effective tax rate differs from
the statutory federal income tax rate in these years primarily
because of the effects of (a) state and local income taxes, (b) in
1997, capital losses from the sale of German operations, (c)
leveraged lease tax benefits, (d) amortization and write-offs of
intangible assets, (e) reduction of noncurrent tax requirements and
(f) in 1998, nondeductible merger costs.
<PAGE>
<PAGE> 12
8. EARNINGS (LOSS) PER COMMON SHARE
- -------------------------------------
Computations of earnings (loss) per common share for the three and
six months ended June 30 were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Three Months Ended
June 30,
In millions, except per share data. 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Diluted<F1> Basic Diluted Basic
------- ------- ------ ------
Earnings (loss):
Net income (loss) $(501.6) $(501.6) $238.6 $238.6
Preferred dividends (4.1) (4.1) (4.2) (4.2)
------- ------- ------ ------
Earnings (loss) available to common
shareholders $(505.7) $(505.7) $234.4 $234.4
======= ======= ====== ======
Average shares:
Common 489.4 489.4 457.4 457.4
Common equivalents <F1> - - 8.5 -
------- ------- ------ ------
Total 489.4 489.4 465.9 457.4
======= ======= ====== ======
Earnings (loss) per common share $ (1.03) $ (1.03) $ .50 $ .51
======= ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Six Months Ended
June 30,
In millions, except per share data. 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Diluted<F1> Basic Diluted Basic
------- ------- ------ -------
Earnings (loss):
Net income (loss) $(143.8) $(143.8) $470.8 $470.8
Preferred dividends (8.3) (8.3) (8.7) (8.7)
------- ------- ------ ------
Earnings (loss) available to common
shareholders $(152.1) $(152.1) $462.1 $462.1
======= ======= ====== ======
Average shares:
Common 487.5 487.5 457.2 457.2
Common equivalents <F1> - - 8.5 -
------- ------- ------ ------
Total 487.5 487.5 465.7 457.2
======= ======= ====== ======
Earnings (loss) per common share $ (.31) $ (.31) .99 1.01
======= ======= ====== ======
<FN>
<F1> Common equivalent shares are not presented for purposes of earnings per
share calculations during these periods because it results in antidilution.
</FN>
</TABLE>
<PAGE>
<PAGE> 13
9. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARY TRUSTS
- --------------------------------------------------------------------
In March 1998 Household Capital Trust IV ("HCT IV"), a wholly-owned
subsidiary of Household, issued 8 million 7.25 percent Trust
Preferred Securities ("preferred securities") at $25 per preferred
security. The sole asset of HCT IV is $206.2 million of 7.25
percent Junior Subordinated Deferrable Interest Notes issued by
Household. The junior subordinated notes held by HCT IV mature on
December 31, 2037 and are redeemable by Household in whole or in
part beginning on March 19, 2003, at which time the HCT IV
preferred securities are callable at par ($25 per preferred
security) plus accrued and unpaid dividends. Net proceeds from the
issuance of preferred securities were used for general corporate
purposes.
In June 1996 Household Capital Trust II ("HCT II"), a wholly-owned
subsidiary of Household, issued 4 million 8.70 percent preferred
securities at $25 per preferred security. The sole asset of HCT II
is $103.1 million of 8.70 percent Junior Subordinated Deferrable
Interest Notes issued by Household. The junior subordinated notes
held by HCT II mature on June 30, 2036 and are redeemable by
Household in whole or in part beginning on June 30, 2001, at which
time the HCT II preferred securities are callable at par ($25 per
preferred security) plus accrued and unpaid dividends.
In 1995 Household Capital Trust I ("HCT I"), a wholly-owned
subsidiary of Household, issued 3 million 8.25 percent preferred
securities at $25 per preferred security. The sole asset of HCT I
is $77.3 million of 8.25 percent Junior Subordinated Deferrable
Interest Notes issued by Household. The junior subordinated notes
held by HCT I mature on June 30, 2025 and are redeemable by
Household in whole or in part beginning June 30, 2000, at which
time the HCT I preferred securities are callable at par ($25 per
preferred security) plus accrued and unpaid dividends. HCT I may
elect to extend the maturity of its preferred securities to June
30, 2044.
The obligations of Household with respect to the junior
subordinated notes, when considered together with certain
undertakings of Household with respect to HCT I, HCT II and HCT IV,
constitute full and unconditional guarantees by Household of HCT
I's, HCT II's and HCT IV's obligations under the respective
preferred securities. The preferred securities are classified in
our balance sheets as company obligated mandatorily redeemable
preferred securities of subsidiary trusts (representing the
minority interest in the trusts) at their face and redemption
amount of $375 million at June 30, 1998 and $175 million at
December 31, 1997. The preferred securities have a liquidation
value of $25 per preferred security. Dividends on the preferred
securities are cumulative, payable quarterly in arrears, and are
deferrable at Household's option for up to five years from date of
issuance. Household cannot pay dividends on its preferred and
common stocks during such deferments.
10. COMPREHENSIVE INCOME (LOSS)
- --------------------------------
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("FAS No. 130"), effective for fiscal years
beginning after December 15, 1997. This statement establishes
standards for the reporting and presentation of comprehensive
income. Comprehensive income, in addition to traditional net
income, includes the mark-to-market adjustments on available-for-
sale securities, cumulative translation adjustments and other items
which represent a change in equity from "nonowner" sources. FAS No.
130 does not change existing requirements for certain items to be
reported as a separate component of shareholders' equity. In
accordance with the interim reporting guidelines of FAS No. 130,
comprehensive income (loss) was $(490.5) million for the quarter
ended June 30, 1998, $260.6 million for the quarter ended June 30,
1997, $(108.8) million for the six months ended June 30, 1998 and
$459.3 million for the six months ended June 30, 1997. Excluding
the impact of the merger and integration related costs as well as
the gain on sale of Beneficial Canada, comprehensive income was
$260.5 million for the quarter ended June 30, 1998 and $523.7
million for the six months ended June 30, 1998.<PAGE>
<PAGE> 14
11. COMMITMENTS AND CONTINGENT LIABILITIES
- -------------------------------------------
In 1992, the Internal Revenue Service ("IRS") completed its
examination of Beneficial's federal income tax returns for 1984
through 1987. The IRS proposed $142.0 million in adjustments that
relate principally to activities of a former subsidiary, American
Centennial Insurance Company, prior to its sale in 1987.
In order to limit the further accrual of interest on the proposed
adjustments, Beneficial paid $105.5 million of tax and interest
during the third quarter of 1992.
The issues were not resolved during the administrative appeals
process, and the IRS issued a statutory Notice of Deficiency
asserting the unresolved adjustments and increased the disallowance
to $195.0 million in the third quarter of 1996.
Beneficial has initiated litigation in the United States Tax Court
to oppose the disallowance. While the conclusion of this matter in
its entirety cannot be predicted with certainty, management does
not anticipate the ultimate resolution to differ materially from
amounts accrued.
12. ACCOUNTING PRONOUNCEMENTS
- ------------------------------
In March 1998, Statement of Position 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use ("SOP 98-1"),
was issued. This statement, effective for financial statements issued
for fiscal years beginning after December 15, 1998, provides guidance on
accounting for the costs of computer software developed or obtained for
internal use. We do not expect the adoption of SOP 98-1 to have a
material impact on our consolidated financial statements.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities ("FAS No. 133"). FAS
No. 133 establishes accounting and reporting standards requiring
that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value.
FAS No. 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting
criteria are met. FAS No. 133 is effective for fiscal years
beginning after June 15, 1999, and can be implemented as of the
beginning of any fiscal quarter after issuance (that is, fiscal
quarters beginning June 16, 1998 and thereafter). FAS No. 133
cannot be applied retroactively. We expect to adopt FAS No. 133 on
January 1, 2000 and have not yet quantified the impacts of adopting
this statement on our financial statements.
<PAGE>
<PAGE> 15
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Form 10-Q contains certain estimates and projections regarding
Household and our merger with Beneficial Corporation ("Beneficial"),
that may be forward-looking in nature, as defined by the Private
Securities Litigation Reform Act of 1995. A variety of factors may
cause actual results to differ materially from the results discussed
in these forward-looking statements. Factors that might cause such a
difference are discussed herein and in Household International's and
Beneficial Corporation's Annual Reports on Forms 10-K, for the year
ended December 31, 1997, all filed with the Securities and Exchange
Commission.
On June 30, 1998, we merged with Beneficial, a consumer finance
holding company headquartered in Wilmington, Delaware. Each
outstanding share of Beneficial common stock was converted into
3.0666 shares of Household's common stock, resulting in the
issuance of approximately 168.4 million shares of common stock.
Each share of Beneficial $5.50 Convertible Preferred Stock (the
"Beneficial Convertible Stock") was converted into the number of
shares of Household common stock the holder would have been
entitled to receive in the merger had the Beneficial Convertible
Stock been converted into shares of Beneficial common stock
immediately prior to the merger. Additionally, each other share of
Beneficial preferred stock outstanding was converted into one share
of a newly-created series of Household preferred stock with terms
substantially similar to those of existing Beneficial preferred
stock. The merger was accounted for as a pooling of interests and,
therefore, the information included in this report presents the
combined results of Household and Beneficial as if the two
companies had operated as a combined entity for all periods
presented.
In connection with the merger, we incurred pre-tax merger and
integration related costs of approximately $1 billion ($751 million
after-tax) in the second quarter. These costs included
approximately $305 million in lease exit costs, $50 million in
fixed asset write-offs related to closed facilities, $255 million
in severance and change in control payments, $230 million in asset
writedowns to reflect modified business plans, $75 million in
investment banking fees, $25 million in legal and other expenses,
and $60 million in prepayment premiums related to debt.
The merger and integration related costs included approximately
$291 million in non-cash charges. Cash payments of approximately
$709 million will be funded through our existing operations and by
issuing additional commercial paper and other borrowings. In
addition, we received tax benefits of approximately $249 million.
Substantially all of the cash payments are expected to be made by
the end of 1998.
OPERATIONS SUMMARY
- ------------------
Our operating income (net income excluding merger and integration
related costs and the gain on sale of Beneficial's Canadian
operations) for the second quarter of 1998 was $249.4 million, up
from $238.6 million in 1997. Operating income for the first six
months of 1998 was $488.7 million, up from $470.8 million a year
ago. Diluted operating earnings per share was $.49 in the second
quarter and $.96 for the first six months of 1998, compared to $.50
and $.99 per share in the same periods in 1997. The difference
between the increases in operating income and the decreases in
diluted operating earnings per share was due to the issuance of
over 27 million common shares in June 1997. Including merger and
integration related costs and, for the first six months of 1998,
the gain on sale of Beneficial's Canadian operations, we recognized
a net loss of $(501.6) million for the second quarter and $(143.8)
million for the first six months of 1998. Additionally, diluted loss
per share was $(1.03) for the second quarter and $(.31) for the first
six months of 1998.
<PAGE>
<PAGE> 16
On a stand-alone basis and excluding merger costs, Household's net
income for the second quarter of 1998 was $201.9 million, up from
$150.3 million in 1997, while Beneficial's net income for the
second quarter was $47.5 million, compared to $88.3 million last
year. On a stand-alone basis, Household's diluted earnings per
share for the quarter was $.61, up 24 percent from $.49 last year,
while Beneficial's diluted earnings per share was $.81, down from
$1.61 last year. Beneficial's second quarter 1997 diluted earnings
per share included about $.59 of non-transactional gains, mostly
securitization gains on home equity loans. There were no Beneficial
securitizations during the second quarter of 1998. Excluding the
prior year's nonrecurring items, Beneficial's stand-alone diluted
earnings per share for the quarter was down about 21 percent. The
decline was due to increased credit losses, partially offset by an
improved net interest margin. Beneficial's results for the quarter
were consistent with our expectations.
Excluding merger and integration related costs and the gain on sale
of Beneficial's Canadian operations, our annualized return on
average common shareholders' equity was 14.7 percent for both the
second quarter and first six months of 1998. This compares to an
annualized return on average common shareholders' equity of 21.1
percent for the second quarter of 1997 and 21.4 percent for the
first six months of 1997. The decrease in 1998 was a result of the
June 1997 common stock offering which decreased our leverage,
resulting in more of our assets being funded by equity as compared
to the prior year.
- - On March 10, 1998, the Board of Directors approved a three-for-
one split of Household's common stock effected in the form of a
dividend, issued on June 1, 1998, to shareholders of record as of
May 14, 1998. The split was subject to shareholder approval to
increase authorized shares which was received on May 13, 1998.
Accordingly, all common share and per common share data in this
report includes the effect of Household's stock split.
- - On April 28, the sale of Beneficial's German operations was
completed. An after-tax loss of $27.8 million was recorded in the
fourth quarter of 1997. This loss was recorded after consideration
of a $31.0 million tax benefit, primarily generated by the expected
utilization of capital losses to cover the expected loss associated
with disposing of the German operations. No additional losses were
realized in 1998 as a result of the sale.
- - On March 2, 1998, the sale of Beneficial's Canadian operations
was completed. An after-tax gain of $118.5 million was recorded
upon consummation of the transaction.
- - The following summarizes our operating results for our key
businesses for the second quarter and first six months of 1998
compared to the corresponding prior year periods:
Results for our domestic consumer finance business improved from
the prior year periods reflecting higher net interest margin and
fee income due mainly to higher levels of average managed
receivables. These improvements were partially offset by higher
credit losses resulting primarily from increased personal
bankruptcy filings.
Our MasterCard* and Visa* credit card business reported lower
net interest margin and, for the first six months, higher credit
losses, partially offset by higher fee income. This business
includes our co-branding and affinity relationship strategies,
in particular our alliance with General Motors Corporation
("GM") to issue the GM Card, a co-branded credit card, and the
AFL-CIO's Union Privilege affinity relationship.
* MasterCard is a registered trademark of MasterCard
International, Incorporated and Visa is a registered trademark
of VISA USA, Inc.<PAGE>
<PAGE> 17
Our private label credit card business reported higher credit
losses, partially offset by higher net interest margin and fee
income, and improved efficiency. Higher credit losses reflected
higher personal bankruptcies as well as the maturing of
promotional balances in the first quarter of 1998.
Beneficial's tax refund anticipation loan ("RAL") business
profits declined from the prior year periods, reflecting certain
limited measures taken by the Internal Revenue Service to delay
payment on the returns of selected taxpayers claiming an earned
income tax credit.
Net income increased in our United Kingdom ("U.K.") operation
primarily due to improved efficiency, as well as higher
interchange income and insurance premiums, due to receivables
growth. The Goldfish Card, issued in alliance with the Centrica
Group, contributed significantly to the growth in credit card
receivables during the quarter.
- - Our normalized managed basis efficiency ratio improved to 39.1
percent for the second quarter of 1998 and 39.8 percent for the
first six months of 1998 compared to 41.3 percent in the second
quarter of 1997 and 42.0 percent for the first six months of
1997. The efficiency ratio is the ratio of operating expenses to
the sum of our managed net interest margin and other revenues
less policyholders' benefits. We normalize, or adjust for, items
that are not indicative of ongoing operations. The improvement
in the managed ratio in the second quarter of 1998 resulted from
a 9 percent growth in normalized managed net revenues over the
prior year, compared to a 3 percent increase in normalized
operating expenses over the comparable period. The improvement
in the managed ratio for the first six months of 1998 resulted
from growth in normalized managed net revenues over the prior
year, compared to essentially no change in normalized operating
expenses over the comparable period.
On a stand-alone basis, Household's normalized managed
efficiency ratio was 34.2 percent, down from 36.0 percent last
quarter and 36.5 percent a year ago. Beneficial's normalized
managed efficiency ratio for the quarter was 52.7 percent,
essentially unchanged from the first quarter, and up from 52.2
percent last year.
BALANCE SHEET REVIEW
- --------------------
- - Managed consumer receivables (receivables on our balance sheet
plus receivables serviced with limited recourse) grew 3 percent
over the prior year. Core products increased 7 percent from a year
ago to $62.2 billion. Core products exclude first mortgages and
commercial receivables, Beneficial's German and Canadian
receivables which were sold in the first half of 1997 and
Household's student loan receivables which were sold in the fourth
quarter of 1997. Growth in auto finance receivables reflect the
acquisition of ACC Consumer Finance Corporation ("ACC") in October
1997. New loan originations in our retail branch network were up,
however, the higher level of refinancings continued to impact home
equity loan growth. MasterCard and Visa receivables were up from a
year ago due to solid growth in our U.K. bankcard business and the
purchase of a $925 million portfolio in the first quarter of 1998.
This growth was offset by the non-strategic portfolio sales which
occurred in the second half of 1997. Other unsecured receivables
were up compared to the prior year reflecting the purchase of an
$850 million portfolio in the first quarter. In addition, other
unsecured growth was affected by our slowed origination of new
unsecured business in recent quarters because of the uncertain
credit environment.
On a stand-alone basis, Household's core portfolio grew 7
percent and Beneficial's core portfolio increased 6 percent year-
over-year.
<PAGE>
<PAGE> 18
- - Compared to the first quarter, core products were relatively
flat. New loan originations in the HFC retail branch network were
up over 20 percent in the quarter. However, the higher level of
refinancings continued to impact home equity loan growth. Our other
unsecured portfolio declined slightly in the quarter as run-off
outpaced new volume. As discussed above, the decline in other
unsecured is attributable to our slowing growth somewhat due to
credit quality concerns. MasterCard/Visa receivables were flat with
the first quarter. Starting in the first quarter, we actively
repriced our MasterCard/Visa portfolios and cut credit lines to
minimize future loss experience. These actions, however, led to
greater attrition than anticipated. Private label receivables were
down in the quarter from attrition at two major merchants due to
less promotional activity by Beneficial.
- - Consumer receivables on our balance sheet were $39.9 billion
at June 30, 1998, up from $39.2 billion at March 31, 1998 and $38.0
billion at June 30, 1997. Changes in these owned receivables from
period to period may vary depending on the timing and significance
of securitization transactions.
- - Our managed credit loss reserves were $2,620.1 million at June
30, 1998, up from $2,573.0 million at March 31, 1998 and $2,293.7
million at June 30, 1997. Credit loss reserves as a percent of
managed receivables were 4.14 percent, up from 4.06 percent at
March 31, 1998 and 3.73 percent at June 30, 1997. Reserves as a
percent of nonperforming managed receivables were 116.9 percent,
compared to 116.1 percent at March 31, 1998 and 119.6 percent at
June 30, 1997. Consumer two-months-and-over contractual delinquency
("delinquency") as a percent of managed consumer receivables was
4.65 percent at June 30, 1998 and March 31, 1998 and 4.18 percent
at June 30, 1997. The annualized total consumer managed chargeoff
ratio in the second quarter of 1998 was 4.26 percent, compared to
4.17 percent in the prior quarter and 3.86 percent in the year-ago
quarter.
- - The ratio of total shareholders' equity (including company
obligated mandatorily redeemable preferred securities of subsidiary
trusts) to total owned assets was 13.52 percent, compared to 14.13
percent at December 31, 1997. The ratio of total shareholders'
equity to managed assets was 9.28 percent, unchanged from December
31, 1997. The ratios in 1998 were impacted by the merger and
integration related costs incurred in the quarter.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Our subsidiaries use cash to originate loans, purchase loans or
investment securities or acquire businesses. Their main sources of
cash are the collection and securitization of receivable balances;
maturities or sales of investment securities; proceeds from the
issuance of debt and deposits; and cash provided by operations.
The following describes major changes in our funding base from
December 31, 1997 to June 30, 1998:
- - In March 1998, a subsidiary trust issued $200 million of
company obligated mandatorily redeemable preferred securities.
- - Deposits decreased 22 percent to $1.8 billion from $2.3
billion due to the sale of Beneficial's German operations, as
previously discussed.
- - Commercial paper, bank and other borrowings increased 7
percent to $11.4 billion from $10.7 billion. Senior and senior
subordinated debt (with original maturities over one year)
increased 8 percent to $25.7 billion from $23.7 billion. The
increase in debt levels from year end is primarily attributable to
the increase in owned receivables.
<PAGE>
<PAGE> 19
- - In connection with the Beneficial merger, we have repurchased
or have commitments to repurchase approximately $1.1 billion of
senior and senior subordinated debt and bank and other borrowings.
We funded the debt repurchase with senior debt and other borrowings.
Cash payments of approximately $709 million for merger and
integration related costs will be funded through our existing
operations, senior debt and other borrowings.
- - In June 1998, we issued 168.4 million shares of common stock
in connection with the Beneficial merger, as previously discussed.
- - Our securitized portfolio of home equity, auto finance,
MasterCard and Visa, private label and other unsecured receivables
totaled $22.6 billion at June 30, 1998, compared to $24.5 billion
at December 31, 1997. During the three months ended June 30, 1998,
we securitized, excluding replenishments of certificate holder
interests, $1.7 billion of auto finance and MasterCard/Visa
receivables. During the six months ended June 30, 1998, we
securitized, excluding replenishments of certificate holder
interests, $2.0 billion of auto finance, MasterCard/Visa and other
unsecured receivables.
The composition of these securitizations by type is as follows
(in billions):
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
1998 1998
- -----------------------------------------------------------
<S> <C> <C>
Auto finance $ .4 $ .4
Visa/MasterCard 1.3 1.3
Other unsecured - .3
------- -------
Total $ 1.7 $ 2.0
======= =======
</TABLE>
The market for securities backed by receivables is a reliable,
efficient and cost-effective source of funds, which we plan to
continue to utilize in the future.
PRO FORMA MANAGED STATEMENTS OF INCOME
- --------------------------------------
Securitizations of consumer receivables have been, and will
continue to be, an important source of funding. We continue to
service securitized receivables after they have been sold and
retain a limited recourse liability for future credit losses. We
include revenues and credit-related expenses related to the off-
balance sheet portfolio in one line item in our owned statements of
income. Specifically, we report net interest margin, fee and other
income, and provision for credit losses for securitized receivables
as a net amount in securitization income.
We monitor our operations on a managed basis as well as on the
owned basis shown in our statements of income. The managed basis
assumes that the securitized receivables have not been sold and are
still on our balance sheet. The income and expense items discussed
above are reclassified from securitization income into the
appropriate caption. Pro forma managed statements of income, which
reflect these reclassifications, are presented below. For purposes
of this analysis, the managed results do not reflect the
differences between our accounting policies for owned receivables
and the off-balance sheet portfolio. Therefore, net income on a pro
forma managed basis equals net income on an owned basis.
<PAGE>
<PAGE> 20
Pro Forma Managed Statements of Income
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
All dollar amounts are June 30, June 30,
stated in millions. 1998 * 1997 * 1998 * 1997 *
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Finance and other interest
income $ 2,200.7 13.77% $ 2,043.1 13.65% $ 4,435.0 13.78% $ 4,063.9 13.61%
Interest expense 961.9 6.02 905.9 6.06 1,941.8 6.03 1,788.9 5.99
--------- ----- --------- ----- --------- ----- --------- -----
Net interest margin 1,238.8 7.75 1,137.2 7.67<F1> 2,493.2 7.75 2,275.0 7.66<F1>
Provision for credit losses 687.0 580.6 1,337.8 1,208.2
--------- --------- --------- ---------
Net interest margin after
provision for credit losses 551.8 556.6 1,155.4 1,066.8
--------- --------- --------- ---------
Insurance revenues 117.8 111.3 237.3 222.6
Investment income 38.5 39.9 78.4 85.1
Fee income 362.7 318.0 653.1 619.2
Other income 40.1 61.6 127.8 227.6
Gain on sale of Beneficial
Canada - - 189.4 -
--------- --------- --------- ---------
Total other revenues 559.1 530.8 1,286.0 1,154.5
--------- --------- --------- ---------
Salaries and fringe
benefits 264.4 264.6 540.6 517.3
Occupancy and equipment
expense 82.5 79.2 167.6 163.9
Other marketing expenses 99.0 98.8 202.0 213.6
Other servicing and
administrative expenses 187.6 179.0 381.5 391.1
Amortization of acquired
intangibles and goodwill 44.8 37.1 87.2 73.9
Policyholders' benefits 55.3 65.1 118.9 134.9
--------- --------- --------- ---------
Total costs and expenses
before merger charge 733.6 723.8 1,497.8 1,494.7
Merger and integration
related costs 1,000.0 - 1,000.0 -
--------- --------- --------- ---------
Total costs and expenses
including merger charge 1,733.6 723.8 2,497.8 1,494.7
--------- --------- --------- ---------
Income (loss) before taxes (622.7) 363.6 (56.4) 726.6
Income taxes (benefit) (121.1) 125.0 87.4 255.8
--------- --------- --------- ---------
Net income (loss) $ (501.6) $ 238.6 $ (143.8) $ 470.8
========= ========= ========= =========
Average managed receivables $63,097.1 $58,743.4 $63,375.6 $58,821.0
Average noninsurance
investments 519.0 1,149.3 676.3 885.3
Other interest-earning
assets 305.8 - 293.5 -
--------- --------- --------- ---------
Average managed interest-
earning assets $63,921.9 $59,892.7 $64,345.4 $59,706.3
========= ========= ========= =========
* As a percent, annualized, of appropriate earning assets.
<FN>
<F1> Managed net interest margin as a percent of average managed interest-
earning assets for the second quarter and first six months of 1997 excludes
temporary investments relating to acquisitions. Including the impact of these
temporary investments, managed net interest margin was 7.59 percent for the
second quarter and 7.62 percent for the first six months ended June 30, 1997.
</FN>
</TABLE>
The following discussion on revenues, where applicable, and
provision for credit losses includes comparisons to amounts
reported on our historical owned statements of income ("Owned
Basis"), as well as on the above pro forma managed statements of
income ("Managed Basis").
<PAGE>
<PAGE> 21
Net interest margin
- -------------------
Net interest margin on an Owned Basis was $766.9 million for the
second quarter of 1998, up from $683.7 million for the prior year
quarter. Net interest margin on an Owned Basis for the first six
months of 1998 was $1,483.6 million, up from $1,388.5 million in
the prior year period. Owned margin improved due to an increase in
average owned home equity loans as a result of the acquisition of
Transamerica Financial Services Holding Company ("TFS") in 1997,
but was offset by a decrease in average owned private label and
other unsecured receivables.
Net interest margin on a Managed Basis was $1,238.8 million for the
second quarter of 1998, up 9 percent compared to the year-ago period.
Managed Basis net interest margin for the first six months of 1998 was
$2,493.2 million, up 10 percent compared to the prior year period. The
increases were primarily due to managed receivable growth. Net interest
margin as a percent of average managed interest-earning assets, annualized,
was 7.75 percent, flat with the previous quarter, and up from 7.59 percent
in the year-ago quarter. The net interest margin percentage on a Managed
Basis in the second quarter of 1997 was adversely affected by temporary
investments that were used to pre-fund the acquisition of TFS. Excluding
the impact of these temporary investments, net interest margin as a percent
of average managed interest-earning assets, annualized, was 7.67 percent in
the second quarter of 1997. The improvement in net interest margin over the
year-ago quarter was primarily due to the continuing change in product mix,
improved pricing and lower leverage.
On a stand-alone basis, Household's managed net interest margin expanded
to 7.45 percent from 7.41 percent last quarter. The improvement was
primarily due to improved pricing and lower leverage.
Provision for credit losses
- ---------------------------
The provision for credit losses for receivables on an Owned Basis
for the second quarter of 1998 totaled $391.6 million, up 12
percent from $351.0 million in the prior year quarter. The
provision for the first six months of 1998 was $780.9 million, up 7
percent from $729.5 million in the year-ago period. The provision
as a percent of average owned receivables, annualized, was 3.80
percent in the second quarter of 1998 compared to 3.77 percent in
the second quarter of 1997. Owned provision in excess of owned
chargeoffs was $15 million for the three months ended June 30,
1998, compared to $49 million for the three months ended June 30,
1997. Owned provision in excess of owned chargeoffs for the six
months ended June 30, 1998 was $44 million, compared to $107
million for the six months ended June 30, 1997. The provision for
credit losses on an Owned Basis may vary from quarter to quarter,
depending on the amount of securitizations in a particular period.
The provision for credit losses for receivables on a Managed Basis totaled
$687.0 million in the second quarter of 1998, up 18 percent from $580.6
million in the prior year quarter. The provision for credit losses on a
Managed Basis for the first six months of 1998 was $1,337.8 million, up
11 percent from $1,208.2 million in the year-ago period. As a percent of
average managed receivables, annualized, the provision was 4.36 percent,
compared to 3.95 percent in the second quarter of 1997. The Managed Basis
provision includes the over-the-life reserve requirement on the off-balance
sheet portfolio. This provision is impacted by the type and amount of
receivables securitized in a given period and substantially offsets the
income recorded on the securitization transactions. Managed provision in
excess of managed chargeoffs for the three months ended June 30, 1998 was
$21 million, compared to $19 million for the three months ended June 30,
1997. Managed provision in excess of managed chargeoffs was $16 million for
the six months ended June 30, 1998, compared to $131 million for the six
months ended June 30, 1997. In the second quarter of 1998, we securitized
approximately $1.7 billion of auto finance and MasterCard/Visa receivables,
compared to approximately $1.9 billion of home equity and MasterCard/Visa
receivables a year ago. For the first six months of 1998, we securitized
approximately $2.0 billion of auto finance, MasterCard/Visa and other
unsecured receivables, compared to approximately $3.9 billion of home
equity, MasterCard/Visa and other unsecured receivables in the year ago
period. See the credit quality section for further discussion of factors
affecting the provision for credit losses.
<PAGE>
<PAGE> 22
Other revenues
- --------------
Securitization income on an Owned Basis was $394.2 million for the second
quarter of 1998, compared to $422.2 million for the same period in 1997.
Securitization income on an Owned Basis for the first six months of 1998
was $813.5 million, up from $788.4 million in the year-ago period.
Securitization income consists of income associated with the securitization
and sale of receivables with limited recourse, including net interest
income, fee and other income and provision for credit losses related to
those receivables. The decrease in securitization income compared to the
second quarter of 1997 was primarily due to Beneficial's securitization
gains on home equity loans in the prior year quarter. Securitization
income for the first six months of 1998 increased compared to a year ago
due to an increase in average securitized receivables. The components of
securitization income are reclassified to the appropriate caption in the
statements of income on a Managed Basis.
Fee income on an Owned Basis includes revenues from fee-based
products such as credit cards. Fee income was $145.0 million in the
second quarter of 1998, up from $119.7 million in the comparable
period of the prior year. Fee income for the first six months of
1998 was $292.3 million, up from $238.6 million for the same period
in 1997. The increase in fee income reflected higher credit card
fees as compared to the prior year periods.
Fee income on a Managed Basis, which in addition to the items
discussed above, includes fees and other income related to the off-
balance sheet portfolio. Managed Basis fee income was $362.7
million in the second quarter of 1998, up from $318.0 million in
the 1997 quarter. Managed Basis fee income was $653.1 million for
the first six months of 1998, up from $619.2 million in the year-
ago period. The increases were primarily due to higher credit card
and interchange fees, offset by lower securitization revenue.
Other income was $40.1 million in the second quarter of 1998, down
from $61.6 million in the second quarter of 1997. Other income for
the first six months of 1998 was $127.8 million, compared to $227.6
million in the year-ago period. The decrease in other income in
1998 is due to lower RAL income. Additionally, the 1997 year-to-
date amount included approximately $50 million of non-recurring
gains on the sales of certain non-strategic assets and a gain from
the sale of a Beneficial life insurance portfolio in June 1997.
Total other revenue for the first six months of 1998 included a
pretax gain of $189.4 million from the sale of Beneficial's
Canadian operations, as previously discussed.
Expenses
- --------
Operating expenses for the second quarter of 1998, excluding the
one-time merger and integration related costs of approximately $1.0
billion, were $678.3 million, compared to $658.7 million in the
comparable prior year quarter. Operating expenses for the first six
months of 1998, excluding the one-time merger related costs, were
$1,378.9 million, compared to $1,359.8 million in the year-ago
period.
Salaries and fringe benefits for the second quarter were $264.4
million compared to $264.6 million in the second quarter of 1997.
Salaries and fringe benefits for the first six months of 1998 were
$540.6 million compared to $517.3 million for the first half of
1997. The expense was flat in the second quarter as the increase in
the average number of employees in our domestic consumer finance
and auto finance businesses in connection with Household's
acquisitions of TFS in June 1997 and ACC in October 1997 were
offset by the sale of Beneficial's Canadian operations in March
1998 and German operations in April 1998. The higher expense for
the first six months was primarily due to the increase in the
average number of employees in connection with the acquisitions of
TFS and ACC.
<PAGE>
<PAGE> 23
Other marketing expenses for the second quarter were $99.0 million,
relatively unchanged from $98.8 million in 1997. Other marketing
expense for the first six months of 1998 totaled $202.0 million,
compared to $213.6 million in the year-ago period. Other marketing
expense was down from the prior year due to increased spending on
private label programs in 1997 for several Beneficial private label
merchants.
Other servicing and administrative expenses were $187.6 million in
the second quarter of 1998, up from $179.0 million in the prior
year. Other servicing and administrative expenses for the first six
months of 1998 were $381.5 million, down from $391.1 million for
the same period in 1997. The increase from the prior year quarter
was due to higher expenses for systems development costs. The
decrease in expense for the first six months of 1998 was primarily
due to reductions in fraud losses and lower real estate owned
costs.
Amortization of acquired intangibles and goodwill was $44.8 million
in the second quarter of 1998, up from $37.1 million in the prior
year quarter. Amortization expense for the first six months of
1998 was $87.2 million, up from $73.9 million in the prior year
period. The increase reflects our acquisitions of TFS and ACC in
1997.
CREDIT LOSS RESERVES
- --------------------
Our consumer credit management policies focus on product type and
specific portfolio risk factors. The consumer credit portfolio is
diversified by product and geographic location. See Note 5,
"Receivables" in the accompanying financial statements for
receivables by product type.
Total managed credit loss reserves, which include reserves
established on the off-balance sheet portfolio when receivables are
securitized, were as follows (in millions):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
June 30, March 31, December 31, June 30,
1998 1998 1997 1997
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Owned $1,757.2 $1,725.6 $1,642.1 $1,556.4
Serviced with limited recourse 862.9 847.4 880.9 737.3
-------- -------- -------- --------
Total $2,620.1 $2,573.0 $2,523.0 $2,293.7
======== ======== ======== ========
</TABLE>
Managed credit loss reserves as a percent of nonperforming managed
receivables were 116.9 percent, compared to 116.1 percent at March
31, 1998 and 119.6 percent at June 30, 1997.
Total owned and managed credit loss reserves as a percent of
receivables were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
June 30, March 31, December 31, June 30,
1998 1998 1997 1997
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Owned 4.32% 4.31% 4.25% 3.99%
Managed 4.14 4.06 3.99 3.73
---- ---- ---- ----
</TABLE>
The level of reserves for consumer credit losses is based on
delinquency and chargeoff experience by product and judgmental
factors. We also evaluate the potential impact of existing and
anticipated national and regional economic conditions on the
managed receivable portfolio when establishing credit loss
reserves. See Note 6, "Credit Loss Reserves" in the accompanying
financial statements for analyses of reserves.
<PAGE>
<PAGE> 24
CREDIT QUALITY
- --------------
Delinquency and chargeoff statistics reflect the impact of the
portfolio acquisitions during the quarter. Delinquency levels in
the consumer portfolio were flat compared to the prior quarter, but
increased from the year-ago quarter. Chargeoffs were up compared to
the prior and year-ago quarters. We track delinquency and chargeoff
levels on a managed basis. We include the off-balance sheet
portfolio since we apply the same credit and portfolio management
procedures as on our owned portfolio. This results in a similar
credit loss exposure for us.
Delinquency
- -----------
Two-Months-and-Over Contractual Delinquency (as a percent of
managed consumer receivables):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
6/30/98 3/31/98 12/31/97 9/30/97 6/30/97
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First mortgage 11.07% 9.33% 10.35% 9.27% 10.27%
Home equity 3.55 3.68 3.69 3.16 2.97
Auto finance <F1> 1.67 1.84 2.09 - -
MasterCard/Visa 3.30 3.10 3.10 3.20 3.13
Private label 6.10 6.04 5.81 5.72 5.15
Other unsecured 7.82 7.72 7.81 7.14 6.70
----- ---- ----- ---- -----
Total 4.65% 4.65% 4.64% 4.47% 4.18%
===== ==== ===== ==== =====
<FN>
<F1> Prior to the fourth quarter of 1997, delinquency statistics for
auto finance receivables were not significant. For prior
periods, delinquency data for these receivables were included
in other unsecured receivables.
</FN>
</TABLE>
Delinquency as a percent of managed consumer receivables for the
combined company was flat from the prior quarter but increased from
the prior year quarter. On a stand-alone basis, Household's
delinquency ratio fell 8 basis points, to 4.71 percent, while
Beneficial's delinquency ratio increased 24 basis points to 4.50
percent. Dollars of delinquency at Household declined nearly $30
million and reflected a trend of stabilizing delinquency over the
last four months. The improvement was mainly in our home equity and
private label businesses and continues to be most evident in early-
stage delinquency. We attribute some of the Beneficial increase to
transition in the quarter.
The increase in the managed delinquency ratio for the combined
company from a year ago was due to seasoning of the home equity,
MasterCard/Visa and other unsecured portfolios and the maturing of
certain special promotional balances in our private label
portfolio. The seasoning or maturing of a product is the effect of
a growing portfolio reaching expected levels of chargeoffs as loans
age. Dollars of delinquency in the first mortgage portfolio were
down as this portfolio continued to liquidate.
<PAGE>
<PAGE> 25
Net Chargeoffs of Consumer Receivables
- --------------------------------------
Net Chargeoffs of Consumer Receivables (as a percent, annualized,
of average managed consumer receivables):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
1998 1998 1997 1997 1997
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First mortgage .21% .81% 1.29% 1.21% .87%
Home equity .52 .61 .62 .53 .67
Auto finance <F1> 5.18 5.94 5.31 - -
MasterCard/Visa 5.49 5.78 5.56 6.22 5.66
Private label <F2> 6.05 5.73 5.19 4.79 4.37
Other unsecured 7.26 6.22 5.85 5.66 5.23
---- ---- ---- ---- ----
Total 4.26% 4.17% 3.94% 3.98% 3.86%
==== ==== ==== ==== ====
<FN>
<F1> Prior to the fourth quarter of 1997, chargeoff statistics for
auto finance receivables were not significant and were included
in other unsecured receivables.
<F2> Following the merger, Household adopted Beneficial's presentation
of chargeoffs related to private label receivables. As a result, at
the time a receivable is charged off, the principal balance is
written off against the allowance for credit losses, and accrued
finance charges and other fees are reversed against the respective
items on the statement of operations. Chargeoffs, net interest margin,
provision for credit losses and fee income have been restated for all
periods.
</FN>
</TABLE>
The second quarter chargeoff ratio for the combined company was
4.26 percent compared to 4.17 percent in the first quarter. On a
stand-alone basis, Household's chargeoff ratio declined 3 basis
points from the first quarter to 4.68 percent, with all products
except other unsecured contributing to the improvement. For
Beneficial, chargeoffs increased 31 basis points in the quarter to
3.09 percent, led by increases in both unsecured consumer loans and
private label credit cards. We are currently taking steps to
address the chargeoff increases in the Beneficial portfolio.
The increase in the chargeoff ratio for the combined company
compared to a year ago was primarily due to increased bankruptcy
filings in and continued seasoning of the private label and other
unsecured portfolios.
<PAGE>
<PAGE> 26
Nonperforming Assets
- --------------------
Nonperforming assets consisted of the following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
In millions. 6/30/98 3/31/98 12/31/97 9/30/97 6/30/97
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual owned receivables $ 948.5 $ 901.2 $ 939.0 $ 816.5 $ 807.3
Accruing owned consumer
receivables 90 or more days
delinquent 548.7 494.7 499.6 509.9 470.9
Renegotiated commercial loans 12.3 12.3 12.4 12.9 12.9
-------- -------- -------- -------- --------
Total nonperforming owned
receivables 1,509.5 1,408.2 1,451.0 1,339.3 1,291.1
Real estate owned 224.2 214.7 212.8 222.5 217.1
-------- -------- -------- -------- --------
Total nonperforming owned assets $1,733.7 $1,622.9 $1,663.8 $1,561.8 $1,508.2
======== ======== ======== ======== ========
Owned credit loss reserves as
a percent of nonperforming
owned receivables 116.4% 122.5% 113.2% 118.6% 120.5%
-------- -------- -------- -------- --------
Nonaccrual managed receivables $1,409.6 $1,390.3 $1,364.9 $1,220.0 $1,177.4
Accruing managed consumer
receivables 90 or more days
delinquent 818.6 812.7 807.8 757.6 728.2
Renegotiated commercial
loans 12.3 12.3 12.4 12.9 12.9
-------- -------- -------- -------- --------
Total nonperforming managed
receivables 2,240.5 2,215.3 2,185.1 1,990.5 1,918.5
Real estate owned 224.2 214.7 212.8 222.5 217.1
-------- -------- -------- -------- --------
Total nonperforming assets $2,464.7 $2,430.0 $2,397.9 $2,213.0 $2,135.6
======== ======== ======== ======== ========
Managed credit loss reserves as
a percent of nonperforming
managed receivables 116.9% 116.1% 115.5% 117.3% 119.6%
-------- -------- -------- -------- --------
</TABLE>
<PAGE>
<PAGE> 27
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In 1992, the Internal Revenue Service ("IRS") completed its
examination of Beneficial's federal income tax returns for 1984
through 1987. The IRS proposed $142.0 million in adjustments that
relate principally to activities of a former subsidiary, American
Centennial Insurance Company, prior to its sale in 1987.
In order to limit the further accrual of interest on the proposed
adjustments, Beneficial paid $105.5 million of tax and interest
during the third quarter of 1992.
The issues were not resolved during the administrative appeals
process, and the IRS issued a statutory Notice of Deficiency
asserting the unresolved adjustments and increased the disallowance
to $195.0 million in the third quarter of 1996.
Beneficial has initiated litigation in the United States Tax Court
to oppose the disallowance. While the conclusion of this matter in
its entirety cannot be predicted with certainty, management does
not anticipate the ultimate resolution to differ materially from
amounts accrued.
Item 4. Submission of Matters to a Vote of Security-Holders
The Annual Meeting of Stockholders of Household International was
held on Wednesday, May 13, 1998, for the purpose of (1) electing
directors; (2) approving an increase in the authorized shares of
Household Common Stock from 250 to 750 million shares; (3)
approving the 1998 Key Executive Bonus Plan; and (4) ratifying the
appointment of Arthur Andersen LLP as the public accountants for
Household. The voting results, which have been adjusted for
Household's 3-for-1 stock split effected in the form of a stock
dividend and paid on June 1, 1998, were as follows:
Each of the following persons received the number of votes set out
after his or her name and were elected directors to hold office for
the ensuing year and until their successors shall be elected and
shall qualify:
FOR WITHHELD
------------- -------------
- -
W.F. Aldinger 281,109,258 691,278
R.J. Darnall 281,006,346 794,190
G.G. Dillon 281,090,106 710,430
J.A. Edwardson 281,125,815 674,721
M.J. Evans 281,047,260 753,276
J.D. Fishburn 281,130,255 670,281
C.F. Freidheim, Jr. 281,137,146 663,390
L.E. Levy 281,130,810 669,726
G.A. Lorch 281,137,263 663,273
J.D. Nichols 281,128,158 672,378
J.B. Pitblado 281,126,553 673,983
S.J. Stewart 281,141,889 658,647
L.W. Sullivan, M.D. 281,044,239 756,294
<PAGE>
<PAGE> 28
Proposal to increase the authorized shares of Household Common
Stock from 250 million to 750 million:
FOR AGAINST ABSTAIN BROKER NON-VOTE
------------ ----------- --------- ----------------
248,512,479 32,648,850 637,935 1,269
Approval of the 1998 Key Executive Bonus Plan:
FOR AGAINST ABSTAIN BROKER NON-VOTE
------------ ----------- --------- ----------------
264,723,384 15,333,201 1,743,948 0
Ratification of the appointment of Arthur Andersen LLP as
Household's public accountants for the year 1998:
FOR AGAINST ABSTAIN BROKER NON-VOTE
------------ ----------- --------- ----------------
281,000,673 309,558 490,302 0
A Special Meeting of Stockholders of Household International was
held on Tuesday, June 30, 1998, for the purpose of (1) approving
the issuance of shares of Common Stock, par value $1.00 per share,
of Household International, Inc. pursuant to the Agreement and Plan
of Merger, dated as of April 7, 1998, among Household, Household
Acquisition Corporation II and Beneficial Corporation; and (2)
approving the adjournment of the Household Special Meeting, if
necessary, to allow for the soliciting of additional proxies in the
event that there were not sufficient votes at the time of the
Special Meeting to approve the foregoing proposal or for any such
other reason deemed appropriate. The voting results, which have
been adjusted for Household's 3-for-1 stock split effected in the
form of a stock dividend and paid on June 1, 1998, were as follows:
Proposal to approve the issuance of shares of Common Stock, par
value $1.00 per share, of Household International, Inc. pursuant to
the Agreement and Plan of Merger, dated as of April 7, 1998, among
Household, Household Acquisition Corporation II and Beneficial
Corporation:
FOR AGAINST ABSTAIN BROKER NON-VOTE
------------ ----------- --------- ----------------
244,364,589 521,937 227,853 0
Proposal to approve to the adjournment of the Household Special
Meeting, if necessary, to allow for the soliciting of additional
proxies in the event that there were not sufficient votes at the
time of the Special Meeting to approve the foregoing proposal or
for any such other reason deemed appropriate:
FOR AGAINST ABSTAIN BROKER NON-VOTE
------------ ----------- ---------- ----------------
188,252,376 49,583,931 7,278,069 3
<PAGE>
<PAGE> 29
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation of
Household International, Inc.
3.2 Bylaws of Household International, Inc. as
amended June 4, 1998.
10.1 Household International, Inc. 1998 Key Executive
Bonus Plan.
12 Statement of Computation of Ratio of Earnings
to Fixed Charges and to Combined Fixed Charges and
Preferred Stock Dividends.
21 List of Household International subsidiaries.
27 Financial Data Schedule.
27.1 Restated Financial Data Schedule.
99.1 Debt and Preferred Stock Securities Ratings.
(b) Reports on Form 8-K
During the second quarter of 1998, the Registrant filed
Current Reports on Form 8-K dated April 7 and 20, 1998
pertaining to its merger agreement with Beneficial
Corporation, and a Current Report on Form 8-K dated June
30, 1998 with respect to supplemental consolidated
financial statements restating Household's historical
consolidated financial statements as of and for the three
years ended December 31, 1997 and as of and for the three
months ended March 31, 1998 and 1997.
<PAGE>
<PAGE> 30
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 thereunto duly authorized.
HOUSEHOLD INTERNATIONAL, INC.
-----------------------------
(Registrant)
Date: August 14, 1998 By: /s/ David A. Schoenholz
--------------- -----------------------------
David A. Schoenholz
Executive Vice President -
Chief Financial Officer
and on behalf of
Household International, Inc.
<PAGE>
<PAGE> 31
Exhibit Index
-------------
3.1 Restated Certificate of Incorporation of
Household International, Inc.
3.2 Bylaws of Household International, Inc. as
amended June 4, 1998.
10.1 Household International, Inc. 1998 Key
Executive Bonus Plan.
12 Statement of Computation of Ratio of Earnings
to Fixed Charges and to Combined Fixed Charges and
Preferred Stock Dividends.
21 List of Household International subsidiaries.
27 Financial Data Schedule.
27.1 Restated Financial Data Schedule.
99.1 Debt and Preferred Stock Securities Ratings.
EXHIBIT 3(i)
HOUSEHOLD INTERNATIONAL, INC.
RESTATED CERTIFICATE OF INCORPORATION INDEX
DATE DESCRIPTION
-------- -----------
9/4/81 Restated Certificate of Incorporation
7/25/84 Certificate of Change of Address of
Registered Office and of Registered Agent
5/13/87 Certificate of Amendment (Article VII)
10/14/92 Certificate of Designation, Preferences and
Rights of 8-1/4% Cumulative Preferred Stock,
Series 1992-A
5/12/93 Certificate of Amendment (Article IV)
9/1/93 Certificate of Designation, Preferences and
Rights of 7.35% Cumulative Preferred Stock,
Series 1993-A
7/9/96 Certificate of Designations of Series A
Junior Participating Preferred Stock
5/14/97 Certificate of Amendment (Article IV)
5/13/98 Certificate of Amendment (Article IV)
6/30/98 Certificate of Designation, Preferences and
Rights of 5% Cumulative Preferred Stock
6/30/98 Certificate of Designation, Preferences and
Rights of $4.50 Cumulative Preferred Stock
6/30/98 Certificate of Designation, Preferences and
Rights of $4.30 Cumulative Preferred Stock
<PAGE>
RESTATED
CERTIFICATE OF INCORPORATION
OF
HOUSEHOLD INTERNATIONAL, INC.
This Restated Certificate of Incorporation was duly adopted
by the Board of Directors of Household International, Inc. in
accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware. This Restated
Certificate of Incorporation only restates and integrates and
does not further amend the provisions of the Corporation's
certificate of incorporation as heretofore amended or
supplemented, and there is no discrepancy between those
provisions and the provisions of this Restated Certificate of
Incorporation. The original Certificate of Incorporation was
filed with the Secretary of State of Delaware on February 20,
1981.
ARTICLE I
The name of the corporation is Household International, Inc.
ARTICLE II
The address of the Corporation's registered office in the
State of Delaware is 100 West Tenth Street, Wilmington, Delaware
19899. The name of its registered agent at such address is The
Corporation Trust Company, in the county of New Castle.
ARTICLE III
The Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE IV
The total number of shares that may be issued by the
Corporation is 75,655,004 of which 8,155,004 shares shall be
Preferred Stock without par value and 67,500,000 shares shall be
Common Stock of the par value of $1 per share.
The 8,155,004 shares of Preferred Stock may be issued from
time to time in one or more series, which may have such
designations, powers, preferences and relative, participating,
optional or other special rights, and qualifications, limitations
or restrictions thereof, as shall be stated in the resolution or
resolutions (authorizing resolutions) providing for the issue of
such shares adopted by the Board of Directors. Without otherwise
limiting the generality of the foregoing provision, the Board of
Directors is expressly authorized to provide, with respect to
each such series, that:
(a) the shares of such series shall be subject to redemption
(including redemption through a sinking fund or analogous fund)
at such time or times and at such price or prices as shall be
stated in the authorizing resolutions;
(b) the holders of the shares of such series shall be
entitled to receive dividends at such rates, on such conditions
and at such times, payable in preference, or in such relation, to
the dividends payable on any other class or classes or of any
other series of stock of the Corporation, and cumulative or non-
cumulative, all as shall be stated in the authorizing
resolutions;
(c) the holders of the shares of such series shall be
entitled to such rights upon the dissolution, or upon any
distribution of the assets, of the Corporation as shall be stated
in the authorizing resolutions;
(d) the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock,
or of any series thereof, of the Corporation at such price or
prices or at such rate or rates and with such adjustments, all as
shall be stated in the authorizing resolutions;
(e) the shares of such series shall have such voting powers,
full or limited, or no voting powers, as shall be stated in the
authorizing resolutions.
The following is a statement of the powers, preferences, and
rights, and the qualifications, limitations or restrictions
thereof, in respect of the Preferred Stock, except such thereof
as the Board of Directors is herein authorized to provide for,
and in respect of the Common Stock:
(1) Except as otherwise provided in authorizing resolutions
creating series of Preferred Stock, each share of Preferred Stock
shall rank on a parity with each other share of Preferred Stock,
regardless of series, in preference to the Common Stock, with
respect to the payment of dividends at the respectively
designated rates. No dividend shall be declared or paid on the
shares of any particular series of Preferred Stock unless at the
same time a dividend in like proportion to the respectively
designated dividend rates shall be declared or paid on the shares
of each other series of Preferred Stock then issued and
outstanding ranking prior to or on a parity with such particular
series with respect to the payment of dividends. Except as
otherwise provided in the authorizing resolutions creating
additional series of Preferred Stock, each share of Preferred
Stock shall rank on a parity with each other share of Preferred
Stock, regardless of series, in preference to the Common Stock,
with respect to the distribution of assets according to the
amounts to which the shares of the respective series are
thereupon entitled.
(2) The holders of shares of the Preferred Stock shall be
entitled to receive, when and as declared by the Board of
Directors, out of any funds legally available for that purpose,
dividends in cash at such respective rates, payable on such dates
in each year and in respect of such dividend periods, all as
stated in the authorizing resolutions, before any dividends shall
be declared or paid or set apart for payment upon the Common
Stock. Dividends on the shares of each series of the Preferred
Stock shall be cumulative or non-cumulative and, if cumulative,
shall be cumulative from such date, all as stated in the
authorizing resolutions.
At any time after all dividends shall have been paid, as
above provided, on the Preferred Stock of all series then
outstanding and after, or concurrently with, the declaration and
setting aside of a sum for the payment of full dividends on the
Preferred Stock of each series then outstanding for the then
current dividend period established for such series, then, but
not prior thereto, such dividends (payable either in cash, stock,
or otherwise) as may be determined by the Board of Directors may
be declared and paid on the Common Stock out of any remaining
assets legally available for the declaration of dividends and the
Preferred Stock shall not be entitled to participate in any such
dividends whether payable in cash, stock, or otherwise. No
Preferred Stock or Common Stock may be purchased by the
Corporation if any Preferred Stock dividends are in arrears, and
no Preferred Stock may be redeemed in such case unless all issued
and outstanding shares of Preferred Stock are redeemed.
(3) The whole or any part of the Preferred Stock, of any one
or more series, redeemable pursuant to provisions stated in the
respective authorizing resolutions, at the time outstanding, may,
at the option of the Board of Directors, be redeemed, in
accordance with such authorizing resolutions, at any time or from
time to time, by the payment or by making provision for payment
of such price or prices per share in the case of every such
redemption as shall be stated in such authorizing resolutions,
and, in every case, a sum equal to accrued and unpaid dividends,
if any, with respect to each such share to be so redeemed, at the
rate of the dividends fixed therefor, to the date fixed for
redemption.
In case of redemption of a part only of any series of the
Preferred Stock at the time outstanding, such redemption shall be
made by lot or pro rata in such manner as may be prescribed by
resolution of the Board of Directors. The Board of Directors
shall have full power and authority, subject to the limitations
and provisions herein contained and stated in the respective
authorizing resolutions, to prescribe the manner in which and the
terms and conditions upon which Preferred Stock shall be redeemed
from time to time.
Notice of the Corporation's intention to redeem Preferred
Stock, specifying the date of redemption, shall be published in
newspapers of general circulation in New York, New York, and
Chicago, Illinois, and shall be mailed not less than forty-five
nor more than ninety days before the redemption date to the
holders of record of such stock to be redeemed at their
respective addresses as the same shall appear on the books of the
Corporation, and, if less than all the shares owned by any such
stockholder are then to be redeemed, the notice shall specify the
number of shares thereof which are to be redeemed.
If notice shall be given as aforesaid and the funds
necessary to redeem such stock shall have been set aside by the
Corporation (other than by the trust deposit hereinafter provided
for) separate and apart from its other funds for the benefit of
the holders of the shares called for redemption, such stock shall
be redeemed upon such date of redemption and shall cease to be
outstanding; the right to receive dividends thereon shall cease
to accrue from and after such date of redemption and all rights
of holders of the Preferred Stock so called for redemption shall
forthwith on such redemption date cease and terminate except only
the right of the holders thereof, upon presentation and surrender
of their respective certificates representing said shares, to
receive the redemption price therefor but without interest, and
the right of conversion, if any.
Anything herein contained to the contrary notwithstanding,
if notice shall be given as aforesaid and before the redemption
date an amount sufficient to redeem the shares so called for
redemption shall be deposited in trust to be applied to such
redemption with a bank or with bankers authorized to conduct
banking business or with a trust company, in the Borough of
Manhattan, City of New York, or in the City of Chicago, having a
combined capital and surplus of at least $5,000,000, then, from
and after the date of such deposit, such shares shall be deemed
to be redeemed and to cease to be outstanding, and all rights of
the holders of the shares called for redemption, as stockholders
of the Corporation, shall cease except (i) the right, upon
presentation and surrender of their respective certificates
representing said shares, to receive from such bank or bankers or
trust company on or after such redemption date the moneys so
deposited in trust, but without interest, and (ii) the right of
conversion, if any. The Corporation shall be entitled to any
interest payable on the funds so deposited. Any redemption funds
unclaimed at the end of six years shall be repaid to the
Corporation, after which holders of the redeemed shares shall
look only to the Corporation for payment of the redemption price,
but without interest thereon.
(4) In the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation, the
holders of the Preferred Stock shall be entitled to be paid or to
have set apart for payment such sum or sums per share as shall be
stated in the respective authorizing resolutions, together in
each case with a sum equal to accrued and unpaid dividends, if
any, at the rate of the dividends fixed therefor, to the date
fixed for payment of such price or prices, before any
distribution or payment shall be made to the holders of the
Common Stock. No consolidation or merger of the Corporation with
another corporation or corporations and no sale by the
Corporation of its assets as an entirety or substantially as an
entirety shall be deemed to be a liquidation, dissolution, or
winding up of the Corporation within the meaning of this
subdivision (4).
(5) The Corporation shall not, without the consent
(expressed either in writing or by affirmative vote at a meeting
called for that purpose) of the holders of two-thirds of the then
outstanding Preferred Stock of all series, other than series in
respect of which the authorizing resolutions expressly provide
that such consent shall not be required:
(i) consolidate or merge with another corporation or
corporations or sell its assets as an entirety or
substantially as an entirety, provided, however, that the
purchase for cash, stock, or otherwise by the Corporation of
all or any part of the assets, stock or other securities of
another corporation or corporations shall not be deemed to
be a consolidation or merger;
(ii) issue Preferred Stock of any series if there shall
be cumulative dividends in arrears on outstanding Preferred
Stock, irrespective of series;
(iii) increase the authorized amount of the Preferred
Stock, or create or issue any class of stock ranking prior
to or on a parity with the Preferred Stock, or any series
thereof, as to the payment of dividends or the distribution
of assets;
(iv) adopt any amendment to the Certificate of
Incorporation of the Corporation which adversely alters any
preference, power, or special right of the Preferred Stock,
or of the holders thereof; provided, however, that if any
such amendment would adversely alter any preference, power,
or special right of one or more but not all of the series of
the Preferred Stock or of the holders thereof, then the
consent (expressed as above provided) only of the holders of
two-thirds of the then outstanding shares of all series so
affected, voting as a class, other than series in respect of
which the authorizing resolutions expressly provide that
such consent shall not be required, shall be required for
the adoption of such amendment.
(6) In the event that any four quarterly cumulative
dividends, whether consecutive or not, upon the Preferred Stock,
or any series thereof, shall be in arrears, the holders of
Preferred Stock of all series, other than series in respect of
which the right is expressly withheld by the authorizing
resolutions, shall have the right, at the next meeting of
stockholders called for the election of directors, to elect one-
third of the members of the Board of Directors out of the number
fixed by the by-laws, and the holders of such Preferred Stock
shall continue to have such right until all unpaid dividends upon
the Preferred Stock shall have been paid in full. In the event
that any eight quarterly cumulative dividends, whether
consecutive or not, upon the Preferred Stock, or any series
thereof, shall be in arrears, the holders of Preferred Stock of
all series, other than series in respect of which the right is
expressly withheld by the authorizing resolutions, shall have the
right, at the next meeting of stockholders called for the
election of directors, to elect a majority of the members of the
Board of Directors out of the numbers fixed by the by-laws, and
the holders of such Preferred Stock shall continue to have such
right until all unpaid dividends upon the Preferred Stock shall
have been paid in full.
(7) The holders of the Common Stock shall be entitled to
vote at all meetings of the stockholders and, subject to the
rights of holders of Preferred Stock to elect directors in
accordance with the provisions of the foregoing subdivision (6),
shall be entitled to one vote for each share of Common Stock
held.
ARTICLE V
There is hereby created a series of Preferred Stock of the
Corporation, such series to be within the class of Preferred
Stock authorized by Article IV hereof; to be designated $6.25
Cumulative Convertible Voting Preferred Stock (the "$6.25
Preferred Stock"); to consist of 3,454,635 shares; to have the
powers, preferences and rights and the qualifications,
limitations and restrictions set forth in, and to be subject to
all of the terms and provisions of, Article IV hereof (except to
the extent that the same may be inconsistent with this Article
V); and to have the following additional powers, preferences,
rights, qualifications, limitations, restrictions, terms and
provisions:
(a) $6.25 per share is fixed as the amount per annum at
which the holders of $6.25 Preferred Stock shall be entitled to
receive dividends when and as declared by the Board of Directors,
such dividends to be paid only from retained earnings of the
Corporation; and such dividends shall be cumulative and shall
accrue, whether or not earned or declared, from the Issue Date
(as hereinafter defined), and shall be payable quarterly on the
fifteenth day of January, April, July and October in each year to
holders of record on the respective business days next preceding
the first days of those months (and the quarterly dividend
periods shall commence on the first days of those months);
provided, however, that as to any shares of $6.25 Preferred Stock
issued less than 60 days prior to a dividend payment date, the
dividend that would otherwise be payable on such dividend payment
date will be payable on the next succeeding dividend payment
date; and provided, further, that no dividend shall be declared
or paid if (i) the Corporation is insolvent or would be rendered
insolvent by payment of such dividend or (ii) the payment of such
dividend would impair the Corporation's capital (i.e., the fair
market value of the remaining assets of the Corporation would be
less than the sum of its liabilities and the liquidation value of
any classes and series of its Preferred Stock ranking prior to or
on a parity with the $6.25 Preferred Stock). The "Issue Date"
shall mean the day on which occurs the merger of Wallace-Murray
Corporation, a Delaware corporation, into Household Acquisition
Corporation Second, a Delaware corporation, or other subsidiary
of the Corporation. An "Anniversary Date" shall mean any
anniversary date of the Issue Date.
(b) The shares of $6.25 Preferred Stock shall be subject to
redemption at the option of the Corporation at any time, and from
time to time, in whole or in part, at the redemption price of $50
per share plus the amount of accrued and unpaid dividends, if
any, thereon to the date fixed for redemption; provided, however,
that no such optional redemption shall be made unless (i) the
date fixed for redemption is on or after the fifth Anniversary
Date, and (ii) at all times during the twelve-month period
terminating on the date on which notice of such redemption is
first given, the annualized rate of dividends in respect of the
outstanding shares of Common Stock of the Corporation shall have
equalled or exceeded the quotient obtained by dividing $6.25 by
the conversion rate specified in paragraph (d) hereof (as said
conversion rate may have been adjusted pursuant to the provisions
of said paragraph). As used herein, the term "annualized rate of
dividends" shall mean, as of any particular time, the aggregate
per share amount of regular cash dividends (excluding special and
extraordinary dividends) paid on shares of the Common Stock of
the Corporation generally, in respect of the most recently
completed twelve-month period.
(c) The amount to which shares of $6.25 Preferred Stock
shall be entitled upon liquidation, dissolution, or winding up of
the Corporation, whether voluntary or involuntary, shall be $50
per share, plus the amount of accrued and unpaid dividends, if
any, thereon to the date fixed for payment, and no more.
(d) The shares of $6.25 Preferred Stock shall be convertible
at any time after issue at the option of the record holder
thereof, in the manner hereinafter provided, into fully paid and
nonassessable shares of Common Stock of the Corporation at the
rate of 1.923 shares (adjusted to 2.327 shares as of close of
business on April 7, 1989 and 4.654 shares as of close of
business on October 15, 1993) of Common Stock for each share of
$6.25 Preferred Stock; provided, however, that as to any shares
of $6.25 Preferred Stock which shall have been called for
redemption, the right of conversion shall terminate at the close
of business on the fifth full business day prior to the date
fixed for redemption. No payment or adjustment shall be made for
dividends accrued on any shares of $6.25 Preferred Stock that
shall be converted or for dividends on any shares of Common Stock
that shall be issuable upon such conversion, but all dividends
accrued and unpaid on such shares of $6.25 Preferred Stock up to
the dividend payment date immediately preceding the date of
conversion shall be payable to the converting shareholder, and no
dividend shall be paid upon the shares of Common Stock until the
same shall be paid or sufficient funds set apart for the payment
thereof.
The conversion rate provided for above shall be subject to
the following adjustments:
(i) In case the Corporation shall declare and pay to
the holders of the shares of Common Stock a dividend in
shares of Common Stock, the conversion rate in effect
immediately prior to the time fixed for the determination of
shareholders entitled to such dividend shall be
proportionately increased (adjusted to the nearest, or if
there shall be no nearest then to the next lower, one-
thousandth of a share of Common Stock), such adjustment to
become effective immediately after the time fixed for such
determination.
(ii) In case the Corporation shall subdivide the
outstanding shares of Common Stock into a greater number of
shares of Common Stock or combine the outstanding shares of
Common Stock into a smaller number of shares of Common
Stock, the conversion rate in effective immediately prior to
such subdivision or combination, as the case may be, shall
be proportionately increased or decreased (adjusted to the
nearest, or if there shall be no nearest then to the next
lower, one-thousandth of a share of Common Stock), as the
case may require, such increase or decrease, as the case may
be, to become effective when such subdivision or combination
becomes effective.
(iii) In case of any reclassification or change of
outstanding shares of Common Stock of the class issuable
upon conversion of the shares of $6.25 Preferred Stock, or
in case of any consolidation or merger of the Corporation
with or into another corporation, or in case of any sale or
conveyance to another corporation of all or substantially
all of the property of the Corporation, the holder of each
share of $6.25 Preferred Stock then outstanding shall have
the right thereafter, so long as his conversion right
hereunder shall exist, to convert such share into the kind
and amount of shares of stock and other securities and
property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock of the Corporation into
which such shares of $6.25 Preferred Stock might have been
converted immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance, and shall
have no other conversion rights under these provisions;
provided, however, that effective provision shall be made,
in the Articles or Certificate of Incorporation of the
resulting, surviving, or successor corporation or otherwise,
so that the provisions set forth herein for the protection
of the conversion rights of the shares of $6.25 Preferred
Stock shall thereafter be applicable, as nearly as
reasonably may be, to any such other shares of stock and
other securities and property deliverable upon conversion of
the shares of $6.25 Preferred Stock remaining outstanding or
other convertible preferred shares received by the holders
in place thereof; and provided, further, that any such
resulting, surviving, or successor corporation shall
expressly assume the obligation to deliver, upon the
exercise of the conversion privilege, such shares,
securities, or property as the holders of the shares of
$6.25 Preferred Stock remaining outstanding, or other
convertible preferred shares received by the holders in
place thereof, shall be entitled to receive pursuant to the
provisions hereof, and to make provision for the protection
of the conversion right as above provided. In case
securities or property other than shares of Common Stock
shall be issuable or deliverable upon conversion as
aforesaid, then all references in this paragraph shall be
deemed to apply, so far as appropriate and as nearly as may
be, to such other securities or property. The subdivision
or combination of shares of Common Stock at any time
outstanding into a greater or lesser number of shares of
Common Stock (whether with or without par value) shall not
be deemed to be a reclassification of the Common Stock of
the Corporation for the purposes of this subparagraph (iii).
(iv) Unless the holders of shares of the $6.25
Preferred Stock shall be issued subscription rights or
warrants on a reasonably equivalent basis, in case the
Corporation shall issue to the holders of shares of any
class of its capital stock subscription rights or warrants
entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the Average Market
Price (as hereinafter defined) at the time fixed for
determination of shareholders entitled to such subscription
rights or warrants, the conversion rate in effect
immediately prior to the time of said determination shall be
increased (adjusted to the nearest, or if there shall be no
nearest then to the next lower, one-thousandth of a share of
Common Stock) by multiplying said rate by a fraction of
which the numerator shall be the sum of the number of shares
of Common Stock outstanding at the time of such
determination and the number of additional shares of Common
Stock so offered for subscription or purchase, and of which
the denominator shall be the sum of the number of shares of
Common Stock outstanding at the time of such determination
and the number of shares of Common Stock which the aggregate
subscription price of the total number of shares so offered
would purchase at the Average Market Price, such adjustment
to become effective immediately after the time fixed for
such determination; provided, however, that if such
subscription rights or warrants shall have a term not
exceeding 45 days and if any such subscription rights or
warrants expire unexercised, then the conversion rate will
be readjusted, effective immediately after the expiration of
such term, to the conversion rate which would have obtained
if such unexercised subscription rights or warrants had not
been issued.
For the purposes of any computation under this
subparagraph (iv) or subparagraph (v), the "Average Market
Price" per share of Common Stock for any time shall be the
average of the daily closing prices for the 30 consecutive
business days commencing 45 business days before the time in
question. The closing price for each day shall be the last
sales price regular way or, in case no such sale takes place
on such day, the average of the closing bid and asked prices
regular way, in either case as recorded on the New York
Stock Exchange (or, if the Common Stock is not regularly
traded on the New York Stock Exchange, on the principal
market or system on which trades in the Common Stock are
recorded).
(v) Unless the holders of shares of the $6.25 Preferred
Stock shall be distributed evidences of indebtedness or
other assets on a reasonably equivalent basis, in case the
Corporation shall distribute to the holders of the shares of
Common Stock evidences of indebtedness of the Corporation or
other assets of the Corporation (other than cash dividends
to the extent paid from retained earnings, dividends in
shares of Common Stock or subscription rights or warrants
entitling them to subscribe for or purchase shares of Common
Stock, but including securities convertible into capital
stock of the Corporation), the conversion rate in effect
immediately prior to the time fixed for determination of
shareholders entitled to such distribution shall be
increased (adjusted to the nearest, or if there shall be no
nearest then to the next lower, one-thousandth of a share of
Common Stock) by multiplying said rate by a fraction of
which the numerator shall be the number of shares of Common
Stock outstanding at the time of such determination, and of
which the denominator shall be the difference between the
number of shares of Common Stock outstanding at the time of
such determination and a number of shares of Common Stock
having an aggregate Average Market Price at the time of such
determination equal to the fair value (as determined by the
Board of Directors of the Corporation in good faith) of the
evidences of indebtedness or other assets so distributed,
such adjustment to become effective immediately after the
time fixed for such determination.
Except as provided in the foregoing subparagraphs (i)
through (v), there shall be no adjustments to the conversion rate
set forth above.
In order to convert shares of $6.25 Preferred Stock into
shares of Common Stock, the holder thereof shall surrender the
certificate or certificates for shares of $6.25 Preferred Stock,
duly endorsed to the Corporation or in blank, at the office of
any Transfer Agent for the shares of $6.25 Preferred Stock (or
such other place as may be designated by the Corporation), and
shall give written notice to the Corporation at said office that
he elects to convert the same and shall state in writing therein
the name or names in which he wishes the certificate or
certificates for shares of Common Stock to be issued. The
Corporation shall, as soon as practicable thereafter, deliver at
said office to such holder of shares of $6.25 Preferred Stock or
to his nominee or nominees, a certificate or certificates for the
number of full shares of Common Stock to which he shall be
entitled as aforesaid and shall make appropriate payment in cash
for any fractional shares. Shares of $6.25 Preferred Stock shall
be deemed to have been converted as of the date of the surrender
of such shares for conversion as provided above, and the person
or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on
such date.
No fractions of shares of Common Stock shall be issued upon
conversion, but in lieu thereof the Corporation shall adjust such
fractional interest by payment to the holders of an amount in
cash equal (computed to the nearest cent) to the same fraction of
the closing price (as defined in subparagraph (iv) above) on the
business day immediately preceding such conversion.
A number of authorized shares of Common Stock sufficient to
provide for the conversion of the shares of $6.25 Preferred Stock
outstanding upon the bases hereinbefore provided shall at all
times be reserved for such conversion.
(e) There shall be a sinking fund (the "Sinking Fund") for
the benefit of the shares of $6.25 Preferred Stock. For the
purposes of the Sinking Fund, out of any net assets of the
Corporation legally available therefor (but only from retained
earnings and subject to the provisions of the last sentence of
paragraph (2) of Article IV of the Certificate of Incorporation),
before any dividends, in cash or property, shall be paid or
declared, or any distribution ordered or made on the Common Stock
of the Corporation, and before any shares of Common Stock of the
Corporation shall be purchased, redeemed, or otherwise acquired
for value by the Corporation or any subsidiary, the Corporation
shall have paid or set aside in cash annually on the day prior to
each Anniversary Date commencing with the tenth Anniversary Date,
so long as there shall be outstanding any shares of $6.25
Preferred Stock, an amount sufficient to redeem, on the day prior
to each such Anniversary Date prior to the thirtieth, 4% of the
number of shares of $6.25 Preferred Stock issued on the Issue
Date (or such lesser number as remains outstanding) and, on the
day prior to the thirtieth Anniversary Date, all such shares of
$6.25 Preferred Stock as remain outstanding, at a price of $50
per share plus the amount of accrued and unpaid dividends, if
any, thereon to the date so fixed for redemption; provided,
however, that there shall be allowed to the Corporation as a
credit thereagainst any shares of $6.25 Preferred Stock which the
Corporation may have acquired (as a result of the conversion of
such shares or otherwise, which it may have redeemed pursuant to
paragraph (b) hereof, or which it may have redeemed pursuant to
this paragraph (e) (otherwise than through the operation of the
Sinking Fund), which have not theretofore been used for the
purpose of any such credit or any credit against a redemption of
$6.25 Preferred Stock at the Corporation's election as
hereinafter in this paragraph (e) provided for and which shares
shall have been set aside by the Corporation for the purpose of
the Sinking Fund; and provided, further, that no monies shall be
paid or set aside for the Sinking Fund if at the day prior to any
such Anniversary Date the Corporation is in arrears in respect of
a sinking fund obligation under any other series of Preferred
Stock ranking prior to or on a parity with the $6.25 Preferred
Stock except to the extent that, in the case of any series
ranking on a parity with the $6.25 Preferred Stock, provision is
made for the payment or setting aside of monies for the Sinking
Fund and for the sinking funds of such other series in proportion
to the respective aggregate amounts then required to be paid or
set aside therefor; and provided, further, that no monies shall
be paid or set aside for the Sinking Fund if (i) the Corporation
is insolvent or would be rendered insolvent by the payment or
setting aside of such monies or (ii) the payment or setting aside
of such monies would impair the Corporation's capital (i.e., the
fair market value of the remaining assets of the Corporation
would be less than the sum of its liabilities and the liquidation
value of classes and series of its Preferred Stock ranking prior
to or on a parity with the $6.25 Preferred Stock). The Sinking
Fund shall be cumulative so that if on the day prior to any such
Anniversary Date, the net assets of the Corporation legally
available therefor or the retained earnings of the Corporation
shall be insufficient to permit any such amount be paid or set
aside in full, or if for any other reason such amount shall not
have been paid or set aside in full, the amount of the deficiency
shall be paid or set aside, but without interest, before any
dividend, in cash or property, shall be paid or declared, or any
other distribution ordered or made, on the Common Stock of the
Corporation, and before any shares of Common Stock of the
Corporation shall be purchased, redeemed or otherwise acquired
for value by the Corporation or by any subsidiary of the
Corporation. The Corporation may elect to redeem, on any Sinking
Fund redemption date, up to an additional 4% of the number of
shares of $6.25 Preferred Stock issued on the Issue Date, at a
price of $50 per share plus the amount of accrued and unpaid
dividends, if any, thereon to the date fixed for redemption;
provided, however, that there shall be allowed to the Corporation
as a credit thereagainst any shares of $6.25 Preferred Stock
which the Corporation may have acquired or redeemed otherwise
than pursuant to paragraph (b) above and this paragraph (e) which
have not theretofore been used for the purpose of any such credit
or for the purpose of any credit against a redemption of $6.25
Preferred Stock pursuant to the Sinking Fund. Such optional
right shall not be cumulative and, if unexercised in a particular
year, may not be carried forward to subsequent years.
(f) The holders of $6.25 Preferred Stock shall be entitled
to vote at all meetings of the stockholders, and at each such
meeting shall be entitled to one vote for each share held.
(g) To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, in respect
of additional series of Preferred Stock, none of the preferences
or rights of any such additional series as fixed by the Board of
Directors shall be prior or superior in any respect to those of
the $6.25 Preferred Stock. Without limiting the rights conferred
by paragraph (5) of Article IV of the Certificate of
Incorporation of the Corporation, the Corporation shall not,
without the consent of the holders of two-thirds of the then
outstanding shares of $6.25 Preferred Stock, adopt any amendment
to the Certificate of Incorporation of the Corporation or take
other action, whether by the Board of Directors or stockholders,
which adversely alters the preferences, powers and special rights
conferred by the provisions of paragraphs (b), d(iv), d(v) or (e)
hereof.
ARTICLE VI
In furtherance, and not in limitation, of the powers
conferred by statute, the Board of Directors of the Corporation
is expressly authorized:
(1) To make, alter, amend and rescind the by-laws of
the Corporation.
(2) To determine from time to time, whether and to what
extent, and at what times and places, and under what
conditions and regulations the accounts and books of the
Corporation (other than the stock ledger) or any of them
shall be open to inspection of the stockholders; and no
stockholder shall have any right to inspect any account,
book or document of the Corporation, except as conferred by
statute, unless authorized by a resolution of the
stockholders then entitled to vote thereon or the Board of
Directors.
IN WITNESS WHEREOF, said Household International, Inc. has
caused its corporate seal to be hereunto affixed and this
certificate to be signed by D. C. Clark, its President, and
attested by J. D. Pinkerton, its Secretary, this 4th day of
September, 1981.
Household International, Inc.
By: /s/ D. C. Clark
---------------
President
[SEAL]
Attest:
By: /s/ J. D. Pinkerton
-------------------
Secretary
A:\WP51\IC9481.WP
<PAGE>
CERTIFICATE OF CHANGE OF ADDRESS OF
REGISTERED OFFICE AND OF REGISTERED AGENT
PURSUANT TO SECTION 134 OF TITLE 8 OF THE DELAWARE CODE
To: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 of Title 8 of the
Delaware Code, the undersigned Agent for service of process, in
order to change the address of the registered office of the
corporations for which it is registered agent, hereby certifies
that:
1. The name of the agent is: The Corporate Trust Company
2. The address of the old registered office was:
100 West Tenth Street
Wilmington, Delaware 19801
3. The address to which the registered office is to be
changed is:
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
The new address will be effective on July 30, 1984.
4. The names of the corporation represented by said agent
are set forth on the list annexed to this certificate
and made a part hereof by reference.
IN WITNESS WHEREOF, said agent has caused this certificate
to be signed on its behalf by its Vice-President and Assistant
Secretary this 25th day of July, 1984.
THE CORPORATION TRUST COMPANY
(Name of Registered Agent)
By: Virginia Colwell
----------------
(Vice-President)
Attest:
Mick Nurman
- ---------------------
(Assistant Secretary) <PAGE>
PAGE 796
STATE OF DELAWARE - DIVISION OF CORPORATIONS
CHANGE OF ADDRESS FILING FOR
CORPORATION TRUST AS OF JULY 27, 1984
DOMESTIC
0908612 HOUSEHOLD INTERNATIONAL, INC. 02/21/1981 D DE
A:\WP51\IC72584.WP<PAGE>
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Household International, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Restated Certificate of Incorporation, as
heretofore amended, of said Corporation has been further amended
by inserting the following as Article VII:
ARTICLE VII
(1) Elimination of Certain Liability of Directors. A
director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law or
successor provision, or (iv) for any transaction from which
the director derived an improper personal benefit. Any
repeal or amendment to this Section shall not adversely
affect any right or protection of a director of the
Corporation for any act or occurrence taking place prior to
such repeal or amendment.
(2) Indemnification and Insurance.
(a) Each person who was or is made a party or is
threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or
was a director, officer, or employee of the Corporation or
is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation
or of a partnership, joint venture, trust, or other
enterprise, including service with respect to employee
benefit plans, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law
permitted the Corporation to provide prior to such
amendment), against all expense, liability, and loss
(including attorneys' fees, judgments, fines, ERISA excise
taxes, or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person
in connection therewith, and such indemnification shall
continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit
of his or her heirs, executors and administrators; provided,
however, that except as provided in paragraph (b) hereof,
the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors
of the Corporation. The right to indemnification conferred
in this Section shall be a contract right and shall include
the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its
final disposition upon delivery to the Corporation of an
undertaking to repay all amounts so advanced if it shall
ultimately be determined that such person is not entitled to
be indemnified under this Section or otherwise. The
Corporation may, by action of its Board of Directors,
provide indemnification to agents of the Corporation with
the same scope and effect as the foregoing indemnification
of directors, officers, and employees.
(b) If a claim under paragraph (a) of this
Section is not paid in full by the Corporation, the claimant
may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and,
if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final
disposition where the required undertaking has been tendered
to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the
Delaware General Corporation Law and paragraph (a) of this
Section for the Corporation to indemnify the claimant for
the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the
circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(c) The right to indemnification and the payment
of expenses incurred in defending a proceeding in advance of
its final disposition conferred in this Section shall not be
exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of this
Certificate of Incorporation, bylaw, agreement, contract,
vote of stockholders or disinterested directors, or
otherwise.
(d) The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of
this Section, the Delaware General Corporation Law, or
otherwise.
SECOND: That the aforesaid amendment of the Restated
Certificate of Incorporation of said Corporation, set forth in
Paragraph FIRST hereinabove, has been duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by
D. C. Clark, its Chairman of the Board and Chief Executive
Officer, and J. D. Pinkerton, its Senior Vice President -
Administration and Secretary, this 13th day of May, 1987.
HOUSEHOLD INTERNATIONAL, INC.
[SEAL]
By: /s/ D. C. Clark
-------------------------
Chairman of the Board and
Chief Executive Officer
Attest:
/s/ J. D. Pinkerton
- ----------------------------
Senior Vice President -
Administration and Secretary
A:\WP51\IC51387.WP<PAGE>
CERTIFICATE OF HOUSEHOLD INTERNATIONAL, INC.
UNDER SECTION 151(g) OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
Household International, Inc., a Delaware corporation
(hereinafter referred to as the "Corporation"), does hereby
certify that:
1) the Corporation's 9-1/2% Cumulative Preferred Stock,
Series 1991-A (the "Preferred Stock") has been redeemed in its
entirety and that no shares of the Preferred Stock are
outstanding as of the date hereof.
2) the following resolution has been duly adopted by the
Corporation's Board of Directors:
"RESOLVED, that the officers of the Corporation are
duly authorized to file a certificate with the Secretary of
State of Delaware eliminating from the Corporation's
Certificate of Incorporation all matters set forth in each
Certificate of Designation, Preferences and Rights for the
Preferred Stock and as permitted by the Certificate of
Designation, Preferences and Rights for the Preferred Stock,
such shares of Preferred Stock redeemed shall resume the
status of authorized and unissued shares of the
Corporation's preferred stock."
Upon the effective date of the filing of this Certificate,
it shall eliminate from the Corporation's Certificate of
Incorporation all matters set forth in the Certificate of
Designation, Preferences and Rights with respect to the
Corporation's 9-1/2% Cumulative Preferred Stock, Series 1991-A,
and all of such shares of 9-1/2% Cumulative Preferred Stock,
Series 1991-A, shall resume the status of authorized and unissued
shares of the Corporation's class of Preferred Stock.
IN WITNESS WHEREOF, said Household International, Inc., has
caused its corporate seal to be hereunto affixed and this
Certificate to be signed by Paul R. Shay, its Secretary, and
attested by Susan E. Casey, its Assistant Secretary, this 14th
day of March, 1997.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ P. R. Shay
------------------------
Secretary
Attest:
By: /s/ S. E. Casey
-------------------
Assistant Secretary
<PAGE>
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
8-1/4% Cumulative Preferred Stock, Series 1992-A
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolutions
were duly adopted by the Board of Directors of the Corporation
and by the Preferred Stock Committee of the Board of Directors,
pursuant to authority conferred upon the Board of Directors by
the provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and pursuant to authority conferred
upon the Preferred Stock Committee by the resolutions of the
Board of Directors set forth herein and in accordance with
Section 141(c) of the General Corporation Law of the State of
Delaware.
1. The Board of Directors has adopted the following
resolutions designating a Preferred Stock Committee of the Board
of Directors and authorizing the Preferred Stock Committee to act
on behalf of the Board of Directors (within certain limitations)
in connection with the designation, issuance and sale of shares
in one or more series of Preferred Stock of the Corporation:
"RESOLVED, that a Preferred Stock Committee of the
Board of Directors is hereby designated which shall have and
may exercise, to the fullest extent permitted by law, the
full power and authority of the Board of Directors with
respect to the issuance and sale of one or more new series
of the Corporation's Preferred Stock without par value (each
such series herein referred to as the "New Preferred
Stock"), including, without limitation, establishing the
purchase price therefor, and fixing the designations and any
of the preferences, powers, rights (other than voting powers
or voting rights which shall be fixed by the Board of
Directors) and relative, participating, optional or other
special rights and qualifications, limitations or
restrictions thereof, of such shares of each series of New
Preferred Stock, and fixing the number of shares of each
series of New Preferred Stock.
"FURTHER RESOLVED, that the Preferred Stock Committee
is authorized to take such additional actions and adopt such
additional resolutions as it deems necessary or appropriate
for the purpose of authorizing and implementing the
issuance, offer, and sale for cash of New Preferred Stock,
including, without limiting the generality of the foregoing,
the authorization and execution of agreements (including
underwriting agreements) relating to the offer and sale of
New Preferred Stock, authorization and approval of listing
applications (including amendments or supplements thereto)
for the listing of such New Preferred Stock on a stock
exchange, approval of forms of stock certificates and
authorization of issuance of New Preferred Stock in
uncertificated form, any actions which may be necessary to
qualify the offering and sale of New Preferred Stock under
Blue Sky Laws of the various states, any necessary filings
with the Secretary of State of Delaware and other
jurisdictions, and the appointment of a transfer agent.
"FURTHER RESOLVED, that notwithstanding the foregoing
resolutions, the Preferred Stock Committee may not authorize
the sale of New Preferred Stock for more than $150 million
cash consideration in the aggregate, and the power and
authority of the Preferred Stock Committee set forth in the
preceding resolutions shall expire on December 31, 1994,
unless extended by further action of the Board of Directors
of the Corporation.
"FURTHER RESOLVED, that the members of the Preferred
Stock Committee shall be D. C. Clark, E. P. Hoffman, and
G. P. Osler. In the absence of Mr. Osler, A. E. Rasmussen
is designated as an alternate member of the Preferred Stock
Committee to serve in his place."
2. The Board of Directors has adopted the following
resolution pertaining to the voting rights for series of
Preferred Stock authorized for issuance by the Preferred Stock
Committee of the Board of Directors:
"RESOLVED, that holders of each series of the
Corporation's New Preferred Stock which is authorized by the
Preferred Stock Committee of the Board of Directors shall
have no voting rights, and their consent shall not be
required for taking any corporate action, except as
otherwise set forth herein, or as otherwise required by law,
and except as otherwise provided by the Board of Directors
with respect to any particular series of New Preferred
Stock.
The consent of the holders of the New Preferred Stock
with respect to the matters set forth in sub-sections (i)
and (iii) of paragraph (5) of Article IV of the
Corporation's Restated Certificate of Incorporation
("Paragraph (5)") shall not be required, except with respect
to the creation or issuance of any class of stock ranking
prior to or on a parity with the New Preferred Stock, or
any series thereof, as to the payment of dividends or the
distribution of assets; but the other provisions of
Paragraph (5) shall be applicable to the New Preferred
Stock. The holders of the New Preferred Stock shall have no
right to elect directors pursuant to paragraph (6) of
Article IV of the Corporation's Restated Certificate of
Incorporation ("Paragraph (6)"), such right hereby being
expressly withheld.
In the event that any six quarterly cumulative
dividends, whether consecutive or not, upon the New
Preferred Stock shall be in arrears, the holders of the New
Preferred Stock shall have the right, voting separately as a
class with holders of shares of any one or more other series
of Preferred Stock of the Corporation ranking on a parity
with the New Preferred Stock either as to payment of
dividends or the distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary, and upon which like voting rights have been
conferred and are then exercisable, at the next meeting of
stockholders called for the election of directors, to elect
two members of the Board of Directors. The right of such
holders of such shares of the New Preferred Stock, voting
separately as a class, to elect (together with the holders
of shares of any one or more other series of Preferred Stock
of the Corporation ranking on such a parity) members of the
Board of Directors of the Corporation as aforesaid shall
continue until such time as all dividends accumulated on
such shares of the New Preferred Stock shall have been paid
in full, at which time such right shall terminate, except as
herein or by law expressly provided, subject to revesting in
the event of each and every subsequent failure to pay
dividends of the character above mentioned.
Upon any termination of the right of the holders of the
New Preferred Stock as a class to elect directors as herein
provided, the term of office of all directors so elected
shall terminate immediately. If the office of any director
elected by such holders voting as a class becomes vacant by
reason of death, resignation, retirement, disqualification,
removal from office or otherwise, the remaining director
elected by such holders voting as a class may choose a
successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. Whenever the term
of office of the directors elected by such holders voting as
a class shall end and the special voting powers vested in
such holders as provided in this resolution shall have
expired, the number of directors shall thereupon be such
number as may be provided for in the Corporation's Bylaws
irrespective of any increase made pursuant to the provisions
of this resolution.
Until all unpaid dividends on the New Preferred Stock
shall have been paid in full, and in order to permit the
holders of the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, and any other series of Preferred
Stock issued by the Corporation having the voting rights set
forth in Paragraph (6) to exercise fully the right to elect
directors as granted by and provided in Paragraph (6), the
number of directors constituting the whole Board of
Directors of the Corporation shall not be less than seven.
If, upon any such arrearage in dividends, the number of
directors constituting the whole Board of Directors shall be
less than seven, the size of the Board of Directors shall,
immediately prior to the next meeting of stockholders called
for the election of directors, automatically be increased by
such number as shall be necessary to cause the number of
directors constituting the whole Board of Directors to be no
less than seven.
To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof in
respect of additional series of Preferred Stock, none of the
preferences or rights of any such additional series as fixed
by the Board of Directors shall rank prior to the New
Preferred Stock as to payment of dividends or the
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, without the
consent of the holders of two-thirds of the outstanding
shares of such series of New Preferred Stock voting as a
class.
The foregoing voting provisions shall not apply to any
series of New Preferred Stock if, at or prior to the time
when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of
such series of New Preferred Stock shall have been redeemed
or sufficient funds shall have been deposited in trust to
effect such redemption.
On any item in which the holders of New Preferred Stock
are entitled to vote, such holders shall be entitled to one
vote for each share held."
3. The Preferred Stock Committee of the Board of Directors
has adopted the following resolution pursuant to authority
conferred upon the Preferred Stock Committee of the Board of
Directors by the resolution of the Board of Directors set forth
in paragraph 1 above of this Certificate of Designation,
Preferences and Rights:
"RESOLVED, that the issue of a series of Preferred
Stock without par value of the Corporation is hereby
authorized and the designation, preferences and privileges,
relative, participating, optional and other special rights,
and qualifications, limitations and restrictions thereof, in
addition to those set forth in the Restated Certificate of
Incorporation, as amended, of the Corporation, are hereby
fixed as follows:
8-1/4% Cumulative Preferred Stock, Series 1992-A
(1) Number of Shares and Designation. 50,000 shares of
Preferred Stock without par value of the Corporation are
hereby constituted as a series of Preferred Stock without
par value and designated as 8-1/4% Cumulative Preferred
Stock, Series 1992-A (hereinafter called the "8-1/4%
Preferred Stock").
(2) Dividends. The holders of shares of the 8-1/4%
Preferred Stock shall be entitled to receive cash dividends,
when and as declared by the Board of Directors of the
Corporation, out of assets legally available for such
purpose, at the rate determined as provided below. Such
dividends shall be cumulative from the date of original
issue of such shares and shall be payable quarterly in
arrears, when and as declared by the Board of Directors of
the Corporation, on the fifteenth day of January, April,
July and October in each year to holders of record on the
respective business days next preceding the first days of
those months (and the quarterly dividend periods shall
commence on the first days of those months).
Dividends on the 8-1/4% Preferred Stock for quarterly
dividend periods will be payable at the rate of 8-1/4% per
annum from the date of original issue applied to the amount
of $1,000 per share of 8-1/4% Preferred Stock. The amount
of dividends payable on each share of 8-1/4% Preferred Stock
for each full quarterly dividend period shall be computed by
dividing the dividend rate by four and applying the dividend
rate to the amount of $1,000 per share. The amount of
dividends payable for any dividend period shorter or longer
than a full quarterly dividend period shall be computed on
the basis of 30-day months, a 360-day year and the actual
number of days elapsed in the period.
(3) Liquidation Preference. The amount to which shares
of 8-1/4% Preferred Stock shall be entitled upon
liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, shall be $1,000 per share,
plus an amount equal to all accrued and unpaid dividends, if
any, thereon to the date fixed for payment, and no more.
(4) Redemption. The shares of 8-1/4% Preferred Stock
shall be subject to redemption in whole or in part at the
option of the Corporation on or after October 15, 2002, at
$1,000 per share, plus an amount equal to all accrued and
unpaid dividends, if any, thereon to the date fixed for
redemption, and no more.
(5) Shares to be Retired. All shares of 8-1/4%
Preferred Stock purchased or redeemed by the Corporation
shall be retired and cancelled and shall be restored to the
status of authorized but unissued shares of the class of
Preferred Stock without par value, without designation as to
series, and may thereafter be issued, but not as shares of
8-1/4% Preferred Stock.
(6) Conversion or Exchange. The holders of shares of
8-1/4% Preferred Stock shall not have any rights herein to
convert such shares into or exchange such shares for shares
of any other series of any class or classes of capital stock
(or any other security) of the Corporation.
(7) Ranking. The 8-1/4% Preferred Stock shall rank on
a parity with the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, 9-1/2% Cumulative Preferred Stock,
Series 1989-A, Flexible Rate Auction Preferred Stock, Series
A, Flexible Rate Auction Preferred Stock, Series B, 11-1/4%
Enhanced Rate Cumulative Preferred Stock and 9-1/2%
Cumulative Preferred Stock, Series 1991-A as to payment of
dividends and distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary, and shall rank prior to the Corporation's
Common Stock and Series A Junior Participating Preferred
Stock as to payment of dividends and distribution of assets
upon liquidation, dissolution, or winding up, whether
voluntary or involuntary, and prior to any other series of
stock authorized to be issued by the Corporation which ranks
junior to the $6.25 Cumulative Convertible Voting Preferred
Stock, 9-1/2% Cumulative Preferred Stock, Series 1989-A,
Flexible Rate Auction Preferred Stock, Series A, Flexible
Rate Auction Preferred Stock, Series B, 11-1/4% Enhanced
Rate Cumulative Preferred Stock and 9-1/2% Cumulative
Preferred Stock, Series 1991-A as to payment of dividends
and distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be signed
by J. Richard Hull, Senior Vice President-Secretary of the
Corporation, and attested by John W. Blenke, Assistant Secretary,
this 14th day of October, 1992.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ J. Richard Hull
----------------------
Senior Vice President-
Secretary
Attest:
/s/ John W. Blenke
- -------------------
Assistant Secretary
A:\WP51\IC101492.WP<PAGE>
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Household International, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Restated Certificate of Incorporation, as
heretofore amended, of said Corporation has been further amended
by deleting, in its entirety, the first paragraph of Article IV
thereof and inserting the following as the new first paragraph of
Article IV:
The total number of shares that may be issued by
the Corporation is 158,155,004 of which 8,155,004
shares shall be Preferred Stock without par value and
150,000,000 shares shall be Common Stock of the par
value of $1 per share.
SECOND: That the aforesaid amendment of the Restated
Certificate of Incorporation of said Corporation, set forth in
Paragraph FIRST hereinabove, has been duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by
D. C. Clark, its Chairman of the Board and Chief Executive
Officer and J. W. Blenke, Assistant General Counsel and Assistant
Secretary, this 12th day of May, 1993.
HOUSEHOLD INTERNATIONAL, INC.
[SEAL]
By: /s/ D. C. Clark
-------------------------
Chairman of the Board and
Chief Executive Officer
Attest:
/s/ J. W. Blenke
- -----------------------------
Assistant General Counsel and
Assistant Secretary
A:\WP51\IC51293.WP
<PAGE>
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
7.35% Cumulative Preferred Stock, Series 1993-A
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolutions
were duly adopted by the Board of Directors of the Corporation
and by the Offering Committee of the Board of Directors, pursuant
to authority conferred upon the Board of Directors by the
provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and pursuant to authority conferred
upon the Offering Committee by the resolutions of the Board of
Directors set forth herein and in accordance with Section 141(c)
of the General Corporation Law of the State of Delaware.
1. The Board of Directors on May 12, 1993 has adopted the
following resolutions designating an Offering Committee of the
Board of Directors and authorizing the Offering Committee to act
on behalf of the Board of Directors (within certain limitations)
in connection with the designation, issuance and sale of shares
in one or more series of Preferred Stock, without par value, of
the Corporation:
"FURTHER RESOLVED, that an Offering Committee of the
Board of Directors is hereby designated which shall have and
may exercise, to the fullest extent permitted by law, the
full power and authority of the Board of Directors with
respect to the issuance and sale of (i) the Common Stock,
(ii) the Debt Securities or (iii) one or more new series of
the Corporation's Preferred Stock, including, without
limitation, establishing the purchase price therefore, and
fixing the designations and any of the preferences, powers,
rights (other than voting powers or voting rights which
shall be fixed by the Board of Directors) and relative,
participating, optional or other special rights and
qualifications, limitations or restrictions thereof, of such
shares of each series of Preferred Stock; and
"FURTHER RESOLVED, that notwithstanding the foregoing
resolutions, the power and authority of the Offering
Committee set forth in the preceding resolution shall expire
on June 30, 1995, unless extended by further action of the
Board of Directors of the Corporation; and
"FURTHER RESOLVED, that the members of the Offering
Committee shall be D. C. Clark, A. E. Rasmussen and G. P.
Osler. In the absence of any of the named directors, any
current director of the Corporation is designated as an
alternate member of the Offering Committee to serve in such
named director's place; and
"FURTHER RESOLVED, that the Offering Committee is
authorized to take such additional actions and adopt such
additional resolutions as it deems necessary or appropriate
for the purpose of authorizing and implementing the
issuance, offer, and sale for cash of Preferred Stock,
including, without limiting the generality of the foregoing,
the authorization and execution of agreements (including
underwriting agreements) relating to the offer and sale of
Preferred Stock, approval of forms of stock certificates and
authorization of issuance of Preferred Stock in
uncertificated form, any actions which may be necessary to
qualify the offering and sale of Preferred Stock under Blue
Sky Laws of the various states, any necessary filings with
the Secretary of State of Delaware and other jurisdictions,
and the appointment of a transfer agent; and
"FURTHER RESOLVED, that the Offering Committee is
hereby empowered, in connection with the issuance and sale
of any new series of the Corporation's Preferred Stock, to
authorize the issuance and sale of depositary shares and
depositary receipts for such depositary shares with respect
to any such series of Preferred Stock, and to authorize the
appointment of a depositary, registrar, and transfer agent
for such depositary shares and depositary receipts, the
execution of a depositary agreement, and any additional
agreements or actions in connection therewith as the
Offering Committee deems necessary or appropriate."
2. The Board of Directors, on May 12, 1993, has adopted
the following resolution pertaining to the voting rights for
series of Preferred Stock, without par value, authorized for
issuance by the Offering Committee of the Board of Directors:
"FURTHER RESOLVED, that holders of each series of the
Corporation's Preferred Stock which is authorized by the
Offering Committee of the Board of Directors shall have no
voting rights, and their consent shall not be required for
taking any corporate action, except as otherwise set forth
herein or as otherwise required by law, and except as
otherwise provided by the Board of Directors with respect to
any particular series of Preferred Stock:
The consent of the holders of the Preferred Stock with
respect to the matters set forth in sub-sections (i) and
(iii) of paragraph (5) of Article IV of the Corporation's
Restated Certificate of Incorporation ("Paragraph (5)")
shall not be required, except with respect to the creation
or issuance of any class of stock ranking prior to or on a
parity with the Preferred Stock, or any series thereof, as
to the payment of dividends or the distribution of assets;
but the other provisions of Paragraph (5) shall be
applicable to the Preferred Stock. The holders of the
Preferred Stock shall have no right to elect directors
pursuant to paragraph (6) of Article IV of the Corporation's
Restated Certificate of Incorporation ("Paragraph (6)"),
such right hereby being expressly withheld.
In the event that any six quarterly cumulative
dividends, whether consecutive or not, upon the Preferred
Stock shall be in arrears, the holders of the Preferred
Stock shall have the right, voting separately as a class
with holders of shares of any one or more other series of
preferred stock of the Corporation ranking on a parity with
the Preferred Stock either as to payment of dividends or the
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and upon which
like voting rights have been conferred and are then
exercisable, at the next meeting of stockholders called for
the election of directors, to elect two members of the Board
of Directors. The right of such holders of such shares of
the Preferred Stock, voting separately as a class, to elect
(together with the holders of shares of any one or more
other series of preferred stock of the Corporation ranking
on such a parity) members of the Board of Directors of the
Corporation as aforesaid shall continue until such time as
all dividends accumulated on such shares of the Preferred
Stock shall have been paid in full, at which time such right
shall terminate, except as herein or by law expressly
provided, subject to revesting in the event of each and
every subsequent failure to pay dividends of the character
above mentioned.
Upon any termination of the right of the holders of the
Preferred Stock as a class to elect directors as herein
provided, the term of office of all directors so elected
shall terminate immediately. If the office of any director
elected by such holders voting as a class becomes vacant by
reason of death, resignation, retirement, disqualification,
removal from office or otherwise, the remaining director
elected by such holders voting as a class may choose a
successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. Whenever the term
of office of the directors elected by such holders voting as
a class shall end and the special voting powers vested in
such holders as provided in this resolution shall have
expired, the number of directors shall thereupon be such
number as may be provided for in the Corporation's Bylaws
irrespective of any increase made pursuant to the provisions
of this resolution.
Until all unpaid dividends on the Preferred Stock shall
have been paid in full, and in order to permit the holders
of the Corporation's $6.25 Cumulative Convertible Voting
Preferred Stock, and any other series of preferred stock
issued by the Corporation having the voting rights set forth
in Paragraph (6) to exercise fully the right to elect
directors as granted by and provided in Paragraph (6), the
number of directors constituting the whole Board of
Directors of the Corporation shall not be less than seven.
If, upon any such arrearage in dividends the number of
directors constituting the whole Board of Directors shall be
less than seven, the size of the Board of Directors shall,
immediately prior to the next meeting of stockholders called
for the election of directors, automatically be increased by
such number as shall be necessary to cause the number of
directors constituting the whole Board of Directors to be no
less than seven.
To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof in
respect of additional series of preferred stock, none of the
preferences or rights of any such additional series as fixed
by the Board of Directors shall rank prior to the Preferred
Stock as to payment of dividends or the distribution of
assets upon liquidation, dissolution, or winding up, whether
voluntary or involuntary, without the consent of the holders
of two-thirds of the outstanding shares of such series of
Preferred Stock voting as a class.
The foregoing voting provisions shall not apply to any
series of Preferred Stock, if at or prior to the time when
the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of such
series of Preferred Stock shall have been redeemed or
sufficient funds shall have been deposited in trust to
effect such redemption.
On any item in which the holders of Preferred Stock are
entitled to vote, such holders shall be entitled to one vote
for each share held."
3. The Offering Committee of the Board of Directors has on
August 30, 1993 adopted the following resolution pursuant to
authority conferred upon the Offering Committee of the Board of
Directors by the resolutions of the Board of Directors set forth
in paragraph 1 above of this Certificate of Designation,
Preferences and Rights:
"RESOLVED, that the issue of a series of Preferred
Stock without par value of the Corporation is hereby
authorized and the designation, preferences and privileges,
relative, participating, optional and other special rights,
and qualifications, limitations and restrictions thereof, in
addition to those set forth in the Restated Certificate of
Incorporation, as amended, of the Corporation, are hereby
fixed as follows:
7.35% Cumulative Preferred Stock, Series 1993-A
(1) Number of Shares and Designation. 100,000 shares
of Preferred Stock without par value of the Corporation are
hereby constituted as a series of Preferred Stock without
par value and designated as 7.35% Cumulative Preferred
Stock, Series 1993-A (hereinafter called the "7.35%
Preferred Stock").
(2) Dividends. The holders of shares of the 7.35%
Preferred Stock shall be entitled to receive cash dividends,
when and as declared by the Board of Directors of the
Corporation, out of assets legally available for such
purpose, at the rate determined as provided below. Such
dividends shall be cumulative from the date of original
issue of such shares and shall be payable quarterly in
arrears, when and as declared by the Board of Directors of
the Corporation, on the fifteenth day of January, April,
July and October in each year to holders of record on the
respective business days next preceding the first days of
those months (and the quarterly dividend periods shall
commence on the first days of those months).
Dividends on the 7.35% Preferred Stock for quarterly
dividend periods will be payable at the rate of 7.35% per
annum from the date of original issue applied to the amount
of $1,000 per share of 7.35% Preferred Stock. The amount of
dividends payable on each share of 7.35% Preferred Stock for
each full quarterly dividend period shall be computed by
dividing the dividend rate by four and applying the dividend
rate to the amount of $1,000 per share. The amount of
dividends payable for any dividend period shorter or longer
than a full quarterly dividend period shall be computed on
the basis of 30-day months, a 360-day year and the actual
number of days elapsed in the period.
(3) Liquidation Preference. The amount to which shares
of 7.35% Preferred Stock shall be entitled upon liquidation,
dissolution, or winding up of the Corporation, whether
voluntary or involuntary, shall be $1,000 per share, plus an
amount equal to all accrued and unpaid dividends, if any,
thereon to the date fixed for payment, and no more.
(4) Redemption. The shares of 7.35% Preferred Stock
shall be subject to redemption in whole or in part at the
option of the Corporation on or after October 15, 1998 at
$1,000 per share, plus an amount equal to all accrued and
unpaid dividends, if any, thereon to the date fixed for
redemption, and no more.
(5) Shares to be Retired. All shares of 7.35%
Preferred Stock purchased or redeemed by the Corporation
shall be retired and cancelled and shall be restored to the
status of authorized but unissued shares of the class of
Preferred Stock without par value, without designation as to
series, and may thereafter be issued, but not as shares of
7.35% Preferred Stock.
(6) Conversion or Exchange. The holders of shares of
7.35% Preferred Stock shall not have any rights herein to
convert such shares into or exchange such shares for shares
of any other series of any class or classes of capital stock
(or any other security) of the Corporation.
(7) Ranking. The 7.35% Preferred Stock shall rank on a
parity with the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, 9-1/2% Cumulative Preferred Stock,
Series 1989-A, Flexible Rate Auction Preferred Stock, Series
B, 11-1/4% Enhanced Rate Cumulative Preferred Stock, 9-1/2%
Cumulative Preferred Stock, Series 1991-A and 8-1/4%
Cumulative Preferred Stock, Series 1992-A as to payment of
dividends and distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary, and shall rank prior to the Corporation's
Common Stock and Series A Junior Participating Preferred
Stock as to payment of dividends and distribution of assets
upon liquidation, dissolution, or winding up, whether
voluntary or involuntary, and prior to any other series of
stock authorized to be issued by the Corporation which ranks
junior to the $6.25 Cumulative Convertible Voting Preferred
Stock, 9-1/2% Cumulative Preferred Stock, Series 1989-A,
Flexible Rate Auction Preferred Stock, Series B, 11-1/4%
Enhanced Rate Cumulative Preferred Stock, 9-1/2% Cumulative
Preferred Stock, Series 1991-A and 8-1/4% Cumulative
Preferred Stock, Series 1992-A as to payment of dividends
and distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be signed
by J. Richard Hull, Senior Vice President-Secretary and General
Counsel of the Corporation, and attested by John W. Blenke,<PAGE>
Assistant General Counsel and Assistant Secretary, this 1st day
of September, 1993.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ J. Richard Hull
----------------------
Senior Vice President-
Secretary and General
Counsel
Attest:
/s/ John W. Blenke
- -----------------------------
Assistant General Counsel and
Assistant Secretary
<PAGE>
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
HOUSEHOLD INTERNATIONAL, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Household International, Inc., a corporation organized
and existing under the General Corporation Law of the State of
Delaware (hereinafter called the "Corporation"), hereby certifies
that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on
July 9, 1996:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation (hereinafter
called the "Board of Directors" or the "Board") in accordance
with the provisions of the Restated Certificate of Incorporation,
the Board hereby creates a series of Preferred Stock, without par
value (the "Preferred Stock"), of the Corporation and hereby
states the designation and number of shares, and fixes the
relative rights, preferences, and limitations thereof as follows:
FURTHER RESOLVED, that pursuant to the authority
granted to and vested in the Board in accordance with the
provisions of the Restated Certificate of Incorporation, the
consent of the holders of Series A Preferred Stock with respect
to the matters set forth in sub-sections (i) and (iii) of para-
graph (5) of Article IV of the Corporation's Restated Certificate
of Incorporation ("Paragraph (5)") shall not be required; but the
other provisions of Paragraph (5) shall be applicable to the
Series A Preferred Stock. The holders of the Series A Preferred
Stock shall have no right to elect directors per paragraph (6) of
Article IV of the Corporation's Restated Certificate of
Incorporation, such right hereby being expressly withheld:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series A Junior Participating
Preferred Stock" (the "Series A Preferred Stock") and the number
of shares constituting the Series A Preferred Stock shall be
150,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided that no decrease
shall reduce the number of shares of Series A Preferred Stock to
a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible
into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares
of any series of Preferred Stock (or any similar stock)
ranking prior and superior to the Series A Preferred Stock
with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common
Stock, par value $1.00 per share (the "Common Stock"), of
the Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the fifteenth day
January, April, July and October in each year (each such
date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of
(a) $1 or (b) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issu-
ance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares
a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1 per share
on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may
fix a record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed
for the payment thereof.
Section 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment here-
inafter set forth, each share of Series A Preferred Stock
shall entitle the holder thereof to 1,000 votes on all
matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred
Stock or any similar stock, or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of
the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking
any corporate action.
(D) The consent of the holders of Series A Preferred
Stock with respect to the matters set forth in sub-sections
(i) and (iii) of paragraph (5) of Article IV of the
Corporation's Restated Certificate of Incorporation
("Paragraph 5") shall not be required, ; but the other
provisions of Paragraph (5) shall be applicable to the
Series A Preferred Stock. The holders of the Series A
Preferred Stock shall have no right to elect directors
pursuant to paragraph (6) of Article IV of the Corporation's
Restated Certificate of Incorporation, such right hereby
being expressly withheld.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior
(either as to dividends or upon liquidation, dis-
solution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding
up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock,
or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend
rates and other relative rights and preferences of the
respective series and classes, shall determine in good
faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless
the Corporation could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time
and in such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Certificate of
Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Corpo-
ration, no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1,000 per share, plus an
amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock
shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount to be distributed per
share to holders of shares of Common Stock, or (2) to the holders
of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series
A Preferred Stock and all such parity stock in proportion to the
total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the de-
nominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
each share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject
to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by mul-
tiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series A
Preferred Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall
rank, with respect to the payment of dividends and the
distribution of assets, junior to all series of any other class
of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incor-
poration of the Corporation shall not be amended in any manner
which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred
Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Corporation by its Chief Executive
Officer or Chief Financial Officer and attested by its Secretary
this 9th day of July, 1996.
/s/ William F. Aldinger
--------------------------
Chief Executive Officer or
Chief Financial Officer
Attest:
/s/ Paul R. Shay
- ----------------
Secretary
U:\LAW\EDGAR\IC7996.WP<PAGE>
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Household International, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Restated Certificate of Incorporation, as
heretofore amended, of said Corporation has been further amended
by deleting, in its entirety, the first paragraph of Article IV
thereof and inserting the following as the new first paragraph of
Article IV:
The total number of shares that may be issued by
the Corporation is 258,155,004 of which 8,155,004
shares shall be Preferred Stock without par value and
250,000,000 shares shall be Common Stock of the par
value of $1 per share.
SECOND: That the aforesaid amendment of the Restated
Certificate of Incorporation of said Corporation, set forth in
Paragraph FIRST hereinabove, has been duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by
W. F. Aldinger, its Chairman and Chief Executive Officer and
P. R. Shay, Assistant General Counsel and Secretary, this 14th
day of May, 1997.
HOUSEHOLD INTERNATIONAL, INC.
[SEAL]
By: /s/ W. F. Aldinger
-------------------------
Chairman and Chief
Executive Officer
Attest:
/s/ P. R. Shay
- -----------------------------
Assistant General Counsel and
Secretary
U:\WP\EMP819\EDGAR\IC51497.WP <PAGE>
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Household International, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Restated Certificate of Incorporation, as
heretofore amended, of said Corporation has been further amended
by deleting, in its entirety, the first paragraph of Article IV
thereof and inserting the following as the new first paragraph of
Article IV:
The total number of shares that may be issued by
the Corporation is 758,155,004 of which 8,155,004
shares shall be Preferred Stock without par value and
750,000,000 shares shall be Common Stock of the par
value of $1 per share.
SECOND: That the number of shares constituting the Series A
Junior Participating Preferred Stock is increased to 750,000.
THIRD: That the aforesaid amendments of the Restated
Certificate of Incorporation of said Corporation set forth above
have been duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by
W. F. Aldinger, its Chairman and Chief Executive Officer and
P. R. Shay, Assistant General Counsel and Corporate Secretary,
this 13th day of May, 1998.
HOUSEHOLD INTERNATIONAL, INC.
[SEAL]
By: /s/ W. F. Aldinger
-----------------------
Chairman and
Chief Executive Officer
Attest:
/s/ P. R. Shay
- -----------------------------
Assistant General Counsel and
Corporate Secretary
U:\LAW\EDGAR\IC51398.WP
<PAGE>
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
5% Cumulative Preferred Stock
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolution
was duly adopted by the Board of Directors of the Corporation
pursuant to authority conferred upon the Board of Directors by
the provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and in accordance with Section
141(c) of the General Corporation Law of the State of Delaware.
1. The Board of Directors has on May 13, 1998 adopted the
following resolution:
"RESOLVED, that the issue of a series of Preferred Stock of
the Corporation is hereby authorized and the designation,
preferences and privileges, relative, participating, optional and
other special rights, and qualifications, limitations and
restrictions thereof, in addition to those set forth in the
Restated Certificate of Incorporation, as amended, of the
Corporation, are hereby fixed as follows:
5% Cumulative Preferred Stock
(1) Number of Shares and Designation. 407,718 shares
of Preferred Stock, without par value of the Corporation are
hereby constituted as a series of Preferred Stock, without
par value and designated as 5% Cumulative Preferred Stock
(hereinafter called the "5% Preferred Stock").
(2) Dividends. The holders of shares of the 5%
Preferred Stock shall be entitled to receive cash dividends,
when and as declared by the Board of Directors of the
Corporation, out of assets legally available for such
purpose, at the rate determined as provided below. Such
dividends shall be cumulative from the date of original
issue of such shares and shall be payable semi-annually in
arrears, when and as declared by the Board of Directors of
the Corporation, on the last day of June and December in
each year to holders of record, in each case, on the last
business day of the calendar month next preceding the
dividend payment date (and the semi-annual dividend periods
shall commence on the first day following each dividend
payment date and end on the next succeeding dividend payment
date).
Dividends on the 5% Preferred Stock for semi-annual
dividend periods will be payable at the rate of 5% per annum
from the date of original issue. The amount of dividends
payable on each share of 5% Preferred Stock for each full
semi-annual dividend period shall be computed by dividing
the dividend rate by two and applying the dividend rate to
each outstanding share.
(3) Liquidation Preference. The amount to which shares
of 5% Preferred Stock shall be entitled upon liquidation,
dissolution, or winding up of the Corporation, whether
voluntary or involuntary, shall be $50.00 per share, plus an
amount equal to all accrued and unpaid dividends, if any,
thereon to the date fixed for payment, whether or not
enarned or declared, and no more. Such amount to be set
apart from holders or paid to holders out of the assets of
the Corporation before any distribution is made to or set
apart for holders of the Corporation's Common Stock.
(4) Redemption. (a) The shares of the 5% Preferred
Stock shall be subject to redemption in whole or in part at
the option of the Corporation, by vote of the Board of
Directors, at $50.00 per share, plus an amount equal to all
accrued and unpaid dividends, if any, thereon to the date
fixed for redemption, whether or not earned or declared, and
no more. If less than all of the outstanding shares of 5%
Preferred Stock are to be redeemed, the shares to be
redeemed shall be determined by lot in such usual manner and
subject to such regulations as the Board of Directors in its
sole discretion shall prescribe.
(b) At least 30 days prior to the date fixed for
the redemption of shares of the 5% Preferred Stock, a
written notice shall be mailed to each holder of record of
shares of 5% Preferred Stock to be redeemed in a postage
prepaid envelope addressed to such holder at his post office
address as shown on the records of the Corporation,
notifying such holder of the election of the Corporation to
redeem such shares stating the date fixed for redemption
thereof (the "redemption date"), and calling upon such
holder to surrender to the Corporation on the redemption
date at the place designated in such notice his certificate
or certificates representing the number of shares specified
in such notice of redemption.
(c) On or after the redemption date each holder
of shares of 5% Preferred Stock to be redeemed shall present
and surrender his certificate or certificates for such
shares to the Corporation at the place designated in such
notice and thereupon the redemption price of such shares
shall be paid to or on the order of the person whose name
appears on such certificate or certificates as the owner
thereof and each surrendered certificate shall be canceled.
(d) In case less than all the shares represented
by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
(e) From and after the redemption date (unless
default shall be made by the Corporation in payment of the
redemption price) all dividends on the shares of 5%
Preferred Stock designated for redemption in such notice
shall cease to accrue, and all rights of the holders thereof
as stockholders of the Corporation, except the right to
receive the redemption price thereof upon the surrender of
certificates representing the same, shall cease and
determine and such shares shall not thereafter be
transferred (except with the consent of the Corporation) on
the books of the Corporation, and such shares shall not be
deemed to be outstanding for any purpose whatsoever.
(f) At its election, prior to the redemption
date, the Corporation may deposit the redemption price of
the shares of 5% Preferred Stock called for redemption in
trust for the holders thereof with a bank or trust company
(having a capital and surplus of not less than $1,000,000)
in the City of Chicago, Illinois or in the Borough of
Manhattan, City and State of New York or in any other city
in which the Corporation at the time shall maintain a
transfer agency with respect to such stock, in which case
such redemption notice shall state the date of such deposit,
shall specify the office of such bank or trust company as
the place of payment of the redemption price, and shall call
upon such holders to surrender the certificates representing
such shares at such place on or after the date fixed in such
redemption notice (which shall not be later than the
redemption date) against payment of the redemption price.
From and after the making of such deposit, the shares of 5%
Preferred Stock so designated for redemption shall not be
deemed to be outstanding for any purpose whatsoever, and the
rights of the holders of such shares shall be limited to the
right to receive the redemption price of such shares without
interest, upon surrender of the certificates representing
the same to the Corporation at said office of such bank or
trust company.
(g) Any moneys so deposited which shall remain
unclaimed by the holders of such 5% Preferred Stock at the
end of six years after the redemption date shall be returned
by such bank or trust company to the Corporation after which
the holders of the 5% Preferred Stock shall have no further
interest in such moneys.
(5) Shares to be Retired. All shares of 5% Preferred
Stock purchased or redeemed by the Corporation shall be
retired and cancelled and shall be restored to the status of
authorized but unissued shares of the class of Preferred
Stock without par value, without designation as to series,
and may thereafter be issued, but not as shares of 5%
Preferred Stock.
(6) Conversion or Exchange. The holders of shares of
5% Preferred Stock shall not have any rights herein to
convert such shares into or exchange such shares for shares
of any other series of any class or classes of capital stock
(or any other security) of the Corporation.
(7) Voting Rights. (a) Each holder of 5% Preferred
Stock shall be entitled to one vote for each share held on
each matter submitted to a vote of stockholders of the
Corporation and, except as otherwise herein or by law
provided, the 5% Preferred Stock, the Common Stock of the
Corporation, and any other capital stock of the Corporation
at the time entitled thereto, shall vote together as one
class, except that while the holders of 5% Preferred Stock,
voting as a class, are entitled to elect two directors as
hereinafter provided, they shall not be entitled to
participate with the Common Stock (or any other capital
stock as stated above) in the election of any other
directors.
(b) In case at any time three or more full semi-
annual dividends (whether consecutive or not) on the 5%
Preferred Stock shall be in arrears, then during the period
(the "Class Voting Period") commencing with such time and
ending with the time when all arrears in dividends on the 5%
Preferred Stock shall have been paid and the full dividend
on the 5% Preferred Stock for the then current semi-annual
dividend period shall have been declared and paid or set
aside for payment, at any meeting of the stockholders of the
Corporation held for the election of directors during the
Class Voting Period, the holders of 5% Preferred Stock
represented in person or by proxy at said meeting shall be
entitled, as a class, to the exclusion of the holders of all
other classes of stock of the Corporation, to elect two
directors of the Corporation, each share of 5% Preferred
Stock entitling the holder thereof to one vote.
(c) Any director who shall have been elected by
holders of 5% Preferred Stock or by any director so elected
as herein contemplated, may be removed at any time during a
Class Voting Period, either for or without cause, by, and
only by, the affirmative votes of the holders of record of a
majority of the outstanding shares of 5% Preferred Stock
given at a special meeting of such stockholders called for
the purpose, and any vacancy thereby created may be filled
during such Class Voting Period by the holders of 5%
Preferred Stock present in person or represented by proxy at
such meeting. Any director to be elected by the Board of
Directors of the Corporation to replace a director elected
by holders of 5% Preferred Stock or elected by a director as
provided for in this sentence shall be elected by the
remaining director previously elected by the holders of 5%
Preferred Stock. At the end of the Class Voting Period the
holders of 5% Preferred Stock shall be automatically
divested of all voting power vested in them under this
resolution but subject always to the subsequent vesting
hereunder of voting power in the holders of 5% Preferred
Stock in the event of any similar default or defaults
thereafter.
(8) Ranking. The 5% Preferred Stock shall rank on a
parity with the Corporation's 8-1/4% Cumulative Preferred
Stock, Series 1992-A, 7.35% Cumulative Preferred Stock,
Series 1993-A, $4.50 Cumulative Preferred Stock and $4.30
Cumulative Preferred Stock as to payment of dividends and
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and shall rank
prior to the Corporation's Common Stock and Series A Junior
Participating Preferred Stock as to payment of dividends and
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and prior to
any other series of stock authorized to be issued by the
Corporation which ranks junior to the Corporation's 8-1/4%
Cumulative Preferred Stock, Series 1992-A, 7.35% Cumulative
Preferred Stock, Series 1993-A, $4.50 Cumulative Preferred
Stock and $4.30 Cumulative Preferred Stock as to payment of
dividends and distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary.
(9) Amendments. While any 5% Preferred Stock is
outstanding, the Corporation shall not alter or change the
preferences, special rights or powers of the 5% Preferred Stock
so as to adversely affect the 5% Preferred Stock without the
affirmative consent (given in writing or at a meeting duly called
for the purpose) of the holders of at least two-thirds (2/3rds)
of the aggregate number of shares of 5% Preferred Stock then
outstanding.
"FURTHER RESOLVED, that the Chairman, President, or any Vice
President, together with the Secretary or an Assistant Secretary,
of the Corporation are hereby authorized and directed to execute,
acknowledge, file with the Delaware Secretary of State, and
record in New Castle County, Delaware, a Certificate of
Designation, Preferences and Rights of the 5% Preferred Stock
when such officers of the Corporation shall in their sole
discretion consider such action to be necessary or advisable; and
"FURTHER RESOLVED, that the form of certificates for the 5%
Preferred Stock which form of certificate has been presented to
this meeting, and a copy of which the Secretary or an Assistant
Secretary is instructed to mark for identification and file with
the corporate records, is hereby approved, the facsimile
signatures of the officers of the Corporation contained on the
certificates are adopted as the valid and binding signatures of
the officers so signing, and the proper corporate officers are
authorized on behalf of and under the corporate seal of the
Corporation to execute and deliver the said certificates in
substantially the form presented with such changes therein as may
be approved by the officers executing the same, execution thereof
to be conclusive evidence of such approval; and
"FURTHER RESOLVED, that application be made to the New York
Stock Exchange, Inc. (the "Exchange") for listing of the 5%
Preferred Stock upon official notice of issuance of the 5%
Preferred Stock and that Messrs. J. W. Blenke, P. R. Shay and P.
D. Schwartz or any counsel designated by any of the foregoing
individuals, be and each hereby are authorized and designated by
the Corporation to appear before the Exchange in furtherance of
the listing of said 5% Preferred Stock, including authority to
file or make any such changes in the said applications or any
agreements relevant thereto and to execute any and all documents
on behalf of the Corporation as may be necessary or desirable to
conform with the requirements for listing; and
"FURTHER RESOLVED, that the officers of the Corporation, or
any counsel designated thereby, are hereby severally authorized
to execute on behalf of the Corporation and file with appropriate
authorities such applications, statements, certificates,
consents, and other documents as may be necessary for the
registration or qualification of the 5% Preferred Stock under the
securities laws of the states of the United States in which such
securities are required to be registered or qualified, and any
actions having previously been taken are hereby authorized,
approved and ratified; and
"FURTHER RESOLVED, that Harris Trust and Savings Bank
("Harris Bank") is hereby appointed as transfer agent and
registrar for the 5% Preferred Stock upon such terms as the
officers of the Corporation consider necessary or advisable; and
"FURTHER RESOLVED, that for the purpose of the original
issue of the shares of 5% Preferred Stock, Harris Bank, as the
Corporation's transfer agent and registrar, is authorized and
directed to issue and is authorized to register and deliver
certificates representing an aggregate of up to 407,718 shares of
5% Preferred Stock of the Corporation all in accordance with
instructions from the officers of the Corporation; and
"FURTHER RESOLVED, that the 5% Preferred Stock shall be
without par value; and
"FURTHER RESOLVED, that the officers of the Corporation are
hereby authorized and directed on behalf of the Corporation to
take and cause to be taken all action necessary or desirable to
carry out the terms, implications and intent of these
resolutions, and to consummate the transactions contemplated
therein."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be signed
by David A. Schoenholz, Executive Vice President and Chief
Financial Officer of the Corporation, and attested by Patrick D.
Schwartz, Associate General Counsel and Assistant Secretary, this
30th day of June, 1998.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ David A. Schoenholz
-------------------------
David A. Schoenholz
Executive Vice President-
Chief Financial Officer
Attest:
/s/ Patrick D. Schwartz
- -----------------------------
Patrick D. Schwartz
Associate General Counsel and
Assistant Secretary
<PAGE>
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
$4.50 Cumulative Preferred Stock
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolution
was duly adopted by the Board of Directors of the Corporation
pursuant to authority conferred upon the Board of Directors by
the provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and in accordance with Section
141(c) of the General Corporation Law of the State of Delaware.
1. The Board of Directors has on May 13, 1998 adopted the
following resolution:
"RESOLVED, that the issue of a series of Preferred Stock of
the Corporation is hereby authorized and the designation,
preferences and privileges, relative, participating, optional and
other special rights, and qualifications, limitations and
restrictions thereof, in addition to those set forth in the
Restated Certificate of Incorporation, as amended, of the
Corporation, are hereby fixed as follows:
$4.50 Cumulative Preferred Stock
(1) Number of Shares and Designation. 103,976 shares
of Preferred Stock, without par value of the Corporation are
hereby constituted as a series of Preferred Stock, without
par value and designated as $4.50 Cumulative Preferred Stock
(hereinafter called the "$4.50 Preferred Stock").
(2) Dividends. The holders of shares of the $4.50
Preferred Stock shall be entitled to receive cash dividends,
when and as declared by the Board of Directors of the
Corporation, out of assets legally available for such
purpose, at the rate determined as provided below. Such
dividends shall be cumulative from the date of original
issue of such shares and shall be payable semi-annually in
arrears, when and as declared by the Board of Directors of
the Corporation, on the last day of June and December in
each year to holders of record, in each case, on the last
business day of the calendar month next preceding the
dividend payment date (and the semi-annual dividend periods
shall commence on the first day following each dividend
payment date and end on the next succeeding dividend payment
date).
Dividends on the $4.50 Preferred Stock for semi-annual
dividend periods will be payable at the rate of $4.50 per
annum from the date of original issue. The amount of
dividends payable on each share of $4.50 Preferred Stock for
each full semi-annual dividend period shall be computed by
dividing the dividend rate by two and applying the dividend
rate to each outstanding share.
(3) Liquidation Preference. The amount to which shares
of $4.50 Preferred Stock shall be entitled upon liquidation,
dissolution, or winding up of the Corporation, whether
voluntary or involuntary, shall be $100.00 per share, plus
an amount equal to all accrued and unpaid dividends, if any,
thereon to the date fixed for payment, whether or not earned
or declared, and no more. Such amount to be set apart from
holders or paid to holders out of the assets of the
Corporation before any distribution is made to or set apart
for holders of the Corporation's Common Stock.
(4) Redemption. (a) The shares of the $4.50 Preferred
Stock shall be subject to redemption in whole or in part at
the option of the Corporation, by vote of the Board of
Directors, at $103.00 per share, plus an amount equal to all
accrued and unpaid dividends, if any, thereon to the date
fixed for redemption, whether or not earned or declared, and
no more. If less than all of the outstanding shares of
$4.50 Preferred Stock are to be redeemed, the shares to be
redeemed shall be determined by lot in such usual manner and
subject to such regulations as the Board of Directors in its
sole discretion shall prescribe.
(b) At least 30 days prior to the date fixed for
the redemption of shares of the $4.50 Preferred Stock, a
written notice shall be mailed to each holder of record of
shares of $4.50 Preferred Stock to be redeemed in a postage
prepaid envelope addressed to such holder at his post office
address as shown on the records of the Corporation,
notifying such holder of the election of the Corporation to
redeem such shares stating the date fixed for redemption
thereof (the "redemption date"), and calling upon such
holder to surrender to the Corporation on the redemption
date at the place designated in such notice his certificate
or certificates representing the number of shares specified
in such notice of redemption.
(c) On or after the redemption date each holder
of shares of $4.50 Preferred Stock to be redeemed shall
present and surrender his certificate or certificates for
such shares to the Corporation at the place designated in
such notice and thereupon the redemption price of such
shares shall be paid to or on the order of the person whose
name appears on such certificate or certificates as the
owner thereof and each surrendered certificate shall be
canceled.
(d) In case less than all the shares represented
by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
(e) From and after the redemption date (unless
default shall be made by the Corporation in payment of the
redemption price) all dividends on the shares of $4.50
Preferred Stock designated for redemption in such notice
shall cease to accrue, and all rights of the holders thereof
as stockholders of the Corporation, except the right to
receive the redemption price thereof upon the surrender of
certificates representing the same, shall cease and
determine and such shares shall not thereafter be
transferred (except with the consent of the Corporation) on
the books of the Corporation, and such shares shall not be
deemed to be outstanding for any purpose whatsoever.
(f) At its election, prior to the redemption
date, the Corporation may deposit the redemption price of
the shares of $4.50 Preferred Stock called for redemption in
trust for the holders thereof with a bank or trust company
(having a capital and surplus of not less than $1,000,000)
in the City of Chicago, Illinois or in the Borough of
Manhattan, City and State of New York or in any other city
in which the Corporation at the time shall maintain a
transfer agency with respect to such stock, in which case
such redemption notice shall state the date of such deposit,
shall specify the office of such bank or trust company as
the place of payment of the redemption price, and shall call
upon such holders to surrender the certificates representing
such shares at such place on or after the date fixed in such
redemption notice (which shall not be later than the
redemption date) against payment of the redemption price.
From and after the making of such deposit, the shares of
$4.50 Preferred Stock so designated for redemption shall not
be deemed to be outstanding for any purpose whatsoever, and
the rights of the holders of such shares shall be limited to
the right to receive the redemption price of such shares
without interest, upon surrender of the certificates
representing the same to the Corporation at said office of
such bank or trust company.
(g) Any moneys so deposited which shall remain
unclaimed by the holders of such $4.50 Preferred Stock at
the end of six years after the redemption date shall be
returned by such bank or trust company to the Corporation
after which the holders of the $4.50 Preferred Stock shall
have no further interest in such moneys.
(5) Shares to be Retired. All shares of $4.50
Preferred Stock purchased or redeemed by the Corporation
shall be retired and cancelled and shall be restored to the
status of authorized but unissued shares of the class of
Preferred Stock without par value, without designation as to
series, and may thereafter be issued, but not as shares of
$4.50 Preferred Stock.
(6) Conversion or Exchange. The holders of shares of
$4.50 Preferred Stock shall not have any rights herein to
convert such shares into or exchange such shares for shares
of any other series of any class or classes of capital stock
(or any other security) of the Corporation.
(7) Voting Rights. (a) Each holder of $4.50
Preferred Stock shall be entitled to one vote for each share
held on each matter submitted to a vote of stockholders of
the Corporation and, except as otherwise herein or by law
provided, the $4.50 Preferred Stock, the Common Stock of the
Corporation, and any other capital stock of the Corporation
at the time entitled thereto, shall vote together as one
class, except that while the holders of $4.50 Preferred
Stock, voting as a class, are entitled to elect two
directors as hereinafter provided, they shall not be
entitled to participate with the Common Stock (or any other
capital stock as stated above) in the election of any other
directors.
(b) In case at any time three or more full semi-
annual dividends (whether consecutive or not) on the $4.50
Preferred Stock shall be in arrears, then during the period
(the "Class Voting Period") commencing with such time and
ending with the time when all arrears in dividends on the
$4.50 Preferred Stock shall have been paid and the full
dividend on the $4.50 Preferred Stock for the then current
semi-annual dividend period shall have been declared and
paid or set aside for payment, at any meeting of the
stockholders of the Corporation held for the election of
directors during the Class Voting Period, the holders of
$4.50 Preferred Stock represented in person or by proxy at
said meeting shall be entitled, as a class, to the exclusion
of the holders of all other classes of stock of the
Corporation, to elect two directors of the Corporation, each
share of $4.50 Preferred Stock entitling the holder thereof
to one vote.
(c) Any director who shall have been elected by
holders of $4.50 Preferred Stock or by any director so
elected as herein contemplated, may be removed at any time
during a Class Voting Period, either for or without cause,
by, and only by, the affirmative votes of the holders of
record of a majority of the outstanding shares of $4.50
Preferred Stock given at a special meeting of such
stockholders called for the purpose, and any vacancy thereby
created may be filled during such Class Voting Period by the
holders of $4.50 Preferred Stock present in person or
represented by proxy at such meeting. Any director to be
elected by the Board of Directors of the Corporation to
replace a director elected by holders of $4.50 Preferred
Stock or elected by a director as provided for in this
sentence shall be elected by the remaining director
previously elected by the holders of $4.50 Preferred Stock.
At the end of the Class Voting Period the holders of $4.50
Preferred Stock shall be automatically divested of all
voting power vested in them under this resolution but
subject always to the subsequent vesting hereunder of voting
power in the holders of $4.50 Preferred Stock in the event
of any similar default or defaults thereafter.
(8) Ranking. The $4.50 Preferred Stock shall rank on a
parity with the Corporation's 8-1/4% Cumulative Preferred
Stock, Series 1992-A, 7.35% Cumulative Preferred Stock,
Series 1993-A, 5% Cumulative Preferred Stock and $4.30
Cumulative Preferred Stock as to payment of dividends and
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and shall rank
prior to the Corporation's Common Stock and Series A Junior
Participating Preferred Stock as to payment of dividends and
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and prior to
any other series of stock authorized to be issued by the
Corporation which ranks junior to the Corporation's 8-1/4%
Cumulative Preferred Stock, Series 1992-A, 7.35% Cumulative
Preferred Stock, Series 1993-A, 5% Cumulative Preferred
Stock and $4.30 Cumulative Preferred Stock as to payment of
dividends and distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary.
(9) Amendments. While any $4.50 Preferred Stock is
outstanding, the Corporation shall not alter or change the
preferences, special rights or powers of the $4.50 Preferred
Stock so as to adversely affect the $4.50 Preferred Stock
without the affirmative consent (given in writing or at a
meeting duly called for the purpose) of the holders of at
least two-thirds (2/3rds) of the aggregate number of shares
of $4.50 Preferred Stock then outstanding.
"FURTHER RESOLVED, that the Chairman, President, or any Vice
President, together with the Secretary or an Assistant Secretary,
of the Corporation are hereby authorized and directed to execute,
acknowledge, file with the Delaware Secretary of State, and
record in New Castle County, Delaware, a Certificate of
Designation, Preferences and Rights of the $4.50 Preferred Stock
when such officers of the Corporation shall in their sole
discretion consider such action to be necessary or advisable; and
"FURTHER RESOLVED, that the form of certificates for the
$4.50 Preferred Stock which form of certificate has been
presented to this meeting, and a copy of which the Secretary or
an Assistant Secretary is instructed to mark for identification
and file with the corporate records, is hereby approved, the
facsimile signatures of the officers of the Corporation contained
on the certificates are adopted as the valid and binding
signatures of the officers so signing, and the proper corporate
officers are authorized on behalf of and under the corporate seal
of the Corporation to execute and deliver the said certificates
in substantially the form presented with such changes therein as
may be approved by the officers executing the same, execution
thereof to be conclusive evidence of such approval; and
"FURTHER RESOLVED, that application be made to the New York
Stock Exchange, Inc. (the "Exchange") for listing of the $4.50
Preferred Stock upon official notice of issuance of the $4.50
Preferred Stock and that Messrs. J. W. Blenke, P. R. Shay and P.
D. Schwartz or any counsel designated by any of the foregoing
individuals, be and each hereby are authorized and designated by
the Corporation to appear before the Exchange in furtherance of
the listing of said $4.50 Preferred Stock, including authority to
file or make any such changes in the said applications or any
agreements relevant thereto and to execute any and all documents
on behalf of the Corporation as may be necessary or desirable to
conform with the requirements for listing; and
"FURTHER RESOLVED, that the officers of the Corporation, or
any counsel designated thereby, are hereby severally authorized
to execute on behalf of the Corporation and file with appropriate
authorities such applications, statements, certificates,
consents, and other documents as may be necessary for the
registration or qualification of the $4.50 Preferred Stock under
the securities laws of the states of the United States in which
such securities are required to be registered or qualified, and
any actions having previously been taken are hereby authorized,
approved and ratified; and
"FURTHER RESOLVED, that Harris Trust and Savings Bank
("Harris Bank") is hereby appointed as transfer agent and
registrar for the $4.50 Preferred Stock upon such terms as the
officers of the Corporation consider necessary or advisable; and
"FURTHER RESOLVED, that for the purpose of the original
issue of the shares of $4.50 Preferred Stock, Harris Bank, as the
Corporation's transfer agent and registrar, is authorized and
directed to issue and is authorized to register and deliver
certificates representing an aggregate of up to 103,976 shares of
$4.50 Preferred Stock of the Corporation all in accordance with
instructions from the officers of the Corporation; and
"FURTHER RESOLVED, that the $4.50 Preferred Stock shall be
without par value; and
"FURTHER RESOLVED, that the officers of the Corporation are
hereby authorized and directed on behalf of the Corporation to
take and cause to be taken all action necessary or desirable to
carry out the terms, implications and intent of these
resolutions, and to consummate the transactions contemplated
therein."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be signed
by David A. Schoenholz, Executive Vice President and Chief
Financial Officer of the Corporation, and attested by Patrick D.
Schwartz, Associate General Counsel and Assistant Secretary, this
30th day of June, 1998.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ David A. Schoenholz
-------------------------
David A. Schoenholz
Executive Vice President-
Chief Financial Officer
Attest:
/s/ Patrick D. Schwartz
- -----------------------------
Patrick D. Schwartz
Associate General Counsel and
Assistant Secretary
<PAGE>
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
$4.30 Cumulative Preferred Stock
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolution
was duly adopted by the Board of Directors of the Corporation
pursuant to authority conferred upon the Board of Directors by
the provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and in accordance with Section
141(c) of the General Corporation Law of the State of Delaware.
1. The Board of Directors has on May 13, 1998 adopted the
following resolution:
"RESOLVED, that the issue of a series of Preferred Stock of
the Corporation is hereby authorized and the designation,
preferences and privileges, relative, participating, optional and
other special rights, and qualifications, limitations and
restrictions thereof, in addition to those set forth in the
Restated Certificate of Incorporation, as amended, of the
Corporation, are hereby fixed as follows:
$4.30 Cumulative Preferred Stock
(1) Number of Shares and Designation. 836,585 shares
of Preferred Stock, without par value of the Corporation are
hereby constituted as a series of Preferred Stock, without
par value and designated as $4.30 Cumulative Preferred Stock
(hereinafter called the "$4.30 Preferred Stock").
(2) Dividends. The holders of shares of the $4.30
Preferred Stock shall be entitled to receive cash dividends,
when and as declared by the Board of Directors of the
Corporation, out of assets legally available for such
purpose, at the rate determined as provided below. Such
dividends shall be cumulative from the date of original
issue of such shares and shall be payable semi-annually in
arrears, when and as declared by the Board of Directors of
the Corporation, on the last day of March and September in
each year to holders of record, in each case, on the last
business day of the calendar month next preceding the
dividend payment date (and the semi-annual dividend periods
shall commence on the first day following each dividend
payment date and end on the next succeeding dividend payment
date).
Dividends on the $4.30 Preferred Stock for semi-annual
dividend periods will be payable at the rate of $4.30 per
annum from the date of original issue. The amount of
dividends payable on each share of $4.30 Preferred Stock for
each full semi-annual dividend period shall be computed by
dividing the dividend rate by two and applying the dividend
rate to each outstanding share.
(3) Liquidation Preference. The amount to which shares
of $4.30 Preferred Stock shall be entitled upon liquidation,
dissolution, or winding up of the Corporation, whether
voluntary or involuntary, shall be $100.00 per share, plus
an amount equal to all accrued and unpaid dividends, if any,
thereon to the date fixed for payment, whether or not earned
or declared, and no more. Such amount to be set apart from
holders or paid to holders out of the assets of the
Corporation before any distribution is made to or set apart
for holders of the Corporation's Common Stock.
(4) Redemption. (a) The shares of the $4.30 Preferred
Stock shall be subject to redemption in whole or in part at
the option of the Corporation, by vote of the Board of
Directors, at $100.00 per share, plus an amount equal to all
accrued and unpaid dividends, if any, thereon to the date
fixed for redemption, whether or not earned or declared, and
no more. If less than all of the outstanding shares of
$4.30 Preferred Stock are to be redeemed, the shares to be
redeemed shall be determined by lot in such usual manner and
subject to such regulations as the Board of Directors in its
sole discretion shall prescribe.
(b) At least 30 days prior to the date fixed for
the redemption of shares of the $4.30 Preferred Stock, a
written notice shall be mailed to each holder of record of
shares of $4.30 Preferred Stock to be redeemed in a postage
prepaid envelope addressed to such holder at his post office
address as shown on the records of the Corporation,
notifying such holder of the election of the Corporation to
redeem such shares stating the date fixed for redemption
thereof (the "redemption date"), and calling upon such
holder to surrender to the Corporation on the redemption
date at the place designated in such notice his certificate
or certificates representing the number of shares specified
in such notice of redemption.
(c) On or after the redemption date each holder
of shares of $4.30 Preferred Stock to be redeemed shall
present and surrender his certificate or certificates for
such shares to the Corporation at the place designated in
such notice and thereupon the redemption price of such
shares shall be paid to or on the order of the person whose
name appears on such certificate or certificates as the
owner thereof and each surrendered certificate shall be
canceled.
(d) In case less than all the shares represented
by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
(e) From and after the redemption date (unless
default shall be made by the Corporation in payment of the
redemption price) all dividends on the shares of $4.30
Preferred Stock designated for redemption in such notice
shall cease to accrue, and all rights of the holders thereof
as stockholders of the Corporation, except the right to
receive the redemption price thereof upon the surrender of
certificates representing the same, shall cease and
determine and such shares shall not thereafter be
transferred (except with the consent of the Corporation) on
the books of the Corporation, and such shares shall not be
deemed to be outstanding for any purpose whatsoever.
(f) At its election, prior to the redemption
date, the Corporation may deposit the redemption price of
the shares of $4.30 Preferred Stock called for redemption in
trust for the holders thereof with a bank or trust company
(having a capital and surplus of not less than $1,000,000)
in the City of Chicago, Illinois or in the Borough of
Manhattan, City and State of New York or in any other city
in which the Corporation at the time shall maintain a
transfer agency with respect to such stock, in which case
such redemption notice shall state the date of such deposit,
shall specify the office of such bank or trust company as
the place of payment of the redemption price, and shall call
upon such holders to surrender the certificates representing
such shares at such place on or after the date fixed in such
redemption notice (which shall not be later than the
redemption date) against payment of the redemption price.
From and after the making of such deposit, the shares of
$4.30 Preferred Stock so designated for redemption shall not
be deemed to be outstanding for any purpose whatsoever, and
the rights of the holders of such shares shall be limited to
the right to receive the redemption price of such shares
without interest, upon surrender of the certificates
representing the same to the Corporation at said office of
such bank or trust company.
(g) Any moneys so deposited which shall remain
unclaimed by the holders of such $4.30 Preferred Stock at
the end of six years after the redemption date shall be
returned by such bank or trust company to the Corporation
after which the holders of the $4.30 Preferred Stock shall
have no further interest in such moneys.
(5) Shares to be Retired. All shares of $4.30
Preferred Stock purchased or redeemed by the Corporation
shall be retired and cancelled and shall be restored to the
status of authorized but unissued shares of the class of
Preferred Stock without par value, without designation as to
series, and may thereafter be issued, but not as shares of
$4.30 Preferred Stock.
(6) Conversion or Exchange. The holders of shares of
$4.30 Preferred Stock shall not have any rights herein to
convert such shares into or exchange such shares for shares
of any other series of any class or classes of capital stock
(or any other security) of the Corporation.
(7) Voting Rights. (a) Each holder of $4.30
Preferred Stock shall be entitled to one vote for each share
held on each matter submitted to a vote of stockholders of
the Corporation and, except as otherwise herein or by law
provided, the $4.30 Preferred Stock, the Common Stock of the
Corporation, and any other capital stock of the Corporation
at the time entitled thereto, shall vote together as one
class, except that while the holders of $4.30 Preferred
Stock, voting as a class, are entitled to elect two
directors as hereinafter provided, they shall not be
entitled to participate with the Common Stock (or any other
capital stock as stated above) in the election of any other
directors.
(b) In case at any time three or more full semi-
annual dividends (whether consecutive or not) on the $4.30
Preferred Stock shall be in arrears, then during the period
(the "Class Voting Period") commencing with such time and
ending with the time when all arrears in dividends on the
$4.30 Preferred Stock shall have been paid and the full
dividend on the $4.30 Preferred Stock for the then current
semi-annual dividend period shall have been declared and
paid or set aside for payment, at any meeting of the
stockholders of the Corporation held for the election of
directors during the Class Voting Period, the holders of
$4.30 Preferred Stock represented in person or by proxy at
said meeting shall be entitled, as a class, to the exclusion
of the holders of all other classes of stock of the
Corporation, to elect two directors of the Corporation, each
share of $4.30 Preferred Stock entitling the holder thereof
to one vote.
(c) Any director who shall have been elected by
holders of $4.30 Preferred Stock or by any director so
elected as herein contemplated, may be removed at any time
during a Class Voting Period, either for or without cause,
by, and only by, the affirmative votes of the holders of
record of a majority of the outstanding shares of $4.30
Preferred Stock given at a special meeting of such
stockholders called for the purpose, and any vacancy thereby
created may be filled during such Class Voting Period by the
holders of $4.30 Preferred Stock present in person or
represented by proxy at such meeting. Any director to be
elected by the Board of Directors of the Corporation to
replace a director elected by holders of $4.30 Preferred
Stock or elected by a director as provided for in this
sentence shall be elected by the remaining director
previously elected by the holders of $4.30 Preferred Stock.
At the end of the Class Voting Period the holders of $4.30
Preferred Stock shall be automatically divested of all
voting power vested in them under this resolution but
subject always to the subsequent vesting hereunder of voting
power in the holders of $4.30 Preferred Stock in the event
of any similar default or defaults thereafter.
(8) Ranking. The $4.30 Preferred Stock shall rank on a
parity with the Corporation's 8-1/4% Cumulative Preferred
Stock, Series 1992-A, 7.35% Cumulative Preferred Stock,
Series 1993-A, $4.50 Cumulative Preferred Stock and 5%
Cumulative Preferred Stock as to payment of dividends and
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and shall rank
prior to the Corporation's Common Stock and Series A Junior
Participating Preferred Stock as to payment of dividends and
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and prior to
any other series of stock authorized to be issued by the
Corporation which ranks junior to the Corporation's 8-1/4%
Cumulative Preferred Stock, Series 1992-A, 7.35% Cumulative
Preferred Stock, Series 1993-A, $4.50 Cumulative Preferred
Stock and 5% Cumulative Preferred Stock as to payment of
dividends and distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary.
(9) Amendments. While any $4.30 Preferred Stock is
outstanding, the Corporation shall not alter or change the
preferences, special rights or powers of the $4.30 Preferred
Stock so as to adversely affect the $4.30 Preferred Stock without
the affirmative consent (given in writing or at a meeting duly
called for the purpose) of the holders of at least two-thirds
(2/3rds) of the aggregate number of shares of $4.30 Preferred
Stock then outstanding.
"FURTHER RESOLVED, that the Chairman, President, or any Vice
President, together with the Secretary or an Assistant Secretary,
of the Corporation are hereby authorized and directed to execute,
acknowledge, file with the Delaware Secretary of State, and
record in New Castle County, Delaware, a Certificate of
Designation, Preferences and Rights of the $4.30 Preferred Stock
when such officers of the Corporation shall in their sole
discretion consider such action to be necessary or advisable; and
"FURTHER RESOLVED, that the form of certificates for the
$4.30 Preferred Stock which form of certificate has been
presented to this meeting, and a copy of which the Secretary or
an Assistant Secretary is instructed to mark for identification
and file with the corporate records, is hereby approved, the
facsimile signatures of the officers of the Corporation contained
on the certificates are adopted as the valid and binding
signatures of the officers so signing, and the proper corporate
officers are authorized on behalf of and under the corporate seal
of the Corporation to execute and deliver the said certificates
in substantially the form presented with such changes therein as
may be approved by the officers executing the same, execution
thereof to be conclusive evidence of such approval; and
"FURTHER RESOLVED, that application be made to the New York
Stock Exchange, Inc. (the "Exchange") for listing of the $4.30
Preferred Stock upon official notice of issuance of the $4.30
Preferred Stock and that Messrs. J. W. Blenke, P. R. Shay and P.
D. Schwartz or any counsel designated by any of the foregoing
individuals, be and each hereby are authorized and designated by
the Corporation to appear before the Exchange in furtherance of
the listing of said $4.30 Preferred Stock, including authority to
file or make any such changes in the said applications or any
agreements relevant thereto and to execute any and all documents
on behalf of the Corporation as may be necessary or desirable to
conform with the requirements for listing; and
"FURTHER RESOLVED, that the officers of the Corporation, or
any counsel designated thereby, are hereby severally authorized
to execute on behalf of the Corporation and file with appropriate
authorities such applications, statements, certificates,
consents, and other documents as may be necessary for the
registration or qualification of the $4.30 Preferred Stock under
the securities laws of the states of the United States in which
such securities are required to be registered or qualified, and
any actions having previously been taken are hereby authorized,
approved and ratified; and
"FURTHER RESOLVED, that Harris Trust and Savings Bank
("Harris Bank") is hereby appointed as transfer agent and
registrar for the $4.30 Preferred Stock upon such terms as the
officers of the Corporation consider necessary or advisable; and
"FURTHER RESOLVED, that for the purpose of the original
issue of the shares of $4.30 Preferred Stock, Harris Bank, as the
Corporation's transfer agent and registrar, is authorized and
directed to issue and is authorized to register and deliver
certificates representing an aggregate of up to 836,585 shares of
$4.30 Preferred Stock of the Corporation all in accordance with
instructions from the officers of the Corporation; and
"FURTHER RESOLVED, that the $4.30 Preferred Stock shall be
without par value; and
"FURTHER RESOLVED, that the officers of the Corporation are
hereby authorized and directed on behalf of the Corporation to
take and cause to be taken all action necessary or desirable to
carry out the terms, implications and intent of these
resolutions, and to consummate the transactions contemplated
therein."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be signed
by David A. Schoenholz, Executive Vice President and Chief
Financial Officer of the Corporation, and attested by Patrick D.
Schwartz, Associate General Counsel and Assistant Secretary, this
30th day of June, 1998.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ David A. Schoenholz
-------------------------
David A. Schoenholz
Executive Vice President-
Chief Financial Officer
Attest:
/s/ Patrick D. Schwartz
- -----------------------------
Patrick D. Schwartz
Associate General Counsel and
Assistant Secretary
U:\LAW\EDGAR\IRCOI.WP
HOUSEHOLD INTERNATIONAL, INC.
Bylaws
______________
(As in effect June 4, 1998)
<PAGE>
_________________________________________________________________
BYLAWS OF
HOUSEHOLD INTERNATIONAL, INC.
_________________________________________________________________
ARTICLE I.
DEFINITIONS, PLACES OF MEETINGS.
SECTION l. Definitions. When used herein, "Board" shall
mean the Board of Directors of this Corporation, and "Chairman"
shall mean Chairman of the Board of Directors.
SECTION 2. Places of Meetings of Stockholders and
Directors. Unless the Board shall fix another place for the
holding of the meeting, meetings of stockholders and of the Board
shall be held at the Corporation's International Headquarters,
Prospect Heights, Cook County, Illinois, or at such other place
in Cook County specified by the person or persons calling the
meeting.
ARTICLE II.
STOCKHOLDERS MEETINGS.
SECTION l. Annual Meeting of Stockholders. The annual
meeting of stockholders shall be held on such date and at such
time as is fixed by the Board. Any previously scheduled annual
meeting of stockholders may be postponed by resolution of the
Board of Directors upon public announcement given prior to the
date previously scheduled for such annual meeting of
stockholders.
SECTION 2. Special Meetings.
CALL. Special meetings of the stockholders may be
called at any time by the President, Chief Executive Officer or a
majority of the Board of Directors. Any previously scheduled
special meeting of stockholders may be postponed by resolution of
the Board of Directors upon public announcement given prior to
the date previously scheduled for such special meeting of
stockholders.
REQUISITES OF CALL. A call for a special meeting of
stockholders shall be in writing, filed with the Secretary, and
shall specify the time and place of holding such meeting and the
purpose or purposes for which it is called.
SECTION 3. Notice of Meetings. Written notice of a meeting
of stockholders setting forth the place, date, and hour of the
meeting and the purpose or purposes for which the meeting is
called shall be mailed not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to
vote at the meeting.
SECTION 4. Quorum and Adjournments. At any meeting of
stockholders, the holders of a majority of all the outstanding
shares entitled to vote, present in person or by proxy, shall
constitute a quorum for the transaction of business, and a
majority of such quorum shall prevail except as otherwise
required by law, the Certificate of Incorporation, or the bylaws.
If the stockholders necessary for a quorum shall fail to be
present at the time and place fixed for any meeting, the holders
of a majority of the shares entitled to vote who are present in
person or by proxy may adjourn the meeting from time to time,
until a quorum is present, provided, however, that any
stockholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time by the Chairman of
the meeting. At any adjourned meeting, any business may be
transacted which might have been transacted at the original
meeting.
SECTION 5. Inspectors of Election. The Corporation shall,
in advance of any meeting of stockholders, appoint one or more
inspectors to act at the meeting and make a written report
thereof. The Corporation may designate one or more persons as
alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at a meeting of
stockholders, the person presiding at the meeting shall appoint
one or more inspectors to act at the meeting. Each inspector,
before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his ability.
The inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the
shares represented at a meeting and the validity of proxies and
ballots, (iii) count all votes and ballots, (iv) determine and
retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (v)
certify their determination of the number of shares represented
at the meeting, and their count of all votes and ballots. The
inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the
inspectors.
SECTION 6. List of Stockholders. The Secretary shall
prepare, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the
name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be
produced and kept at the time and place of the meeting during the
whole time thereof and may be inspected by any stockholder
present.
SECTION 7. Polls. The date and time of the opening and the
closing of the polls for each matter upon which the stockholders
will vote at a meeting shall be announced at the meeting. No
ballot, proxies or votes, nor any revocations thereof or changes
thereto, shall be accepted by the inspectors after the closing of
the polls unless the Court of Chancery of the State of Delaware
upon application by a stockholder shall determine otherwise.
SECTION 8. Nomination and Stockholder Business.
(A) Annual Meetings of Stockholders. (1) Nominations of
persons for election to the Board of Directors of the Corporation
and the proposal of business to be considered by the stockholders
may be made (a) by or at the direction of the Board of Directors
pursuant to the Corporation's proxy statement or notice of
meeting or at the annual meeting of stockholders, or (b) other
than as permitted by Rule 14a-8 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), by any stockholder of the
Corporation at the annual meeting of stockholders, provided such
stockholder is entitled to vote at the meeting, has complied with
the notice and the other procedures set forth in this Section 8,
and was a stockholder of record at the time of giving of notice
provided for in this Section 8.
(2) For proposed nominees or other business to be
properly brought before an annual meeting by a stockholder
pursuant to clause (b) of paragraph (A)(1) of this Section 8, the
stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not less than 120 days nor
more than 150 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the
event that the date of the annual meeting is advanced by more
than 30 days or delayed by more than 60 days from such
anniversary date, notice by the stockholder to be timely must be
so delivered not earlier than the 150th day prior to such annual
meeting and not later than the close of business on the later of
the 120th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of
such meeting is first made. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to
nominate at the annual meeting for election or reelection as a
director all information relating to such person that is required
to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including such person's
written consent to serving as a director if elected). Any
individual proposed to be nominated to the Board of Directors by
a stockholder pursuant to this procedure shall only become a
nominee for election to the Board of Directors if the stockholder
who has provided the notice, or his proxy, presents such
individual as a nominee at the annual meeting; (b) as to any
other business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on
whose behalf the proposal is made; and (c) as to the stockholder
giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and
address of such stockholder, as it appears on the Corporation's
books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation which are owned beneficially and of
record by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (A)(2) of this Section 8 to the contrary, in the event
that the number of directors to be elected to the Board of
Directors of the Corporation is increased and there is no public
announcement naming all of the nominees for Director or
specifying the size of the increased Board of Directors made by
the Corporation at least 70 days prior to the first anniversary
of the preceding year's annual meeting, a stockholder's notice
required by this Section 8 shall also be considered timely, but
only with respect to proposed nominees for any new positions
created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the Corporation
not later than the close of business on the 10th day following
the day on which such public announcement is first made by the
Corporation.
(B) Special Meetings of Stockholders. Only such business
shall be conducted at a special meeting of stockholders as shall
have been brought before the meeting pursuant to the
Corporation's proxy statement or notice of meeting. Nominations
of persons for election to the Board of Directors at a special
meeting of stockholders at which directors are to be elected may
be made (a) by or at the direction of the Board of Directors
pursuant to the Corporation's proxy statement or notice of
meeting or at the meeting, or (b) at the meeting by any
stockholder of the Corporation who is a stockholder of record at
the time of giving of notice provided for in this paragraph (B)
of Section 8, who shall be entitled to vote at the meeting and
who complies with the procedures set forth in clause (a) of
paragraph (A)(2) of of this Section 8. Stockholder's notice
required by this paragraph (B) of this Section 8 shall be
delivered to the Secretary at the principal executive offices of
the Corporation not earlier than the 150th day prior to such
special meeting and not later than the close of business on the
later of the 120th day prior to such special meeting or the 10th
day following the day on which public announcement is first made
of the date of the special meeting and of the nominees proposed
by the Board of Directors to be elected at such meeting.
(C) General. (1) Only such persons who are nominated in
accordance with the procedures set forth in this Section 8 shall
be eligible to serve as directors and only such business shall be
conducted at a meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in
this Section 8. The Chairman of the meeting shall have the power
and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance
with the procedures set forth in this Section 8 and, if any
proposed nomination or business is not in compliance with this
Section 8, to declare that such defective nomination or proposal
shall be disregarded.
(2) For purposes of this Article II, "public
announcement" shall mean disclosure in a press release reported
by the Dow Jones News Service, Associated Press or comparable
national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant
to Sections 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding anything set forth herein to the
contrary, any stockholder may submit a notice delivered to the
Secretary at the principal executive offices of the Corporation
containing names of individuals for the Board of Directors to
consider as potential nominees to the Board of Directors at the
next meeting of stockholders called for the purpose of electing
directors. In connection with such notice, the stockholder shall
provide the information required in clause (a) of paragraph
(A)(2) of this Section 8, including, the written consent of each
individual to be named in the Corporation's proxy statement or
notice of meeting if the Board of Directors, in its sole
discretion, determines to nominate such individual. Any such
notice provided by a stockholder must be timely received by the
Corporation to enable the Board of Directors to review the
qualifications of any person to be considered for a nomination.
For purposes hereof, the notice shall be deemed timely if it is
delivered to the Secretary of the Corporation within the time
periods required for notices of stockholder proposals as set
forth in Rule 14a-8 of the Exchange Act.
(4) Nothing in this Section 8 shall be deemed to
affect any rights of stockholders to request inclusion of
proposals in the Corporation's proxy statement or notice of
meeting pursuant to Rule 14a-8 of the Exchange Act.
(5) Notwithstanding the foregoing provisions of this
Section 8, a stockholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this
Section 8.
ARTICLE III.
BOARD OF DIRECTORS.
SECTION l. General Powers. The business and affairs of
this Corporation shall be managed under the direction of the
Board.
NUMBER. The number of directors shall be fixed from
time to time by resolution of the Board.
TENURE. The directors shall be elected at the annual
meeting of stockholders. Each director shall hold office until
his successor is elected and qualified or until his earlier
resignation or removal.
VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office
though less than a quorum.
SECTION 2. Annual Meetings of the Board. The annual
meeting of the Board shall be held following the annual meeting
of stockholders and shall be a meeting of the directors elected
at such meeting of stockholders. No notice shall be required.
SECTION 3. Regular Meetings of the Board. Regular meetings
of the Board shall be held at such times and places as the Board
may fix. No notice shall be required.
SECTION 4. Special Meetings of the Board. Special meetings
of the Board shall be held whenever called by the President,
Chief Executive Officer, or any four or more directors. At least
twenty-four hours written or oral notice of each special meeting
shall be given to each director. If mailed, notice must be
deposited in the United States mail at least seventy-two hours
before the meeting.
SECTION 5. Quorum. A majority of the members of the Board
if the total number is odd or one-half thereof if the total
number is even shall constitute a quorum for the transaction of
business, but if at any meeting of the Board there is less than a
quorum the majority of those present may adjourn the meeting from
time to time until a quorum is present. At any such adjourned
meeting, a quorum being present, any business may be transacted
which might have been transacted at the original meeting.
Except as otherwise provided by law, the Certificate of
Incorporation, or the bylaws, all actions of the Board shall be
decided by vote of a majority of those present.
SECTION 6. Committees. The Board may, by resolution passed
by a majority of the entire Board, designate one or more
committees of directors which to the extent provided in the
resolution shall have and may exercise powers and authority of
the Board in the management of the business and affairs of the
Corporation.
SECTION 7. Action Without a Meeting. Any action required
or permitted to be taken at any meeting of the Board or of any
committee thereof may be taken without a meeting if all the
members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
ARTICLE IV.
OFFICERS.
SECTION l. Officers. The General Officers of the
Corporation shall be a Chairman of the Board, a Chief Executive
Officer, a President, such number of Executive Vice Presidents,
Group Executives or Senior Vice Presidents as may be determined
by the Board, a Secretary and a Treasurer. The Chairman and
President shall be directors.
The Board may from time to time designate, employ, or
appoint such other officers and assistant officers, agents,
employees, counsel, and attorneys at law or in fact as it shall
deem desirable for such periods and on such terms as it may deem
advisable, and such persons shall have such titles, only such
power and authority, and perform such duties as the Board may
determine.
SECTION 2. Duties of Chairman of the Board. The Chairman
shall sign and issue, jointly with the President, all reports to
the stockholders and shall preside at all meetings of
stockholders and of the Board. He shall, in general, perform
duties incident to the office of Chairman as may be prescribed by
the Board.
SECTION 3. Duties of Chief Executive Officer. At each
annual meeting of the Board, or other meeting at which General
Officers are or may be elected, the Board shall designate the
Chairman or the President as the Chief Executive Officer of the
Corporation. The Chief Executive Officer shall have general
authority over all matters relating to the business and affairs
of the Corporation subject to the control and direction of the
Board. In the absence or inability of the Chief Executive
Officer to act, the Chairman of the Executive Committee of the
Board shall perform the duties of the Chief Executive Officer.
SECTION 4. Duties of President. The President shall, in
general, perform all duties incident to the office of President
and shall perform such other duties as may be prescribed by the
Board. In the absence or inability of the Chairman to act, the
President shall perform the duties of the Chairman."
SECTION 5. Duties of Executive Vice President, Group
Executives and Senior Vice Presidents. Each Executive Vice
President, Group Executive and Senior Vice President shall have
such powers and perform such duties as may be prescribed by the
Chief Executive Officer of the Corporation or the Board. The
order of seniority, if any, among the Executive Vice Presidents,
Group Executives and Senior Vice Presidents shall be as
designated from time to time by the Chief Executive Officer of
the Corporation. In the absence or inability of the Chairman and
the President to act, the senior of the Executive Vice
Presidents, Group Executives and Senior Vice Presidents, if one
has been so designated, shall perform the duties of the
President. In the absence of any such designation, the director
who is the acting Chairman of the Executive Committee of the
Board of Directors shall assume the duties of the President for
such time period as required.
SECTION 6. Duties of Secretary. The Secretary shall record
the proceedings of meetings of the stockholders and directors,
give notices of meetings, and shall, in general, perform all
duties incident to the office of Secretary and such other duties
as may be prescribed by the Board.
SECTION 7. Duties of Treasurer. The Treasurer shall have
custody of all funds, securities, evidences of indebtedness, and
other similar property of the Corporation, and shall, in general,
perform all duties incident to the office of Treasurer and such
other duties as may be prescribed by the Board."
ARTICLE V.
MISCELLANEOUS PROVISIONS.
SECTION l. Waiver of Notice. Whenever notice is required
to be given, a written waiver thereof signed by the person
entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully
called or convened.
SECTION 2. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board may fix, in
advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than
sixty days prior to any other action; except that the
establishment of a record date for determination of stockholders
entitled to express consent to corporate action in writing
without a meeting shall be established pursuant to Article VII of
the bylaws.
ARTICLE VI.
EMERGENCY BYLAWS.
SECTION l. When Operative. Notwithstanding any different
provision in the preceding Articles of the bylaws or in the
Certificate of Incorporation, the emergency bylaws provided in
this Article VI shall be operative during any emergency resulting
from an attack on the United States or on a locality in which the
Corporation conducts its business or customarily holds meetings
of its Board or its stockholders, or during any nuclear or atomic
disaster, or during the existence of any catastrophe, or other
similar emergency condition, as a result of which a quorum of the
Board or a standing committee thereof cannot readily be convened
for action.
SECTION 2. Board Meetings. During any such emergency, a
meeting of the Board may be called by any director or, if
necessary, by any officer who is not a director. The meeting
shall be held at such time and place, within or without Cook
County, Illinois, specified by the person calling the meeting and
in the notice of the meeting which shall be given to such of the
directors as it may be feasible to reach at the time and by such
means as may be feasible at the time, including publication or
radio. Such advance notice shall be given as, in the judgment of
the person calling the meeting, circumstances permit. Two
directors shall constitute a quorum for the transaction of
business. To the extent required to constitute a quorum at the
meeting, the officers present shall be deemed, in order of rank
and within the same rank in order of seniority, directors for the
meeting.
SECTION 3. Amendments to Emergency Bylaws. These emergency
bylaws may be amended, either before or during any emergency, to
make any further or different provision that may be practical and
necessary for the circumstances of the emergency.
ARTICLE VII.
CONSENTS TO CORPORATE ACTION.
SECTION 1. Action by Written Consent. Unless otherwise
provided in the Certificate of Incorporation, any action which is
required to be or may be taken at any annual or special meeting
of stockholders of the Corporation, subject to the provisions of
Sections (2) and (3) of this Article VII, may be taken without a
meeting, without prior notice and without a vote if a consent in
writing, setting forth the action so taken, shall have been
signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize
or to take such action at a meeting at which all shares entitled
to vote thereon were present and voted; provided, however, that
prompt notice of the taking of the corporate action without a
meeting and by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.
SECTION 2. Determination of Record Date for Action by
Written Consent. The record date for determining stockholders
entitled to express consent to corporate action in writing
without a meeting shall be fixed by the Board of Directors of the
Corporation. Any stockholder seeking to have the stockholders
authorize or take corporate action by written consent without a
meeting shall, by written notice to the Secretary, request the
Board of Directors to fix a record date. Upon receipt of such a
request, the Secretary shall, as promptly as practicable, call a
special meeting of the Board of Directors to be held as promptly
as practicable. At such meeting, the Board of Directors shall
fix a record date as provided in Section 213(b) (or its successor
provision) of the Delaware General Corporation Law; that record
date, however, shall not be more than 10 days after the date upon
which the resolution fixing the record date is adopted by the
Board nor more than 15 days from the date of the receipt of the
stockholder's request. Notice of the record date shall be
published in accordance with the rules and policies of any stock
exchange on which securities of the Corporation are then listed.
Should the Board fail to fix a record date as provided for in
this Section 2, then the record date shall be the day on which
the first written consent is duly delivered pursuant to Section
213(b) (or its successor provision) of the Delaware General
Corporation Law, or, if prior action is required by the Board
with respect to such matter, the record date shall be at the
close of business on the day on which the Board adopts the
resolution taking such action.
SECTION 3. Procedures for Written Consent. In the event of
the delivery to the Corporation of a written consent or consents
purporting to represent the requisite voting power to authorize
or take corporate action and/or related revocations, the
Secretary of the Corporation shall provide for the safekeeping of
such consents and revocations and shall promptly engage
nationally recognized independent inspectors of elections for the
purpose of promptly performing a ministerial review of the
validity of the consents and revocations. No action by written
consent without a meeting shall be effective until such
inspectors have completed their review, determined that the
requisite number of valid and unrevoked consents has been
obtained to authorize or take the action specified in the
consents, and certified such determination for entry in the
records of the Corporation kept for the purpose of recording the
proceedings of meetings of stockholders.
U:\LAW\EDGAR\IBYLAWS.AS1
<PAGE> 1
HOUSEHOLD INTERNATIONAL
1998 KEY EXECUTIVE BONUS PLAN
<PAGE>
<PAGE> 2
HOUSEHOLD INTERNATIONAL
-----------------------
1998 KEY EXECUTIVE BONUS PLAN
-----------------------------
I. CONCEPT
-------
The Household International 1998 Key Executive Bonus Plan
(the "Plan") is a short-term incentive plan that is intended
to comply with Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), and is designed to award
"performance based" compensation as determined in accordance
with that provision of the Code. Awards will be based solely
on the return on equity ("ROE") of Household International,
Inc. and its consolidated subsidiaries (the "Company")
provided, however, that the Compensation Committee of the
Board of Directors shall have the discretion to reduce any
participant's award based on (1) other financial performance
criteria of the Company or of certain subsidiaries or
business units of the Company; and (2) on an evaluation of
each participant's individual performance. Performance
goals and award opportunities will be determined prior to
the beginning of each Plan period (which will generally be a
calendar year), or at a later date as allowed by Internal
Revenue Service ("IRS") notice or regulation, by the
Compensation Committee and will be communicated to each Plan
participant.
II. PARTICIPATION
-------------
Participation in the Plan will be restricted to the key
executives of Household International, Inc. whose positions
are set forth on Attachment A hereto (which exhibit may be
changed at any time by the Compensation Committee).
Participants will share a bonus pool calculated as a
percentage of the net income of the Company as reported in
the audited financial statements of the Company, which net
income shall be calculated without regard to the bonuses to
be paid hereunder. The Compensation Committee will
establish the maximum bonus opportunity available to such
participant, stated as a percentage of the entire bonus
pool. The sum of the individual percentages of the pool
assigned to each participant will not exceed 100 percent.
Any changes in the key executives participating in the Plan
will be made by the Compensation Committee.
III. LEVEL OF AWARDS
---------------
The bonus pool will equal 5% of the portion of the Company's
net income that exceeds the amount of net income that would
have resulted if a 12% ROE had been achieved. Thus, unless
actual ROE exceeds 12%, the amount of the bonus pool will be
zero. For purposes of this Plan, the Company's net income
means the consolidated net income of the Company pursuant to
its audited financial statements. ROE shall be calculated
by taking the amount of net income determined as above, and
dividing it by the average common shareholders' equity for
the year, excluding any adjustments related to investment
securities under FASB 115. Prior to each Plan period (or at
a later date as allowed by IRS notice or regulation), the
Compensation Committee of the Board of Directors may
establish a dollar cap for the bonus pool. In addition, and
within that same timeframe, the Compensation Committee will
establish the percentage of the bonus pool that will be
allocated to each participant. However, no more than 50% of
the bonus pool for any Plan year may be allocated to any one
participant, and the sum of the bonus pool percentages which
are allocated to all participants shall not exceed 100%.
<PAGE>
<PAGE> 3
Prior to each Plan period (or at a later date as allowed by
IRS notice or regulation), the Chief Executive Officer
("CEO") of the Company will recommend for approval by the
Compensation Committee the minimum ROE objective that must
be met, in order to pay bonuses under this Plan to any
participant at that participant's allocated bonus pool
percentage level. This minimum ROE objective will not be
less than 12%.
If the Compensation Committee approves the aforementioned
minimum ROE objective, this objective shall be deemed to be
established for the applicable participant for the
applicable Plan period and shall be deemed to be part of
this Plan for said Plan period. Subject to the Compensation
Committee's negative discretion described in the next
paragraph, attainment of the minimum ROE objective will
entitle the participant to his/her allocated percentage of
the bonus pool.
The CEO will also recommend for approval by the Compensation
Committee certain other financial performance indicators for
the Company or one or more subsidiaries or business units
and/or individual goals, which may include specific targets
for financial performance goals, which the Compensation
Committee may, in its sole discretion, take into account
solely for purposes of determining whether it should reduce
or eliminate the bonus otherwise due to a participant by
virtue of the Company having met the participant's minimum
ROE objective. The exercise by the Compensation Committee
of this negative discretion with respect to one participant
may not result in an increase in the amount of bonus payable
to another participant.
IV. DETERMINATION OF AWARDS
-----------------------
A. Approval of Goals/Awards
------------------------
The Compensation Committee of the Board of
Directors must approve the minimum ROE objective prior
to the beginning of any Plan period for all
participants in the Plan (or at a later date as allowed
by IRS notice or regulation). This goal will be the
sole criteria for measuring performance and determining
the bonus for that period. The Compensation Committee
will solely determine whether the minimum ROE objective
has been satisfied for all participants in the Plan, as
well as the total amount of the bonus pool, and prior
to payment of any bonus hereunder will certify in
writing as to the satisfaction of the minimum ROE
objective and the amount of the bonus pool to the Board
of Directors of the Company.
Notwithstanding anything contained herein to the
contrary, the Compensation Committee may, however, at
its sole discretion, reduce bonus awards in light of
other financial performance indicators, individual
performance of the participant, overall business
conditions or other circumstances.
V. PAYMENT OF AWARDS
-----------------
Awards will be paid as soon as practicable at the
end of the Plan period, subject to all required tax
withholdings. Awards may be paid in cash, shares of
the Company's common stock, or some combination thereof
at the sole discretion of the Compensation Committee.
<PAGE>
<PAGE> 4
VI. ADMINISTRATIVE MATTERS
----------------------
A. Position Changes
----------------
Normally awards, provided the goals have been met,
will be pro-rated according to the portion of the Plan
period that an incumbent is eligible for the bonus.
However, the Compensation Committee shall have the
right to review each individual case and take such
action as it deems appropriate consistent with the
intent and purposes of this Plan.
B. Effect on Benefits
------------------
Payments made under this Plan shall be included in
an employee's income for purposes of determining
pension benefits, life insurance, long-term disability,
and participation in the Company's TRIP plan.
C. Termination of Employment
-------------------------
Normally awards, provided the goals therefore have
been met, will be pro-rated in the case of death,
permanent and total disability, or retirement under one
of the Company's pension plans during a Plan period.
If a participant terminates employment for any other
reason prior to the last working day of a Plan period,
he will normally forfeit any right to an award for the
Plan period. Notwithstanding the foregoing, however,
the Compensation Committee shall have the right to
review each individual case and take such action as it
deems appropriate consistent with the intent and
purposes of this Plan.
D. Administration of the Plan
--------------------------
The Plan shall be administered solely by the
Compensation Committee. Any and all determinations
made by the Compensation Committee in connection with
this Plan shall be final and binding on the Company and
each participant in the Plan. Neither eligible
participation in the Plan, nor award payments
thereunder shall guarantee an employee any right to
continued employment. The Plan does not give any
employee a right or claim to an award under the Plan.
The Compensation Committee reserves the right to change
or discontinue the Plan at any time; provided, however,
that any new factors used to establish a goal, other
than ROE, or any change in the formula used to
calculate the amount of the bonus pool, must be
approved by the stockholders of the Company.
E. Stockholder Approval
--------------------
The Plan shall be submitted to the stockholders of
the Company at the 1998 annual meeting of stockholders.
If the Plan is not approved by the stockholders by
December 31, 1998, then this Plan shall be deemed to be
null and void and any awards or grants made pursuant
hereto shall automatically terminate. Thereafter, this
Plan shall again be submitted to the stockholders for
approval every fifth (5th) year or as may be required
by the applicable provisions of the Code.
H:\OS\BOARD\98KEBP.WP (as approved by stockholders on 5/13/98)
<PAGE>
<PAGE> 5
Attachment A
------------
1998 KEY EXECUTIVE BONUS PLAN POSITIONS
Chief Executive Officer
Chief Operating Officer
Group Executive
Executive Vice President
Senior Vice President
EXHIBIT 12
----------
HOUSEHOLD INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
All dollar amounts are stated in millions.
Six months ended June 30 1998 1997
- ------------------------------------------------------------------
<S> <C> <C>
Net income (loss) $ (143.8) $ 470.8
Income taxes 87.4 255.8
-------- --------
Income (loss) before income taxes (56.4) 726.6
-------- --------
Fixed charges:
Interest expense <F1> 1,238.6 1,164.4
Interest portion of rentals <F2> 28.6 26.3
-------- --------
Total fixed charges 1,267.2 1,190.7
-------- --------
Total earnings as defined $1,210.8 $1,917.3
======== ========
Ratio of earnings to fixed charges <F4> .96 1.61
======== ========
Ratio of earnings to fixed charges, excluding
merger and integration related costs 1.74 -
======== ========
Preferred stock dividends <F3> $ 12.9 $ 13.6
======== ========
Ratio of earnings to combined fixed charges
and preferred stock dividends <F4> .95 1.59
======== ========
Ratio of earnings to combined fixed charges
and preferred stock dividends, excluding
merger and integration related costs 1.73 -
======== ========
<FN>
<F1> For financial statement purposes, interest expense includes
income earned on temporary investment of excess funds,
generally resulting from over-subscriptions of commercial
paper.
<F2> Represents one-third of rentals, which approximates the
portion representing interest.
<F3> Preferred stock dividends are grossed up to their pretax
equivalent based upon an effective tax rate, excluding
merger and integration related costs, of 35.7 percent
for the six months ended June 30, 1998 and 35.2 percent
for the same period in 1997.
<F4> The 1998 ratios have been negatively impacted by the one-time
merger and integration related costs associated with our merger
with Beneficial Corporation. As a result, ratios excluding
these costs have also been presented for comparative purposes.
</FN>
</TABLE>
Exhibit 21
SUBSIDIARIES OF HOUSEHOLD INTERNATIONAL, INC.
- ---------------------------------------------
As of June 30, 1998, the following subsidiaries were directly or
indirectly owned by the Registrant. Certain subsidiaries which
in the aggregate do not constitute significant subsidiaries may
be omitted.
Voting
Stock
Organized Owned
Under By
Names of Subsidiaries Laws of: Parent
- --------------------- --------- ------
Hamilton Investments, Inc. Delaware 100%
Craig-Hallum Corporation Delaware 100%
Household Acquisition Corporation II Delaware 100%
Household Bank, f.s.b U.S. 100%
Beneficial Retail Services Inc. Delaware 100%
Beneficial Service Corporation Delaware 100%
Beneficial Service Corporation of Delaware Delaware 100%
HHTS, Inc. Illinois 100%
Household Bank (SB), N.A. U.S. 100%
Household Affinity Funding Corporation Delaware 100%
Household Service Corporation
of Illinois, Inc. Illinois 100%
Household Insurance Services, Inc. Illinois 100%
Housekey Financial Corporation Illinois 100%
Household Mortgage Services, Inc. Delaware 100%
Household Capital Corporation Delaware 100%
Household Commercial Canada Inc. Canada 100%
Household Finance Corporation Delaware 100%
Beneficial Corporation Delaware 100%
Bencharge Credit Service Holding Company Delaware 100%
Beneficial Credit Services of
Connecticut Inc. Delaware 100%
Beneficial Credit Servivces of
Mississippi Inc. Delaware 100%
Beneficial Credit Services of
South Carolina Inc. Delaware 100%
Beneficial Credit Services Inc. Delaware 100%
Beneficial Arizona Inc. Delaware 100%
Beneficial California Inc. Delaware 100%
Beneficial Colorado Inc. Delaware 100%
Beneficial Commercial Holding Corporation Delaware 100%
Beneficial Commercial Corporation Delaware 100%
Beneficial Leasing Group, Inc. Delaware 100%
Neil Corporation Delaware 100%
Silliman Corporation Delaware 100%
Beneficial Connecticut Inc. Delaware 100%
Beneficial Consumer Discount Company Pennsylvania 100%
Beneficial Delaware Inc. Delaware 100%
Beneficial Discount Co. of Virginia Delaware 100%
Beneficial Finance Co. of West Virginia Delaware 100%
Beneficial Finance Limited England 100%
Beneficial Finance Services, Inc. Kansas 100%
Beneficial Florida Inc. Delaware 100%
Beneficial Mortgage Co. of Florida Delaware 100%
Beneficial Georgia Inc. Delaware 100%
Beneficial Hawaii Inc. Delaware 100%
Beneficial Homeowners Inc. Delaware 100%
Beneficial Idaho Inc. Delaware 100%
Beneficial Illinois Inc. Delaware 100%
Beneficial Income Tax Service
Holding Co., Inc. Delaware 100%
Beneficial Tax Masters Inc. Delaware 100%
Beneficial Indiana Inc. Delaware 100%
Beneficial Insurance Group Holding Company Delaware 100%
Beneficial Investment Co. Delaware 100%
Beneficial New York Inc. New York 100%
Beneficial Homeowner Service Corporation Delaware 100%
Beneficial Iowa Inc. Iowa 100%
Beneficial Kansas Inc. Kansas 100%
Beneficial Kentucky Inc. Delaware 100%
Beneficial Land Company, Inc. New Jersey 100%
Beneficial Loan & Thrift Co. Minnesota 100%
Beneficial Louisana Inc. Delaware 100%
Beneficial Maine Inc. Delaware 100%
Beneficial Management Corporation Delaware 100%
Beneficial Management Institute, Inc. New York 100%
Beneficial Management Corporation
of America Delaware 100%
Beneficial Franchise Company Inc. Delaware 100%
Beneficial Mark Holding Inc. Delaware 100%
Beneficial Trademark Co. Delaware 100%
Beneficial Management Headquarters, Inc. New Jersey 100%
Beneficial Facilities Corporation New Jersey 100%
Beneficial Maryland Inc. Delaware 100%
Beneficial Massachusetts Inc. Delaware 100%
Beneficial Michigan Inc. Delaware 100%
Beneficial Minnesota Inc. Delaware 100%
Beneficial Mississippi Inc. Delaware 100%
Beneficial Missouri, Inc. Delaware 100%
Beneficial Montana Inc. Delaware 100%
Beneficial Mortgage Holding Company Delaware 100%
Beneficial Service Corporation
of New Jersey Delaware 100%
Beneficial Nebraska Inc. Nebraska 100%
Beneficial Nevada Inc. Delaware 100%
Beneficial New Hampshire Inc. Delaware 100%
Beneficial New Jersey Inc. Delaware 100%
Beneficial New Mexico Inc. Delaware 100%
Beneficial North Carolina Inc. Delaware 100%
Beneficial Oklahoma Inc Delaware 100%
Beneficial Oregon Inc. Delaware 100%
Beneficial Real Estate Company, Inc. New Jersey 100%
Beneficial Rhode Island Inc. Delaware 100%
Beneficial South Carolina Inc. Delaware 100%
Beneficial South Dakota Inc. Delaware 100%
Beneficial Systems Development Corporation Delaware 100%
Beneficial Technology Corporation Delaware 100%
Beneficial Telemarketing Services Inc. Delaware 100%
Beneficial Tennessee Inc. Tennessee 100%
Beneficial Texas Inc. Texas 100%
Beneficial Utah Inc. Delaware 100%
Beneficial Virginia Inc. Delaware 100%
Beneficial Washington Inc. Delaware 100%
Beneficial West Virginia, Inc. West Virginia 100%
Beneficial Wisconsin Inc. Delaware 100%
Beneficial Wyoming Inc. Wyoming 100%
Benevest Group Inc. Delaware 100%
Benevest Services, Inc. Washington 100%
BMC Holding Company Delaware 100%
Beneficial Mortgage Corporation Delaware 100%
Beneficial Mortgage Services, Inc. Delaware 100%
Bon Secour Properties Inc. Alabama 100%
Capital Financial Services Inc. Nevada 100%
Corporate Security Engineering
Services, Inc. New Jersey 100%
Garrison Platt Properties Inc. Florida 100%
Harbour Island Inc. Florida 100%
Harbour Island Property Management Inc. Florida 100%
Harbour Island Security Co., Inc. Florida 100%
Harbour Island Venture One, Inc. Florida 100%
Harbour Island Venture Three, Inc. Florida 100%
Harbour Island Venture Four, Inc. Florida 100%
Tampa Island Transit Company, Inc. Florida 100%
Personal Mortgage Holding Company Delaware 100%
Personal Mortgage Corporation Delaware 100%
Southern Trust Company Delaware 100%
Southwest Beneficial Finance, Inc. Illinois 100%
Wasco Properties, Inc. Delaware 100%
Beneficial Real Estate Joint
Venture, Inc. Delaware 100%
Beneficial Insurance Group Holding Company Delaware 100%
BFC Agency, Inc. Delaware 100%
BFC Insurance Agency of America Wyoming 100%
Beneficial Bank plc England 99.9%
Beneficial Financial Services Limited England 100%
Beneficial Financing Limited England 100%
Beneficial Leasing Limited England 100%
Beneficial Trust Investments Limited England 100%
Beneficial Trust (Guernsey) Limited England 100%
Beneficial Trust (Jersey) Limited England 100%
Beneficial Trust Nominees Limited England 100%
Endeavour Personal Financial Limited England 100%
Security Trust Limited England 100%
Sterling Credit Limited England 100%
Sterling Credit Management Limited England 100%
The Loan Corporation Limited England 100%
Extracard Corp. Delaware 100%
BFC Insurance Agency of Nevada Nevada 100%
Beneficial Direct, Inc. New Jersey 100%
Beneficial Insurance Group, Inc. Delaware 100%
Service Administrators, Inc. (USA) Colorado 100%
Service General Insurance Company Ohio 100%
Beneficial Ohio Inc. Delaware 100%
Service Management Corporation Ohio 100%
B.I.G. Insurance Agency, Inc. Ohio 100%
The Central National Life Insurance
Company of Omaha Delaware 100%
First Central National Life Insurance
Company of New York New York 100%
Wesco Insurance Company Delaware 100%
Southwest Texas General Agency, Inc. Texas 100%
Beneficial Mortgage Holding Company Delaware 100%
Beneficial Excess Servicing Inc. Delaware 100%
Beneficial Home Mortgage Loan Corp. Delaware 100%
Beneficial Mortgage Co. of Arizona Delaware 100%
Beneficial Mortgage Co. of Colorado Delaware 100%
Beneficial Mortgage Co. of Connecticut Delaware 100%
Beneficial Mortgage Co. of Georgia Delaware 100%
Beneficial Mortgage Co. of Idaho Delaware 100%
Beneficial Mortgage Co. of Indiana Delaware 100%
Beneficial Mortgage Co. of Kansas, Inc. Delaware 100%
Beneficial Mortgage Co. of Louisiana Delaware 100%
Beneficial Mortgage Co. of Maryland Delaware 100%
Beneficial Mortgage Co. of Massachusetts Delaware 100%
Beneficial Mortgage Co. of Mississippi Delaware 100%
Beneficial Mortgage Co. of Missouri, Inc. Delaware 100%
Beneficial Mortgage Co. of Nevada Delaware 100%
Beneficial Mortgage Co. of New Hampshire Delaware 100%
Beneficial Mortgage Co. of North Carolina Delaware 100%
Beneficial Mortgage Co. of Oklahoma Delaware 100%
Beneficial Mortgage Co. of Rhode Island Delaware 100%
Beneficial Mortgage Co. of South Carolina Delaware 100%
Beneficial Mortgage Co. of Texas Delaware 100%
Beneficial Mortgage Co. of Utah Delaware 100%
Beneficial Mortgage Co. of Virginia Delaware 100%
HFC Auto Credit Corp. Delaware 100%
HFC Card Funding Corporation Delaware 100%
HFC Funding Corporation Delaware 100%
HFC Revolving Corporation Delaware 100%
HFS Funding Corporation Delaware 100%
Household Acquisition Corporation Delaware 100%
HFTA Corporation Delaware 100%
First Credit Corporation Delaware 100%
HFTA Consumer Discount Company Pennsylvania 100%
HFTA First Financial Corporation California 100%
HFTA Second Corporation Alabama 100%
HFTA Third Corporation Delaware 100%
HFTA Fourth Corporation Minnesota 100%
HFTA Fifth Corporation Nevada 100%
HFTA Sixth Corporation Nevada 100%
HFTA Seventh Corporation New Jersey 100%
HFTA Eighth Corporation Ohio 100%
HFTA Ninth Corporation West Virginia 100%
HFTA Tenth Corporation Washington 100%
Household Finance Corporation of Hawaii Hawaii 100%
Household Realty Corporation (1997)
Limited B.C. 100%
Pacific Finance Loans California 100%
Household Automotive Finance Corporation Delaware 100%
ACC Funding Corp. Delaware 100%
ACC Receivables Corp. Delaware 100%
Household Automotive Credit Corporation Delaware 100%
OFL-A Receivables Corp. Delaware 100%
Household Auto Receivables Corporaton Nevada 100%
Household Bank (Nevada), N.A. U.S. 100%
Household Card Funding Corporation Delaware 100%
Household Receivables Funding Corporation Nevada 100%
Household Receivables Funding Delaware 100%
Corporation II
Household Receivables Funding, Inc. Delaware 100%
Household Capital Markets, Inc. Delaware 100%
Household Card Services, Inc. Nevada 100%
Household Bank (Illinois), N.A. U.S. 100%
Household Consumer Loan Corporation Nevada 100%
Household Corporation Delaware 100%
Household Credit Services, Inc. Delaware 100%
Household Credit Services of Mexico, Inc. Delaware 100%
Household Finance Receivables Corporation II Delaware 100%
Household Financial Services, Inc. Delaware 100%
Household Group, Inc. Delaware 100%
AHLIC Investment Holdings Corporation Delaware 100%
Arcadia General Insurance Company Arizona 100%
Arcadia Insurance Administrators, Inc. Delaware 100%
Arcadia National Life Insurance Company Arizona 100%
Cal-Pacific Services, Inc. California 100%
HFS Investments, Inc. Nevada 100%
Household Insurance Agency, Inc. Michigan 100%
Household Insurance Company Michigan 100%
Household Life Insurance Co. of Arizona Arizona 100%
Household Life Insurance Company Michigan 100%
Household Business Services, Inc. Delaware 100%
Household Commercial Financial Delaware 100%
Services, Inc.
Business Realty Inc. Delaware 100%
Business Lakeview, Inc. Delaware 100%
Capital Graphics, Inc. Delaware 100%
Color Prelude Inc. Delaware 100%
HCFS Business Equipment Corporation Delaware 100%
HFC Commercial Realty, Inc. Delaware 100%
G.C. Center, Inc. Delaware 100%
Com Realty, Inc. Delaware 100%
Lighthouse Property Corporation Delaware 100%
Household OPEB I, Inc. Illinois 100%
Land of Lincoln Builders, Inc. Illinois 100%
PPSG Corporation Delaware 100%
Steward's Glenn Corporation Delaware 100%
HFC Leasing, Inc. Delaware 100%
First HFC Leasing Corporation Delaware 100%
Second HFC Leasing Corporation Delaware 100%
Valley Properties Corporation Tennessee 100%
Fifth HFC Leasing Corporation Delaware 100%
Sixth HFC Leasing Corporation Delaware 100%
Seventh HFC Leasing Corporation Delaware 100%
Eighth HFC Leasing Corporation Delaware 100%
Tenth HFC Leasing Corporation Delaware 100%
Eleventh HFC Leasing Corporation Delaware 100%
Thirteenth HFC Leasing Corporation Delaware 100%
Fourteenth HFC Leasing Corporation Delaware 100%
Seventeenth HFC Leasing Corporation Delaware 100%
Nineteenth HFC Leasing Corporation Delaware 100%
Twenty-second HFC Leasing Corporation Delaware 100%
Twenty-sixth HFC Leasing Corporation Delaware 100%
Beaver Valley, Inc. Delaware 100%
Hull 752 Corporation Delaware 100%
Hull 753 Corporation Delaware 100%
Third HFC Leasing Corporation Delaware 100%
Macray Corporation California 100%
Fourth HFC Leasing Corporation Delaware 100%
Pargen Corporation California 100%
Fifteenth HFC Leasing Corporation Delaware 100%
Hull Fifty Corporation Delaware 100%
Household Capital Investment Corporation Delaware 100%
B&K Corporation Michigan 94%
Household Commercial of California, Inc. California 100%
OLC, Inc. Rhode Island 100%
OPI, Inc. Virginia 100%
Household Finance Consumer Discount Company Pennsylvania 100%
Overseas Leasing Two FSC, Ltd. Bermuda 99%
Household Finance Corporation II Delaware 100%
Household Finance Corporation of Alabama Alabama 100%
Household Finance Corporation of California Delaware 100%
Household Finance Corporation of Nevada Delaware 100%
Household Finance Realty Corporation of Delaware 100%
New York
Household Finance Corporation of
West Virginia West Virginia 100%
Household Finance Industrial Loan Company Washington 100%
Household Finance Industrial Loan Company Iowa 100%
of Iowa
Household Finance Realty Corporation of Delaware 100%
Nevada
Household Finance Corporation III Delaware 100%
Amstelveen FSC, Ltd. Bermuda 99%
HFC Agency of Connecticut, Inc. Connecticut 100%
HFC Agency of Michigan, Inc. Michigan 100%
HFC Agency of Missouri, Inc. Missouri 100%
Night Watch FSC, Ltd. Bermuda 99%
Household Realty Corporation Delaware 100%
Overseas Leasing One FSC, Ltd. Bermuda 100%
Overseas Leasing Four FSC, Ltd. Bermuda 99%
Overseas Leasing Five FSC, Ltd. Bermuda 99%
Household Retail Services, Inc. Delaware 100%
HRSI Funding, Inc. Nevada 100%
Household Financial Center Inc. Tennessee 100%
Household Industrial Finance Company Minnesota 100%
Household Industrial Loan Co. of Kentucky Kentucky 100%
Household Insurance Agency, Inc. Nevada 100%
Household Recovery Services Corporation Delaware 100%
Household Relocation Management, Inc. Illinois 100%
Mortgage One Corporation Delaware 100%
Mortgage Two Corporation Delaware 100%
Pacific Agency Inc. Nevada 100%
Sixty-First HFC Leasing Corporation Delaware 100%
Household Pooling Corporation Nevada 100%
Household Receivables Acquisition Company Delaware 100%
Household REIT Corporation Nevada 100%
Household Financial Group, Ltd. Delaware 100%
Household Global Funding, Inc. Delaware 100%
Household International (U.K.) Limited England 100%
D.L.R.S. Limited Cheshire 100%
HFC Bank plc England 100%
Hamilton Financial Planning Services
Limited England 100%
Hamilton Insurance Company Limited England 100%
Hamilton Life Assurance Co. Limited England 100%
HFC Pension Plan Limited England 100%
Household Funding Limited England 100%
Household Investments Limited England/Wales 100%
Household Leasing Limited England 100%
Household Management Corporation Limited England/Wales 100%
Household Overseas Limited England 100%
Household International Netherlands, B.V. Netherlands 100%
Household Financial Corporation Limited Ontario 100%
Household Finance Corporation of Canada Canada 100%
Household Realty Corporation Limited Ontario 100%
Household Trust Company Canada 100%
Merchant Retail Services Limited Ontario 100%
Household Reinsurance Ltd. Bermuda 100%
U:\LAW\EDGAR\IEX21.WP (8/13/98)
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 364,700
<SECURITIES> 3,436,600
<RECEIVABLES> 40,699,400
<ALLOWANCES> (2,620,100)
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,237,200
<DEPRECIATION> (792,100)
<TOTAL-ASSETS> 49,502,300
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 25,740,300
0
264,500
<COMMON> 541,400
<OTHER-SE> 5,886,400
<TOTAL-LIABILITY-AND-EQUITY> 49,502,300
<SALES> 0
<TOTAL-REVENUES> 4,451,300
<CGS> 0
<TOTAL-COSTS> 2,497,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 780,900
<INTEREST-EXPENSE> 1,229,000
<INCOME-PRETAX> (56,400)
<INCOME-TAX> 87,400
<INCOME-CONTINUING> (143,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (143,800)
<EPS-PRIMARY> (.31)<F2>
<EPS-DILUTED> (.31)<F3>
<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.
<F2>REPRESENTS BASIC EPS COMPUTED IN ACCORDANCE WITH STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 128, "EARNINGS PER SHARE."
AMOUNT REFLECTS HOUSEHOLD'S 3-FOR-1 STOCK SPLIT EFFECTED IN THE
FORM OF A STOCK DIVIDEND AND PAID ON JUNE 1, 1998.
<F3>REPRESENTS DILUTED EPS COMPUTED IN ACCORDANCE WITH STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 128, "EARNINGS PER SHARE." AMOUNT
REFLECTS HOUSEHOLD'S 3-FOR-1 STOCK SPLIT EFFECTED IN THE FORM OF A
STOCK DIVIDEND AND PAID ON JUNE 1, 1998.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997<F1>
<PERIOD-END> JUN-30-1997
<CASH> 635,500
<SECURITIES> 2,896,300
<RECEIVABLES> 39,026,300
<ALLOWANCES> (2,293,700)
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 1,245,000
<DEPRECIATION> (705,800)
<TOTAL-ASSETS> 46,852,900
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 24,405,600
0
264,500
<COMMON> 536,700
<OTHER-SE> 5,435,200
<TOTAL-LIABILITY-AND-EQUITY> 46,852,900
<SALES> 0
<TOTAL-REVENUES> 4,104,900
<CGS> 0
<TOTAL-COSTS> 1,494,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 729,500
<INTEREST-EXPENSE> 1,154,100
<INCOME-PRETAX> 726,600
<INCOME-TAX> 255,800
<INCOME-CONTINUING> 470,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 470,800
<EPS-PRIMARY> 1.01<F3>
<EPS-DILUTED> .99<F4>
<FN>
<F1>RESTATED
<F2>FINANCIAL STATEMENTS OF THE COMPANY WERE PREPARED IN ACCORDANCE
WITH FINANCIAL INSTITUTION INDUSTRY STANDARDS. ACCORDINGLY, THE
COMPANY'S BALANCE SHEETS WERE NON-CLASSIFIED.
<F3>REPRESENTS BASIC EPS COMPUTED IN ACCORDANCE WITH STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 128, "EARNINGS PER SHARE."
AMOUNT HAS BEEN RESTATED AS A RESULT OF HOUSEHOLD'S MERGER WITH
BENEFICIAL, ACCOUNTED FOR AS A POOLING OF INTERESTS, AND FOR
HOUSEHOLD'S 3-FOR-1 STOCK SPLIT EFFECTED IN THE FORM OF A STOCK
DIVIDEND AND PAID ON JUNE 1, 1998.
<F4>REPRESENTS DILUTED EPS COMPUTED IN ACCORDANCE WITH STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 128, "EARNINGS PER
SHARE." AMOUNT HAS BEEN RESTATED AS A RESULT OF HOUSEHOLD'S MERGER
WITH BENEFICIAL, ACCOUNTED FOR AS A POOLING OF INTERESTS, AND FOR
HOUSEHOLD'S 3-FOR-1 STOCK SPLIT EFFECTED IN THE FORM OF A STOCK
DIVIDEND AND PAID ON JUNE 1, 1998.
</FN>
</TABLE>
EXHIBIT 99.1
------------
HOUSEHOLD INTERNATIONAL, INC. AND SUBSIDIARIES
DEBT AND PREFERRED STOCK SECURITIES RATINGS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Standard Moody's Fitch Duff & Phelps
& Poor's Investors Investors Credit Thomson
Corporation Service Services Rating Co. BankWatch
- ------------------------------------------------------------------------------------------------------
At June 30, 1998
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Household International, Inc.
Senior debt A A3 A A A
Commercial paper A-1 P-2 F-1 Duff 1 TBW-1
Preferred stock A- baa1 A- A- BBB+
----------- --------- --------- ------------- ---------
Household Finance Corporation
Senior debt A A2 A+ A+ A+
Senior subordinated debt A- A3 A A A
Commercial paper A-1 P-1 F-1 Duff 1+ TBW-1
----------- --------- --------- ------------- ---------
Beneficial Corporation
Senior debt A A2 A+ A NR
Commercial paper A-1 P-1 F-1 Duff 1 NR
----------- --------- --------- ------------- ---------
Household Bank, f.s.b.
Senior debt A A2 A A NR
Subordinated debt A- A3 A- A- A
Certificates of deposit
(long/short-term) A/A-1 A2/P-1 A/F-1 A/Duff 1 TBW-1
Thrift notes A-1 P-1 F-1 Duff 1 TBW-1
- ------------------------------------------------------------------------------------------------------
</TABLE>
