<PAGE> 1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: January 19, 2000
----------------
HOUSEHOLD INTERNATIONAL, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-8198 36-3121988
- --------------------------------------------------------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation Number)
2700 Sanders Road, Prospect Heights, Illinois 60070
- ---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 847/564-5000
------------
<PAGE>
<PAGE> 2
Item 5. Other Events
Press release pertaining to the financial results of
Household International, Inc., for the quarter and year
ended December 31, 1999. Said release is filed as an
exhibit hereto.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
No. Exhibit
--- -------
27 Financial Data Schedule.
99 Press release titled "Household
International Reports Best Quarter
and Year in its History" dated
January 19, 2000.
<PAGE>
<PAGE> 3
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
HOUSEHOLD INTERNATIONAL, INC.
----------------------------
(Registrant)
By: /s/ John W. Blenke
-------------------
John W. Blenke
Assistant Secretary
Dated: January 20, 2000
----------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SUMMARY FINANCIAL INFORMATION OF THE COMPANY AND
ITS SUBSIDIARIES IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION AND FINANCIAL STATEMENTS PREVIOUSLY FILED WITH THE
SECURITIES & EXCHANGE COMMISSION.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 270,600
<SECURITIES> 3,128,100
<RECEIVABLES> 52,289,400
<ALLOWANCES> 2,666,600
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,324,100
<DEPRECIATION> 847,700
<TOTAL-ASSETS> 60,749,400
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 34,887,300
0
164,400
<COMMON> 550,400
<OTHER-SE> 6,275,500
<TOTAL-LIABILITY-AND-EQUITY> 60,749,400
<SALES> 0
<TOTAL-REVENUES> 9,499,100
<CGS> 0
<TOTAL-COSTS> 2,785,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,716,400
<INTEREST-EXPENSE> 2,776,600
<INCOME-PRETAX> 2,220,700
<INCOME-TAX> 734,300
<INCOME-CONTINUING> 1,486,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,486,400
<EPS-BASIC> 3.10
<EPS-DILUTED> 3.07
<FN>
<F1>FINANCIAL STATEMENTS OF THE COMPANY WERE PREPARED IN ACCORDANCE
WITH FINANCIAL INSTITUTION INDUSTRY STANDARDS. ACCORDINGLY, THE
COMPANY'S BALANCE SHEETS WERE NON-CLASSIFIED.
</FN>
</TABLE>
<PAGE> 1
Household International
Reports Best Quarter and Year in its History
- - Fourth quarter earnings per share of $.92, up 30 percent
- - Core receivables grow $3.9 billion, or 5.9 percent, in the quarter
- - 1999 full year earnings per share of $3.07, up 33 percent
- - Core receivables up 12.5 percent for the year
- - Return on Managed Assets reaches 1.99 percent for the year
Prospect Heights, IL, January 19, 2000 -- Household International
(NYSE: HI) today reported that fourth quarter earnings per share
increased 30 percent to a record $.92, from $.71 a year ago.
Fourth quarter net income rose 25 percent to a record
$438.8 million, compared with $349.9 million a year ago.
For the full year, Household reported record earnings per share
of $3.07, which was 33 percent over 1998 operating earnings per
share. Net income totaled $1.5 billion, or 29 percent above the
prior year's operating net income.
The company's core loan portfolio increased 12.5 percent in 1999,
with growth accelerating each quarter of the year. This trend of
improving receivable growth reflects momentum in the consumer
finance business for all products. The company's MasterCard/Visa
business also showed improving receivable growth trends each
quarter and finished the year with strong receivable and account
growth.
William F. Aldinger, Household's chairman and chief executive
officer, said, "We are very pleased to report another record
quarter, the culmination of an absolutely outstanding year for
Household. Growth and profitability in the quarter were excellent
and exceeded our expectations. Revenues were particularly
strong."
Commenting on the full year results, Aldinger continued, "Our
record earnings reflect an outstanding year in our consumer
finance business, a dramatic turnaround in our MasterCard/Visa
business, and strong results in all of our other businesses. We
are particularly pleased with excellent receivable growth in
1999, particularly in our branches, while fully realizing all of
the acquisition synergies of the Beneficial merger. We move into
the new year with a real sense of excitement, great momentum
throughout the company and strong competitive positions in each
of our businesses."
(more)
<PAGE>
<PAGE> 2
Fourth Quarter Highlights
- - The company's managed portfolio grew $3.9 billion in the quarter,
or 5.9 percent, with all core product lines reporting solid
growth. Branch originated loans were up 3.1 percent and
MasterCard/Visa receivables increased 5.6 percent.
- - Revenues, excluding securitization related income, grew 5.2
percent in the quarter, driven by significant growth in average
receivables and fee income.
- - Fourth quarter operating expenses rose somewhat, reflecting
marketing spending for new business initiatives, including the
launch of marblesTM, the company's internet enabled credit card in
the U.K.
- - Credit performance improved in the quarter, as credit losses
dropped 13 basis points in the quarter, reaching the lowest level
since 1997.
- - The company's return on managed assets expanded to 2.25 percent
for the quarter, and return on equity reached 27.5 percent.
Receivable Growth
The company's managed portfolio grew $3.9 billion, or
5.9 percent, in the fourth quarter. Receivable growth in the
U.S. consumer finance business was a very strong 5.6 percent,
with approximately 85 percent of that growth in real estate
secured loan products. During the quarter, the company entered
into an agreement with a major credit card issuer to purchase
home equity loans on an ongoing basis. As part of that
agreement, the company acquired a $760 million portfolio of home
equity receivables from this issuer.
The company's MasterCard/Visa portfolio grew $832 million or 5.6
percent in the quarter, with the strongest results coming in the
GM Card and Union Privilege portfolios. Account growth in the
company's nonprime credit card business exceeded expectations, as
the number of accounts at year end surpassed 500,000.
In the fourth quarter, the company introduced marblesTM, an
internet enabled credit card for the U.K. market. Within weeks
of the launch, marblesTM generated over $90 million of
receivables.
Revenues
The company's managed net interest margin was 8.29 percent
compared to 8.36 percent in the third quarter and 8.03 percent a
year ago. The sequential decline reflected higher funding costs.
Managed fee income increased 11.1 percent from the third quarter
and 12.8 percent compared to a year ago, principally reflecting
higher levels of credit card interchange and other fees.
Operating Expenses
Operating expenses in the quarter rose slightly from the third
quarter and year-ago levels. The increase compared to the third
quarter was mainly driven by higher marketing expenses, including
costs related to the launch of the marblesTM credit card in the
U.K. The efficiency ratio improved to 31.3 percent in the
fourth quarter from 33.9 percent a year ago.
(more)
<PAGE>
<PAGE> 3
Credit Quality and Loss Reserves
Credit quality improved from both the third quarter and a year
ago. The annualized managed net chargeoff ratio for the fourth
quarter fell 13 basis points to 3.96 percent, the lowest level
since 1997. The chargeoff ratio was 4.09 percent in the third
quarter and 4.39 percent in the year-ago quarter. The managed
delinquency ratio (60+days) improved 23 basis points to
4.66 percent at December 31, compared with 4.89 percent at
September 30 and 4.90 percent a year ago.
The company's managed credit loss reserves totaled $2.7 billion,
up slightly from September 30. Reserves as a percent of managed
receivables at December 31 were 3.72 percent compared to
3.84 percent at September 30. Reserves to nonperforming loans
were 100.1 percent at year end.
Full Year Highlights
- - The managed portfolio rose over $7.8 billion in 1999, with
strongest growth in home equity receivables.
- - The company's net interest margin widened to 8.23 percent from
7.86 percent in 1998, resulting from increased pricing in the
unsecured and MasterCard/Visa portfolios coupled with lower
funding costs.
- - Operating expenses for the full year declined 5.4 percent. The
efficiency ratio improved to 33.6 percent from 37.6 percent in
1998. The company achieved all of its expense savings goals
related to the Beneficial merger.
- - The company's full year chargeoff ratio improved 16 basis points
to 4.13 percent.
Share Repurchase Program
In connection with its $2 billion share repurchase program,
announced on March 9, 1999, the company bought back 3 million
shares in the quarter. The company repurchased a total of
21.8 million shares in 1999 including 5 million shares to fund
employee benefit plans.
Household International, through its subsidiaries, is a leading
provider of consumer finance, credit card, auto finance and
credit insurance products in the United States, United Kingdom
and Canada. In the United States, Household operates under the
two oldest and most recognized names in consumer finance - HFC
and Beneficial. Household is also one of the nation's largest
issuers of private-label and general purpose credit cards,
including the GM Card and the AFL-CIO's Union Privilege card.
For more information, visit the company's web site at
http://www.household.com.
This press release contains certain estimates and projections
that may be forward-looking in nature, as defined by the Private
Securities Litigation Reform Act of 1995. A variety of factors
may cause actual results to differ materially from the results
discussed in these forward-looking statements. Factors that
might cause such a difference are discussed in Household
International's Annual Report on Form 10-K, filed with the SEC.
# # #
CONTACTS:
Craig A. Streem, Vice President--Investor Relations, 847-564-6053,
Celeste M. Murphy, Director -- Investor Relations, 847-564-7568,
both of Household International
<PAGE>
<PAGE> 4
Quarterly Financial Supplement
<TABLE>
<CAPTION>
December 31, 1999 - Quarterly Highlights
- -------------------------------------------------------------------------------------------------------------------
Summary Managed Income Statement Three Months Ended % Change from Prior
------------------------------ -------------------
($ millions) 12/31/99 9/30/99 12/31/98 Qtr. Year
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Managed-basis net interest margin <F1> $1,470.0 $1,409.9 $1,317.4 4.3% 11.6%
Managed-basis other revenues <F1> 560.6 552.8 555.0 1.4 1.0
Managed-basis provision for credit losses <F1> 738.1 741.1 716.7 (0.4) 3.0
Operating expenses 634.7 626.9 631.2 1.2 0.6
- -------------------------------------------------------------------------------------------------------------------
Income before income taxes 657.8 594.7 524.5 10.6 25.4
Income taxes 219.0 194.8 174.6 12.4 25.4
- -------------------------------------------------------------------------------------------------------------------
Net income $ 438.8 $ 399.9 $ 349.9 9.7% 25.4%
===================================================================================================================
Common Stock Data
- -------------------------------------------------------------------------------------------------------------------
Basic earnings per common share $ 0.93 $ 0.84 $ 0.72 10.7% 29.2%
Diluted earnings per common share 0.92 0.83 0.71 10.8 29.6
- -------------------------------------------------------------------------------------------------------------------
Average common shares (millions) 468.7 475.6 482.9 (1.5) (2.9)
Average common and equivalent shares (millions) 472.7 480.2 489.0 (1.6) (3.3)
- -------------------------------------------------------------------------------------------------------------------
Common stock price
High $ 48.00 $ 50.19 $ 40.50 (4.4) 18.5
Low 35.81 36.19 23.00 (1.1) 55.7
Period end 37.25 40.13 39.63 (7.2) (6.0)
- -------------------------------------------------------------------------------------------------------------------
Dividends declared per common share $ 0.17 $ 0.17 $ 0.15 - 13.3
Book value per common share 13.79 13.26 12.88 4.0 7.1
===================================================================================================================
Key Ratios
- -------------------------------------------------------------------------------------------------------------------
Return on average common shareholders' equity 27.5% 25.3% 22.8% 8.7% 20.6%
Return on average owned assets 2.96 2.80 2.64 5.7 12.1
Return on average managed assets 2.25 2.14 1.90 5.1 18.4
Managed efficiency ratio, normalized 31.3 31.9 33.9 (1.9) (7.7)
Managed net interest margin 8.29 8.36 8.03 (0.8) 3.2
Total shareholders' equity as a percent of managed assets 8.72 8.91 9.31 (2.1) (6.3)
Tangible equity to tangible managed assets 6.96 7.00 7.11 (0.6) (2.1)
===================================================================================================================
</TABLE>
<PAGE>
<PAGE> 5
Quarterly Financial Supplement (continued)
<TABLE>
<CAPTION>
Twelve Months Highlights
- -----------------------------------------------------------------------------------------------
Summary Managed Income Statement Twelve Months Ended
--------------------
($ millions) 12/31/99 12/31/98 % Change
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Managed-basis net interest margin <F1> $5,539.2 $5.094.1 8.7%
Managed-basis other revenues <F1> 1,990.6 2,057.5 (3.3)
Gain on sale of Beneficial Canada - 189.4 -
Managed-basis provision for credit losses <F1> 2,781.8 2,716.0 2.4
Operating expenses 2,527.3 2,672.3 (5.4)
Merger and integration related costs - 1,000.0 -
- -----------------------------------------------------------------------------------------------
Income before income taxes 2,220.7 952.7 100+
Income taxes 734.3 428.6 71.3
- -----------------------------------------------------------------------------------------------
Net income $1,486.4 $ 524.1<F2> 100+
===============================================================================================
Common Stock Data
- -----------------------------------------------------------------------------------------------
Basic earnings per common share $ 3.10 $ 1.04 100+
Diluted earnings per common share 3.07 1.03<F2> 100+
- -----------------------------------------------------------------------------------------------
Average common shares (millions) 477.0 487.2 (2.1)
Average common and equivalent shares (millions) 481.8 496.4 (2.9)
- -----------------------------------------------------------------------------------------------
Common stock price
High 52.31 53.69 (2.6)
Low 35.81 23.00 55.7
Dividends declared per common share 0.68 0.60 13.3
===============================================================================================
Key Ratios
- -----------------------------------------------------------------------------------------------
Return on average common shareholders' equity 23.5% 8.1%<F2> 29.1%
Return on average owned assets 2.64 1.04<F2> 15.3
Return on average managed assets 1.99 .72<F2> 24.4
Managed efficiency ratio, normalized 33.6 37.6 (10.6)
Managed net interest margin 8.23 7.86 4.7
===============================================================================================
<FN>
<F1> To aid analysis, net interest margin, other revenues and provision for credit losses are
presented on a pro forma managed basis as if receivables securitized and sold with limited
recourse were held in the portfolio. Policyholders' benefits have been netted against other
revenues.
<F2> Excluding merger and integration related costs of $751.0 million after-tax related to the
Beneficial merger and the gain on sale of Beneficial Canada of $118.5 million after-tax
("Non-Recurring Items"), operating net income was $1,156.6 million, diluted operating
earnings per share was $2.30, return on average common shareholders' equity was 18.2
percent, return on average owned assets was 2.29 percent, and return on average managed
assets was 1.60 percent. See Management's Discussion and Analysis in our 1998 Annual
Report on Form 10-K for further discussion of the merger and integration costs, the
gain on sale of Beneficial Canada, and results excluding these items.
</FN>
</TABLE>
<PAGE>
<PAGE> 6
Consolidated Statements of Income - Owned Basis
<TABLE>
<CAPTION>
Three Months
- -----------------------------------------------------------------------------------
% Change
Three Months Ended from Prior
---------------------------- --------------
($ millions) 12/31/99 9/30/99 12/31/98 Qtr. Year
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Finance income $1,773.2 $1,694.7 $1,492.2 4.6% 18.8%
Other interest income 8.1 8.0 15.5 1.3 (47.7)
Interest expense 762.8 703.7 659.9 8.4 15.6
- -----------------------------------------------------------------------------------
Net interest margin 1,018.5 999.0 847.8 2.0 20.1
Provision for credit losses
on owned receivables 453.2 438.1 377.5 3.4 20.1
- -----------------------------------------------------------------------------------
Net interest margin after
provision for credit losses 565.3 560.9 470.3 0.8 20.2
- -----------------------------------------------------------------------------------
Securitization income 398.2 357.9 365.3 11.3 9.0
Insurance revenues 129.2 130.6 126.3 (1.1) 2.3
Investment income 40.8 45.0 40.3 (9.3) 1.2
Fee income 174.3 155.7 155.6 11.9 12.0
Other income 43.8 32.4 60.1 35.2 (27.1)
- -----------------------------------------------------------------------------------
Total other revenues 786.3 721.6 747.6 9.0 5.2
- -----------------------------------------------------------------------------------
Salaries and fringe benefits 307.2 304.7 268.0 0.8 14.6
Occupancy and equipment expense 70.9 66.6 69.9 6.5 1.4
Other marketing expenses 106.0 91.5 99.5 15.8 6.5
Other servicing and
administrative expenses 114.5 128.5 155.5 (10.9) (26.4)
Amortization of acquired
intangibles and goodwill 36.1 35.5 38.3 1.7 (5.7)
Policyholders' benefits 59.1 61.0 62.2 (3.1) (5.0)
- -----------------------------------------------------------------------------------
Total costs and expenses 693.8 687.8 693.4 0.9 0.1
- -----------------------------------------------------------------------------------
Income before income taxes 657.8 594.7 524.5 10.6 25.4
Income taxes 219.0 194.8 174.6 12.4 25.4
- -----------------------------------------------------------------------------------
Net income 438.8 399.9 349.9 9.7 25.4
- -----------------------------------------------------------------------------------
Preferred dividends (2.3) (2.3) (2.6) - (11.5)
- -----------------------------------------------------------------------------------
Earnings available to common
shareholders $ 436.5 $ 397.6 $ 347.3 9.8% 25.7%
===================================================================================
Effective tax rate 33.3% 32.8% 33.3% 1.5% 0.0%
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE> 7
Consolidated Statements of Income - Owned Basis (continued)
<TABLE>
<CAPTION>
Twelve Months
- ------------------------------------------------------------------------
Twelve Months Ended
--------------------
($ millions) 12/31/99 12/31/98 % Change
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Finance income $6,549.5 $5,604.2 16.9%
Other interest income 33.4 57.1 (41.5)
Interest expense 2,776.6 2,517.0 10.3
- ------------------------------------------------------------------------
Net interest margin 3,806.3 3,144.3 21.1
Provision for credit losses
on owned receivables 1,716.4 1,516.8 13.2
- ------------------------------------------------------------------------
Net interest margin after
provision for credit losses 2,089.9 1,627.5 28.4
- ------------------------------------------------------------------------
Securitization income 1,393.5 1,548.9 (10.0)
Insurance revenues 534.6 492.8 8.5
Investment income 168.8 161.2 4.7
Fee income 595.5 599.7 (0.7)
Other income 223.8 243.7 (8.2)
- ------------------------------------------------------------------------
Total other revenues 2,916.2 3,046.3 (4.3)
- ------------------------------------------------------------------------
Gain on sale of Beneficial Canada - 189.4 -
- ------------------------------------------------------------------------
Salaries and fringe benefits 1,194.6 1,127.5 6.0
Occupancy and equipment expense 270.9 316.1 (14.3)
Other marketing expenses 370.0 403.2 (8.2)
Other servicing and
administrative expenses 547.9 654.9 (16.3)
Amortization of acquired
intangibles and goodwill 143.9 170.6 (15.7)
Policyholders' benefits 258.1 238.2 8.4
- ------------------------------------------------------------------------
Costs and expenses before merger charge 2,785.4 2,910.5 (4.3)
Merger and integration related costs - 1,000.0 -
- ------------------------------------------------------------------------
Total costs and expenses 2,785.4 3,910.5 (28.8)
- ------------------------------------------------------------------------
Income before income taxes 2,220.7 952.7 100+
Income taxes 734.3 428.6 71.3
- ------------------------------------------------------------------------
Net income 1,486.4 524.1<F1> 100+
- ------------------------------------------------------------------------
Preferred dividends (9.2) (15.0) (38.7)
- ------------------------------------------------------------------------
Earnings available to common
shareholders $1,477.2 $ 509.1 100+
========================================================================
Effective tax rate 33.1% 45.0%<F1> (26.4)%
========================================================================
<FN>
<F1> Excluding Non-Recurring Items, operating net income was $1,156.6
million and the effective tax rate was 34.4 percent.
</FN>
</TABLE>
<PAGE>
<PAGE> 8
Consolidated Statements of Income - Owned Basis (continued)
<TABLE>
<CAPTION>
Balance Sheet Data
- ------------------------------------------------------------------------------------
($ millions) 12/31/99 9/30/99 12/31/98
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Owned assets $60,749.4 $57,585.5 $52,892.7
Managed assets 80,188.3 76,050.1 72,594.5
Managed receivables 71,728.3 67,807.1 63,907.7
Debt 50,645.1 47,234.7 42,461.5
Trust originated preferred securities 375.0 375.0 375.0
Preferred stock 164.4 164.4 164.4
Common shareholders' equity 6,450.9 6,240.0 6,221.4
Total shareholders' equity as a percent
of managed assets 8.72% 8.91% 9.31%
====================================================================================
</TABLE>
<PAGE>
<PAGE> 9
Consolidated Statements of Income - Managed Basis
Securitizations and sales of consumer receivables are a source of liquidity
and capital management for us. We continue to service the securitized
receivables after such receivables are sold and we retain a limited
recourse obligation. Securitizations impact the classification of revenues
and expenses in the statement of operations. When reporting on a managed
basis, net interest margin, provision for credit losses, fee income, and
securitization related income related to receivables sold are reclassified
from securitization income into the appropriate caption.
<TABLE>
<CAPTION>
Three Months
- -----------------------------------------------------------------------------------------------------------------------
% Change
Three months ended from Prior
----------------------------------------------------------------- ------------
($ millions) 12/31/99 <F1> 9/30/99 <F1> 12/31/98 <F1> Qtr. Year
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Finance and other interest income $ 2,525.1 14.23% $ 2,368.2 14.04% $ 2,285.5 13.94% 6.6 % 10.5 %
Interest expense 1,055.1 5.94 958.3 5.68 968.1 5.91 10.1 9.0
- -----------------------------------------------------------------------------------------------------------------------
Net interest margin 1,470.0 8.29% 1,409.9 8.36% 1,317.4 8.03% 4.3 11.6
Provision for credit losses 738.1 741.1 716.7 (0.4) 3.0
- -----------------------------------------------------------------------------------------------------------------------
Net interest margin after
provision for credit losses 731.9 668.8 600.7 9.4 21.8
- -----------------------------------------------------------------------------------------------------------------------
Insurance revenues 129.2 130.6 126.3 (1.1) 2.3
Investment income 40.8 45.0 40.3 (9.3) 1.2
Fee income 344.3 309.8 305.3 11.1 12.8
Securitization related income 61.5 95.9 85.2 (35.9) (27.8)
Other income 43.9 32.4 60.1 35.5 (27.0)
- -----------------------------------------------------------------------------------------------------------------------
Total other revenues 619.7 613.7 617.2 1.0 0.4
Operating expenses and policyholders'
benefits 693.8 687.8 693.4 0.9 0.1
- -----------------------------------------------------------------------------------------------------------------------
Income before income taxes 657.8 594.7 524.5 10.6 25.4
Income taxes 219.0 194.8 174.6 12.4 25.4
- -----------------------------------------------------------------------------------------------------------------------
Net income $ 438.8 $ 399.9 $ 349.9 9.7 % 25.4 %
=======================================================================================================================
Average managed receivables:
Home equity $26,436.8 $24,702.2 $22,080.5 7.0 % 19.7 %
Auto finance 2,866.4 2,532.3 1,628.3 13.2 76.0
MasterCard/Visa <F2> 15,198.3 15,021.5 17,787.5 1.2 (14.6)
Private label 10,800.6 10,109.9 9,980.6 6.8 8.2
Other unsecured 13,732.7 13,255.6 11,895.1 3.6 15.4
- -----------------------------------------------------------------------------------------------------------------------
Core products 69,034.8 65,621.5 63,372.0 5.2 8.9
- -----------------------------------------------------------------------------------------------------------------------
First mortgage 134.5 142.6 176.0 (5.7) (23.6)
Commercial 686.4 659.5 746.8 4.1 (8.1)
- -----------------------------------------------------------------------------------------------------------------------
Total 69,855.7 66,423.6 64,294.8 5.2 8.6
Average noninsurance investments 692.5 607.6 995.9 14.0 (30.5)
Other interest-earning assets 421.6 418.0 313.4 0.9 34.5
- -----------------------------------------------------------------------------------------------------------------------
Average managed interest-
earning assets $70,969.8 $67,449.2 $65,604.1 5.2 % 8.2 %
=======================================================================================================================
</TABLE>
<PAGE>
<PAGE> 10
Consolidated Statement of Income - Managed Basis (continued)
<TABLE>
<CAPTION>
Twelve Months
- ---------------------------------------------------------------------------------------------
Twelve Months Ended
-----------------------------------------
($ millions) 12/31/99 <F1> 12/31/98 <F1> % Change
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Finance income and other
interest income $ 9,375.7 13.93% $ 8,975.4 13.85% 4.5 %
Interest expense 3,836.5 5.70 3,881.3 5.99 (1.2)
- ---------------------------------------------------------------------------------------------
Net interest margin 5,539.2 8.23% 5,094.1 7.86% 8.7
Provision for credit losses 2,781.8 2,716.0 2.4
- ---------------------------------------------------------------------------------------------
Net interest margin after
provision for credit losses 2,757.4 2,378.1 15.9
- ---------------------------------------------------------------------------------------------
Insurance revenues 534.6 492.8 8.5
Investment income 168.8 161.2 4.7
Fee income 1,205.4 1,181.2 2.0
Securitization related income 116.0 216.8 (46.5)
Other income 223.9 243.7 (8.1)
- ---------------------------------------------------------------------------------------------
Total other revenues 2,248.7 2,295.7 (2.0)
Gain on sale of Beneficial Canada - 189.4 -
Operating expenses and policyholders'
benefits 2,785.4 2,910.5 (4.3)
Merger and integration related costs - 1,000.0 -
- ---------------------------------------------------------------------------------------------
Income before income taxes 2,220.7 952.7 100+
Income taxes 734.3 428.6 71.3
- ---------------------------------------------------------------------------------------------
Net income $ 1,486.4 $ 524.1<F4> 100+
=============================================================================================
Average managed receivables:
Home equity $24,574.5 $20,878.1 17.7 %
Auto finance 2,370.4 1,260.2 88.1
MasterCard/Visa <F2> 15,295.7 18,742.2 (18.4)
Private label 10,255.9 9,621.2 6.6
Other unsecured 13,008.6 11,847.8 9.8
- ---------------------------------------------------------------------------------------------
Core products 65,505.1 62,349.5 5.1
- ---------------------------------------------------------------------------------------------
First mortgage 149.3 296.7 (49.7)
Commercial 660.3 783.4 (15.7)
Discontinued products <F3> - 247.5 -
- ---------------------------------------------------------------------------------------------
Total 66,314.7 63,677.1 4.1
Average noninsurance investments 558.6 803.7 (30.5)
Other interest-earning assets 416.4 302.6 37.6
- ---------------------------------------------------------------------------------------------
Average managed interest-
earning assets $67,289.7 $64,783.4 3.9%
==============================================================================================
<FN>
<F1> % Columns: comparison to average managed interest-earning assets, annualized.
<F2> MasterCard and Visa are registered trademarks of MasterCard International, Incorporated
and VISA USA Inc., respectively.
<F3> Discontinued products include receivables relating to Beneficial's disposed Canadian
and German operations.
<F4> Excluding Non-Recurring Items, operating net income was $1,156.6 million.
</FN>
</TABLE>
<PAGE>
<PAGE> 11
Reconciliation of Securitization Related Income
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Three Months Ended
-------------------------------
($ millions) 12/31/99 9/30/99 12/31/98
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Gross gains $ 182.6 $ 172.0 $161.6
Amortization (121.1) (76.1) (76.4)
- -----------------------------------------------------------------------------
Securitization related income 61.5 95.9 85.2
Over the life provision on new transactions 142.5 135.7 142.9
- -----------------------------------------------------------------------------
Net effect of securitization activity (81.0) (39.8) (57.7)
=============================================================================
Receivables securitized $2,069.0 $1,670.0 $901.0
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Twelve Months Ended
--------------------
($ millions) 12/31/99 12/31/98
- ------------------------------------------------------------------
<S> <C> <C>
Gross gains $ 493.3 $ 494.5
Amortization (377.3) (277.7)
- -------------------------------------------------------------------
Securitization related income 116.0 216.8
Over the life provision on new transactions 382.2 393.9
- ------------------------------------------------------------------
Net effect of securitization activity (266.2) (177.1)
==================================================================
Receivables securitized $5,241.0 $3,639.0
==================================================================
</TABLE>
<PAGE>
<PAGE> 12
Receivables Analysis
<TABLE>
<CAPTION>
End of Period Managed Receivables
- -----------------------------------------------------------------------------------------------------------------------
% Change from Prior
-------------------
($ millions) 12/31/99 9/30/99 12/31/98 Qtr. Year
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Home equity $26,935.5 $25,261.4 $22,330.1 6.6 % 20.6 %
Auto finance 3,039.8 2,700.8 1,765.3 12.6 72.2
MasterCard/Visa 15,793.1 14,961.5 16,610.8 5.6 (4.9)
Private label 11,269.7 10,456.2 10,377.5 7.8 8.6
Other unsecured 13,881.9 13,600.8 11,970.6 2.1 16.0
- -----------------------------------------------------------------------------------------------------------------------
Core products 70,920.0 66,980.7 63,054.3 5.9 12.5
- -----------------------------------------------------------------------------------------------------------------------
First mortgage 130.1 138.3 156.3 (5.9) (16.8)
Commercial 678.2 688.1 697.1 (1.4) (2.7)
- -----------------------------------------------------------------------------------------------------------------------
Managed portfolio $71,728.3 $67,807.1 $63,907.7 5.8% 12.2%
=======================================================================================================================
Receivables (% of Managed Portfolio)
- -----------------------------------------------------------------------------------------------------------------------
Home equity 37.6% 37.2% 34.9%
Auto finance 4.2 4.0 2.8
MasterCard/Visa 22.0 22.1 26.0
Private label 15.7 15.4 16.2
Other unsecured 19.4 20.1 18.8
- -----------------------------------------------------------------------------------------------------------------------
Core products 98.9 98.8 98.7
- -----------------------------------------------------------------------------------------------------------------------
First mortgage 0.2 0.2 0.2
Commercial 0.9 1.0 1.1
- -----------------------------------------------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
=======================================================================================================================
End of Period Receivables ($ millions)
- -----------------------------------------------------------------------------------------------------------------------
Owned receivables:
First mortgage $ 130.1 $ 138.3 $ 156.3 (5.9)% (16.8)%
Home equity 24,661.9 22,766.2 18,692.7 8.3 31.9
Auto finance 1,233.5 1,065.3 805.0 15.8 53.2
MasterCard/Visa 6,314.4 5,996.3 7,180.2 5.3 (12.1)
Private label 10,119.7 9,806.2 9,566.0 3.2 5.8
Other unsecured 9,151.6 8,882.1 7,108.6 3.0 28.7
Commercial 678.2 688.1 697.1 (1.4) (2.7)
- -----------------------------------------------------------------------------------------------------------------------
Total owned receivables 52,289.4 49,342.5 44,205.9 6.0 18.3
- -----------------------------------------------------------------------------------------------------------------------
Accrued finance charges 879.3 786.5 642.5 11.8 36.9
Credit loss reserve for owned receivables (1,757.0) (1,750.3) (1,734.2) 0.4 1.3
Unearned credit insurance premiums and claims reserves (569.3) (541.2) (505.1) 5.2 12.7
Amounts due and deferred from receivables sales 2,225.6 2,103.6 2,152.9 5.8 3.4
Reserve for receivables serviced with limited recourse (909.6) (855.5) (813.9) 6.3 11.8
- -----------------------------------------------------------------------------------------------------------------------
Total owned receivables, net 52,158.4 49,085.6 43,948.1 6.3 18.7
- -----------------------------------------------------------------------------------------------------------------------
Receivables serviced with limited recourse:
Home equity 2,273.6 2,495.2 3,637.4 (8.9) (37.5)
Auto finance 1,806.3 1,635.5 960.3 10.4 88.1
MasterCard/Visa 9,478.7 8,965.2 9,430.6 5.7 0.5
Private label 1,150.0 650.0 811.5 76.9 41.7
Other unsecured 4,730.3 4,718.7 4,862.0 0.2 (2.7)
- -----------------------------------------------------------------------------------------------------------------------
Total receivables serviced with limited recourse 19,438.9 18,464.6 19,701.8 5.3 (1.3)
- -----------------------------------------------------------------------------------------------------------------------
Total managed receivables, net $71,597.3 $67,550.2 $63,649.9 6.0% 12.5%
=======================================================================================================================
</TABLE>
<PAGE>
<PAGE> 13
Credit Quality/Credit Loss Reserves
<TABLE>
<CAPTION>
Two-Months-and-Over Contractual Delinquency
- -----------------------------------------------------------------------------------------------
As a percent of managed consumer receivables,
excludes commercial. 12/31/99 9/30/99 12/31/98
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Home equity 3.27 3.46 3.67
Auto finance 2.43 2.26 2.29
MasterCard/Visa 2.78 3.10 3.75
Private label 5.97 6.66 6.20
Other unsecured 8.81 8.57 7.94
- -----------------------------------------------------------------------------------------------
Total 4.66% 4.89% 4.90%
===============================================================================================
Quarter-to-Date Chargeoffs, Net of Recoveries
- -----------------------------------------------------------------------------------------------
As a percent of average managed consumer receivables, annualized, excludes commercial.
- -----------------------------------------------------------------------------------------------
Home equity 0.54 0.58 0.68
Auto finance 5.43 4.55 5.63
MasterCard/Visa 5.57 6.15 6.61
Private label 5.88 5.60 5.47
Other unsecured 6.98 7.06 6.94
- -----------------------------------------------------------------------------------------------
Total 3.96% 4.09% 4.39%
===============================================================================================
Nonperforming Assets
- -----------------------------------------------------------------------------------------------
($ millions)
- -----------------------------------------------------------------------------------------------
Nonaccrual managed receivables $1,912.6 $1,803.5 $1,439.2
Accruing managed receivables 90 or more days delinquent 739.9 751.5 874.6
Renegotiated commercial loans 12.3 12.3 12.3
- -----------------------------------------------------------------------------------------------
Total nonperforming managed receivables 2,664.8 2,567.3 2,326.1
Real estate owned 271.5 234.4 253.9
- -----------------------------------------------------------------------------------------------
Total nonperforming assets $2,936.3 $2,801.7 $2,580.0
===============================================================================================
Managed credit loss reserves as a percent
of nonperforming managed receivables 100.1% 101.5% 109.5%
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE> 14
Credit Quality/Credit Loss Reserves (continued)
<TABLE>
<CAPTION>
Credit Loss Reserves
- -----------------------------------------------------------------------------------------------------------------
($ millions) 12/31/99 9/30/99 12/31/98
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reserves for owned receivables at beginning of quarter $1,750.3 $1,737.6 $1,786.2
Provision for credit losses 453.2 438.2 377.5
Chargeoffs, net of recoveries (455.9) (441.4) (415.4)
Portfolio acquisitions, net 9.4 15.9 (14.1)
- -----------------------------------------------------------------------------------------------------------------
Reserves for owned receivables at end of quarter 1,757.0 1,750.3 1,734.2
- -----------------------------------------------------------------------------------------------------------------
Credit loss reserves for receivables serviced
with limited recourse at beginning of quarter 855.5 786.4 876.7
Provision for credit losses 284.9 302.9 339.2
Chargeoffs, net of recoveries (229.2) (236.3) (282.7)
Other, net (1.6) 2.5 (119.3)
- -----------------------------------------------------------------------------------------------------------------
Credit loss reserves for receivables serviced
with limited recourse at end of quarter 909.6 855.5 813.9
- -----------------------------------------------------------------------------------------------------------------
Total credit loss reserves at end of quarter $2,666.6 $2,605.8 $2,548.1
=================================================================================================================
Credit loss reserves
Owned $1,757.0 3.36%<F1> $1,750.3 3.55%<F1> $1,734.2 3.92%<F1>
Serviced with limited recourse 909.6 4.68 855.5 4.63 813.9 4.13
- -----------------------------------------------------------------------------------------------------------------
Total managed credit loss reserves $2,666.6 3.72% $2,605.8 3.84% $2,548.1 3.99%
=================================================================================================================
<FN>
<F1> % Columns: comparisons to appropriate receivables.
</FN>
</TABLE>
