<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2000.
REGISTRATION NOS. 333-33052 AND 333-33052-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
HOUSEHOLD INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR GOVERNING DOCUMENT)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
36-3121988
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
HOUSEHOLD CAPITAL TRUST V
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR GOVERNING DOCUMENT)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
APPLIED FOR
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
847-564-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
LAURIE S. MATTENSON, ASSOCIATE GENERAL COUNSEL
HOUSEHOLD INTERNATIONAL, INC.
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
847-564-6557
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:
(UNDERWRITERS' COUNSEL)
SCOTT N. GIERKE
MCDERMOTT, WILL & EMERY
227 WEST MONROE STREET
CHICAGO, ILLINOIS 60606
312-984-7521
(ISSUERS' COUNSEL)
JOHN W. BLENKE
VICE PRESIDENT -- CORPORATE LAW
HOUSEHOLD INTERNATIONAL, INC.
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
847-564-6150
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement, as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is
not an offer to sell these securities and is not soliciting an offer to
buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION DATED MAY 3, 2000
PROSPECTUS
300,000 CAPITAL SECURITIES
HOUSEHOLD CAPITAL TRUST V
% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
HOUSEHOLD INTERNATIONAL, INC.
------------------------
THE TRUST:
Household Capital Trust V is a Delaware business trust which will:
- sell Capital Securities to the public:
- sell common interests to Household International;
- use the proceeds from these sales to buy an equal principal amount of
% Junior Subordinated Deferrable Interest Notes due , 2030 of
Household International; and
- distribute the cash payments it receives on the Notes to the holders of
its Capital Securities and common interests.
SEMIANNUAL DISTRIBUTIONS:
- For each Capital Security that you own, you will receive cumulative cash
distributions, accumulating from May , 2000 at an annual rate of %
of the liquidation amount of $1,000 per Capital Security, on and
of each year beginning , 2000.
- Household International may defer interest payments on the Notes at any
time, and from time to time, for up to 10 consecutive semiannual periods.
If Household International does defer interest payments on the Notes, the
Trust will also defer payment of distributions on the Capital Securities.
However, deferred distributions will themselves accrue interest at an
annual rate of %, to the extent permitted by law.
REDEMPTION:
- Household International may redeem the Notes upon the occurrence of
specified changes in tax law at a redemption price calculated as described
in this prospectus. If Household International does redeem the Notes, the
Trust will use the cash it receives on redemption of the Notes to redeem
the Capital Securities and the common interests.
INVESTING IN THE CAPITAL SECURITIES INVOLVES CERTAIN RISKS WHICH ARE
DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
------------------------
<TABLE>
<CAPTION>
PER
CAPITAL
SECURITY TOTAL
-------- -----
<S> <C> <C>
Public Offering Price (1)................................... $ $
Underwriting Commission..................................... $(2) $(2)
Proceeds to the Trust....................................... $ $
</TABLE>
- ---------------
(1) Plus accumulated distributions from May , 2000, if settlement occurs after
that date.
(2) The underwriting commission of $ per Capital Security ($ in total)
will be paid by Household International.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
We expect that the Capital Securities will be ready for delivery in
book-entry form through The Depository Trust Company on or about May , 2000.
------------------------
Joint Book Running Managers
MERRILL LYNCH & CO. MORGAN STANLEY DEAN WITTER
BANC ONE CAPITAL MARKETS, INC.
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
------------------------
The date of this prospectus is May __, 2000.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THIS PROSPECTUS................. 2
SUMMARY INFORMATION -- QUESTIONS &
ANSWERS............................. 2
RISK FACTORS.......................... 5
HOUSEHOLD CAPITAL TRUST V............. 6
FINANCIAL STATEMENTS OF TRUST AND
ACCOUNTING TREATMENT................ 7
HOUSEHOLD INTERNATIONAL, INC.......... 8
USE OF PROCEEDS....................... 8
RATIO OF EARNINGS TO FIXED CHARGES OF
HOUSEHOLD........................... 9
SELECTED FINANCIAL INFORMATION OF
HOUSEHOLD........................... 10
CAPITALIZATION OF HOUSEHOLD........... 11
DESCRIPTION OF CAPITAL SECURITIES..... 11
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DESCRIPTION OF THE CAPITAL SECURITIES
GUARANTEE........................... 22
DESCRIPTION OF THE NOTES.............. 25
EFFECT OF OBLIGATIONS UNDER THE NOTES
AND THE CAPITAL SECURITIES
GUARANTEE........................... 33
CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES.................... 34
CERTAIN ERISA CONSIDERATIONS.......... 37
UNDERWRITING.......................... 39
WHERE YOU CAN FIND MORE INFORMATION... 40
INCORPORATION OF INFORMATION WE FILE
WITH THE SEC........................ 40
LEGAL MATTERS......................... 41
EXPERTS............................... 41
</TABLE>
ABOUT THIS PROSPECTUS
You should only rely on the information provided or incorporated by
reference in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of the Capital Securities
to any person in any state where the offer is not permitted. You should not
assume that the information in this prospectus is accurate as of any date other
than the date on the front of this document.
SUMMARY INFORMATION -- QUESTIONS & ANSWERS
This summary includes questions and answers that highlight selected
information from the prospectus to help you understand the Capital Securities.
This summary may not contain all the information that may be important to you.
You should carefully read this prospectus to fully understand the terms of the
Capital Securities, as well as the tax and other considerations that should be
important to you in making a decision about whether to invest in the Capital
Securities. You should pay special attention to the "Risk Factors" section to
determine whether an investment in the Capital Securities is appropriate for
you. You should also read the documents described under "Where You Can Find More
Information" to learn more about Household's business.
In this prospectus references to:
- "Household International", "Household", "we", "us" and "our" are to
Household International, Inc.,
- "Household Trust" or "Trust" are to Household Capital Trust V,
- "Notes" are to the % Junior Subordinated Deferrable Interest Notes due
, 2030 of Household that are deposited with Household
Trust, and
- "Capital Securities" are to the % Capital Securities being offered by
Household Trust through this prospectus.
2
<PAGE> 4
Q: WHO IS HOUSEHOLD TRUST?
A: Household Trust is a business trust established under Delaware law that
exists for the sole purpose of issuing the Capital Securities and a set
amount of common interests for cash. The proceeds from these securities will
be used by the Trust to purchase the Notes from us.
Q: WHAT ARE THE CAPITAL SECURITIES?
A: Each Capital Security is a preferred undivided beneficial ownership interest
in the assets of Household Trust. The common interests issued by the Trust
are subordinate to the Capital Securities with respect to distributions made
by the Trust in the event the Trust is liquidated or dissolved. We will own
all of the common interests of Household Trust. The sole assets of Household
Trust will be our capital contribution to Household Trust for the common
interests and our Notes that will be purchased from us by Household Trust.
Q: WHAT DISTRIBUTIONS WILL I RECEIVE ON THE CAPITAL SECURITIES?
A: The Capital Securities provide for semiannual cash distributions at the
annual rate of % or $ per semiannual period ($ per year) for
each Capital Security you own. Distributions are payable on each
and , beginning , 2000. Distributions will accumulate
from the date Household Trust originally issues the Capital Securities,
which is expected to be May , 2000. The initial cash distribution
payable on , 2000 will equal $ . for each Capital Security.
Because the principal asset of Household Trust will be the Notes issued by
us, Household Trust's ability to pay distributions on the Capital Securities
is ultimately dependent upon our ability to make interest payments on those
Notes. If we exercise our right to defer making an interest payment on our
Notes, Household Trust will not be able to pay distributions to you until we
resume making interest payments on those Notes.
Q: WHO IS HOUSEHOLD?
A: Household is a holding company. Our subsidiary companies provide consumer
lending, credit cards and credit insurance products in the United States,
the United Kingdom and Canada. Our principal executive offices are located
at 2700 Sanders Road, Prospect Heights, Illinois 60070. Our telephone number
is (847) 564-5000. For information about us, see the section "Household
International, Inc." in this prospectus. You should also read the other
documents we have filed with the SEC, which you can find by referring to the
section entitled "Where You Can Find More Information" in this prospectus.
Q: WHAT ARE THE NOTES?
A: The Notes are unsecured, junior subordinated debt obligations of Household.
They rank below any of our senior debt, including normal day-to-day business
expenses. We may exercise our right to defer interest payments on the Notes
for a period of not more than 10 consecutive semiannual periods. We cannot,
however, defer any payments on the Notes beyond their stated maturity which
is , 2030. In certain circumstances we can elect to liquidate
Household Trust and distribute the Notes to you.
Q: CAN THE CAPITAL SECURITIES BE REDEEMED?
A: The Trust must redeem the Capital Securities when the Notes are paid at
maturity or if Household redeems the Notes early. Household can redeem the
Notes at any time if there is a tax event as described in this prospectus.
See "Description of Capital Securities -- Mandatory Redemption" for the
applicable redemption price.
The trustees of Household Trust can elect to liquidate Household Trust and
distribute the Notes to you if at any time there is a specified tax event or
a change in U.S. investment company law as described in this prospectus.
Neither the Notes nor the Capital Securities can be redeemed at any time at
the option of their holders.
Q: ARE THERE ANY RISKS ASSOCIATED WITH MY INVESTMENT?
A: Yes, an investment in the Capital Securities is subject to risk. Please
refer to the section entitled "Risk Factors" in this prospectus for a
description of these risks.
Q: WHAT HAPPENS IF HOUSEHOLD TRUST DOESN'T PAY DISTRIBUTIONS ON THE CAPITAL
SECURITIES?
A: If your distributions are deferred, you will still accumulate distributions
at the annual rate of % plus you will be entitled to additional
distributions at the same rate, compounded semiannually, on any deferred
distribution that remains unpaid.
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<PAGE> 5
If distributions are deferred, during that period until all scheduled
semiannual distributions which are due and owing are paid or set aside for
payment to you, we may not, except in limited circumstances, declare or pay
dividends on, acquire, or make a liquidation payment with respect to, any of
our outstanding capital stock.
This limitation prevents us from paying cash or other dividends to our
shareholders if payments are not being made on the Capital Securities, the
Notes or the guarantee issued by us in connection with the Capital
Securities. However, these provisions will not restrict:
- our ability to pay dividends or distributions on our capital stock in
shares of, or options, warrants or rights to subscribe for or purchase
shares of our capital stock;
- our ability to convert or exchange our common stock or preferred stock of
one class into our common stock or preferred stock of another class;
- our ability to redeem or purchase any rights under a rights agreement
applicable to our common stock or issue preferred stock under those
rights; and
- our ability to purchase our capital stock in the open market or in
private transactions for employee benefit or similar purposes.
Q: WHAT IS THE GUARANTEE?
A: We will guarantee, to the extent described in this prospectus:
- distribution of semiannual payments on the Capital Securities by
Household Trust to you to the extent Household Trust receives
distributions on the Notes;
- the redemption amount due to you if Household Trust redeems the Capital
Securities; and
- the liquidation amount of the Capital Securities if Household Trust is
liquidated.
Our obligations under the guarantee, like our Notes, are subordinate and
junior in right of payment to all other of our liabilities and rank equally
with our most senior preferred stock and similar guarantees of ours with
respect to previous and future issues of securities that are similar to the
Capital Securities.
Q: CAN HOUSEHOLD TRUST BE LIQUIDATED?
A: Household has the right to liquidate the Trust under certain circumstances
and cause cash or the Notes to be distributed to you as part of the Trust
liquidation. If Household Trust is liquidated and cash is to be distributed,
you will be entitled to receive $1,000 plus any accumulated and unpaid
distributions per Capital Security before we can receive any payment for our
common interests. If Household Trust is liquidated and the Notes are
distributed, you will be entitled to receive $1,000 principal amount of
Notes plus accumulated and unpaid distributions per Capital Security.
Q: DO I HAVE VOTING RIGHTS?
A: Except in limited circumstances you will not have any voting rights. The
holders of a majority of the Capital Securities, however, have the right to
direct the time, method and place of conducting any proceeding for any
remedy available to the property trustee, or direct the exercise of any
trust power conferred upon the property trustee.
Q: IN WHAT FORM WILL THE CAPITAL SECURITIES BE ISSUED?
A: The Capital Securities will be issued in the form of a global certificate or
certificates registered in the name of Cede & Co., as nominee for The
Depository Trust Company also known as DTC. This means you will not receive
a certificate for your Capital Securities. Your interests in the Capital
Securities will be evidenced by, and transfers of the Capital Securities
will be effected only through, records maintained by the participants in
DTC.
Q: WILL THE CAPITAL SECURITIES BE LISTED ON A STOCK EXCHANGE?
A: We do not intend to apply for listing of the Capital Securities on any
national securities exchange or for quotation of the Capital Securities on
any automated dealer quotation system. The underwriters have advised us that
they presently intend to make a market in the Capital Securities after
completion of this offering. However, they are under no obligation to do so
and may discontinue any market-making activities at any time without any
notice.
4
<PAGE> 6
RISK FACTORS
Your investment in the Capital Securities will involve risks. You should
carefully consider the following discussion of risks before deciding whether an
investment in the Capital Securities is suitable for you.
YOU WILL ONLY RECEIVE DISTRIBUTIONS IF PAYMENTS ON THE NOTES ARE MADE
Household Trust's ability to pay distributions on the Capital Securities to
you is dependent upon its receipt of payments on the Notes it holds. We may
defer interest payments on the Notes for up to 10 consecutive semiannual
periods. If we fail to make the payments of interest or principal on the Notes
the Trust will lack the funds necessary to pay distributions on the Capital
Securities. If Household Trust does not make payments to you on the Capital
Securities, we will be restricted from, among other things, paying cash or
certain other dividends on our capital stock.
THERE MAY BE TAX CONSEQUENCES TO YOU IF WE FAIL TO PAY YOU DISTRIBUTIONS
As a holder of the Capital Securities, each of which represents a preferred
ownership interest in the assets of Household Trust, if we defer the payment of
interest and principal on the Notes you will be required to accrue income, for
U.S. federal income tax purposes, on the cumulative deferred distributions and
accumulated interest allocable to your Capital Securities. As a result, you will
recognize income for U.S. federal income tax purposes in advance of the receipt
of cash and will not receive the cash from Household Trust related to that
distribution if you dispose of your Capital Securities before the record date
for the date on which those distributions are made.
OUR OBLIGATIONS UNDER THE GUARANTEE AND OUR NOTES ARE SUBORDINATED
Our obligations under the guarantee are unsecured and will rank in priority
of payment:
- subordinate and junior in right of payment to all of our other
liabilities; and
- equally with any of our most senior preferred stock issued from time to
time, and similar guarantees of ours with respect to previous and future
issues of securities that are similar to the Capital Securities.
This means that our obligations under the guarantee will not be paid unless we
can satisfy in full all of our other obligations ranking senior to the
guarantee.
Our obligations under our Notes issued to Household Trust are subordinate
and junior in right of payment to all of our senior indebtedness, including our
day-to-day expenses. At December 31, 1999, we had outstanding senior
indebtedness aggregating approximately $4.7 billion which would have ranked
senior to our obligations under the guarantee and our Notes. In addition,
because we are a holding company, our obligations under the Notes and the
guarantee are effectively subordinated to all existing and future liabilities of
our subsidiaries.
There are no terms in the Capital Securities, the guarantees or the Notes
that limit our ability to incur additional indebtedness, including indebtedness
that ranks senior to the Notes or the guarantee.
REDEMPTION OF THE CAPITAL SECURITIES OR NOTES MAY AFFECT YOUR RETURN
Under certain circumstances involving a tax event or a change in U.S.
investment company law, we may dissolve Household Trust, pay its creditors, if
any, and distribute the Notes to you in exchange for the Capital Securities. If
your Capital Securities are exchanged for the Notes,
- the trading value of the Notes may be lower than the trading value of the
Capital Securities, which may result in a lower return upon your sale of
the Notes; and
- any resulting loss might not be deductible for tax purposes.
Because you may receive Notes upon the occurrence of a tax event or a
change in U.S. investment company law, in connection with your investment
decision with regard to the Capital Securities you are also
5
<PAGE> 7
making an investment decision with regard to the Notes. You should carefully
review all the information regarding the Notes contained in this prospectus.
ENFORCEMENT OF YOUR RIGHTS BY OR ON YOUR BEHALF IS LIMITED
If at any time:
- you have not received a distribution on the Capital Securities for three
consecutive semiannual periods; or
- an event of default occurs and is continuing on the Notes;
then:
- you will be entitled to elect one trustee of the Trust;
- you would rely on the enforcement by the property trustee of its rights,
as a holder of the Notes, against us; and
- the property trustee, under our guarantee of the Capital Securities, will
have the right to enforce the terms of the guarantee.
Our guarantee only guarantees payments to you in the event Household Trust
has the funds to make such payments. If your Capital Securities are exchanged
for the Notes, you would only look to the Notes for repayment.
Except in the case of failure by us to pay interest on principal on the
Notes, you will not be able to proceed directly against us to enforce the Notes
or the guarantee unless the property trustee or the trustee for the guarantee
fail to do so.
YOU HAVE LIMITED VOTING RIGHTS
As a holder of the Capital Securities you will have limited voting rights
and will not be entitled to vote to appoint, change, or to increase or decrease
the number of trustees of Household Trust appointed by us. Since we own all of
Household Trust's common interests, those rights are ours exclusively.
THERE IS NO PRIOR MARKET FOR THE CAPITAL SECURITIES
This series of Capital Securities constitutes a new issue of securities
with no established trading market. There can be no assurance that an active
market for the Capital Securities will develop or be sustained in the future.
Although the underwriters have indicated to us that they intend to make a market
in the Capital Securities, as permitted by applicable laws and regulations, they
are not obligated to do so and may discontinue any market-making activities at
any time without notice. Accordingly, there is no assurance that a trading
market for the Capital Securities will exist and no assurance as to the
liquidity of any trading market.
POTENTIAL TAX LAW CHANGES
Certain tax law changes have been proposed from time to time which could
affect the deductibility of interest paid on the Notes. None of these proposals
have become law. If they were to become law, however, that event could result in
the early redemption of the Capital Securities.
HOUSEHOLD CAPITAL TRUST V
The Trust is a statutory business trust formed under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State on
March 22, 2000. The Trust's business is defined in a Declaration of Trust,
executed by Household International, as sponsor and the Household International
trustees. The Declaration of Trust will be amended and restated in its entirety
(as so amended and restated, the "Declaration") substantially in the form filed
as an exhibit to the registration statement of which this prospectus forms a
part. The Declaration will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Trust will
issue only the Capital Securities and the
6
<PAGE> 8
common interests (together, the "Trust Securities"). Upon issuance of the
Capital Securities, the purchasers thereof will own all of the Capital
Securities. Household International will acquire all of the common interests in
the Trust for an aggregate liquidation value equal to % of the total
capital of the Trust. The Trust exists for the exclusive purposes of (i) issuing
the Trust Securities representing undivided beneficial interest in the assets of
the Trust, (ii) investing the gross proceeds of the Trust Securities in the
Notes and (iii) engaging in only those other activities necessary or incidental
thereto. The Trust has a term of approximately 55 years, but may terminate
earlier as provided in the Declaration.
The Trust's business and affairs will be conducted by the trustees
appointed by Household International, as holder of the common interests. The
duties and obligations of the Household International trustees shall be governed
by the Declaration. Pursuant to the Declaration, the number of Household
International trustees will initially be three. Two of the Household
International trustees (the "Regular Trustees") will be persons who are
employees or officers of, or affiliated with Household International. The third
trustee will be a financial institution which maintains a principal place of
business in the State of Delaware and which is unaffiliated with Household
International. This third trustee will serve as property trustee under the
Declaration and as indenture trustee for purposes of the Trust Indenture Act.
Wilmington Trust Company will act as the property trustee until removed or
replaced by Household. Wilmington Trust Company will also act as indenture
trustee under the Capital Securities Guarantee (the "Capital Guarantee
Trustee"). See "Description of the Capital Securities Guarantee." In certain
circumstances, the holders of a majority of the Capital Securities will be
entitled to appoint one Regular Trustee (a "Special Regular Trustee"), who need
not be an officer or employee of, or otherwise affiliated with, Household
International. See "Description of Capital Securities -- Voting Rights."
The property trustee will hold title to the Notes for the benefit of the
holders of the Capital Securities and will have the power to exercise all
rights, powers and privileges under the Indenture as the holder of the Notes. In
addition, the property trustee will maintain exclusive control of a segregated
non-interest bearing bank account (the "Property Account") to hold all payments
made in respect of the Notes for the benefit of the holders of the Capital
Securities. The property trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities out of funds from the Property Account. The Capital Guarantee Trustee
will hold the Capital Securities Guarantee for the benefit of the holders of the
Capital Securities. Subject to the right of the holders of the Capital
Securities to appoint a Special Regular Trustee, Household International, as the
holder of all the common interests, will have the right to appoint, remove or
replace any Household International trustee and to increase the number of
Household International trustees, provided that the number of Household
International trustees shall be at least three, a majority of which shall be
Regular Trustees. Household International will pay all fees and expenses related
to the Trust and the offering of the Trust Securities. See "Description of the
Notes -- Miscellaneous."
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are as set forth in the
Declaration, the Delaware Business Trust Act (the "Delaware Trust Act") and the
Trust Indenture Act. See "Description of Capital Securities."
The Trust's registered office in the State of Delaware is c/o Wilmington
Trust Company, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890. The principal place of business of the Trust shall be c/o
Household International, 2700 Sanders Road, Prospect Heights, Illinois 60070
(telephone number (847) 564-5000).
FINANCIAL STATEMENTS OF TRUST AND ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with Household
International's financial statements, with the Capital Securities shown as
"Company obligated mandatorily redeemable preferred
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<PAGE> 9
securities of subsidiary trusts." There are no separate financial statements of
Household Trust in this prospectus. We do not believe such financial statements
would be helpful because:
- The Trust is a direct wholly-owned subsidiary of Household International,
which files consolidated financial information under the Exchange Act.
- The Trust does not have any independent operations other than the issuing
of the Capital Securities and common interests, and purchasing the Notes.
- The obligations of Household International under the Notes and the
Capital Securities Guarantee have the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under
the Capital Securities. Holders of Capital Securities may, under certain
circumstances, enforce these obligations directly against Household
International.
The Trust is not currently subject to the information reporting
requirements of the Exchange Act. The Trust will become subject to such
requirements upon the effectiveness of the registration statement that contains
this prospectus, although it intends to seek and expects to receive an exemption
therefrom.
HOUSEHOLD INTERNATIONAL, INC.
Household International was formed in 1981 as a holding company for various
subsidiaries which operated in the financial services, manufacturing,
transportation and merchandising industries. In 1985 we initiated a
restructuring program that has resulted in the disposition of our merchandising,
transportation and manufacturing businesses. This has enabled Household to focus
its resources in the consumer finance industry. Our principal executive office
is located at 2700 Sanders Road, Prospect Heights, Illinois 60070 (telephone:
847-564-5000).
Through subsidiaries, such as Household Finance Corporation, Beneficial
Corporation, Household Bank, f.s.b., Household Automotive Finance Corporation,
Household Retail Services, Inc., Household Bank (Nevada), National Association,
Household Bank (S.B.), National Association, Household Financial Corporation
Limited, and HFC Bank plc, we offer numerous consumer finance products,
including home equity credit lines, revolving and closed-end unsecured personal
loans, non-prime automobile loans, private label credit cards, MasterCard* and
VISA* credit cards and tax refund anticipation loans. Also, in conjunction with
this business, and where applicable laws permit, we make credit life, credit
accident and health, and household contents insurance available to our
customers. This insurance is generally directly written by or reinsured with one
of our insurance subsidiaries.
Household International is principally a holding company whose primary
source of funds is cash received from its subsidiaries primarily in the form of
dividends and borrowings under intercorporate agreements. Dividend distributions
to Household from its savings and loan, banking and insurance subsidiaries may
be restricted by federal and state laws and regulations. Dividend distributions
from our foreign subsidiaries may also be restricted by exchange controls of the
country in which the subsidiary is located. Also, as a holding company, the
rights of any creditors or stockholders of Household International to
participate in the assets of any subsidiary upon the latter's liquidation or
recapitalization will be subject to the prior claims of the subsidiary's
creditors, except to the extent that Household may itself be a creditor with
recognized claims against the subsidiary. Nevertheless, there are no
restrictions that currently materially limit our ability to make payments to our
creditors or to pay dividends on our preferred stock or common stock at current
levels nor are there any restrictions which we reasonably believe are likely to
limit materially such payments in the future.
USE OF PROCEEDS
The proceeds from the sale of the Capital Securities will be used by the
Trust to purchase the Notes. Household International will use the net proceeds
from the sale of such Notes for the repayment of
- ---------------
* MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and VISA,
USA, Inc., respectively.
8
<PAGE> 10
indebtedness we incurred in the normal and ordinary course of our business and
for other general corporate purposes, including advances or capital
contributions to our subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES OF HOUSEHOLD
The ratio of earnings to fixed charges for Household International and
subsidiaries for the periods indicated below was as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges......................... 1.79 1.37 1.58 1.54 1.42
</TABLE>
For purposes of calculating the above ratios, earnings consist of net
income to which has been added income taxes and fixed charges. Fixed charges
consist of interest on all indebtedness (including capitalized interest) and
one-third of rental expense (approximate portion representing interest). The
1998 ratio has been negatively impacted by one-time merger and integration
related costs associated with the merger of Household International and
Beneficial Corporation. Excluding the merger and integration related costs of
$751 million after-tax, the December 31, 1998 ratio would have been 1.75.
9
<PAGE> 11
SELECTED FINANCIAL INFORMATION OF HOUSEHOLD
The financial information which is set forth below as of and for the three
years ended December 31, 1999 has been derived from the consolidated financial
statements and notes thereto of Household International and subsidiaries which
have been audited by Arthur Andersen LLP, independent certified public
accountants. All consolidated financial information of Household International
and subsidiaries presented below should be read in conjunction with the detailed
financial statements included in documents on file with the Commission and
listed under "Incorporation of Information We File with the SEC" in this
prospectus. All dollar amounts stated below are in millions.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
STATEMENT OF INCOME DATA:
Finance income......................................... $ 6,549.5 $ 5,604.2 $ 5,131.0
Other interest income.................................. 33.4 57.1 49.8
Interest expense....................................... 2,776.6 2,517.0 2,358.4
--------- --------- ---------
Net interest margin................................. 3,806.3 3,144.3 2,822.4
Provision for credit losses on owned receivables....... 1,716.4 1,516.8 1,493.0
--------- --------- ---------
Net interest margin after provision for credit
losses.............................................. 2,089.9 1,627.5 1,329.4
--------- --------- ---------
Securitization income.................................. 1,393.5 1,548.9 1,638.4
Insurance revenues..................................... 534.6 492.8 454.2
Investment income...................................... 168.8 161.2 173.1
Fee income............................................. 595.5 599.7 592.4
Other income........................................... 223.8 243.7 355.7
Gain on sale of Beneficial Canada...................... -- 189.4 --
--------- --------- ---------
Total other revenues................................ 2,916.2 3,235.7 3,213.8
--------- --------- ---------
Salaries and fringe benefits........................... 1,194.6 1,127.5 1,085.3
Occupancy and equipment expense........................ 270.9 316.1 333.6
Other marketing expenses............................... 370.0 403.2 449.6
Other servicing and administrative expenses............ 547.9 654.9 857.9
Amortization of acquired intangibles and goodwill...... 143.9 170.6 158.4
Policyholders' benefits................................ 258.1 238.2 255.9
Merger and integration related costs................... -- 1,000.0 --
--------- --------- ---------
Total costs and expenses............................ 2,785.4 3,910.5 3,140.7
--------- --------- ---------
Income before income taxes............................. 2,220.7 952.7 1,402.5
Income taxes........................................... 734.3 428.6 462.2
--------- --------- ---------
Net income.......................................... $ 1,486.4 $ 524.1(2) $ 940.3
========= ========= =========
PERIOD END BALANCE SHEET DATA:
Total assets:
Owned............................................... $60,749.4 $52,892.7 $46,817.0
Managed(1).......................................... 80,188.3 72,594.6 71,295.5
Deposits............................................... 4,980.0 2,105.0 2,344.2
Total other debt....................................... 45,665.1 40,356.5 34,402.3
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts..................... 375.0 375.0 175.0
Preferred stock........................................ 164.4 164.4 264.5
Common shareholders' equity............................ 6,450.9 6,221.4 6,174.0
</TABLE>
- ------------------
(1) Managed assets include assets on our balance sheet and assets that we
service for investors as part of our asset securitization program.
(2) Excluding merger and integration related costs of $751.0 million after-tax
and the $118.5 million after-tax gain on sale of Beneficial's Canadian
operations, operating net income was $1,156.6 million.
10
<PAGE> 12
CAPITALIZATION OF HOUSEHOLD
The following table sets forth the consolidated capitalization of Household
International at December 31, 1999, and as adjusted to reflect a proposed
application of the estimated net proceeds from the sale of the Capital
Securities to reduce our short-term borrowings. See "Use of Proceeds." The table
should be read in conjunction with Household International's consolidated
financial statements and notes thereto included in the documents incorporated by
reference herein. See "Incorporation of Information We File with the SEC."
<TABLE>
<CAPTION>
DECEMBER 31, 1999
------------------------
ACTUAL PRO FORMA
--------- -----------
(UNAUDITED)
-----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Deposits............................................. $ 4,980.0 $ 4,980.0
Commercial paper, bank and other borrowings.......... 10,777.8 10,477.8
Senior and senior subordinated debt (with original
maturities over one year).......................... 34,887.3 34,887.3
--------- ---------
Total debt........................................... 50,645.1 50,345.1
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts.................... 375.0(1) 675.0(2)
Preferred stock...................................... 164.4 164.4
Common shareholders' equity.......................... 6,450.9 6,450.9
--------- ---------
Total capitalization................................. $57,635.4 $57,635.4
========= =========
</TABLE>
- -------------------------
(1) The sole assets of the trusts are Junior Subordinated Deferrable Interest
Notes issued by Household International 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.
(2) Pro forma assets of the trusts includes the $ million principal
amount of Notes issued by Household International in connection with the
issuance of the Capital Securities offered hereby.
DESCRIPTION OF CAPITAL SECURITIES
The Capital Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The property trustee will act as the indenture trustee for
purposes of compliance with the provisions of the Trust Indenture Act. The terms
of the Capital Securities will include those stated in the Declaration and those
made part of the Declaration by the Trust Indenture Act. The following summary
of the principal terms and provisions of the Capital Securities does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
the Declaration, a copy of which is filed as an exhibit to the registration
statement, of which this prospectus is a part, the Delaware Trust Act and the
Trust Indenture Act.
The Declaration authorizes the Regular Trustees, on behalf of the Trust, to
issue the Capital Securities, which represent preferred undivided beneficial
interests in the assets of the Trust, and the common interests, which represent
common undivided beneficial interests in the assets of the Trust. All of the
common interests will be owned by Household International. The common interests
rank pari passu, and payments will be made to them on a pro rata basis with the
Capital Securities, except that upon the occurrence of a Declaration Event of
Default, the rights of the holders of the common interests to receive payment of
periodic distributions and payments upon liquidation, redemption and otherwise
will be subordinated to the rights of the holders of the Capital Securities. The
Declaration does not permit the issuance by the Trust of any securities other
than the Capital Securities and the common interests or the incurrence of any
indebtedness by the Trust. Pursuant to the Declaration, the property trustee
will own and hold the Notes for the benefit of the holders of the Trust
Securities. The payment of distributions out of money held by the Trust, and
payments upon
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<PAGE> 13
redemption of the Capital Securities or liquidation of the Trust, are guaranteed
by Household International on a subordinated basis as and to the extent
described under "Description of the Capital Securities Guarantee." The Capital
Guarantee Trustee will hold the Capital Securities Guarantee for the benefit of
the holders of the Capital Securities. The Capital Securities Guarantee does not
cover payment of distributions on the Capital Securities when the Trust does not
have sufficient available funds in the Property Account to make such
distributions. In such event, the remedy of a holder of Capital Securities is to
(i) vote to appoint a Special Regular Trustee, (ii) to direct the property
trustee to enforce its rights under the Notes or (iii) if the failure of the
Trust to pay distributions is attributable to the failure of Household
International to pay interest or principal on the Notes, institute a proceeding
directly against Household International for enforcement of payment to such
holder of the principal or interest on the Notes having a principal amount equal
to the aggregate liquidation amount of the Capital Securities of such holder on
or after the respective due date specified in the Notes. See "Description of the
Capital Securities -- Voting Rights."
DISTRIBUTIONS
Distributions on the Capital Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $1,000 per Capital Security.
Distributions in arrears for more than one semiannual period will bear interest
thereon at the rate per annum of % thereof. The term "distributions" as
used herein includes any such interest payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months.
Distributions on the Capital Securities will be cumulative, will accrue
from May , 2000 and will be payable semiannually in arrears on and
of each year to the holders of record on the applicable record date,
commencing , 2000 when, as and if available for payment by the
property trustee, except as otherwise described below. The distribution on
, 2000 will include the period from , 2000 to
, 2000.
Household International has the right under the Indenture to defer payments
of interest on the Notes by extending the interest payment period from time to
time on the Notes (each, an "Extension Period"). If Household elects to defer
such payments, this would defer semiannual distributions on the Capital
Securities (though such distributions would continue to accrue interest since
interest would continue to accrue on the Notes) during any such extended
interest payment period. In the event that Household International exercises
this right, then (a) Household International shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase or make
a liquidation payment with respect to, any of its capital stock (other than (i)
repurchases, redemptions or other acquisitions of shares of capital stock of
Household International in connection with any employment contract, benefit plan
or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) as a result of an exchange or conversion of any
class or series of Household International's capital stock for any other class
or series of Household International's capital stock, or (iii) the purchase of
fractional interests in shares of Household International's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged), and (b) Household International shall
not make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by
Household International which rank pari passu with or junior to the Notes. The
foregoing, however, will not apply to any stock dividends paid by Household
International where the dividend stock is the same stock as that on which the
dividend is being paid. Prior to the termination of any such Extension Period,
Household International may further extend the interest payment period, provided
that such Extension Period together with all such previous and further
extensions thereof may not exceed 10 consecutive semiannual periods and provided
further that no Extension Period may extend beyond the maturity of the Notes.
Upon the termination of any Extension Period and the payment of all amounts then
due, Household International may select a new Extension Period as if no
Extension Period had previously been declared, subject to the above
requirements. See "Description of the Notes -- Interest" and "-- Option to
Extend Interest Payment Period." If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid to
12
<PAGE> 14
holders of record of the Capital Securities, if funds are available therefor, as
they appear on the books and records of the Trust on the record date next
following the termination of such Extension Period.
Distributions on the Capital Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Capital Securities will be limited to
payments received under the Notes. See "Description of the Notes." The payment
of distributions out of moneys held by the Trust is guaranteed by Household
International to the extent set forth under "Description of the Capital
Securities Guarantee."
Distributions on the Capital Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Capital Securities remain in book-entry only
form, will be one business day prior to the relevant payment dates. Such
distributions will be paid through the property trustee, who will hold amounts
received in respect of the Notes in the Property Account for the benefit of the
holders of the Trust Securities. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment will be made as
described under "-- Book-Entry Only Issuance -- The Depository Trust Company"
below. In the event the Capital Securities shall not continue to remain in
book-entry only form, the Regular Trustees shall have the right to select record
dates which shall be more than one business day, but less than 30 business days
prior to the relevant payment dates. In the event that any date on which
distributions are to be made on the Capital Securities is not a business day,
then payment of the distributions payable on such date will be made on the next
succeeding day which is a business day (and without any interest or other
payment in respect of any such delay) except that, if such business day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding business day, in each case with the same force and effect as if made
on such date. A "business day" shall mean any day other than Saturday, Sunday or
any day on which banking institutions in Chicago, Illinois, New York, New York,
or the State of Delaware are authorized or required by law to close.
MANDATORY REDEMPTION
The Notes will mature on , 2030, and may be redeemed at any time, in
whole or in part, in certain circumstances upon the occurrence of a tax event.
See "-- Special Event Redemption or Distribution" below. Upon the repayment of
the Notes, whether at maturity or upon redemption, the proceeds from such
repayment or payment shall simultaneously be applied to redeem Trust Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Notes so repaid or redeemed at the redemption price; provided that
holders of Trust Securities shall be given not less than 30 nor more than 60
days notice of such redemption. See "Description of the Notes." In the event
that fewer than all of the outstanding Capital Securities are to be redeemed,
the Capital Securities will be redeemed as described under "-- Book-Entry Only
Issuance -- The Depository Trust Company" below.
The redemption price shall equal, for each Capital Security, the Make-Whole
Amount for a corresponding $1,000 principal amount of Notes together with
accrued distributions to but excluding the redemption date. The "Make-Whole
Amount" shall be equal to the greater of (i) 100% of the principal amount of
such Notes or (ii) as determined by a Quotation Agent as of the redemption date,
the sum of the present value of scheduled payments of principal and interest on
the Notes from the redemption date to the Stated Maturity, discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at a discount rate equal to (a) % if before May ,
2001, and (b) the Treasury Rate plus .50% if after such date.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve and which establishes yields on actively
traded United States Treasury securities adjusted to constant maturity under the
caption "Treasury Constant Maturities," for the maturity corresponding to the
time period from the redemption date to the Stated Maturity, (if no maturity is
within three months before or after such time period, yields for the two
published maturities most closely corresponding to such time period shall be
determined and the Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month) or (ii) if such
release (or any successor release) is not published during the week preceding
the
13
<PAGE> 15
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
business day preceding the redemption date.
"Comparable Treasury Issue" means, with respect to any redemption date, the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the time period from the redemption date to the Stated
Maturity that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the time period. If no United States Treasury security
has a maturity which is within a period from three months before to three months
after the Stated Maturity, the two most closely corresponding United States
Treasury securities shall be used as the Comparable Treasury Issue, and the
Treasury Rate shall be interpolated and extrapolated on a straight-line basis,
rounding to the nearest month using such securities.
"Quotation Agent" means Merrill Lynch, Pierce, Fenner & Smith Incorporated
and its successors: provided, however, that if the foregoing shall cease to be a
primary United States Government securities dealer in New York City (a "Primary
Treasury Dealer") Household International shall substitute therefor another
Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debt Trustee after consultation
with Household International.
"Comparable Treasury Price" means (i) the average of five Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (ii) if the Debt
Trustee obtains fewer than five such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Debt Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Debt Trustee by such Reference Treasury Dealer at 5:00 p.m., New
York City time, on the third business day preceding such redemption date.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax event" means that the Regular Trustees shall have received an opinion
from independent tax counsel experienced in such matters to the effect that, as
a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein or (b) any
amendment to, or change in, an interpretation or application of such laws or
regulations, there is more than an insubstantial risk that (i) the Trust would
be subject to United States federal income tax with respect to income accrued or
received on the Notes, (ii) interest payable to the Trust on the Notes would not
be deductible, in whole or in part, by Household International for United States
federal income tax purposes or (iii) the Trust would be subject to more than a
de minimis amount of other taxes, duties or other governmental charges, which
change or amendment becomes effective on or after the date of this prospectus.
A "change in U.S. investment company law" means that the Regular Trustees
shall have received an opinion from independent counsel to the effect that, as a
result of the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the Investment Company Act of
1940, as amended (the "1940 Act"), which change becomes effective on or after
the date of this prospectus.
If, at any time, a tax event or a change in U.S. investment company law
(each, as defined above, a "Special Event") shall occur and be continuing, the
Trust shall, except in the circumstances described below, be dissolved with the
result that Notes with an aggregate principal amount equal to the aggregate
stated
14
<PAGE> 16
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accrued and unpaid distributions
on, all securities issued by the Trust would be distributed to the holders of
the such securities, in liquidation of such holders' interests in the Trust on a
pro rata basis, within 90 days following the occurrence of such Special Event;
provided, however, that in the case of the occurrence of a Special Event, as a
condition of such dissolution and distribution, the Regular Trustees shall have
received an opinion from independent tax counsel experienced in such matters,
which opinion may rely on published revenue rulings of the Internal Revenue
Service, to the effect that the holders of all securities issued by the Trust
will not recognize any gain or loss for United States federal income tax
purposes as a result of such dissolution and distribution of Notes; and,
provided, further, that, if at the time there is available to the Trust the
opportunity to eliminate, within such 90 day period, the Special Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure, which has no adverse effect on
the Trust, Household International or the holders of all securities issued by
the Trust, the Trust will pursue such measure in lieu of dissolution.
Furthermore, if in the case of the occurrence of a tax event, (i) Household
International has received an opinion from independent tax counsel experienced
in such matters that, as a result of the tax event, there is more than an
insubstantial risk that Household International would be precluded from
deducting the interest on the Notes for United States federal income tax
purposes even after the Notes were distributed to the holders of all securities
issued by the Trust in liquidation of such holders' interests in the Trust as
described above or (ii) the Regular Trustees shall have been informed by such
counsel that the legal opinion required to be delivered with respect to the
recognition of gain or loss as described above cannot be delivered, Household
International shall have the right, upon not less than 30 nor more than 60 days
notice, to redeem the Notes in whole or in part for cash within 90 days
following the occurrence of such tax event, and, following such redemption, such
securities with an aggregate liquidation amount equal to the aggregate principal
amount of the Notes so redeemed shall be redeemed by the Trust at the redemption
price on a pro rata basis; provided, however, that, if at the time there is
available to Household International or the Trust the opportunity to eliminate,
within such 90 day period, the tax event by taking some ministerial action, such
as filing a form or making an election, or pursuing some other similar
reasonable measure which has no adverse effect on the Trust, the holders of
securities issued by the Trust or Household International, the Trust will pursue
such measure in lieu of redemption.
After the date for any distribution of Notes upon dissolution of the Trust,
(i) the Capital Securities and Capital Securities Guarantee will no longer be
deemed to be outstanding, (ii) the depositary or its nominee, as the record
holder of the Capital Securities, will receive a registered global certificate
or certificates representing the Notes to be delivered upon such distribution
and (iii) any certificates representing the Capital Securities and the Capital
Securities Guarantee not held by the depositary or its nominee will be deemed to
represent Notes having an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distribution on, such Capital Securities, until such certificates are
presented to Household International or its agent for transfer or reissuance.
There can be no assurance as to the market prices for the Capital
Securities or the Notes that may be distributed in exchange for the Capital
Securities if a dissolution and liquidation of the Trust were to occur.
Accordingly, the Capital Securities that an investor may purchase, or the Notes
that the investor may receive on dissolution and liquidation of the Trust, may
trade at a discount to the price that the investor paid to purchase the Capital
Securities offered hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding the Capital
Securities unless all accrued and unpaid distributions have been paid on all
Capital Securities for all semiannual distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of the Capital
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that Household International has
paid to the property trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Notes, the property trustee will
irrevocably deposit with the depositary funds
15
<PAGE> 17
sufficient to pay the applicable redemption price and will give the depositary
irrevocable instructions and authority to pay the redemption price to the
holders of the the Capital Securities. See " -- Book-Entry Only Issuance -- The
Depository Trust Company." If notice of redemption shall have been given and
funds deposited as required, then immediately prior to the close of business on
the date of such deposit, distributions will cease to accrue and all rights of
holders of such Capital Securities so called for redemption will cease, except
the right of the holders of such Capital Securities to receive the redemption
price, but without interest on such redemption price. In the event that any date
fixed for redemption of the Capital Securities is not a business day, then
payment of the redemption price payable on such date will be made on the next
succeeding day which is a business day (and without any interest or other
payment in respect of any such delay), except that, if such business day falls
in the next calendar year, such payment will be made on the immediately
preceding business day. In the event that payment of the redemption price in
respect of the Capital Securities is improperly withheld or refused and not paid
either by the Trust or by Household International pursuant to the Capital
Securities Guarantee, distributions on such Capital Securities will continue to
accrue from the original redemption date to the actual date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the redemption price.
In the event that fewer than all of the outstanding Capital Securities are
to be redeemed, the Capital Securities will be redeemed as described under
"-- Book-Entry Only Issuance -- The Depository Trust Company" below.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Household International or
its affiliates may, at any time and from time to time, purchase outstanding
Capital Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, the holders of the Capital Securities at
that time will be entitled to receive out of the assets of the Trust, after
satisfaction of liabilities to creditors, distributions in an amount equal to
the aggregate of the stated liquidation amount of $1,000 per Capital Security
plus accrued and unpaid distributions thereon to the date of payment, unless, in
connection with such liquidation, dissolution, winding-up or termination, Notes
in an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Capital Securities have been distributed on a pro rata basis to the holders of
Capital Securities.
If, upon any such dissolution, the liquidation distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate liquidation distribution, then the amounts payable directly by the
Trust on the Capital Securities shall be paid on a pro rata basis. The holders
of the common interests will be entitled to receive distributions upon any such
dissolution pro rata with the holders of the Capital Securities, except that if
a Declaration Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the common interests with respect to
such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on March 22,
2055, the expiration of the term of the Trust, (ii) upon the bankruptcy of
Household International, (iii) upon the filing of a certificate of dissolution
or its equivalent with respect to Household International (except for permitted
mergers, consolidations or reorganizations of Household International), the
filing of a certificate of cancellation with respect to the Trust, or the
revocation of the charter of Household International and the expiration of 90
days after the date of revocation without a reinstatement thereof, (iv) upon the
distribution of the Notes following the occurrence of a Special Event, (v) upon
the redemption of all of the securities issued by the Trust or (vi) upon the
entry of a decree of a judicial dissolution of Household International or the
Trust.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture constitutes an event of default
under the Declaration with respect to the Capital Securities (a "Declaration
Event of Default"), provided that pursuant to the Declaration, the holder of the
common interests will be deemed to have waived any Declaration Event of
16
<PAGE> 18
Default with respect to the common interests until all Declaration Events of
Default with respect to the Capital Securities have been cured, waived or
otherwise eliminated. Until such Declaration Events of Default with respect to
the Capital Securities have been so cured, waived or otherwise eliminated, the
property trustee will be deemed to be acting solely on behalf of the holders of
the Capital Securities and only the holders of the Capital Securities will have
the right to direct the property trustee with respect to certain matters under
the Declaration, and therefore the Indenture. In the event that any Declaration
Event of Default with respect to the Capital Securities is waived by the holders
of the Capital Securities as provided in the Declaration, the holders of common
interests pursuant to the Declaration have agreed that such waiver also
constitutes a waiver of such Declaration Event of Default with respect to the
common interests for all purposes under the Declaration without any further act,
vote or consent of the holders of common interests. See " -- Voting Rights."
If the property trustee fails to enforce its rights under the Notes, any
holder of Capital Securities may directly institute a legal proceeding against
Household International to enforce the property trustee's rights under the
Notes, without first instituting any legal proceeding against the property
trustee or any other person or entity. Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of Household International to pay interest or
principal on the Notes on the date such interest or principal is otherwise
payable (or in the case of redemption, the redemption date), then a holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such holder of the principal of or interest on the Notes having a
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such holder on or after the respective due date specified in the
Notes. In connection with such action, Household International will be
subrogated to the rights of such holder of Capital Securities under the
Declaration to the extent of any payment made by Household International to such
holder of Capital Securities in such action. The holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Notes.
Upon the occurrence of a Declaration Event of Default, the property
trustee, as the sole holder of the Notes, will have the right under the
Indenture to declare the principal of and interest on the Notes to be
immediately due and payable.
VOTING RIGHTS
Except as provided below, under the Delaware Trust Act, the Trust Indenture
Act and "Description of the Capital Securities Guarantee -- Amendments and
Assignment" and as otherwise required by law and the Declaration, the holders of
the Capital Securities will have no voting rights.
If (i) the Trust fails to pay distributions in full on the Capital
Securities for three consecutive semiannual distribution periods, or (ii) a
Declaration Event of Default occurs and is continuing then the holders of the
Capital Securities, acting as a single class, will be entitled by the majority
vote of such holders to appoint a Special Regular Trustee. For purposes of
determining whether the Trust has failed to pay distributions in full for three
consecutive semiannual distribution periods, distributions shall be deemed to
remain in arrears, notwithstanding any payments in respect thereof, until full
cumulative distributions have been or contemporaneously are paid with respect to
all semiannual distribution periods terminating on or prior to the date of
payment of such cumulative distributions. Any holder of Capital Securities
(other than Household International or any of its affiliates) shall be entitled
to nominate any person to be appointed as Special Regular Trustee. Not later
than 30 days after such right to appoint a Special Regular Trustee arises, the
Regular Trustees shall convene a meeting of the holders of Capital Securities
for the purpose of appointing a Special Regular Trustee. If the Regular Trustees
fail to convene such meeting within such 30-day period, the holders of not less
than 10% of the aggregate stated liquidation amount of the outstanding Capital
Securities will be entitled to convene such meeting. The provisions of the
Declaration relating to the convening and conduct of the meetings of the holders
will apply with respect to any such meeting. Any Special Regular Trustee so
appointed shall cease to be a Special Regular Trustee if the event pursuant to
which the Special Regular Trustee was appointed and all other events which could
cause such appointment cease to be continuing. Notwithstanding the appointment
of any Special Regular Trustee, Household International shall retain all rights
under the Indenture, including the right to extend or defer interest payments as
provided under
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"Description of the Notes -- Option to Extend Interest Payment Period." If such
an extension or deferment occurs, there will be no Indenture event of default,
and therefore no Declaration Event of Default, for failure to make any scheduled
interest payment during that period.
The holders of a majority in aggregate liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the property trustee, or to direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the property trustee, as the holder
of the Notes, to (i) direct the time, method or place of conducting any
proceeding for any remedy available to the Debt Trustee or exercise any trust or
power conferred on the Debt Trustee with respect to the Notes, (ii) waive any
past Indenture event of default which is waivable under the Indenture, (iii)
exercise any right to rescind or annul a declaration that the principal of all
Notes shall be due and payable, or (iv) consent to any amendment, modification
or termination of the Indenture or the Notes where such consent shall be
required; provided that where a consent or action under the Indenture would
require the consent or action of the holders of more than a majority in
principal amount of the Notes (a "Super-Majority") affected thereby, only the
holders of at least such Super-Majority in aggregate liquidation amount of the
Capital Securities may direct the property trustee to give such consent or take
such action. If the property trustee fails to enforce its rights under the
Notes, a holder of Capital Securities may institute a legal proceeding directly
against Household International to enforce the property trustee's rights under
the Notes without first instituting any legal proceeding against the Property
Trustee or any other person or entity. The property trustee shall notify all
holders of the Capital Securities of any notice of default received from the
Debt Trustee with respect to the Notes. Such notice shall state that such
Indenture event of default also constitutes a Declaration Event of Default.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the property trustee shall not take any action
described in clauses (i), (ii), (iii) or (iv) above unless the property trustee
has obtained an opinion of independent tax counsel to the effect that, as a
result of such action, the Trust will not be classified as other than a grantor
trust for United States federal income tax purposes.
In the event the consent of the property trustee, as the holder of the
Notes, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture, the property trustee shall request
the direction of the holders of the securities issued by the Trust with respect
to such amendment, modification or termination and shall vote with respect to
such amendment, modification or termination as directed by a majority in
liquidation amount of the such securities voting together as a single class,
provided that where a consent under the Indenture would require the consent of a
Super-Majority, the property trustee may only give such consent at the direction
of the holders of at least the proportion in liquidation amount of all
securities issued by the Trust which the relevant Super-Majority represents of
the aggregate principal amount of the Notes outstanding. The property trustee
shall not take any such action in accordance with the directions of the holders
of all securities issued by the Trust unless the property trustee has obtained
an opinion of independent tax counsel to the effect that, as a result of such
action, the Trust will not be classified as other than a grantor trust for
United States federal income tax purposes.
A waiver of an Indenture event of default by the property trustee at the
direction of the holders of the Capital Securities will constitute a waiver of
the corresponding Declaration Event of Default.
Any required approval or direction of holders of Capital Securities may be
given at a separate meeting of holders of Capital Securities convened for such
purpose, at a meeting of all of the holders of securities issued by the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be mailed to each holder of record of Capital Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Capital
Securities will be required for the Trust to redeem and cancel Capital
Securities or distribute Notes in accordance with the Declaration.
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Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities at such time that are owned by Household International or any entity
directly or indirectly controlling or controlled by, or under direct or indirect
common control with Household International, shall not be entitled to vote or
consent and shall, for purposes of such vote or consent, be treated as if they
were not outstanding.
The procedures by which holders of Capital Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
Except in the limited circumstances described above in connection with the
appointment of a Special Regular Trustee, holders of the Capital Securities will
have no rights to appoint or remove the Household International trustees, who
may be appointed, removed or replaced solely by Household International, as the
direct or indirect holder of all the common interests.
MODIFICATION OF THE DECLARATION
The Declaration may be amended or modified if approved and executed by a
majority of the Regular Trustees, provided that if any proposed amendment
provides for, or the Regular Trustees otherwise propose to effect, (i) any
action that would materially adversely affect the powers, preferences or special
rights of the holders of securities issued by the Trust, whether by way of
amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or
termination of the Trust other than pursuant to the terms of the Declaration,
then the holders of all the securities issued by the Trust voting together as a
single class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least 66 2/3% in liquidation amount of the Capital Securities affected thereby,
provided that (a) any modification of the right of holders of Capital Securities
to appoint a Special Regular Trustee or (b) a reduction of the principal amount
or the distribution rate, or a change in the payment dates or maturity dates of
the Capital Securities, shall not be permitted without the consent of each
holder of Capital Securities. In the event any amendment or proposal referred to
in clause (i) above would materially adversely affect only the Capital
Securities or the common interests, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of 66 2/3% in liquidation amount
of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the property trustee or (iii) cause the Trust to be deemed to be an "investment
company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the holders of the securities issued by the
Trust, consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided, that (i) such successor
entity either (x) expressly assumes all of the obligations of the Trust with
respect to the securities issued by the Trust or (y) substitutes for the Capital
Securities other securities having substantially the same terms as the Capital
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Capital Securities in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) Household
International expressly appoints a trustee of such successor entity possessing
the same powers and duties as the property trustee as the holder of the Notes,
(iii) such merger, consolidation, amalgamation or replacement does not cause the
Capital Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (iv) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
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dilution of the holders' interest in the new entity), (v) such successor entity
has a purpose identical to that of the Trust, (vi) prior to such merger,
consolidation, amalgamation or replacement, Household International has received
an opinion from independent counsel experienced in such matters to the effect
that (A) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the holders of the
Trust Securities (including any Successor Securities) in any material respect
(other than with respect to any dilution of the holders' interest in the new
entity), and (B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor such successor entity will be required to
register as an investment company under the 1940 Act and (vii) Household
International guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Capital Securities
Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the
consent of holders of 100% in liquidation amount of the Trust Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or the successor entity to be classified for United States
federal income tax purposes as other than a grantor trust. In addition, so long
as any Capital Securities are outstanding and are not held entirely by Household
International, the Trust may not voluntarily liquidate, dissolve, wind-up or
terminate except as described above under "-- Special Event Redemption or
Distribution."
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Capital Securities. The Capital Securities will be issued only as fully
registered securities registered in the name of Cede & Co. (DTC's nominee). One
or more fully registered global Capital Securities certificates will be issued,
representing in the aggregate the total number of Capital Securities, and will
be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in a global Capital
Security.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement among participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its direct participants and by
the New York Stock Exchange, the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a direct
participant, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the Commission.
Purchases of Capital Securities within the DTC system must be made by or
through direct participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser of
Capital Securities is in turn to be recorded on the participants' records.
Beneficial owners will not receive written confirmation from DTC of their
purchases, but beneficial owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the participants through which the beneficial owners purchased
Capital Securities. Transfers of ownership interests in the Capital Securities
are to be accomplished by entries made on the books of participants acting on
behalf of beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests in Capital Securities, except in the
event that use of the book-entry system for the Capital Securities is
discontinued.
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To facilitate subsequent transfers, all the Capital Securities deposited by
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Capital Securities with DTC and their registration in the name of
Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the
actual beneficial owners of the Capital Securities. DTC's records reflect only
the identity of the direct participants to whose accounts such Capital
Securities are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to participants, and by participants to
beneficial owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Capital Securities are being redeemed, DTC will use a lottery to select certain
of the Capital Securities to be redeemed in accordance with its procedures.
Although voting with respect to the Capital Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to Capital Securities. Under its usual procedures, DTC
would mail an omnibus proxy to the Trust as soon as possible after the record
date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to
those direct participants to whose accounts the Capital Securities are credited
on the record date (identified in listing attached to the omnibus proxy).
Household International and the Trust believe the arrangements among DTC,
participants, and beneficial owners will enable the beneficial owners to
exercise rights equivalent in substance to the rights that can be directly
exercised by a holder of a beneficial interest in the Trust.
Distribution payments on the Capital Securities will be made to DTC. DTC's
practice is to credit direct participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by participants to beneficial owners will be governed by standing
instructions and customary practices, as in the case with securities held for
the account of customers in bearer form or registered in "street name," and will
be the responsibility of such participant and not of DTC, the Trust, any trustee
or Household International, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of distributions to DTC is the
responsibility of the Trust, disbursement of such payments to direct
participants is the responsibility of DTC, and disbursement of such payments to
the beneficial owners is the responsibility of participants.
Except as provided herein, a beneficial owner in a global Capital Security
will not be entitled to receive physical delivery of Capital Securities.
Accordingly, each beneficial owner must rely on the procedures of DTC to
exercise any rights under the Capital Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Capital Securities at any time by giving reasonable notice to the
Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Capital Securities certificates are required to be
printed and delivered. Additionally, the Regular Trustees (with consent of
Household International) may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor depositary) with respect to the
Capital Securities. In that event, certificates for the Capital Securities will
be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
have been obtained from sources that Household International and the Trust
believe to be reliable, but Household International and the Trust take no
responsibility for the accuracy thereof.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, prior to the occurrence of a default with respect to
the Trust Securities or interest, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after default, shall exercise the
same degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to such provisions, the property trustee is under no
obligation to exercise any of the powers vested in it
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by the Declaration at the request of any holder of Capital Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The holders of Capital Securities
will not be required to offer such indemnity in the event such holders, by
exercising their voting rights, direct the property trustee to take any action
following a Declaration Event of Default. The property trustee also serves as
trustee under the Capital Securities Guarantee.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
In the event that the Capital Securities do not remain in book-entry only
form, the property trustee will act as paying agent and may designate an
additional or substitute paying agent at any time. Registration of transfers of
Capital Securities will be effected without charge by or on behalf of the Trust,
but upon payment (with the giving of such indemnity as the Trust or Household
International may require) in respect of any tax or other government charges
which may be imposed in relation to it, the Trust will not be required to
register or cause to be registered the transfer of Capital Securities after such
Capital Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Capital Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or characterized for United States
federal income tax purposes as other than a grantor trust. Household
International is authorized and directed to conduct its affairs so that the
Notes will be treated as indebtedness of Household International for United
States federal income tax purposes. In this connection, the Regular Trustees and
Household International are authorized to take any action, not inconsistent with
applicable law, the Declaration or the amended and restated certificate of
incorporation of Household International, that each of the Regular Trustees and
Household International determines in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially and
adversely affect the interests of the holders of the Capital Securities.
DESCRIPTION OF THE CAPITAL SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Capital
Securities Guarantee that will be executed and delivered by Household
International for the benefit of the holders from time to time of Capital
Securities. The Capital Securities Guarantee will be qualified as an indenture
under the Trust Indenture Act. Wilmington Trust Company will act as indenture
trustee under the Capital Securities Guarantee (the "Capital Guarantee Trustee")
including for purposes of the Trust Indenture Act. The terms of the Capital
Securities Guarantee will be those set forth therein and those made part thereof
by the Trust Indenture Act. The summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to the Capital Securities Guarantee, which is filed as an exhibit
to the registration statement of which this prospectus forms a part, and the
Trust Indenture Act. The Capital Securities Guarantee will be held by the
Capital Guarantee Trustee for the benefit of holders of the Capital Securities.
GENERAL
Pursuant to the Capital Securities Guarantee, Household International will
irrevocably agree, to the extent set forth therein, to pay in full to the
holders of the Capital Securities, the guarantee payments (without duplication
of amounts theretofore paid by the Trust), to the extent not paid by the Trust,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert. The guarantee payments with respect to the Capital Securities,
to the extent not paid or made by the Trust, will be: (i) any accrued and unpaid
distributions on the Capital Securities where Household International has made a
payment of
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principal, premium or interest on the Notes held by the property trustee, (ii)
the redemption price, including all accrued and unpaid distributions to the date
of the redemption, to the extent the Trust has funds available therefor with
respect to the Capital Securities called for redemption by the Trust and (iii)
upon a liquidation of the Trust (other than in connection with the distribution
of Notes to the holders of Trust Securities or the redemption of all of the
Capital Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Capital Securities to the date
of payment, to the extent the Trust has funds available therefor, and (b) the
amount of assets of the Trust remaining available for distribution to holders of
Capital Securities in liquidation of the Trust. Household International's
obligation to make a guarantee payment may be satisfied by direct payment of the
required amounts by Household International to the holders of Capital Securities
or by causing the Trust to pay such amounts to such holders.
If Household International does not make interest payments on the Notes
held by the property trustee, the Trust will not make distributions on the
Capital Securities. The Capital Securities Guarantee will guarantee, on a
subordinated basis, the guarantee payments with respect to the Capital
Securities from the time of issuance of the Capital Securities, but will not
apply to the payment of distributions and other payments on the Capital
Securities when the property trustee does not have sufficient funds in the
Property Account to make such distributions or other payments. The Capital
Securities Guarantee, when taken together with Household International's
obligations under the Notes, the Indenture and the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of the Trust (other
than with respect to the Trust Securities), will provide a full and
unconditional guarantee on a subordinated basis by Household International of
amounts due on the Capital Securities.
CERTAIN COVENANTS OF HOUSEHOLD INTERNATIONAL
In the Capital Securities Guarantee, Household International will covenant
that, so long as the Capital Securities remain outstanding, if there shall have
occurred and is continuing any event that would constitute an event of default
under the Capital Securities Guarantee or the Declaration, then (a) Household
International will not declare or pay any dividends on, or purchase, acquire or
make a distribution or liquidation payment with respect to, any of its capital
stock (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of Household International in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
employees, officers, directors or consultants, (ii) as a result of an exchange
or conversion of any class or series of Household International's capital stock
for any other class or series of Household International's capital stock, or
(iii) the purchase of fractional interests in shares of Household
International's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), and (b)
Household International shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by Household International which rank pari passu
with or junior to such Notes. The foregoing, however, will not apply to any
stock dividends paid by Household International where the dividend stock is the
same stock as that on which the dividend is being paid.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of Capital Securities (in which case no consent will be
required), the Capital Securities Guarantee may be amended only with the prior
approval of the holders of not less than 66 2/3% in aggregate liquidation amount
of the outstanding Capital Securities. The manner of obtaining any such approval
of holders of the Capital Securities is set forth under "Description of the
Capital Securities -- Voting Rights." All guarantees and agreements contained in
the Capital Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of Household International and shall inure to the
benefit of the holders of the Capital Securities then outstanding.
TERMINATION OF THE CAPITAL SECURITIES GUARANTEE
The Capital Securities Guarantee will terminate and be of no further force
and effect as to the Capital Securities upon full payment of the redemption
price of all Capital Securities, upon distribution of the Notes
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to the holders of Capital Securities, or upon full payment of the amounts
payable upon liquidation of the Trust. See "Description of the Notes -- Events
of Default" for a description of the events of default and enforcement rights of
the holders of Notes. The Capital Securities Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Capital Securities must repay to the Trust or Household International, or
their respective successors, any sums paid to them under the Capital Securities
or the Capital Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Capital Securities Guarantee will occur upon
the failure of Household International to perform any of its payment or other
obligations thereunder.
The holders of a majority in liquidation amount of the Capital Securities
relating to such Capital Securities Guarantee have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Capital Guarantee Trustee in respect of Capital Securities Guarantee or to
direct the exercise of any trust or power conferred upon the Capital Guarantee
Trustee under such Capital Securities Guarantee. If the Capital Guarantee
Trustee fails to enforce the Capital Securities Guarantee, any holder of Capital
Securities may institute a legal proceeding directly against Household
International to enforce such holder's rights under such Capital Securities
Guarantee, without first instituting a legal proceeding against the Trust, the
Capital Guarantee Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of Household International to pay
interest or principal on the Notes on the date such interest or principal is
otherwise payable (or in the case of redemption, the redemption date), then a
holder of Capital Securities may directly institute a proceeding for enforcement
of payment to such holder of the principal of or interest on the Notes having a
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such holder on or after the respective due date specified in the
Notes. In connection with such action, Household International will be
subrogated to the rights of such holder of Capital Securities under the
Declaration to the extent of any payment made by Household International to such
holder of Capital Securities in such action. The holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Notes.
STATUS OF THE CAPITAL SECURITIES GUARANTEE
Household International's obligations under the Capital Securities
Guarantee to make the guarantee payments will constitute an unsecured obligation
of Household International and will rank (i) subordinate and junior in right of
payment to all other liabilities of Household International, including the
Notes, except those made pari passu or subordinate by their terms, and (ii) pari
passu with the most senior preferred stock now or hereafter issued by Household
International and with any guarantee now or hereafter entered into by Household
International in respect of any preferred security of any affiliate of Household
International. The terms of the Capital Securities provide that each holder of
Capital Securities by acceptance thereof agrees to the subordination provisions
and other terms of the Capital Securities Guarantee. In addition, because
Household International is a holding company, its obligations under the Capital
Securities Guarantee are effectively subordinated to all existing and future
liabilities of its subsidiaries.
The Capital Securities Guarantee will constitute a guarantee of payment and
not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without first instituting a legal proceeding against any other person
or entity). The Capital Securities Guarantee will be deposited with the property
trustee to be held for the benefit of the holders of the Capital Securities.
Except as otherwise noted herein, the property trustee has the right to enforce
the Capital Securities Guarantee on behalf of the holders of the Capital
Securities. The Capital Securities Guarantee will not be discharged except by
payment of the guarantee payments in full (without duplication of amounts
theretofore paid by the Trust).
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INFORMATION CONCERNING THE CAPITAL GUARANTEE TRUSTEE
The Capital Guarantee Trustee, prior to the occurrence of a default with
respect to a Capital Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Capital Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Capital Guarantee Trustee is under no obligation to exercise any
of the powers vested in it by the Capital Securities Guarantee at the request of
any holder of Capital Securities, unless offered reasonable indemnity against
the costs, expenses and liabilities which might be incurred thereby. The Capital
Guarantee Trustee also serves as property trustee.
GOVERNING LAW
The Capital Securities Guarantee will be governed by and construed in
accordance with the laws of the State of Illinois.
DESCRIPTION OF THE NOTES
Set forth below is a description of the terms of the Notes. The following
description does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the Indenture (the "Base Indenture"), dated as
of May 15, 1995, between Household International and Bank One, National
Association (formerly known as The First National Bank of Chicago) as trustee
(the "Debt Trustee"), as supplemented by a Fourth Supplemental Indenture, dated
as of April 1, 2000 (the Base Indenture, as so supplemented, is hereinafter
referred to as the "Indenture"), the forms of which are filed as an exhibit to
the registration statement of which this prospectus forms a part. The terms of
the Notes will include those stated in the Indenture and those made a part of
the Indenture by reference to the Trust Indenture Act. Certain capitalized terms
used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Special Event, Notes may be distributed to the
holders of Trust securities in liquidation of the Trust. See "Description of the
Capital Securities -- Special Event Redemption or Distribution."
GENERAL
The Notes will be issued as unsecured junior subordinated debt securities
under the Indenture. The Notes will be limited in aggregate principal amount to
approximately $ , such amount being the sum of the aggregate
stated liquidation amount of the Capital Securities and the capital contributed
by Household International in exchange for the common interests (the "Payment").
The Notes are not subject to a sinking fund provision. The Notes will
mature on May , 2030 (such date, as it may be advanced as hereinafter
described, the "Stated Maturity"). If a tax event occurs, then Household
International will have the right prior to the termination of the Trust, to
advance the Stated Maturity of the Notes to the minimum extent required in order
to allow for the payments of interest in respect of the Notes to continue to be
tax deductible, but in no event shall the resulting maturity of the Notes be
less than 15 years from the date of original issuance thereof. The Stated
Maturity shall be advanced only if, in the opinion of counsel to Household
International experienced in such matters, (a) after advancing the Stated
Maturity, interest paid on the Notes will be deductible for United States
federal income tax purposes and (b) advancing the Stated Maturity will not
result in a taxable event to holders of the Capital Securities.
If Household International elects to advance the Stated Maturity of the
Notes, it will give notice to the Debt Trustee, and the Debt Trustee will give
notice of such change to the holders of the Notes not less than 30 and not more
than 60 days prior to the effectiveness thereof.
If Notes are distributed to holders of the Capital Securities in
liquidation of such holders' interests in the Trust, such Notes will initially
be issued as a Global Security. As described herein, under certain limited
circumstances, Notes may be issued in certificated form in exchange for a Global
Security. See "-- Book-Entry and Settlement." In the event Notes are issued in
certificated form, the Notes will be in denominations
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of $1,000 and integral multiples thereof and may be transferred or exchanged at
the offices described below. Payments on Notes issued as Global Securities will
be made to the depositary for the Notes. In the event Notes are issued in
certificated form, principal and interest will be payable, the transfer of the
Notes will be registrable and Notes will be exchangeable for Notes of other
denominations of a like aggregate principal amount at the corporate trust office
of the Debt Trustee in Chicago, Illinois or its current principal office;
provided, that payment of interest may be made at the option of Household
International by check mailed to the address of the persons entitled thereto.
The Indenture does not contain provisions that afford holders of Notes
protection in the event of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction involving Household International.
SUBORDINATION
The Indenture provides that the Notes are subordinated and junior in right
of payment to all senior indebtedness of Household International. No payment of
principal of (including redemption payments, if any), premium, if any, or
interest on, the Notes may be made if (a) any senior indebtedness is not paid
when due and any applicable grace period with respect to such default has ended
with such default not being cured or waived or ceasing to exist, or (b) the
maturity of any senior indebtedness has been accelerated because of a default.
Upon any distribution of assets of Household International to creditors upon any
dissolution, winding-up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
all principal of, premium, if any, and interest due or to become due on, all
senior indebtedness must be paid in full before the holders of Notes are
entitled to receive or retain any payment. The rights of the holders of the
Notes will be subrogated to the rights of the holders of senior indebtedness to
receive payments or distributions applicable to such senior indebtedness until
all amounts owing on the Notes are paid in full.
The term "senior indebtedness" means, with respect to Household
International, (i) any payment in respect of (a) indebtedness of such obligor
for money borrowed (including any financial derivative, hedging or futures
contract or similar instrument) and (b) indebtedness evidenced by securities,
debentures, bonds, notes or other similar instruments issued by Household
International which, by their terms, are senior or senior subordinated debt
securities including, without limitation, all obligations under its indentures
with various trustees; (ii) all capital lease obligations; (iii) all obligations
issued or assumed as the deferred purchase price of property, all conditional
sale obligations and all obligations of Household International under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations for the reimbursement on any
letter of credit, banker's acceptance, security purchase facility or similar
credit transaction; (v) all obligations of the type referred to in clauses (i)
through (iv) above of other persons the payment of which Household International
is responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of Household International
(whether or not such obligation is assumed by Household International), except
for (1) any such indebtedness that is by its terms subordinated to or pari passu
with the Notes and (2) any unsecured indebtedness between or among Household
International or its affiliates including all other debt securities and
guarantees in respect of these debt securities, issued to (a) any other trust or
a trustee of such trust and (b) any other partnership or other entity affiliated
with Household International that is a financing vehicle of Household
International or its subsidiaries in connection with the issuance by such
financing vehicle of securities similar to the Capital Securities or other
securities that rank pari passu with, or junior to, the Capital Securities. Such
senior indebtedness shall continue to be senior indebtedness and be entitled to
the benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such senior indebtedness.
The Indenture does not limit the aggregate amount of senior indebtedness
which may be issued by Household International. As of December 31, 1999, senior
indebtedness of Household International aggregated approximately $4.7 billion.
In addition, because Household International is a holding company, its
obligations under the Notes will be effectively subordinated to all existing and
future liabilities of its subsidiaries. At December 31, 1999, such subsidiaries
had total liabilities of approximately $52.8 billion.
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CERTAIN COVENANTS
If (i) there shall have occurred any event that would constitute an event
of default under the Indenture, (ii) Household International shall be in default
with respect to its payment of any obligations under the Capital Securities
Guarantee, or (iii) Household International shall have given notice of its
election to extend or defer interest payments on the Notes as provided in the
Indenture and such period, or any extension thereof, shall be continuing, then
(a) Household International shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase or make a liquidation payment
with respect to, any of its capital stock, other than (x) repurchases,
redemptions or other acquisitions of shares of capital stock of Household
International in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (y) as a result of an exchange or conversion of any class or series
of Household International's capital stock for any other class or series of
Household International's capital stock, or (z) the purchase of fractional
interests in shares of Household International's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, and (b) Household International shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by Household
International which rank pari passu with or junior to the Notes.
For so long as the Trust Securities remain outstanding, Household
International will covenant (i) to directly or indirectly maintain 100%
ownership of the common interests of the Trust; provided, however, that any
permitted successor of Household International under the Indenture may succeed
to Household International's ownership of such common interests, and (ii) to use
its reasonable efforts to cause the Trust (a) to remain a statutory business
trust, except in connection with the distribution of Notes to the holders of
Trust Securities in liquidation of the Trust, the redemption of all of the Trust
Securities of the Trust, or certain mergers, consolidations or amalgamations,
each as permitted by the Declaration, and (b) to otherwise continue to be
classified as a grantor trust for United States federal income tax purposes.
OPTIONAL REDEMPTION
Household International shall have the right to redeem the Notes at any
time, in whole or in part, in certain circumstances upon the occurrence of a tax
event as described under "Description of the Capital Securities -- Special Event
Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice. The redemption price shall be equal to the Make-Whole Amount (as defined
under "Description of Capital Securities -- Mandatory Redemption"), together
with accrued and unpaid interest thereon to but excluding the redemption date.
POSSIBLE TAX LEGISLATION
There can be no assurance that legislation affecting Household
International's ability to deduct interest paid on the Notes or the
characterization of the Notes for United States federal income tax purposes will
not be enacted in the future or that any such legislation would not be effective
retroactively. If tax law changes are enacted and apply retroactively to the
Notes, such changes could give rise to a tax event, which would, in certain
circumstances, require the dissolution of the Trust or permit Household
International to redeem the Notes. See "Risk Factors -- Redemption of the
Capital Securities or Notes May Affect Your Return," "Description of Capital
Securities -- Special Event Redemption or Distribution," and "Certain United
States Federal Income Consequences -- Possible Tax Legislation."
INTEREST
Each Note shall bear interest at the rate of % per annum from the
original date of issuance, payable semiannually in arrears on and
of each year (each, an "Interest Payment Date"), commencing
, 2000, to the person in whose name such Note is registered, subject
to certain exceptions, at the close of business on the business day next
preceding such Interest Payment Date. In the event the Notes shall not continue
to remain in book-entry only form, Household International shall have the right
to select such record dates which shall be not less than fifteen days prior to
each Interest Payment Date.
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The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Notes is not a business day, then payment of the
interest payable on such date will be made on the next succeeding day which is a
business day (and without any interest or other payment in respect of any such
delay), except that, if such business day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding business day, in
each case with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Household International shall have the right at any time, and from time to
time, during the term of the Notes to defer payments of interest by extending
the interest payment period for a period not exceeding 10 consecutive semiannual
periods, provided, that no extension period may extend beyond the maturity of
the Notes, at the end of which extension period, Household International shall
pay all interest then accrued and unpaid (including any Additional Interest)
(together with interest thereon at the rate specified for the Notes to the
extent permitted by applicable law); provided further that, during any such
extension period, (a) Household International shall not declare or pay any
dividend or make any distributions with respect to, or redeem, purchase or make
a liquidation payment with respect to, any of its capital stock (other than (i)
repurchases, redemptions or other acquisitions of shares of capital stock of
Household International in connection with any employment contract, benefit plan
or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) as a result of an exchange or conversion of any
class or series of Household International's capital stock for any other class
or series of Household International's capital stock, or (iii) the purchase of
fractional interests in shares of Household International's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged), and (b) Household International shall
not make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by
Household International which rank pari passu with or junior to the Notes. The
foregoing, however, will not apply to any stock dividends paid by Household
International where the dividend stock is the same stock as that on which the
dividend is being paid. Prior to the termination of any such extension period,
Household International may further defer payments of interest by extending the
interest payment period, provided that such extension period together with all
such previous and further extensions thereof may not exceed 10 consecutive
semiannual periods and no extension period may extend beyond the maturity of the
Notes. Upon the termination of any extension period and the payment of all
amounts then due, Household International may select a new extension period, as
if no extension period had previously been declared, subject to the above
requirements. No interest during an extension period, except at the end thereof,
shall be due and payable. Household International has no present intention of
exercising its rights to defer payments of interest by extending the interest
payment period on the Notes. If the property trustee shall be the sole holder of
the Notes, Household International shall give the Regular Trustees and the
property trustee notice of its selection of such extension period one business
day prior to the earlier of (i) the date distributions on the Capital Securities
are payable or (ii) the date the Regular Trustees are required to give notice to
holders of the Capital Securities of the record date or the date such
distribution is payable, but in any event not less than one Business Day prior
to such record date. The Regular Trustees shall give notice of Household
International's selection of such extension period to the holders of the Capital
Securities. If the property trustee shall not be the sole holder of the Notes,
Household International shall give the holders of the Notes notice of its
selection of such extension period ten business days prior to the earlier of (i)
the next Interest Payment Date or (ii) the date Household International is
required to give notice to holders of the Notes of the record or payment date of
such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, Household International will pay as additional interest ("Additional
Interest") such additional amounts as shall be required so that the net amounts
received and retained by the Trust after paying
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such taxes, duties, assessments or other governmental charges will be not less
than the amounts the Trust would have received had no such taxes, duties,
assessments or other governmental changes been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture event of default shall occur and be continuing, the
property trustee, as the holder of the Notes, will have the right to declare the
principal of and the interest on the Notes (including Additional Interest, if
any) and any other amounts payable under the Indenture to be forthwith due and
payable and to enforce its other rights as a creditor with respect to the Notes.
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "event of default"
with respect to the Notes:
(a) failure for 60 days to pay interest on the Notes, including any
Additional Interest in respect thereof, when due; provided, however, that a
valid extension of the interest payment period by Household International
shall not constitute a default in the payment of interest for this purpose;
or
(b) failure to pay principal or premium, if any, on the Notes when due
whether at maturity or upon earlier redemption;
(c) failure to observe or perform any other covenant (other than those
specifically relating to another series of Notes) contained in the
Indenture for 90 days after written notice to Household International from
the Debt Trustee or the holders of at least 25% in principal amount of the
outstanding Notes; or
(d) certain events of bankruptcy, insolvency, or reorganization of
Household International; or
(e) the voluntary or involuntary dissolution, winding-up or
termination of the Trust, except in connection with the distribution of
Notes to the holders of Capital Securities in liquidation of the Trust and
in connection with certain mergers, consolidations or amalgamation
permitted by the Declaration.
The holders of a majority in aggregate outstanding principal amount of the
Notes have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Debt Trustee. The Debt Trustee or the
holders of not less than 25% in aggregate outstanding principal amount of the
Notes may declare the principal due and payable immediately on default, but the
holders of a majority in aggregate outstanding principal amount may annul such
declaration and waive the default if the default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration and any applicable premium has been deposited
with the Debt Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Notes affected thereby may, on behalf of the holders of all the Notes, waive any
past default, except (i) a default in the payment of principal, premium, if any,
or interest (unless such default been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration and any applicable premium has been deposited with the Debt
Trustee) or (ii) a default in the covenant of Household International not to
declare or pay dividends on, or redeem, purchase or acquire any of its capital
stock during an extension period. An Indenture event of default also constitutes
a Declaration Event of Default. The holders of Capital Securities in certain
circumstances have the right to direct the Property Trustee to exercise its
rights as the holder of the Notes. See "Description of the Capital
Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of
Household International to pay interest or principal on the Notes on the date
such interest or principal is otherwise payable, Household International
acknowledges that, in such event, a holder of Capital Securities may institute a
direct action for payment on or after the respective due date specified in the
Notes. Household International may not amend the Indenture to remove the
foregoing right to bring a direct action without the prior written consent of
all of the holders of Capital Securities of the Trust. Notwithstanding any
payment made to such holder of Capital Securities by Household International in
connection with such a direct action, Household International shall remain
obligated to pay the principal of or interest on the Notes held by the Trust or
property trustee, and Household International shall be subrogated to
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the rights of the holder of such Capital Securities with respect to payments on
the Capital Securities to the extent of any payments made by Household
International to such holder in any such direct action. The holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Notes.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Capital Securities in connection with the
voluntary or involuntary dissolution, winding-up or liquidation of the Trust as
a result of the occurrence of a Special Event, the Notes will be issued in the
form of one or more global certificates (each, a "Global Security") registered
in the name of the depositary or its nominee. Except under the limited
circumstances described below, Notes represented by the Global Security will not
be exchangeable for, and will not otherwise be issuable as, Notes in definitive
form. The Global Securities described above may not be transferred except by the
depositary to a nominee of the depositary or by a nominee of the depositary to
the depositary or another nominee of the depositary or to a successor depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Notes in
definitive form and will not be considered the holders (as defined in the
Indenture) thereof for any purpose under the Indenture, and no Global Security
representing Notes shall be exchangeable, except for another Global Security of
like denomination and tenor to be registered in the name of the depositary or
its nominee or to a successor depositary or its nominee. Accordingly, each
beneficial owner must rely on the procedures of the depositary and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a holder under the
Indenture.
If Notes are distributed to holders of Capital Securities in liquidation of
such holders' interests in the Trust, DTC will act as securities depositary for
the Notes. For a description of DTC and the specific terms of the depository
arrangements, see "Description of the Capital Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." The description therein of DTC's
book-entry system and DTC's practices as they relate to purchases, transfers,
notices and payments with respect to the Capital Securities apply in all
material respects to any debt obligations represented by one or more Global
Securities held by DTC. Household International may appoint a successor to DTC
or any successor depositary in the event DTC or such successor depositary is
unable or unwilling to continue as depositary.
None of Household International, the Trust, the Debt Trustee, any paying
agent and any other agent of Household International or the Debt Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global
Security for such Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
A Global Security shall be exchangeable for Notes registered in the names
of persons other than the depositary or its nominee only if (i) the depositary
notifies Household International that it is unwilling or unable to continue as a
depositary for such Global Security and no successor depositary shall have been
appointed, or if at any time the depositary ceases to be a clearing agency
registered under the Exchange Act at a time when the depositary is required to
be so registered to act as such depositary and no successor depositary shall
have been appointed, (ii) Household International in its sole discretion
determines that such Global Security shall be so exchangeable or (iii) there
shall have occurred an event of default with respect to the Notes. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Notes registered in such names as the depositary shall direct.
It is expected that such instructions will be based upon directions received by
the depositary from its participants with respect to ownership of beneficial
interests in such Global Security.
In the event the Notes are not represented by one or more Global
Securities, certificates evidencing Notes may be presented for registration of
transfer (with the form of transfer endorsed thereon duly executed)
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or exchange, at the office of the Note Registrar or at the office of any
transfer agent designated by Household International for such purpose with
respect to the Notes, without service charge and upon payment of any taxes and
other governmental charges as described in the Indenture. Such transfer or
exchange will be effected upon the Note Registrar or such transfer agent, as the
case may be, being satisfied with the documents of title and identity of the
person making the request. Household International has appointed the Debt
Trustee as Note Registrar with respect to the Notes. Household International may
at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts, except that
Household International will be required to maintain a transfer agent at the
place of payment. Household International may at any time designate additional
transfer agents with respect to the Notes.
In the event of any redemption in part, Household International shall not
be required to (i) issue, register the transfer of or exchange Notes during a
period beginning at the opening of business 15 days before any selection for
redemption of Notes and ending at the close of business on the earliest date on
which the relevant notice of redemption is deemed to have been given to all
holders of the Notes and (ii) register the transfer of or exchange any Notes so
selected for redemption, in whole or in part, except the unredeemed portion of
any Notes being redeemed in part.
PAYMENT AND PAYING AGENTS
Payment of principal of and premium (if any) on the Notes will be made only
against surrender to the paying agent of the Notes. Principal of and any premium
and interest, if any, on Notes will be payable, subject to any applicable laws
and regulations, at the office of such paying agent or paying agents as
Household International may designate from time to time, except that at the
option of Household International payment of any interest may be made by check
mailed to the address of the person entitled thereto as such address shall
appear in the Note Register with respect to the Notes. Payment of interest on
Notes on any Interest Payment Date will be made to the person in whose name the
Notes (or predecessor security) is registered at the close of business on the
Regular Record Date for such interest payment.
The Indenture Trustee will act as paying agent with respect to the Notes.
Household International may at any time designate additional paying agents or
rescind the designation of any paying agents or approve a change in the office
through which any paying agent acts, except that Household International will be
required to maintain a paying agent at the place of payment.
All moneys paid by Household International to a paying agent for the
payment of the principal of or premium or interest, if any, on the Notes which
remain unclaimed at the end of two years after such principal, premium, if any,
or interest shall have become due and payable will be repaid to Household
International and the holder of such Notes will thereafter look only to
Household International for payment thereof.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting Household International and
the Debt Trustee, with the consent of the holders of not less than a majority in
principal amount of the Notes, to modify the Indenture or any supplemental
indenture affecting that series or the rights of the holders of the Notes;
provided, that no such modification may, without the consent of the holder of
each outstanding Note affected thereby, (i) extend the fixed maturity of the
Notes, or reduce the principal amount thereof, or reduce the rate or extend the
time of payment of interest thereon, or reduce any premium payable upon the
redemption thereof, without the consent of the holder of Notes so affected or
(ii) reduce the percentage of Notes, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of each Note then outstanding and affected thereby.
In addition, Household International and the Debt Trustee may execute,
without the consent of holders of the Notes, any supplemental indenture for
certain other usual purposes including the creation of any new series of Notes.
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CONSOLIDATION, MERGER AND SALE
The Indenture provides that Household International will not consolidate
with or merge into any other corporation or convey, transfer or lease its assets
substantially as an entirety unless (a) the successor is a corporation organized
in the United States and expressly assumes the due and punctual payment of the
principal of (and premium, if any) and interest on all Notes issued thereunder
and the performance of every other covenant of the Indenture on the part of
Household International and (b) immediately thereafter no event of default and
no event which, after notice or lapse of time, or both, would become an event of
default, shall have happened and be continuing. Upon any such consolidation,
merger, conveyance or transfer, the successor corporation shall succeed to and
be substituted for Household International under the Indenture and thereafter
the predecessor corporation shall be relieved of all obligations and covenants
under the Indenture and the Notes.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, Household International will be
discharged from any and all obligations in respect of the Notes (except in each
case for certain obligations to register the transfer or exchange of Notes,
replace stolen, lost or mutilated Notes, maintain paying agencies and hold
moneys for payment in trust) if Household International deposits with the Debt
Trustee, in trust, moneys or government obligations, in an amount sufficient to
pay all the principal of, and interest on, the Notes on the dates such payments
are due in accordance with the terms of the Notes.
For federal income tax purposes, any such defeasance of the Notes will be
treated as a taxable exchange of the Notes for an issue of obligations of the
trust or a direct interest in the cash or government securities held in the
trust. In that case, holders of the Capital Securities would recognize gain or
loss as if the trust obligations or the cash or government obligations
deposited, as the case may be, had actually been received by them in exchange
for their Capital Securities. Such holders thereafter would be required to
include in income a share of the income, gain or loss of the trust. The amount
so required to be included in income could be a different amount than would be
includable in the absence of defeasance. Holders of the Capital Securities
should consult their own tax advisors as to the specific consequences of
defeasance.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in
accordance with, the internal laws of the State of Illinois.
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee, prior to default, undertakes to perform only such duties
as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Debt Trustee
is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Notes, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The Debt Trustee is not required to expand or risk its own
funds or otherwise incur personal financial liability in the performance of its
duties if the Debt Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
Household International and certain of its affiliates maintain a deposit
account and a banking relationship with the Debt Trustee. The Debt Trustee
serves as trustee under other indentures pursuant to which debt securities of an
affiliate of Household International are outstanding.
MISCELLANEOUS
Household International will have the right at all times to assign any of
its rights or obligations under the Indenture to a direct or indirect
wholly-owned subsidiary of Household International; provided, that, in the event
of any such assignment, Household International will remain liable for all of
their respective obligations.
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Subject to the foregoing, the Indenture will be binding upon and inure to the
benefit of the parties thereto and their respective successors and assigns. The
Indenture provides that it may not otherwise be assigned by the parties thereto.
The Indenture will also provide that Household International will pay all
fees and expenses related to (i) the offering of the Trust Securities and the
Notes, (ii) the organization, maintenance and dissolution of the Trust, (iii)
the retention of the Household International trustees and (iv) the enforcement
by the property trustee of the rights of holders of Capital Securities.
EFFECT OF OBLIGATIONS UNDER THE NOTES
AND THE CAPITAL SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
Capital Securities and the common interests and invest the proceeds thereof in
the Notes.
As long as payments of interest and other payments are made when due on the
Notes, such payments will be sufficient to cover distributions and payments due
on the Trust Securities primarily because (i) the aggregate principal amount of
Notes will be equal to the sum of the aggregate stated liquidation amount of the
Trust Securities; (ii) the interest rate and interest and other payment dates on
the Notes will match the distribution rate and distribution and other payment
dates for the Capital Securities; (iii) Household International shall pay for
all costs and expenses of the Trust; and (iv) the Declaration provides that the
Household International trustees shall not cause or permit the Trust to, among
other things, engage in any activity that is not consistent with the purposes of
the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Capital Securities (to the extent funds therefor are
available) are guaranteed by Household International as and to the extent set
forth under "Description of the Capital Securities Guarantee." If Household
International does not make interest payments on the Notes purchased by the
Trust, it is expected that the Trust will not have sufficient funds to pay
distributions on the Capital Securities. The Capital Securities Guarantee is a
guarantee on a subordinated basis from the time of its issuance, but does not
apply to any payment of distributions unless and until the Trust has sufficient
funds for the payment of such distributions.
If Household International fails to make interest or other payments on the
Notes when due (taking into account any extension period), the Declaration
provides a mechanism whereby the holders of the Capital Securities, using the
procedures described in "Description of the Capital Securities -- Voting
Rights," may (i) appoint a Special Regular Trustee and (ii) direct the property
trustee to enforce its rights under the Notes, including proceeding directly
against Household International to enforce the Notes. If the property trustee
fails to enforce its rights under the Notes, a holder of Capital Securities may
institute a legal proceeding directly against Household International to enforce
the property trustee's rights under the Notes without first instituting any
legal proceeding against the property trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Household
International to pay interest or principal on the Notes on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Capital Securities may institute an action
for payment on or after the respective due date specified in the Notes. In
connection with such action, Household International will be subrogated to the
rights of such holder of Capital Securities under the Declaration to the extent
of any payment made by Household International to such holder of Capital
Securities in such action. Household International, under the Capital Securities
Guarantee, acknowledges that the Capital Guarantee Trustee shall enforce the
Capital Securities Guarantee on behalf of the holders of the Capital Securities.
If Household International fails to make payments under the Capital
Securities Guarantee, the Capital Securities Guarantee provides a mechanism
whereby the holders of the Capital Securities may direct the Capital Guarantee
Trustee to enforce its rights thereunder. If the Capital Guarantee Trustee fails
to enforce the Capital Securities Guarantee, any holder of Capital Securities
may institute a legal proceeding directly against Household International to
enforce the Capital Guarantee Trustee's rights under the Capital
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<PAGE> 35
Securities Guarantee, without first instituting a legal proceeding against the
Trust, the Capital Guarantee Trustee or any other person or entity.
The Capital Securities Guarantee, when taken together with Household
International's obligations under the Notes, the Indenture and the Declaration,
including its obligations under the Indenture to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities), will
provide a full and unconditional guarantee of amounts due on the Capital
Securities. See "Description of the Capital Securities Guarantee -- General."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the principal United States
federal income tax consequences of the purchase, ownership and disposition of
the Capital Securities to a holder that is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized under
the laws of the United States or any state thereof or the District of Columbia
or an estate or trust described in Section 7701(a)(30) of the Code (a "Holder").
Except as set forth below, this summary does not address the United States
federal income tax consequences to persons other than Holders.
This summary is based on the United States federal income tax laws,
regulations and rulings and decisions now in effect, all of which are subject to
change, possibly on a retroactive basis. This summary does not address the tax
consequences applicable to investors that may be subject to special tax rules
such as banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors or persons that will hold the Capital Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a Holder. Further, it
does not include any description of any alternative minimum tax consequences or
the tax laws of any state or local government or of any foreign government that
may be applicable to a Holder.
CLASSIFICATION OF HOUSEHOLD CAPITAL TRUST V
Sidley & Austin, special counsel to Household International and the Trust,
is of the opinion that, under current law and assuming full compliance with the
terms of the Indenture and the Declaration (and certain other documents),
Household Capital Trust V will be classified as a "grantor trust" for federal
income tax purposes and will not be classified as an association taxable as a
corporation or a partnership. Each Holder will be treated as owning an undivided
beneficial interest in the Notes. Accordingly, each Holder will be required to
include in its gross income interest (or accrued original issue discount
("OID"), if any) with respect to its allocable share of Notes. Investors should
be aware that the opinion of Sidley & Austin does not address any other issue
and is not binding on the Internal Revenue Service (the "Service") or the
courts.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Unless the Notes are issued with OID, stated interest on the Notes will be
taxable to a Holder as ordinary income at the time such interest is paid (if the
Holder uses the cash method of accounting for tax purposes) or accrued (if the
Holder uses the accrual method of accounting for tax purposes). Under
regulations of the U.S. Treasury Department, the Notes will not be considered
issued with OID if the likelihood of Household International exercising its
right to defer interest (as described under "Description of the Notes -- Option
to Extend Interest Payment Period") is considered a "remote" contingency at the
time the Notes are issued. Household International believes that such likelihood
is remote, because exercise of its right to defer interest would prevent
Household International from declaring dividends on its capital stock.
Accordingly, Household International intends to take the position that the Notes
will not be issued with OID. However, the definition of the term "remote" in the
regulations has not yet been addressed in any rulings or other interpretations
by the Service, and it is possible that the Service would assert that the Notes
were issued with OID.
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<PAGE> 36
If, notwithstanding Household International's current belief, it does
exercise its right to defer interest payments, the Notes would be treated as if
they were retired and then reissued with OID at such time. In such case, the
amount of OID would generally be equal to the interest payable thereafter.
If the Notes are treated as having been issued or reissued with OID (either
because Household International exercises its right to defer interest payments
or because the likelihood of exercise of such right is not considered a remote
contingency at the time of issuance), Holders would include that interest in
income on an accrual basis, regardless of their method of tax accounting. The
amount of OID that accrued in any period would approximately equal the amount of
interest that accrued on the Notes in that period at the stated interest rate.
If interest payments were received later than the taxable year in which the
interest accrued, OID treatment would have the effect of accelerating the
reporting of income for Holders who otherwise use a cash method of tax
reporting.
Corporate Holders of Capital Securities will not be entitled to a
dividends-received deduction with respect to any interest earned with respect to
the Capital Securities.
PREMIUM AND MARKET DISCOUNT
To the extent a Holder acquires its Capital Securities at a price that is
greater or less than the principal payable at maturity (or, if the Notes are
treated as having been issued or reissued with OID, the adjusted issue price of
such Holder's share of Notes (which generally should approximate par plus any
OID accrued with respect to unpaid interest)), the Holder will be deemed to have
acquired its interest in the Capital Securities with premium or with market
discount, as the case may be. A Holder acquiring Capital Securities at a premium
may elect to reduce the amount of interest payments (and will reduce the amount
of OID, if any) required to be included in income to reflect amortization of the
premium over the remaining term. A Holder acquiring Capital Securities at a
market discount will also include the amount of such discount in income in
accordance with the market discount rules described below.
A Holder acquiring Capital Securities at a market discount generally will
be required to recognize ordinary income to the extent of accrued market
discount upon the retirement of the underlying Notes or, to the extent of any
gain, upon the disposition of the Capital Securities. Such market discount would
accrue ratably, or, at the election of the Holder, under a constant yield method
over the remaining term of the Notes. A Holder will also be required to defer
the deduction of a portion of the interest paid or accrued on indebtedness
incurred to purchase or carry Capital Securities acquired with market discount.
In lieu of the foregoing, a Holder may elect to include market discount in
income currently as it accrues on all market discount instruments acquired by
such Holder in the taxable year of the election or thereafter, in which case the
interest deferral rule will not apply.
RECEIPT OF NOTES UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
Capital Securities -- Special Event Redemption or Distribution," Notes may be
distributed to Holders in exchange for the Capital Securities and in liquidation
of the Trust. Under current law, such a distribution would be treated as a non-
taxable event to each Holder, and each Holder would receive an aggregate tax
basis in the Notes equal to such Holder's aggregate tax basis in its Capital
Securities. A Holder's holding period in the Notes so received in liquidation of
the Trust would include the period for which the Capital Securities were held by
such Holder.
SALE OF CAPITAL SECURITIES AND REDEMPTION OF NOTES
A Holder that sells Capital Securities, or whose Capital Securities or
Notes (which shall have been distributed to Holders upon liquidation of the
Trust) are redeemed, will recognize gain or loss equal to the difference between
its adjusted tax basis in the Capital Securities or Notes and the amount
realized on the sale or redemption. A Holder's adjusted tax basis in the Capital
Securities or Notes generally will be its initial purchase price increased by
OID, if any, previously includible in such Holder's gross income to the date of
disposition (and the accrual of market discount, if any) and decreased by
payments (other than payments of interest not reflected in OID) received on the
Capital Securities and/or Notes and by any premium that the
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<PAGE> 37
Holder has taken into account. Subject to the market discount rules described
above, any such gain or loss generally will be capital gain or loss.
The Capital Securities may trade at prices that do not accurately reflect
the value of accrued but unpaid interest with respect to the underlying Notes. A
Holder that uses the accrual method of accounting for tax purposes (and a cash
method Holder if the Notes are deemed to have been issued with OID) and that
disposes of Capital Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest on
the Notes through the date of disposition in income as ordinary income, and to
add such amount to such Holder's adjusted tax basis in the pro rata share of the
underlying Notes deemed disposed of. To the extent that the selling price is
less than the Holder's adjusted tax basis (so determined) a Holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.
POSSIBLE TAX LEGISLATION
There can be no assurance that legislation affecting Household
International's ability to deduct interest paid on the Junior Subordinated
Debentures or the characterization of the Notes for United States federal income
tax purposes will not be enacted in the future or that any such legislation
would not be effective retroactively. If tax law changes are enacted and apply
retroactively to the Notes, such changes could give rise to a Tax Event, which
would, in certain circumstances, require the dissolution of the Trust or permit
Household International to redeem the Notes. See "Risk Factors -- Possible Tax
Event," "Risk Factors -- Redemption of the Capital Securities or Notes May
Affect Your Return," "Description of Capital Securities -- Special Event
Redemption or Distribution," and "Description of the Notes -- Possible Tax
Legislation."
FOREIGN INVESTORS
Subject to the discussion of backup withholding below, interest (including
OID) with respect to the Capital Securities paid to a nonresident alien
individual, foreign corporation, foreign partnership or foreign estate or trust
(collectively, "United States Alien Holder") will be exempt from U.S.
withholding tax, provided that the United States Alien Holder complies with
applicable certification requirements (and does not actually or constructively
own ten percent or more of the total combined voting power of all classes of
stock of Household International and is not a controlled foreign corporation
related to Household International or its affiliates).
On October 14, 1997, the Service published in the Federal Register final
regulations (the "Withholding Regulations") which affect the United States
taxation of United States Alien Holders. The Withholding Regulations are
effective for payments after December 31, 2000, regardless of the issue date of
the instrument with respect to which such payments are made, subject to certain
transition rules. In general, the Withholding Regulations provide certification
requirements designed to simplify compliance by those responsible for
withholding on payments to United States Alien Holders. Among other provisions,
the Withholding Regulations provide, in the case of an entity classified as a
foreign partnership under United States tax principles, that the partners,
rather than the partnership, generally will be required to provide the required
certification to qualify for an exemption from withholding.
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Capital
Securities will be reported to Holders on Form 1099, which forms should be
mailed to Holders of Capital Securities by January 31 following each calendar
year.
The Trust will be obligated to report annually to Cede & Co., as Holder of
record of the Capital Securities, the interest (and OID, if any) with respect to
the Capital Securities that accrued during that year. The Trust currently
intends to report such information on Form 1099 prior to January 31 following
each calendar year even though the Trust is not legally required to report to
record Holders until April 15 following each calendar year. The Underwriters
have indicated to the Trust that, to the extent that they hold Capital
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<PAGE> 38
Securities as nominees for beneficial Holders, they currently expect to report
to such beneficial Holders on Forms 1099 by January 31 following each calendar
year. Under current law, Holders of Capital Securities who hold as nominees for
beneficial Holders will not have any obligation to report information regarding
the beneficial Holders to the Trust. The Trust, moreover, will not have any
obligation to report to beneficial Holders who are not also record Holders.
Thus, beneficial Holders of Capital Securities who hold their Capital Securities
through the Underwriters will receive Forms 1099 reflecting the income on their
Capital Securities from such nominee Holders rather than the Trust.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31% unless the Holder or the United
States Alien Holder complies with certain identification or certification
requirements. Any withheld amounts will be allowed as a credit against the
holder's United States federal income tax, if any, provided the required
information is provided to the Service.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE CAPITAL
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
CERTAIN ERISA CONSIDERATIONS
Before authorizing an investment in the Capital Securities, fiduciaries of
pension, profit sharing or other employee benefit plans subject to ERISA
("Plans") should consider, among other matters, (a) ERISA's fiduciary standards
(including its prudence and diversification requirements), (b) whether such
fiduciaries have authority to make such investment in the Capital Securities
under the applicable Plan investment policies and governing instruments, and (c)
rules under ERISA and the Code that prohibit Plan fiduciaries from causing a
Plan to engage in a "prohibited transaction."
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from, among other things, engaging in certain transactions
involving "plan assets" with persons who are "parties in interest" under ERISA
or "disqualified persons" under the Code (collectively, "Parties in Interest")
with respect to such Plan. A violation of these "prohibited transaction" rules
may result in an excise tax or other liabilities under ERISA and/or Section 4975
of the Code for such persons, unless exemptive relief is available under an
applicable statutory or administrative exemption. Such administrative exemptions
include prohibited transaction class exemption ("PTCE"). PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 91-38 (for certain
transactions involving bank collective investment funds), PTCE 95-60 (for
certain transaction involving insurance company general accounts), PTCE 90-1
(for certain transactions involving insurance company pooled separate accounts),
and PTCE 84-14 (for certain transactions determined by independent qualified
asset managers).
The Department of Labor has issued a regulation (29 C.F.R. section
2510.3-101) (the "Plan Assets Regulation") concerning the definition of what
constitutes the assets of a Plan. The Plan Assets Regulation provides that, as a
general rule, the underlying assets and properties of corporations,
partnerships, trusts and certain other entities in which a Plan makes an
"equity" investment will be deemed, for purposes of ERISA, to be assets of the
investing Plan unless certain exceptions apply.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Trust would not be deemed to be "plan assets" of investing Plans
if, immediately after the most recent acquisition of any equity interest in the
Trust, less than 25% of the value of each class of equity interests in the Trust
were held by Plans, other employee benefit plans not subject to ERISA or Section
4975 of the Code (such as governmental,
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<PAGE> 39
church and foreign plans), and entities holding assets deemed to be "plan
assets" of any Plan (collectively, "Benefit Plan Investors"). No assurance can
be given that the value of the Capital Securities held by Benefit Plan Investors
will be less than 25% of the total value of such Capital Securities at the
completion of the initial offering or thereafter, and no monitoring or other
measures will be taken with respect to the satisfaction of the conditions to
this exception.
If Household International or the Trust is a Party in Interest with respect
to the Plan, in the absence of an applicable exemption, the Plan's purchase of
the Capital Securities from the Trust would likely constitute a prohibited
transaction under Section 406(a)(1)(A) or ERISA and Section 4975(c)(1)(A) of the
Code. In addition, in the absence of an applicable exemption, certain other
transactions coincident to the Capital Securities may involve a prohibited
transaction, such as a distribution of the Notes from the Trust to a Plan
investor.
Any plans or other entities whose assets include Plan assets subject to
ERISA or Section 4975 of the Code proposing to acquire Capital Securities should
consult with their own counsel to confirm that such investment will not result
in a prohibited transaction that is not subject to an exemption and will satisfy
any other applicable requirements of ERISA and the Code. Each purchaser using
assets of a Plan to acquire Capital Securities will be deemed to have
represented that its purchase and holding of such Capital Securities will not
result in a non-exempt prohibited transaction under ERISA or the Code or will be
covered by the exemptive relief provided by PTCE 96-23, 95-60, 91-38, 90-1 or
84-14 or another applicable exemption.
Governmental Plans and certain church plans are not subject to ERISA, and
are also not subject to the prohibited transaction provisions of Section 4975 of
the Code. However, state laws or regulations governing the investment and
management of the assets of such plans may contain fiduciary and prohibited
transaction provisions similar to those under ERISA and the Code discussed
above. Accordingly, fiduciaries of governmental and church plans, in
consultation with their advisers, should consider the impact of their respective
state laws on investments in the Capital Securities and the considerations
discussed above to the extent applicable.
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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Trust has agreed to sell to each of the Underwriters named below
(the "Underwriters"), for whom Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated are acting as
joint book running managers and representatives (the "Representatives"), and the
Underwriters have severally agreed to purchase from the Trust, the respective
number of Capital Securities set forth opposite their names below. In the
Underwriting Agreement, the several Underwriters have agreed, subject to the
terms and conditions set forth therein (including, without limitation, the
approval of certain legal matters by counsel to the Underwriters), to purchase
all the Capital Securities offered hereby if any of the Capital Securities are
purchased. In the event of default by an Underwriter, the Underwriting Agreement
provides that, in certain circumstances, the purchase commitments of the
nondefaulting Underwriters may be increased or the Underwriting Agreement may be
terminated.
<TABLE>
<CAPTION>
NUMBER OF
CAPITAL
UNDERWRITER SECURITIES
- ----------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith.......................
Incorporated
Morgan Stanley & Co. Incorporated...........................
Banc One Capital Markets, Inc. .............................
Banc of America Securities LLC..............................
Credit Suisse First Boston Corporation......................
Donaldson, Lufkin & Jenrette Securities Corporation.........
-------
Total............................................. 300,000
=======
</TABLE>
The Representatives have advised us that they propose initially to offer
the Capital Securities to the public at the public offering price set forth on
the cover page of this prospectus and to certain dealers at such price less a
concession not in excess of $ per Capital Security. The Underwriters may
allow, and such dealers may reallow, a discount not in excess of $ per
Capital Security to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed by the
Representatives.
In view of the fact that the proceeds from the sale of the Capital
Securities will be used to purchase the Notes issued by Household, the
Underwriting Agreement provides that Household will pay to the Underwriters as
compensation for their arranging the investment therein of such proceeds an
amount of $ per Capital Security for the accounts of the several
Underwriters. Household estimates that the total expenses of the Offering,
excluding the underwriting commission, will be $ .
Household and the Trust have agreed that, during the period beginning from
the date of the Underwriting Agreement and continuing to and including the
earlier of (i) the termination of trading restrictions on the Capital
Securities, as determined by the Representatives, and (ii) the closing date,
they will not offer, sell, contract to sell or otherwise dispose of any
preferred securities in any trust similar to the Trust, any other beneficial
interests in the assets of the Trust or any trust similar to the Trust, or any
preferred securities or any other securities of the Trust or Household, as the
case may be, that are substantially similar to the Capital Securities, including
any guarantee of such securities, or any securities convertible into or
exchangeable for or representing the right to receive securities, preferred
securities or any such substantially similar securities of either the Trust, any
trust similar to the Trust or Household that are subordinated to Household's
senior indebtedness in a manner substantially similar to the subordination of
the Notes, without the prior written consent of the Underwriters, except for the
Capital Securities offered in connection with this Offering.
The Capital Securities are a new issue of securities with no established
trading market. The Underwriters have advised Household and the Trust that they
intend to make a market in the Capital Securities, but are not obligated to do
so and may discontinue market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for the Capital
Securities.
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Household and the Trust have agreed to indemnify the several Underwriters
against, or contribute to payments that the Underwriters may be required to make
in respect of, certain liabilities, including liabilities under the Securities
Act of 1933, as amended.
In order to facilitate the offering of the Capital Securities, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Capital Securities. Specifically, the Underwriters may
overallot in connection with the offering, creating a short position in the
Capital Securities for their own account. In addition, to cover overallotments
or to stabilize the price of the Capital Securities, the Underwriters may bid
for, and purchase, the Capital Securities in the open market. Finally, the
underwriting syndicate may reclaim selling concessions allowed to an Underwriter
or a dealer for distributing the Capital Securities in the offering, if the
syndicate repurchases previously distributed Capital Securities in transactions
to cover syndicate short positions, in stabilization transactions or otherwise.
Any of these activities may stabilize or maintain the market price of the
Capital Securities above independent market levels. The Underwriters are not
required to engage in these activities, and may end any of these activities at
any time.
It is expected that delivery of the Capital Securities will be made against
payment therefor on or about the date specified in the last paragraph of the
cover page of this prospectus, which will be the fifth business day following
the date of pricing of the Capital Securities. Under Rule 15c6-1 under the
Securities Exchange Act of 1934, as amended, purchases or sales of securities in
the secondary market generally are required to settle within three business days
("T+3"), unless the parties to any such transactions expressly agree otherwise.
Accordingly, prospective purchasers of the Capital Securities who wish to trade
such securities will be required, by virtue of the fact that the Capital
Securities initially will settle within five business days ("T+5"), to specify
an alternate settlement cycle at the time of any such trade to prevent a failed
settlement. Prospective purchasers of the Capital Securities who wish to trade
prior to the settlement date should consult their own legal advisors.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to Household and its affiliates, for which such Underwriters or their
affiliates have received or will receive customary fees and commissions.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. Our
SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference rooms. You may also inspect our SEC reports and other
information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We have filed a registration statement on Form S-3 with the SEC covering
the Capital Securities, the Notes and the guarantee. For further information on
Household International and the Capital Securities, the Notes and the guarantee,
you should refer to our registration statement and its exhibits. This prospectus
summarizes material provisions of contracts and other documents that are
included with that registration statement. Because this prospectus may not
contain all the information that you may find important, you should review the
full text of these contracts and documents.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file with
them, which means:
- incorporated documents are considered part of the prospectus;
- we can disclose important information to you by referring you to those
documents; and
- information that we file with the SEC will automatically update and
supersede this incorporated information.
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We incorporate by reference the documents listed below which were filed
with the SEC under the Exchange Act:
- annual report on Form 10-K for the year ended December 31, 1999; and
- current reports on Form 8-K dated January 19, 2000 and April 20, 2000.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this prospectus until this offering is
completed or after the date of this initial registration statement and before
the effectiveness of the registration statement:
- reports filed under Sections 13(a) and (c) of the Exchange Act;
- definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meeting; and
- any reports filed under Section 15(d) of the Exchange Act.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address:
Ms. Darcie Oakes
Office of the Corporate Secretary
Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois
847-564-7580
email: [email protected]
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Capital
Securities will be passed upon on behalf of the Trust and Household
International by Richards, Layton & Finger, P.A., Wilmington, Delaware, special
Delaware counsel to the Trust and Household International. The validity of the
Notes, the Capital Securities Guarantee and certain matters relating thereto
will be passed upon on behalf of Household International by John W. Blenke, Vice
President -- Corporate Law and Assistant Secretary of Household International.
Certain legal matters will be passed upon for the Underwriters by McDermott,
Will & Emery, Chicago, Illinois. Certain United States federal income taxation
matters will be passed upon for Household International and the Trust by Sidley
& Austin, Chicago, Illinois.
EXPERTS
The financial statements and schedules of Household International and its
subsidiaries, incorporated by reference in this prospectus, to the extent and
for the periods indicated in its reports, have been audited by Arthur Andersen
LLP, independent public accountants, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
41
<PAGE> 43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
300,000 CAPITAL SECURITIES
HOUSEHOLD CAPITAL TRUST V
% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
HOUSEHOLD INTERNATIONAL, INC.
--------------------
PROSPECTUS
--------------------
Joint Book Running Managers
MERRILL LYNCH & CO. MORGAN STANLEY DEAN WITTER
BANC ONE CAPITAL MARKETS, INC.
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
MAY , 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 44
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1 Form of Underwriting Agreement for Capital Securities.
4.1 Indenture between Household International, Inc. and Bank
One, National Association (formerly known as The First
National Bank of Chicago), as Trustee, dated as of May 15,
1995 (incorporated herein by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 (Nos. 333-03337 and
333-03337-01)).
4.2 Form of Supplemental Indenture between Household
International, Inc. and Bank One, National Association, as
Trustee.
4.3 Declaration of Trust of Household Capital Trust V.
4.4 Form of Amended and Restated Declaration of Trust.
4.5 Form of Capital Security (included in Exhibit 4.4 above).
4.6 Form of Notes (included in Exhibit 4.2 above).
4.7 Form of Guarantee with respect to Capital Securities.
4.8 Certificate of Trust.
5.1 Opinion and Consent of Mr. John W. Blenke, Vice
President -- Corporate Law and Assistant Secretary of
Household International, Inc.
5.2 Opinion and Consent of Richards, Layton & Finger, P.A.
8 Tax opinion of Sidley & Austin.
12 Statement on the Computation of Ratio of Earnings to Fixed
Charges and to Combined Fixed Charges and Preferred Stock
Dividends (incorporated herein by reference to Exhibit 12 of
Household International's Form 10-K (File No. 1-8198) for
the year ended December 31, 1999).
23.1* Consent of Arthur Andersen LLP, Independent Public
Accountants.
23.2 Consent of Mr. John W. Blenke, Vice President -- Corporate
Law and Assistant Secretary of Household International, Inc.
is contained in his opinion (Exhibit 5.1).
23.3 Consent of Sidley & Austin is contained in their opinion
(Exhibit 8).
23.4 Consent of Richards, Layton & Finger, P.A. is contained in
their opinion (Exhibit 5.2).
24.1 Powers of Attorney with respect to Household International
officers and directors.
24.2 Powers of Attorney with respect to Household Capital Trust V
trustees.
25.1 Statement of eligibility and qualification of Wilmington
Trust Company.
25.2 Statement of eligibility and qualification of Bank One,
National Association.
</TABLE>
- ---------------
* Filed herewith. All other Exhibits previously filed.
II-1
<PAGE> 45
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
and has duly caused this Post-Effective Amendment to its Registration Statement
on Form S-3 (No. 333-33052-01) to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Prospect Heights, and State of
Illinois, on the 3rd day of May, 2000.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ JOHN W. BLENKE
------------------------------------
John W. Blenke
Vice President -- Corporate Law
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to this Registration Statement has been signed below by
the following persons in the capacities indicated and on the 3rd day of May,
2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
*
- --------------------------------------------------- Chairman, Chief Executive Officer, and Director
(William F. Aldinger) (as Principal Executive Officer)
*
- ---------------------------------------------------
(Robert J. Darnall) Director
*
- ---------------------------------------------------
(Gary G. Dillon) Director
*
- ---------------------------------------------------
(John A. Edwardson) Director
*
- ---------------------------------------------------
(Mary J. Evans) Director
*
- ---------------------------------------------------
(Dudley Fishburn) Director
- ---------------------------------------------------
(Cyrus F. Freidheim, Jr.) Director
- ---------------------------------------------------
(James H. Gilliam, Jr.) Director
*
- ---------------------------------------------------
(Louis E. Levy) Director
*
- ---------------------------------------------------
(George A. Lorch) Director
</TABLE>
II-2
<PAGE> 46
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
*
- ---------------------------------------------------
(John D. Nichols) Director
*
- ---------------------------------------------------
(James B. Pitblado) Director
*
- ---------------------------------------------------
(S. Jay Stewart) Director
*
- ---------------------------------------------------
(Louis W. Sullivan, M.D.) Director
* Group Executive -- Chief Financial Officer
- --------------------------------------------------- (as Principal Accounting and Financial
(David A. Schoenholz) Officer)
*By: /s/ JOHN W. BLENKE
---------------------------------------------
(John W. Blenke)
Attorney-in-fact
</TABLE>
II-3
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Household
Capital Trust V has duly caused this Post-Effective Amendment to its
Registration Statement on Form S-3 (No. 333-33052) to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Prospect Heights,
State of Illinois, on this 3rd day of May, 2000.
HOUSEHOLD CAPITAL TRUST V
By: /s/ B.B. MOSS, JR.
------------------------------------
Name: Benjamin B. Moss, Jr.
Title: Trustee
By: /s/ DENNIS J. MICKEY
------------------------------------
Name: Dennis J. Mickey
Title: Trustee
II-4
<PAGE> 48
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- -------
<C> <S> <C>
1 Form of Underwriting Agreement for Capital Securities.......
4.1 Indenture between Household International, Inc. and Bank
One, National Association (formerly known as The First
National Bank of Chicago, as Trustee, dated as of May 15,
1995 (incorporated herein by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 (Nos. 333-03337 and
333-03337-01)). ............................................
4.2 Form of Supplemental Indenture between Household
International, Inc. and Bank One, National Association, as
Trustee.....................................................
4.3 Declaration of Trust of Household Capital Trust V...........
4.4 Form of Amended and Restated Declaration of Trust...........
4.5 Form of Capital Security (included in Exhibit 4.4 above)....
4.6 Form of Notes (included in Exhibit 4.2 above)...............
4.7 Form of Guarantee with respect to Capital Securities........
4.8 Certificate of Trust........................................
5.1 Opinion and Consent of Mr. John W. Blenke, Vice President --
Corporate Law and Assistant Secretary of Household
International, Inc..........................................
5.2 Opinion and Consent of Richards, Layton & Finger, P.A.......
8 Tax opinion of Sidley & Austin..............................
12 Statement on the Computation of Ratio of Earnings to Fixed
Charges and to Combined Fixed Charges and Preferred Stock
Dividends (Incorporated by reference to Exhibit 12 of
Household International's Form 10-K (File No. 1-8198) for
the year ended December 31, 1999)...........................
23.1* Consent of Arthur Andersen LLP, Independent Public
Accountants.................................................
23.2 Consent of Mr. John W. Blenke, Vice President -- Corporate
Law and Assistant Secretary of Household International, Inc.
is contained in his opinion (Exhibit 5.1)...................
23.3 Consent of Sidley & Austin is contained in their opinion
(Exhibit 8).................................................
23.4 Consent of Richards, Layton & Finger, P.A. is contained in
their opinion (Exhibit 5.2).................................
24.1 Powers of Attorney with respect to Household International
officers and directors......................................
24.2 Powers of Attorney with respect to Household Capital Trust V
trustees....................................................
25.1 Statement of eligibility and qualification of Wilmington
Trust Company...............................................
25.2 Statement of eligibility and qualification of Bank One,
National Association........................................
</TABLE>
- ---------------
* Filed herewith. All other Exhibits previously filed.
II-5
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Household International, Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 (Nos. 333-33052 and
333-33052-1) relating to the offering of 300,000 Capital Securities of Household
Capital Trust V and Junior Subordinated Deferrable Interest Notes of Household
International, Inc. filed with the Securities and Exchange Commission on or
about March 22, 2000 of our report dated January 14, 1999 included in Household
International, Inc.'s Form 10-K for the year ended December 31, 1999 and to all
references to our Firm included in this registration statement.
Arthur Andersen LLP
/s/ Arthur Andersen LLP
Chicago, Illinois
May 3, 2000
