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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: October 1, 1995
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HOUSEHOLD FINANCE CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-75 36-1239445
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation Number)
2700 Sanders Road, Prospect Heights, Illinois 60070
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 708/564-5000
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Item 5. Other Events
Effective October 1, 1995, Household Group, Inc. ("HGI"),
a wholly-owned subsidiary of Household Finance Corporation
("HFC"), sold for cash and stock all the capital stock of
its wholly-owned subsidiary, Alexander Hamilton Life
Insurance Company of America ("AHLIC") to Jefferson-Pilot
Corporation ("JP"). Prior to the closing of this
transaction, HGI removed from AHLIC and retained all
business, related assets and liabilities pertaining to
AHLIC's credit life, accident and health, periodic payment
and corporate-owned life insurance products so that
effectively only the individual life and annuity product
lines ("Transferred Business") were transferred to JP
pursuant to this transaction. At September 30, 1995,
assets related to the Transferred Business totaled
approximately $6 billion and consisted primarily of
investment securities. The purchase price for the
Transferred Business is $575 million plus the net earnings
of AHLIC from January 1, 1995 to the closing date, subject
to a limitation on such earnings as to the attainment of
a minimum statutory net worth by AHLIC as agreed to by the
parties.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Unaudited pro forma consolidated statement of income
of Household Finance Corporation and Subsidiaries for
the nine months ended September 30, 1995 and the
unaudited pro forma consolidated balance sheet as of
September 30, 1995 for Household Finance Corporation
and Subsidiaries giving effect to the pro forma
adjustments related to the sale of Alexander Hamilton
Life Insurance of America as described in Item 5
hereof. The unaudited pro forma consolidated
statement of income of Household Finance Corporation
and Subsidiaries for the year ended December 31, 1994
was included in the Current Report on Form 8-K dated
August 9, 1995.
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The following tables present the historical unaudited consolidated
statement of income for Household Finance Corporation and
Subsidiaries ("HFC") for the nine months ended September 30, 1995
and the historical unaudited consolidated balance sheet for HFC as
of September 30, 1995 and the unaudited pro forma consolidated
statement of income for the nine months ended September 30, 1995
and the unaudited pro forma consolidated balance sheet as of
September 30, 1995 for HFC giving effect to the pro forma
adjustments related to the sale of the individual life and annuity
product lines of Alexander Hamilton Life Insurance Company of
America ("AHLIC") as described herein. The pro forma consolidated
statement of income for the nine months ended September 30, 1995
was prepared assuming the sale of the selected product lines of
AHLIC took place on January 1, 1995. The pro forma adjustments for
the pro forma consolidated balance sheet as of September 30, 1995
assume that the sale of the product lines of AHLIC occurred on
September 30, 1995. HFC does not anticipate that the sale of the
Transferred Business will have a significant effect on results of
operations. HFC does not expect to incur material charges or
credits as a result of the sale of the product lines of AHLIC on an
ongoing basis and has not reflected such in the pro forma
consolidated financial statements below.
For purposes of preparing the pro forma financial statements, HFC
has assumed the cash proceeds from the sale of the product lines of
AHLIC have been used to decrease senior and senior subordinated
debt. The pro forma consolidated financial statements presented
below do not purport to represent what the results of operations or
financial position would have been had the pro forma adjustments
occurred on the dates referred to above or to be indicative of the
future results of operations or financial position of HFC. The pro
forma adjustments are based on available information and certain
assumptions that HFC believes are reasonable.<PAGE>
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Household Finance Corporation and Subsidiaries
Pro Forma Unaudited Consolidated Statements of Income
Nine Months Ended September 30, 1995
In millions.
<TABLE>
<CAPTION>
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Historical Household
Household Finance
Finance Pro Forma Other Corporation
Corporation Adjustments Adjustments Pro Forma
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<S> <C> <C> <C> <C>
Finance income $1,280.1 $1,280.1
Interest income from noninsurance
investment securities 28.7 $ 2.8 <F1> 31.5
Interest expense 610.7 (24.8) <F2> 585.9
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Net interest margin 698.1 27.6 725.7
Provision for credit losses on
owned receivables 386.5 386.5
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Net interest margin after provision
for credit losses 311.6 27.6 339.2
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Securitization income 298.6 298.6
Insurance premiums and contract
revenues 210.9 $ (93.0) <F3> 117.9
Investment income 414.0 (299.5) <F3> 114.5
Fee income 84.3 84.3
Other income 92.2 92.2
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Total other revenues 1,100.0 (392.5) 707.5
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Salaries and fringe benefits 223.1 (16.6) <F3> 206.5
Other operating expenses 502.5 (67.0) <F3> 435.5
Policyholders' benefits 399.0 (255.6) <F3> 143.4
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Total costs and expenses 1,124.6 (339.2) 785.4
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Income before income taxes 287.0 (53.3) 27.6 261.3
Income taxes 96.3 (18.5) <F4> 9.7 <F4> 87.5
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Net income $ 190.7 $ (34.8) $ 17.9 $ 173.8
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Explanation of pro forma adjustments:
<FN>
<F1> Represents investment income for the nine months ended September 30, 1995 on proceeds received in the
form of preferred stock from the sale of certain product lines of AHLIC.
<F2> Represents reduction of interest expense for the nine months ended September 30, 1995 from use of cash
proceeds from the sale of certain product lines of AHLIC to reduce senior and senior subordinated debt.
<F3> Represents the reduction of income and expenses related to the sale of certain product lines of AHLIC
for the nine months ended September 30, 1995 had the sales of assets and liabilities taken place on
January 1, 1995.
<F4> Represents the net effect of the pro forma adjustments at statutory income tax rates.
</FN>
/TABLE
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Household Finance Corporation and Subsidiaries
Pro Forma Unaudited Consolidated Balance Sheet
At September 30, 1995
In millions.
<TABLE>
<CAPTION>
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Historical Household
Household Finance
Finance Pro Forma Corporation
Corporation Adjustments Pro Forma
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<S> <C> <C> <C>
ASSETS
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Cash $ 408.8 $ (4.7) <F1>
525.0 <F2>
(525.0) <F3> $ 404.1
Investment securities 7,650.5 (5,657.6) <F1>
50.0 <F2> 2,042.9
Receivables, net 12,874.3 12,874.3
Advances to parent company and affiliates 78.3 78.3
Deferred insurance policy acquisition costs 468.1 (450.1) <F1> 18.0
Acquired intangibles 313.4 313.4
Properties and equipment 320.3 (16.6) <F1> 303.7
Real estate owned 108.7 108.7
Other assets 752.6 (59.3) <F1> 693.3
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Total assets $22,975.0 $(6,138.3) $16,836.7
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LIABILITIES AND SHAREHOLDER'S EQUITY
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Debt:
Commercial paper, bank and other borrowings $ 4,144.2 $ 4,144.2
Senior and senior subordinated debt (with
original maturities over one year) 8,397.4 $ (525.0) <F3> 7,872.4
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Total debt 12,541.6 (525.0) 12,016.6
Insurance policy and claim reserves 6,959.7 (5,538.6) <F1> 1,421.1
Other liabilities 1,333.0 (74.7) <F1> 1,258.3
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Total liabilities 20,834.3 (6,138.3) 14,696.0
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Preferred stock 100.0 100.0
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Common shareholder's equity:
Common stock and paid-in capital 691.2 691.2
Retained earnings 1,350.5 1,350.5
Foreign currency translation adjustments (8.4) (8.4)
Unrealized gain on investments, net 7.4 7.4
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Total common shareholder's equity 2,040.7 2,040.7
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Total liabilities and shareholder's equity $22,975.0 $(6,138.3) $16,836.7
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Explanation of pro forma adjustments:
<FN>
<F1> Represents the assets and liabilities of the sold product lines of AHLIC at September 30, 1995.
<F2> Represents the proceeds from sale of certain product lines of AHLIC (estimated for purposes of these
statements to be $525 million of cash and $50 million of preferred stock).
<F3> Represents use of cash proceeds of sale of certain product lines of AHLIC to reduce debt.
</FN>
/TABLE
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SIGNATURE
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Pursuant to the requirement of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
HOUSEHOLD FINANCE CORPORATION
(Registrant)
By: /s/ David A. Schoenholz
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David A. Schoenholz
Vice President -
Chief Accounting Officer and
Chief Financial Officer,
Director and on behalf of
Household Finance Corporation
Dated: December 18, 1995
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