<PAGE> 1
FORM 8-K
UNITED STATES
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: February 12, 1998
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HOUSEHOLD FINANCE CORPORATION
------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-75 36-1239445
- --------------------------------------------------------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
2700 Sanders Road, Prospect Heights, Illinois 60070
- ---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 847/564-5000
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Item 5. Other Events
Set forth in the Exhibit hereto are selected
consolidated financial statements which present the
financial position and results of operations and
selected owned and managed financial information for
Household Finance Corporation (the "Company") as of and
for the years ended December 31, 1997 and 1996.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
No. Exhibit
--- --------
27 Financial Data Schedule.
99 Selected consolidated financial
statements and selected owned and managed
financial information with respect to the
operations of Household Finance Corporation
as of and for the years ended December 31,
1997 and 1996.
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
HOUSEHOLD FINANCE CORPORATION
-----------------------------
(Registrant)
By: /s/ David A. Schoenholz
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David A. Schoenholz
Vice President,
Chief Accounting Officer and
Chief Financial Officer,
(a Principal Financial Officer),
Director and on behalf of
Household Finance Corporation
Dated: February 12, 1998
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EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
27 Financial Data Schedule.
99 Selected consolidated financial statements and
selected owned and managed financial information
with respect to the operations of Household Finance
Corporation as of and for the years ended December
31, 1997 and 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SUMMARY FINANCIAL INFORMATION OF THE COMPANY AND ITS
SUBSIDIARIES IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION
AND FINANCIAL STATEMENTS PREVIOUSLY FILED WITH THE SECURITIES &
EXCHANGE COMMISSION.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 291,400
<SECURITIES> 1,723,800
<RECEIVABLES> 17,512,300
<ALLOWANCES> 1,546,800
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 554,200
<DEPRECIATION> 318,700
<TOTAL-ASSETS> 22,934,700
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 12,022,000
1
0
<COMMON> 1
<OTHER-SE> 4,031,400
<TOTAL-LIABILITY-AND-EQUITY> 22,934,700
<SALES> 0
<TOTAL-REVENUES> 3,911,500
<CGS> 0
<TOTAL-COSTS> 1,326,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 801,100
<INTEREST-EXPENSE> 998,500
<INCOME-PRETAX> 785,700
<INCOME-TAX> 272,300
<INCOME-CONTINUING> 513,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 513,400
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>FINANCIAL STATEMENTS OF THE COMPANY WERE PREPARED IN ACCORDANCE WITH
FINANCIAL INSTITUTION INDUSTRY STANDARDS. ACCORDINGLY, THE COMPANY'S
BALANCE SHEETS WERE NON-CLASSIFIED.
</FN>
</TABLE>
<PAGE> 1
Consolidated Statements of Income Exhibit 99
<TABLE>
<CAPTION>
Household Finance Corporation and Subsidiaries
In millions.
Year ended December 31 1997 1996
-------- ---------
<S> <C> <C>
Finance income $2,131.3 $1,927.9
Other interest income 22.1 35.9
Interest expense 998.5 911.1
-------- --------
Net interest margin 1,154.9 1,052.7
Provision for credit losses on owned receivables 801.1 522.8
-------- --------
Net interest margin after provision for
credit losses 353.8 529.9
-------- --------
Securitization income 994.2 720.1
Insurance revenues 175.1 167.9
Investment income 109.0 145.2
Fee income 335.7 178.4
Other income 144.1 69.8
-------- --------
Total other revenues 1,758.1 1,281.4
-------- --------
Salaries and fringe benefits 479.5 392.8
Other operating expenses 537.8 543.8
Amortization of acquired intangibles
and goodwill 143.4 121.1
Policyholders' benefits 165.5 204.0
-------- --------
Total costs and expenses 1,326.2 1,261.7
-------- --------
Income before income taxes 785.7 549.6
Income taxes 272.3 180.6
-------- --------
Net income $ 513.4 $ 369.0
======== ========
</TABLE>
<PAGE>
<PAGE> 2
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Household Finance Corporation and Subsidiaries
In millions, except share data.
At December 31 1997 1996
--------- ----------
<S> <C> <C>
Assets
Cash $ 291.4 $ 228.5
Investment securities 1,723.8 1,720.0
Receivables, net 17,677.8 16,391.7
Advances to parent company and affiliates 10.5 -
Acquired intangibles and goodwill, net 1,734.2 938.2
Properties and equipment, net 235.5 268.7
Real estate owned 102.3 112.1
Other assets 1,159.2 928.2
--------- ---------
Total assets $22,934.7 $20,587.4
========= =========
Liabilities and Shareholder's Equity
Debt:
Commercial paper, bank and other
borrowings $ 4,962.0 $ 5,223.5
Senior and senior subordinated debt
(with original maturities over one year) 12,022.0 10,648.3
--------- ---------
Total debt 16,984.0 15,871.8
Insurance policy and claim reserves 1,057.1 1,021.7
Borrowings from parent company and affiliates - 7.6
Other liabilities 862.2 993.5
--------- ---------
Total liabilities 18,903.3 17,894.6
Preferred stock - 100.0
Common shareholder's equity:
Common stock, $1.00 par value, 1,000 shares
authorized, issued and outstanding at
December 31, 1997 and 1996, and additional
paid-in capital 2,056.3 892.8
Retained earnings 1,980.4 1,721.6
Foreign currency translation adjustments (8.3) (8.9)
Unrealized gain (loss) on investments, net 3.0 (12.7)
--------- ---------
Total common shareholder's equity 4,031.4 2,592.8
--------- ---------
Total liabilities and shareholder's equity $22,934.7 $20,587.4
========= =========
</TABLE>
<PAGE>
<PAGE> 3
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1. Receivables
<TABLE>
<CAPTION>
In millions.
At December 31 1997 1996
--------- ---------
<S> <C> <C>
Home equity $ 6,953.1 $ 2,513.9
Auto finance<F1> 476.5 -
MasterCard/Visa 4,105.0 6,308.9
Private label 3,365.2 3,807.0
Other unsecured 1,857.5 2,564.4
Commercial 755.0 892.6
--------- ---------
Total owned receivables 17,512.3 16,086.8
Accrued finance charges 240.9 215.8
Credit loss reserve for owned receivables (857.6) (671.5)
Unearned credit insurance premiums and claims
reserves (120.1) (82.6)
Amounts due and deferred from receivables sales 1,591.5 1,404.8
Reserve for receivables serviced with limited
recourse (689.2) (561.6)
--------- ---------
Total owned receivables, net 17,677.8 16,391.7
Receivables serviced with limited recourse 15,130.3 12,509.4
--------- ---------
Total managed receivables, net $32,808.1 $28,901.1
========= =========
The outstanding balance of receivables serviced with limited
recourse consisted of the following:
In millions.
At December 31 1997 1996
--------- ---------
Home equity $ 3,125.9 $ 4,337.5
Auto finance<F2> 395.9 -
MasterCard/Visa 6,775.7 5,043.5
Private label 1,025.0 517.0
Other unsecured 3,807.8 2,611.4
--------- ---------
Total $15,130.3 $12,509.4
========= =========
The combination of receivables owned and receivables serviced
with limited recourse, which the company considers its managed
portfolio, is shown below:
In millions.
At December 31 1997 1996
--------- ---------
Home equity $10,079.0 $ 6,851.4
Auto finance<F1> 872.4 -
MasterCard/Visa 10,880.7 11,352.4
Private label 4,390.2 4,324.0
Other unsecured 5,665.3 5,175.8
Commercial 755.0 892.6
--------- ---------
Managed receivables $32,642.6 $28,596.2
========= =========
<FN>
<F1> Prior to the fourth quarter of 1997, auto finance receivables
were not significant and were included in other unsecured
receivables.
<F2> Auto finance receivables were securitized by ACC before its
acquisition in October 1997.
</FN>
</TABLE>
<PAGE>
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The following table sets forth the activity in the company's
credit loss reserves:
<TABLE>
<CAPTION>
In millions.
Year ended December 31 1997 1996
-------- --------
<S> <C> <C>
Credit loss reserves for owned receivables at
January 1 $ 671.5 $ 531.8
Provision for credit losses-owned receivables 801.1 522.8
Owned receivables charged off (765.2) (528.4)
Recoveries on owned receivables 85.5 74.7
Portfolio acquisitions, net 64.7 70.6
-------- --------
Total credit loss reserves for owned receivables
at December 31 857.6 671.5
-------- --------
Credit loss reserves for receivables serviced with
limited recourse at January 1 561.6 334.2
Provision for credit losses-receivables serviced
with limited recourse 731.8 568.1
Receivables charged off (692.3) (356.0)
Recoveries 43.7 17.1
Other, net 44.4 (1.8)
-------- --------
Total credit loss reserves for receivables
serviced with limited recourse at December 31 689.2 561.6
-------- --------
Total credit loss reserves for managed
receivables at December 31 $1,546.8 $1,233.1
======== ========
</TABLE>
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2. Managed Consumer Two-Month-and-Over Contractual Delinquency Ratios
<TABLE>
<CAPTION>
1997 Quarter End 1996 Quarter End
------------------------- --------------------------
4 3 2 1 4 3 2 1
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Home equity 4.03% 3.20% 2.94% 3.53% 3.62% 3.59% 3.47% 3.36%
Auto finance<F1> 1.97 - - - - - - -
MasterCard/Visa 3.22 3.39 3.36 3.32 2.90 2.64 1.99 2.61
Private label 7.45 7.06 6.31 5.81 5.95 5.68 5.25 4.93
Other unsecured 9.22 8.52 7.85 7.68 7.04 6.79 6.59 6.50
---- ---- ---- ---- ---- ---- ---- ----
Total 5.09% 4.84% 4.46% 4.62% 4.33% 4.14% 3.70% 4.01%
==== ==== ==== ==== ==== ==== ==== ====
<FN>
<F1> Prior to the fourth quarter of 1997, delinquency statistics
for auto finance receivables were not significant. For prior
periods, delinquency data for these receivables were included
in the other unsecured category.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
3. Managed Consumer Net Chargeoff Ratios
1997 Quarter Annualized 1996 Quarter Annualized
Full -------------------------- Full -------------------------
Year -------------------------- Year -------------------------
1997 4 3 2 1 1996 4 3 2 1
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Home equity .93% .75% .69% 1.09% 1.35% .99% 1.22% .96% .91% .85%
Auto finance <F1> 4.68 5.33 - - - - - - - -
MasterCard/Visa 5.60 5.74 6.57 5.38 4.76 4.17 3.90 3.99 4.40 4.67
Private label 5.50 6.03 5.52 5.13 5.36 3.30 3.78 3.78 4.08 5.05
Other unsecured 7.15 7.78 7.36 6.78 6.34 5.10 5.53 5.57 4.31 4.85
- ----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total 4.51% 4.55% 4.65% 4.51% 4.31% 3.31% 3.51% 3.45% 3.29% 3.50%
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
<FN>
<F1> Includes ACC net chargeoffs subsequent to our acquisition in October 1997.
Prior to the fourth quarter of 1997, chargeoff statistics for auto finance
receivables were not significant and were included in the other unsecured
category.
</FN>
</TABLE>
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4. Nonperforming Assets
<TABLE>
<CAPTION>
In millions.
At December 31 1997 1996
-------- --------
<S> <C> <C>
Nonaccrual managed receivables $ 729.9 $ 519.9
Accruing managed consumer receivables 90 or
more days delinquent 503.3 405.7
Renegotiated commercial loans 12.4 12.9
-------- --------
Total nonperforming managed receivables 1,245.6 938.5
Real estate owned 102.3 112.1
-------- --------
Total nonperforming managed assets $1,347.9 $1,050.6
======== ========
Managed credit loss reserves as a percent
of nonperforming managed receivables 124.2% 131.4%
-------- --------
</TABLE>
