<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 10, 2000
-----------------
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, 1999 and 1998.
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
--- --------
12 Statement on the Computation of Ratio
of Earnings to Fixed Charges and to Combined
Fixed Charges and Preferred Stock Dividends.
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, 1999 and 1998.
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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
-----------------------------
David A. Schoenholz
Executive Vice President
and Chief Financial Officer,
(a Principal Financial Officer),
Director and on behalf of
Household Finance Corporation
Dated: February 10, 2000
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EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
12 Statement on Computation of
Ratio of Earnings to Fixed Charges and to Combined
Fixed Charges and Preferred Stock Dividends.
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,
1999 and 1998.
<PAGE> 1
EXHIBIT 12
HOUSEHOLD FINANCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net income $1,019.9 $ 304.9 $ 767.1 $ 650.0 $ 412.3
Income taxes 550.8 361.8 391.9 358.1 295.3
-------- -------- -------- -------- --------
Income before income taxes 1,570.7 666.7 1,159.0 1,008.1 707.6
Fixed charges:
Interest expense <F1> 2,158.3 2,009.3 1,863.0 1,727.9 1,675.9
Interest portion of rentals <F2> 37.7 48.1 46.8 45.2 37.1
-------- -------- -------- -------- --------
Total fixed charges 2,196.0 2,057.4 1,909.8 1,773.1 1,713.0
Total earnings as defined 3,766.7 2,724.1 3,068.8 2,781.2 2,420.6
-------- -------- -------- -------- --------
Ratio of earnings to fixed charges 1.72 1.32 1.61 1.57 1.41
-------- -------- -------- -------- --------
Preferred stock dividends <F3> - - $ 14.6 $ 19.4 $ 21.3
-------- -------- -------- -------- --------
Ratio of earnings to combined fixed
charges and preferred stock
dividends <F4> 1.72 1.32 1.59 1.55 1.40
-------- -------- -------- -------- --------
<FN>
<F1> For financial statement purposes, these amounts are reduced
for income earned on temporary investment of excess funds,
generally resulting from over-subscriptions of commercial paper
issuances.
<F2> Represents one-third of rentals, which approximates the
portion representing interest.
<F3> Preferred stock dividends are grossed up to their pretax
equivalents.
<F4> The 1998 ratios have been negatively impacted by the one-time
merger and integration related costs associated with our merger
with Beneficial Corporation ("Beneficial"). Excluding Beneficial
merger and integration costs of $751 million after-tax, our
ratio of earnings to combined fixed charges and preferred stock
dividends in 1998 was 1.81.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SUMMARY FINANCIAL INFORMATION OF THE COMPANY AND ITS
SUBSIDIARIES IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION
AND FINANCIAL STATEMENTS PREVIOUSLY FILED WITH THE SECURITIES &
EXCHANGE COMMISSION.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1999
<CASH> 1,487,200
<SECURITIES> 2,257,200
<RECEIVABLES> 38,250,100
<ALLOWANCES> 2,208,100
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,066,200
<DEPRECIATION> 705,900
<TOTAL-ASSETS> 46,815,200
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 30,383,600
0
0
<COMMON> 1
<OTHER-SE> 5,931,200
<TOTAL-LIABILITY-AND-EQUITY> 46,815,200
<SALES> 0
<TOTAL-REVENUES> 7,093,100
<CGS> 0
<TOTAL-COSTS> 1,962,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,407,400
<INTEREST-EXPENSE> 2,152,700
<INCOME-PRETAX> 1,570,700
<INCOME-TAX> 550,800
<INCOME-CONTINUING> 1,019,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,019,900
<EPS-BASIC> 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>
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Consolidated Statements of Income Exhibit 99
<TABLE>
<CAPTION>
Household Finance Corporation and Subsidiaries
In millions.
Year ended December 31 1999 1998
-------- --------
(Unaudited)
<S> <C> <C>
Finance income $5,139.8 $4,581.4
Other interest income 67.3 36.5
Interest expense 2,152.7 1,995.5
-------- --------
Net interest margin 3,054.4 2,622.4
Provision for credit losses on owned receivables 1,407.4 1,253.1
-------- --------
Net interest margin after provision for
credit losses 1,647.0 1,369.3
-------- --------
Securitization income 794.9 1,058.5
Insurance revenues 357.7 352.9
Investment income 154.4 146.7
Fee income 414.1 498.7
Other income 164.9 239.2
Gain on sale of Beneficial Canada - 189.4
-------- --------
Total other revenues 1,886.0 2,485.4
-------- --------
Salaries and fringe benefits 964.9 921.7
Other operating expenses 629.4 889.9
Amortization of acquired intangibles
and goodwill 143.3 168.8
Policyholders' benefits 224.7 207.6
Merger and integration related costs - 1,000.0
-------- --------
Total costs and expenses 1,962.3 3,188.0
-------- --------
Income before income taxes 1,570.7 666.7
Income taxes 550.8 361.8
-------- --------
Net income $1,019.9 $ 304.9
======== ========
</TABLE>
<PAGE>
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Consolidated Balance Sheets
<TABLE>
<CAPTION>
Household Finance Corporation and Subsidiaries
In millions, except share data.
At December 31 1999 1998
--------- ---------
(Unaudited)
<S> <C> <C>
Assets
Cash $ 1,487.2 $ 428.4
Investment securities 2,257.2 2,944.4
Receivables, net 38,187.6 34,283.2
Advances to parent company and affiliates 691.8 494.0
Acquired intangibles and goodwill, net 1,572.9 1,682.7
Properties and equipment, net 360.3 376.9
Real estate owned 266.6 235.1
Other assets 1,991.6 1,918.3
--------- ---------
Total assets $46,815.2 $42,363.0
========= =========
Liabilities and Shareholder's Equity
Debt:
Commercial paper, bank and other
borrowings $ 8,780.2 $ 7,143.1
Senior and senior subordinated debt
(with original maturities over one year) 30,383.6 27,186.1
--------- ---------
Total debt 39,163.8 34,329.2
Insurance policy and claim reserves 1,077.2 1,076.2
Other liabilities 643.0 1,147.2
--------- ---------
Total liabilities 40,884.0 36,552.6
Common shareholder's equity:
Common stock, $1.00 par value, 1,000 shares
authorized, issued and outstanding at
December 31, 1999 and 1998, and additional
paid-in capital 2,955.5 2,960.3
Retained earnings 3,053.3 2,836.4
Accumulated other comprehensive income (77.6) 13.7
--------- ---------
Total common shareholder's equity 5,931.2 5,810.4
--------- ---------
Total liabilities and shareholder's equity $46,815.2 $42,363.0
========= =========
</TABLE>
<PAGE>
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1. Receivables
<TABLE>
<CAPTION>
In millions.
At December 31 1999 1998
--------- ---------
(Unaudited)
<S> <C> <C>
Home equity $21,229.7 $17,158.7
Auto finance 1,225.5 805.0
MasterCard/Visa 2,956.8 3,805.5
Private label 5,347.5 7,041.4
Other unsecured 6,815.3 4,953.3
Commercial 675.3 682.1
--------- ---------
Total owned receivables 38,250.1 34,446.0
Accrued finance charges 698.0 470.8
Credit loss reserve for owned receivables (1,470.7) (1,448.9)
Unearned credit insurance premiums and claims
reserves (479.4) (410.6)
Amounts due and deferred from receivables sales 1,927.0 1,882.3
Reserve for receivables serviced with limited
recourse (737.4) (656.4)
--------- ---------
Total owned receivables, net 38,187.6 34,283.2
Receivables serviced with limited recourse 12,711.8 12,699.2
--------- ---------
Total managed receivables, net $50,899.4 $46,982.4
========= =========
The outstanding balance of receivables serviced with limited recourse
consisted of the following:
In millions.
At December 31 1999 1998
--------- ---------
(Unaudited)
Home equity $ 2,273.6 $ 3,637.4
Auto finance 1,806.3 960.3
MasterCard/Visa 3,610.4 3,397.5
Private label 1,150.0 811.5
Other unsecured 3,871.5 3,892.5
--------- ---------
Total $12,711.8 $12,699.2
========= =========
The combination of receivables owned and receivables serviced with
limited recourse, which we consider our managed portfolio, is shown
below:
In millions.
At December 31 1999 1998
--------- ---------
(Unaudited)
Home equity $23,503.3 $20,796.1
Auto finance 3,031.8 1,765.3
MasterCard/Visa 6,567.2 7,203.0
Private label 6,497.5 7,852.9
Other unsecured 10,686.8 8,845.8
Commercial 675.3 682.1
--------- ---------
Managed receivables $50,961.9 $47,145.2
========= =========
</TABLE>
<PAGE>
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The following table sets forth the activity in our credit loss reserves:
<TABLE>
<CAPTION>
In millions.
Year ended December 31 1999 1998
-------- --------
(Unaudited)
<S> <C> <C>
Credit loss reserves for owned receivables at
January 1 $1,448.9 $1,417.5
Provision for credit losses 1,407.4 1,253.1
Chargeoffs (1,605.7) (1,426.8)
Recoveries 153.9 127.6
Portfolio acquisitions, net 66.2 77.5
-------- --------
Total credit loss reserves for owned receivables
at December 31 1,470.7 1,448.9
-------- --------
Credit loss reserves for receivables serviced with
limited recourse at January 1 656.4 707.8
Provision for credit losses 653.4 805.3
Chargeoffs (611.4) (800.1)
Recoveries 29.2 50.7
Other, net 9.8 (107.3)
-------- --------
Total credit loss reserves for receivables serviced
with limited recourse at December 31 737.4 656.4
-------- --------
Total credit loss reserves for managed receivables
at December 31 $2,208.1 $2,105.3
======== ========
</TABLE>
- ----------------------------------------------------------------------
2. Managed Consumer Two-Months-and-Over Contractual Delinquency Ratios
<TABLE>
<CAPTION>
1999 Quarter End 1998 Quarter End
------------------------ ------------------------
4 3 2 1 4 3 2 1
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Home equity 3.34% 3.42% 3.09% 3.36% 3.55% 3.59% 3.39% 3.59%
Auto finance 2.44 2.26 1.87 1.74 2.29 2.05 1.67 1.84
MasterCard/Visa 3.46 3.90 3.73 4.69 5.19 4.67 4.35 3.32
Private label 9.30 9.69 8.46 8.00 7.38 7.32 6.27 6.22
Other unsecured 9.83 9.58 9.12 8.62 8.86 9.15 8.74 8.22
---- ---- ---- ---- ---- ---- ---- ----
Total 5.45% 5.57% 5.14% 5.22% 5.41% 5.39% 5.03% 4.79%
==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
- ---------------------------------------------------------------------
3. Managed Consumer Net Chargeoff Ratios
<TABLE>
<CAPTION>
1999 Quarter Annualized 1998 Quarter Annualized
Full Year ----------------------- Full Year -----------------------
1999 4 3 2 1 1998 4 3 2 1
--------- ---- ---- ---- ---- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Home equity .56% .56% .58% .62% .48% .58% .65% .68% .40% .58%
Auto finance 4.96 5.44 4.55 4.41 5.45 5.39 5.63 4.89 5.18 5.95
MasterCard/Visa 8.04 6.13 7.04 9.24 9.60 6.29 7.66 6.98 5.31 5.65
Private label 7.50 8.60 7.63 7.24 6.66 6.05 6.22 5.46 6.43 6.02
Other unsecured 7.51 8.29 8.19 6.27 7.16 7.90 7.89 8.66 8.13 6.91
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total 4.20% 4.25% 4.21% 4.05% 4.30% 4.21% 4.35% 4.36% 4.10% 4.04%
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
<PAGE>
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- ---------------------------------------------------------------
4. Nonperforming Assets
<TABLE>
<CAPTION>
In millions.
At December 31 1999 1998
-------- --------
<S> <C> <C>
Nonaccrual managed receivables $1,610.1 $1,165.5
Accruing managed consumer receivables 90
or more days delinquent 605.8 707.7
Renegotiated commercial loans 12.3 12.3
-------- --------
Total nonperforming managed receivables 2,228.2 1,885.5
Real estate owned 266.6 235.1
--------- --------
Total nonperforming managed assets $2,494.8 $2,120.6
======== ========
Managed credit loss reserves as a percent
of nonperforming managed receivables 99.1% 111.7%
-------- --------
</TABLE>
