SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Nos. 0-23942
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
(Exact name of Registrant as specified in Department
of the Treasury, Internal Revenue Service Form SS-4)
HOUSEHOLD FINANCE CORPORATION
(Servicer of the Trust)
(Exact name as specified in Servicer's charter)
DELAWARE 36-3670374
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation of Servicer) Number of Registrant
2700 SANDERS ROAD, PROSPECT HEIGHTS, ILLINOIS 60070
(Address of principal executive offices of (Zip Code)
Servicer)
Servicer's telephone number, including area code (847) 564-5000
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No _____
The aggregate principal amount of the Certificates held by non-
affiliates of the Servicer as of December 31, 1998 was
approximately $3,836.9 billion.
<PAGE>
INTRODUCTORY NOTE
Household Affinity Funding Corporation (the "Seller") is the
seller under a Pooling and Servicing Agreement dated as of April
30, 1993, as amended by the Amended and Restated Pooling and
Servicing Agreement dated as of August 1, 1993 (collectively, the
"Agreement") by and among the Seller, Household Finance
Corporation, as Servicer (the "Servicer") and The Bank of New York,
as trustee (the "Trustee"), as supplemented thereby by various
series supplements, providing for the issuance of certificates in
varying series (the "Certificates"), and is the originator of the
trust called the Household Affinity Credit Card Master Trust I (the
"Registrant" or the "Trust").
Each Certificate represents an undivided interest in a pool of
receivables held by the Trust. The Certificates issued, or to be
issued, may be senior ("Class A Certificates"), subordinated
("Class B Certificates") and Seller Certificate(s). The Registrant
has prepared this Form 10-K in reliance upon various no-action
letters issued by the Securities and Exchange Commission (the
"Commission") to other trusts which are substantially similar to
the Trust and as a result of the Commission's issuance of a
favorable response to the Trust's Application for Exemptive Order
pursuant to Section 12(h) of the Securities Exchange Act of 1934.
Items designated herein as "Not Applicable" have been omitted as a
result of this reliance and in anticipation of favorable action by
the Commission.
<PAGE>
PART I
Item 1. Business.
Not Applicable.
Item 2. Properties.
Not Applicable.
Item 3. Legal Proceedings.
The Servicer is not aware of any material pending legal
proceedings involving either the Registrant, the Trustee,
the Seller or the Servicer with respect to the
Certificates or the Registrant's property.
Item 4. Submission of Matters to a Vote of Security Holders.
No vote or consent of the holders of the Certificates
(the "Certificateholders") was solicited for any purpose
during the year ended December 31, 1998.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
To the best knowledge of the Servicer, there is no
established public trading market for the Certificates.
As of February 3, 1999, there were 127 Class A
Certificateholders (no more than 42 for any one series)
and 27 Class B Certificateholders, some of whom may be
holding Certificates for the accounts of others.
Item 6. Selected Financial Data.
Not Applicable.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Not Applicable.
Item 8. Financial Statements and Supplementary Data.
Not Applicable.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Not Applicable.
Item 11. Executive Compensation.
Not Applicable.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The Servicer is not aware of any Schedules 13D or 13G
filed with the Securities and Exchange Commission in
respect of the Certificates. All Certificates are held
in the name of The Depository Trust Company (DTC). The
Servicer will provide, without charge, a listing of the
beneficial owners as provided by DTC as of February 3,
1999.
<PAGE>
Item 13. Certain Relationships and Related Transactions.
None or Not Applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) List the following documents filed as a part of the
report:
(1) Financial Statements
Not Applicable.
(2) Financial Statement Schedules
Not Applicable.
(3) The Servicer is obligated to prepare an Annual
Statement to Certificateholders for the year
1998, and Independent Public Accountants are
required to prepare an Annual Servicing Report
pertaining to the compliance of the Servicer
with its servicing obligations pursuant to the
Agreement. Copies of said documents are or
will be filed as exhibits to this Form 10-K
when they are available.
(b) The Registrant filed the following current reports
on Form 8-K for the fourth quarter of 1998.
Date of Reports Items Covered
October 15, 1998 Item 7 -- Statement to
November 16, 1998 Certificateholders with respect
December 15, 1998 to distributions made on
October 15, 1998, November 16,
1998 and December 15, 1998.
(c) (1) Exhibit 99. Copy of Annual Statement to
Certificateholders for the year 1998.
(2) Exhibit 99.1. Copy of Annual Servicing Report
as to Compliance for the year 1998.
(d) Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Servicer has duly caused this
report to be signed on behalf of the Household Affinity Credit Card
Master Trust I by the undersigned, thereunto duly authorized.
HOUSEHOLD FINANCE CORPORATION,
as Servicer of and on behalf of the
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
(Registrant)
Date: February 25, 1999 By:/s/John W. Blenke
John W. Blenke
Assistant Secretary
U:\WP\HFS088\95-10K\AFFINITY
<PAGE>
Exhibit Index
Exhibit No. Exhibit Page No.
99 Copy of Annual Statement to 8
Certificateholders for the year
ended December 31, 1998.
99.1 Copy of Annual Servicing Report 9
as to Compliance for the year
ended December 31, 1998.
Exhibit 99
Household Finance Corporation
Household Affinity Funding Corporation
Household Affinity Credit Card
Master Trust, Series 1993-1
Original Class A Principal 900,000,000.0
0
Number of Class A Bonds (000's) 900,000.00
Original Class B Principal 52,945,000.00
Number of Class B Bonds (000's) 52,945.00
Sum 1/15/98 -
12/15/98
Distribution Date 12/15/98 Total
CLASS A
Beginning Class A Principal 300,000,000.0
Outstanding 0
Beginning Class A Pool Factor 0.33333333
Class A Principal Distributions 75,000,000.00 675,000,000.00
Class A Principal Payment Factor 83.33333333 750.00000000
(per 1,000 Bond)
Ending Class A Principal 225,000,000.0
Outstanding 0
Ending Class A Pool Factor 0.25000000
Class A Interest 1,323,804.08 40,075,243.32
Class A Interest Payment Factor 1.47089342 44.52804813
(per 1,000 Bond)
CLASS B
Beginning Class B Principal 52,945,000.00
Outstanding
Beginning Class B Pool Factor 1.00000000
Class B Principal Distributions 0.00 0.00
Class B Principal Pymt Factor 0.00000000 0.00000000
(per 1,000 per Bond)
Ending Class B Principal 52,945,000.00
Outstanding
Ending Class B Pool Factor 1.00000000
Class B Interest 233,840.42 2,806,085.04
Class B Interest PymtFactor (per 4.41666673 53.00000076
1,000 per Bond)
<PAGE>
Household Finance Corporation
Household Affinity Funding Corporation
Household Affinity Credit Card
Master Trust, Series 1993-2
Original Class A Principal 500,000,000.00
Number of Class A Bonds (000's) 500,000.00
Original Class B Principal 29,412,000.00
Number of Class B Bonds (000's) 29,412.00
Sum 1/15/98 -
12/15/98
Distribution Date 12/15/98 Total
CLASS A
Beginning Class A Principal 500,000,000.0
Outstanding 0
Beginning Class A Pool Factor 1.00000000
Class A Principal Distributions 0.00 0.00
Class A Principal Payment Factor 0.00000000 0.000000000
(per 1,000 Bond)
Ending Class A Principal 500,000,000.0
Outstanding 0
Ending Class A Pool Factor 1.00000000
Class A Interest 2,333,333.33 27,999,999.96
Class A Interest Payment Factor 4.66666666 55.999999920
(per 1,000 Bond)
CLASS B
Beginning Class B Principal 29,412,000.00
Outstanding
Beginning Class B Pool Factor 1.00000000
Class B Principal Distributions 0.00 0.00
Class B Principal Payment Factor 0.00000000 0.000000000
(per 1,000 Bond)
Ending Class B Principal 29,412,000.00
Outstanding
Ending Class B Pool Factor 1.00000000
Class B Interest 144,609.00 1,735,308.00
Class B Interest Payment Factor 4.91666667 59.000000000
(per 1,000 Bond)
<PAGE>
Household Finance Corporation
Household Affinity Funding Corporation
Household Affinity Credit Card
Master Trust, Series 1994-1
Original Class A Principal 850,000,00
0
Number of Class A Bonds (000's) 850,000
Original Class B Principal 50,000,000
Number of Class B Bonds (000's) 50,000
Sum 1/15/98 -
12/15/98
Distribution Date 12/15/98 Total
CLASS A
Beginning Class A Principal 850,000,00
Outstanding 0.00
Beginning Class A Pool Factor 1.00000000
Class A Principal Distributions 106,250,00 106,250,000.00
0.00
Class A Principal Payment Factor 125.000000 125.000000000
(per 1,000 Bond) 00
Ending Class A Principal 743,750,00
Outstanding 0.00
Ending Class A Pool Factor 0.87500000
Class A Interest 3,716,542. 49,725,428.79
13
Class A Interest Payment Factor 4.37240251 58.500504459
(per 1,000 Bond)
CLASS B
Beginning Class B Principal 50,000,000
Outstanding .00
Beginning Class B Pool Factor 1.00000000
Class B Principal Distributions 0.00 0.00
Class B Principal Payment Factor 0.00000000 0.000000000
(per 1,000 Bond)
Ending Class B Principal 50,000,000
Outstanding .00
Ending Class B Pool Factor 1.00000000
Class B Interest 252,083.33 3,024,999.96
Class B Interest Payment Factor 5.04166660 60.499999200
(per 1,000 Bond)
<PAGE>
Household Finance Corporation
Household Affinity Funding Corporation
Household Affinity Credit Card
Master Trust, Series 1995-1
Original Class A Principal 522,000,000.00
Number of Class A Bonds (000's) 522,000.00
Original Class B Principal 24,000,000.00
Number of Class B Bonds (000's) 24,000.00
Sum 1/15/98 -
12/15/98
Distribution Date 12/15/98 Total
CLASS A
Beginning Class A Principal 522,000,000.00
Outstanding
Beginning Class A Pool Factor 1.000000000
Class A Principal Distribution 0.00 0.00
Class A Principal Payment Factor 0.000000000 0.000000000
(per 1,000 Bond)
Ending Class A Principal 522,000,000.00
Outstanding
Ending Class A Pool Factor 1.000000000
Class A Interest 2,282,394.11 30,537,263.35
Class A Interest Payment Factor 4.372402510 58.500504502
(per 1,000 Bond)
CLASS B
Beginning Class B Prinicpal 24,000,000.00
Outstanding
Beginning Class B Principal Factor 1.000000000
Class B Principal Distribution 0.00 0.00
Class B Principal Payment Factor 0.000000000 0.000000000
(per 1,000 Bond)
Ending Class B Principal 24,000,000.00
Outstanding
Ending Class B Pool Factor 1.000000000
Class B Interest 154,000.00 1,848,000.00
Class B Interest Payment Factor 6.416666667 77.000000000
(per 1,000 Bond)
<PAGE>
Household Finance Corporation
Household Affinity Funding Corporation
Household Affinity Credit Card
Master Trust, Series 1997-1
Original Class A Principal 870,000,00
0
Number of Class A Bonds (000's) 870,000
Original Class B Principal 47,500,000
Number of Class B Bonds (000's) 47,500
Sum 1/15/98 -
12/15/98
Distribution Date 12/15/98 Total
CLASS A
Beginning Class A Principal 870,000,00
Outstanding 0.00
Beginning Class A Pool Factor 1.00000000
Class A Principal Distribution 0.00 0.00
Class A Principal Payment Factor 0.00000000 0.000000000
(per 1,000 Bond)
Ending Class A Principal 870,000,00
Outstanding 0.00
Ending Class A Pool Factor 1.00000000
Class A Interest 3,768,948. 50,454,397.22
51
Class A Interest Payment Factor 4.33212472 57.993560023
(per 1,000 Bond)
CLASS B
Beginning Class B Prinicpal 47,500,000
Outstanding .00
Beginning Class B Pool Factor 1.00000000
Class B Principal Distribution 0.00 0.00
Class B Principal Payment Factor 0.00000000 0.000000000
(per 1,000 Bond)
Ending Class B Principal 47,500,000
Outstanding .00
Ending Class B Pool Factor 1.00000000
Class B Interest 212,663.42 2,841,381.58
Class B Interest Payment Factor 4.47712463 59.818559579
(per 1,000 Bond)
<PAGE>
Household Finance Corporation
Household Affinity Funding Corporation
Household Affinity Credit Card
Master Trust, Series 1998-1
Original Class A Principal 844,000,000
Number of Class A Bonds (000's) 844,000
Original Class B Principal 46,100,000
Number of Class B Bonds (000's) 46,100
Sum 1/15/98 -
12/15/98
Distribution Date 12/15/98 Total
CLASS A
Beginning Class A Principal 844,000,000.0
Outstanding 0
Beginning Class A Pool Factor 1.00000000
Class A Principal Distribution 0.00 0.00
Class A Principal Payment Factor 0.00000000 0.000000000
(per 1,000 Bond)
Ending Class A Principal 844,000,000.0
Outstanding 0
Ending Class A Pool Factor 1.00000000
Class A Interest 3,669,911.04 9,883,213.98
Class A Interest Payment Factor 4.34823583 11.709969171
(per 1,000 Bond)
CLASS B
Beginning Class B Prinicpal 46,100,000.00
Outstanding
Beginning Class B Pool Factor 1.00000000
Class B Principal Distribution 0.00 0.00
Class B Principal Payment Factor 0.00000000 0.000000000
(per 1,000 Bond)
Ending Class B Principal 46,100,000.00
Outstanding
Ending Class B Pool Factor 1.00000000
Class B Interest 207,880.89 559,550.13
Class B Interest Payment Factor 4.509346855 12.137746855
(per 1,000 Bond)
Independent Accountants' Report on Applying Agreed-Upon Procedures
To Household Finance Corporation:
We have performed procedures enumerated below in items A. and B. in
conjunction with Section 3.06 of the Pooling and Servicing Agreement,
dated August 1, 1993, as amended and supplemented (the "Agreement").
A. We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements of Household
Finance Corporation (the "Servicer") and subsidiaries as of December
31, 1998, and have issued our report thereon dated January 20, 1999.
We have not audited any financial statements of the Servicer as of
any date or for any period subsequent to December 31, 1998, or
performed any audit procedures subsequent to the date of our report
on those statements.
In connection with our audit, nothing came to our attention that
caused us to believe that the Servicer was not in compliance with
any of the terms, covenants, provisions, or conditions in Sections
3.01, 3.02, 3.04, 3.09, 3.10, 4.02, 4.03, 4.04, and 8.08 (to the
extent such sections are applicable to Household Finance Corporation
as Servicer) of the Agreement, or Sections 3, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15, 4.16, and 4.17 (to the extent such
sections are applicable to Household Finance Corporation as
Servicer) of the Series 1993-1, Series 1993-2, Series 1994-1, Series
1995-1, Series 1996-A, Series 1996-B, Series 1997-A, Series 1997-B,
Series 1997-1, Series 1998-A, and Series 1998-1 Supplements, in
conjunction with the servicing of consumer revolving credit card
receivables owned by the Household Affinity Credit Card Master Trust
I insofar as they relate to accounting matters. It should be noted,
however, that our audit was not directed primarily toward obtaining
knowledge of such noncompliance.
As a part of our audit, we obtained an understanding of the
Servicer's internal control structure over the Servicer's entire
consumer revolving credit card portfolio, including those loans
serviced under the Agreement, and the related Supplements, to the
extent considered necessary in order to assess control risk as
required by generally accepted auditing standards. The purpose of
our consideration of the internal control structure, which includes
the accounting systems, was to determine the nature, timing, and
extent of the auditing procedures necessary for expressing an
opinion on the financial statements. Such audit procedures, however,
were not performed in order to express a separate opinion on the
Household Affinity Credit Card Master Trust I.
Our audit disclosed no exceptions or errors in records relating
to credit card receivables serviced by the Servicer that, in our
opinion, Section 3.06 of the Agreement required us to report.
B. We have performed the procedure described in the following
paragraph, which was agreed to by the management of the Servicer,
the Bank of New York as Trustee, and the Credit Enhancement Provider
(together, the "Specified Users"), with respect to Section 3.06 of
the Agreement, in conjunction with the servicing of consumer
revolving credit card receivables owned by the Household Affinity
Credit Card Master Trust I. This agreed-upon procedure was
performed in accordance with standards established by the American
Institute of Certified Public Accountants. The sufficiency of the
procedure is solely the responsibility of the Specified Users of the
report. Consequently, we make no representation regarding the
sufficiency of the procedure described below either for the purpose
for which this report has been requested or for any other purpose.
The procedure and associated findings are as follows:
From the Monthly Servicer's Certificates prepared by the
Servicer between January, 1998 and December, 1998, we selected the
following months and performed the following procedure:
We compared the mathematical calculation of each amount set
forth in the Monthly Servicer's Certificates to the Servicer's
accounting records for the month of November, 1998, for Series
1993-1, Series 1993-2, Series 1994-1, Series 1995-1, Series 1996-
A, Series 1996-B, Series 1997-1, Series 1997-A, Series 1998-1,
Series 1998-A, and for month of September, 1998, for Series 1997-B
and found them to be in agreement. Our comparisons were based on
records provided to us by the Servicer and the methodology set
forth in the Agreement.
With respect to the procedure performed in item B. above, we were not
engaged to, and did not, perform an audit, the objective of which would
be the expression of an opinion on the Monthly Servicer's Certificates
described above. Accordingly, we do not express such an opinion. Had
we been engaged to perform additional procedures, other matters might
have come to our attention that would have been reported to you.
This report is intended solely for the information and use of the
Specified Users and should not be used for any other purpose.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 24, 1999
