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. 0-36050
HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER TRUST II
(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 $330 million.
<PAGE>
INTRODUCTORY NOTE
HRSI Funding, Inc. (the "Seller") is the seller under a
Pooling and Servicing Agreement (the "Agreement") dated as of
October 1, 1994, by and among the Seller, Household Finance
Corporation, as Servicer (the "Servicer") and Bank America National
Trust Company, as trustee (the "Trustee"), as amended by the Series
1994-2 Supplement to the Agreement dated as of October 1, 1994 (the
"Supplement"), providing for the issuance of certificates in
varying series (the "Certificates"), and is the originator of the
trust called the Household Private Label Credit Card Master Trust
II (the "Registrant" or the "Trust").
Each Certificate represents an undivided interest in a
specific 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 a Seller Certificate.
The Seller, Servicer and Trustee have established a Cash Collateral
Account and a Collateral Invested Amount for the benefit of the
holders of the Class A and Class B Certificates. 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 favorable response to
the Loan Application for Exemptive Order pursuant to Section 12(h)
of the Securities Exchange Act of 1934 on May 20, 1992 which the
Commission issued to the Private Label Credit Card Master Trust,
the predecessor to the Trust. 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 16 Class A
Certificateholders (0 holders of Class A Certificates,
Series 1994-1 and 16 holders of Class A Certificates,
Series 1994-2) and 4 Class B Certificateholders (0
holders of Class B Certificates, Series 1994-1 and 4
holders of Class B Certificates, Series 1994-2), 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 following table sets forth (i) the name and address
of each entity owning more than 5% of the outstanding
principal amount of the Class A or the Class B
Certificates; (ii) the principal amount of Certificates
owned by each and (iii) the percent that the principal
amount of Certificates owned represents of the
outstanding principal amount of the Class A or the Class
B Certificates. The information set forth in the table
is based upon information obtained by the Servicer from
the Trustee and from The Depository Trust Company as of
February 3, 1999. The Servicer is not aware of any
Schedules 13D or 13G filed with the Securities and
Exchange Commission in respect of the Certificates.
<PAGE>
Amount Owned
All dollar amounts are
in thousands
Name and Address Principal Percent
Class A Certificateholders (Series 1994-2)
The Bank of New York $ 71,450 23.24
925 Patterson Plank Road
Secaucus, NJ 07094
Bankers Trust Company $ 41,773 13.59
c/o BT Services Tennessee Inc.
648 Grassmere Park Drive
Nashville, TN 37211
Chase Manhattan Bank $ 73,777 24.97
4 New York Plaza - 13th Floor
New York, NY 10004
Prudential Securities Custody $ 24,830 8.07
111 8th Avenue - 4th Floor
New York, NY 10011
State Street Bank & Trust Company $ 42,900 13.95
Global Corp. Action Dept. JAB5W
P. O. Box 1631
Boston, MA 02105-1631
<PAGE>
Amount Owned
All dollar amounts are
in thousands
Name and Address Principal Percent
Class B Certificateholders (Series 1994-2)
The Bank of New York $ 5,000 22.22
925 Patterson Plank Road
Secaucus, NJ 07094
Bankers Trust Company $ 6,500 28.89
c/o BT Services Tennessee Inc.
648 Grassmere Park Drive
Nashville, TN 37211
Chase Manhattan Bank $ 5,000 22.22
4 New York Plaza - 13th Floor
New York, NY 10004
Citibank, N.A. $ 6,000 26.67
P. O. Box 30576
Tampa, KL 33630-3576
<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 20, 1998 Item 7 -- Statement to
November 20, 1998 Certificateholders with respect
December 21, 1998 to distributions made on
October 20, 1998, November 20,
1998 and December 21, 1998.
(c) (1) Exhibit 99. Copy of Annual Statement to
Certificateholders for the year 1998.
(2) Exhibit 99.1. Copy of Annual Servicing
Report 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 Private Label Credit
Card Master Trust II by the undersigned, thereunto duly authorized.
HOUSEHOLD FINANCE CORPORATION,
as Servicer of and on behalf of the
HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER TRUST II
(Registrant)
Date: February 25, 1999 By:/s/ John W. Blenke
John W. Blenke
Assistant Secretary
<PAGE>
Exhibit Index
Exhibit No. Exhibit Page No.
99 Copy of Annual Statement to 10
Certificateholders for the year
ended December 31, 1998
99.1 Copy of Annual Servicing Report 11
for the year ended December 31, 1998
Household Finance
Corporation
HRSI Funding, Inc.
Household Private Label
Credit Card Master Trust II,
Series 1994-2
Original Principal Class A 307,500,000.00
Number of Class A Bonds 307,500
($1,000)
Original Principal Class B 22,500,000.00
Number of Class B Bonds 22,500
($1,000)
Sum 1/20/98 -
12/21/98
Distribution Date 12/21/98 Total 1998
Days 31
CLASS A
Beginning Class A Principal 136,666,666.68
Balance
Beg Class A Percentage 44.44%
Principal Distribution 17,083,333.33 187,916,666.65
Principal Payment Factor 55.555555545 611.11
(per $1,000)
Ending Class A Principal 119,583,333.35
Balance
Ending Class A Percentage 38.89%
Class A Interest 888,333.33 17,877,708.33
Distribution
Interest Payment Factor (per 2.888888878 58.14
$1,000)
Total Class A Distribution 17,971,666.66 205,794,374.98
Amount
Total Distribution Pymt 58.444444423 669.25
Factor (per $1,000)
Class B
Beginning Class B Principal 22,500,000.00
Balance
Beg Class B Percentage 100.00%
Principal Distribution 0.00 0.00
Principal Payment Factor 0.000000000 0.00
(per $1,000)
Ending Class B Principal 22,500,000.00
Balance
Ending Class B Percentage 100.00%
Class B Interest 150,000.00 1,800,000.00
Distribution
Interest Payment Factor (per 6.666666667 80.00
$1,000)
Total Class B Distribution 150,000.00 1,800,000.00
Amount
Total Distribution Pymt 6.666666667 80.00
Factor (per $1,000)
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 October 1, 1994, 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, 4.02, 4.03, 4.04, 4.05, 4.06, and 8.08 (to the extent
such
sections are applicable to Household Finance Corporation as
Servicer)
of the Agreement, or Sections 4.08, 4.09, 4.10, 4.11, 4.12, 4.13,
4.14,
and 4.15 (to the extent such sections are applicable to Household
Finance Corporation as Servicer) of the Series 1994-2, Series
1995-A,
and Series 1997-B Supplements in conjunction with the servicing
of
consumer revolving private label credit card receivables owned by
the
Household Private Label Credit Card Master Trust II 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 private label 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
Private Label Credit Card Master Trust II.
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,
US
Bank, N.A., formerly known as the First Trust 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 private
label credit card receivables owned by the Household Private
Label
Credit Card Master Trust II. 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 have 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 September,
1998, for Series 1994-2, Series 1995-A, and 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
