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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 9, 2000
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Advanta Corp.
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(Exact name of registrant as specified in its charter)
Delaware 0-14120 23-1462070
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
Welsh and McKean Roads, P.O. Box 844, Spring House, PA 19477
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 657-4000
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Item 5. Other Events
On October 9, 2000 Advanta Corp. (the "Company" or "Advanta") announced that, on
a preliminary basis, the Company estimates that net income for the third quarter
will be approximately $8 million or approximately $0.32 per share on a diluted
basis for Class A and Class B shares combined. Operating earnings per share, on
a diluted basis, for the third quarter are expected to be approximately
breakeven. The results for the third quarter have been impacted primarily by a
slower than anticipated turnaround of the Company's leasing business, lower
mortgage origination volume due to continued implementation during the quarter
of processes required by the regulatory agreements, and strengthening of
reserves for the Company's business credit card unit due to the maturing and
growth of this portfolio as well as regulatory factors and considerations.
Advanta expects to release its final earnings results for the third quarter on
Tuesday, October 24, 2000. Management will hold its regularly scheduled
conference call with analysts and institutional investors on October 24 at 9:00
am Eastern time to discuss the quarter's results.
The Company is also revising its outlook for the remainder of the year. Because
the Company is in the process of evaluating strategic alternatives for its
mortgage and leasing businesses, it is not in a position to provide specific
guidance for the remainder of the year at this time. The Company will update its
progress on the evaluation of strategic alternatives at its October 24
conference call.
Earnings for the third quarter are expected to include approximately $23 million
of provisions and charges consisting of the following items: (i) a charge of
approximately $10 million due to continued charge-offs largely concentrated
within certain unprofitable segments of the leasing business from prior
periods; (ii) an increase of approximately $10 million in reserve coverage for
the Company's business credit card unit; and (iii) a $3 million charge in the
Company's insurance business relating to a large policy claim settled during
the quarter. Excluding these items, earnings per share for the third quarter
would have been in the area of $1.23 per share on a diluted basis. Similarly,
operating earnings for the third quarter would have been substantially higher
excluding these items.
The Company has pursued aggressive remedial initiatives in the leasing business,
including the addition of experienced leadership to oversee collections. The
Company has also implemented its plan to discontinue lease originations from the
unprofitable segments of the broker channel and improve the yields on new
originations. In addition, the Company is actively pursuing strategic
alternatives for the leasing business, including its possible divestiture.
Although the Company anticipates moderate improvement in results for the fourth
quarter, it expects full year operating results will be below prior guidance
levels because it anticipates that the factors impacting third quarter results
for the mortgage and leasing businesses will continue into the fourth quarter.
In addition, the Company has received notice that one of its largest mortgage
subservicing clients will move aspects of its
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servicing in-house and will terminate its subservicing contract with the Company
effective during the fourth quarter. The Company expects to collect a
termination fee, which will partially offset the financial impact of the
cancellation of this contract.
The Company's conference call scheduled for October 24 will be broadcast
simultaneously for the public over the Internet through http://www.advanta.com
or http://www.vcall.com. To listen to the live call, please go to the web site
at least fifteen minutes early to register, download, and install any necessary
audio software. For those unable to listen to the live broadcast, replays will
be available shortly after the call on the Vcall site.
Advanta (http://www.advanta.com) is a highly focused financial services company
with over 2,700 employees, servicing over $26 billion of assets, including
approximately $12.4 billion in managed assets and approximately $13.6 billion in
assets serviced for third parties. Advanta provides consumers and small
businesses with targeted financial products and services, including
non-conforming mortgages, business credit cards, equipment leases, insurance and
deposit products. The Company is also one of the largest servicers of
non-conforming mortgages for third parties in the country.
Advanta has leveraged its first-class direct marketing and information based
expertise to develop state-of-the-art data warehousing and statistical modeling
tools that identify potential customers and new target markets. Advanta created
one of the first automated underwriting and sales engines in the non-conforming
mortgage industry. The Company also offers its customers and business partners a
broad range of self-service financial solutions and other services on the
Internet.
Advanta was named one of the 500 Most Admired Companies in America in FORTUNE
Magazine's most recent annual survey. In June 2000, American Banker ranked
Advanta Bank Corp. third among the top 100 community banks in the nation in
terms of return on average assets.
This Current Report on Form 8-K contains forward-looking statements that are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those projected. The most significant among these risks
and uncertainties are: (1) the Company's managed net interest margin; (2)
competitive pressures; (3) factors that affect the level of delinquencies and
charge-offs, including a deterioration of general economic conditions; (4) the
rate of prepayments; (5) interest rate fluctuations; (6) the level of expenses;
(7) managed and sub-serviced receivables volume; (8) the timing of the
securitizations of the Company's receivables; (9) the level of insurance policy
renewals; (10) the effects of government regulation, including restrictions and
limitations imposed by banking laws, regulators, examinations, and the
agreements between the Company's bank subsidiaries and their respective
regulators; (11) relationships with significant vendors, business partners and
customers; (12) the amount and cost of financing available to the Company; (13)
the ratings on the debt of the Company and its subsidiaries; (14) the ability to
attract and retain key personnel and
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customers; and (15) the results of the evaluation of strategic alternatives.
Additional risks that may affect the Company's future performance are detailed
in the Company's filings with the Securities and Exchange Commission, including
its most recent Annual Report on Form 10-K and its Quarterly Reports on Form
10-Q.
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Form 8-K Advanta Corp.
October 9, 2000
Item 7. Financial Statements and Exhibits.
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(c) Exhibits:
None.
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Form 8-K Advanta Corp.
October 9, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Advanta Corp.
By: /s/ Elizabeth H. Mai
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Elizabeth H. Mai, Senior Vice President,
Secretary and General Counsel
October 10, 2000
