-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sik2AzrhsijHGDOmMfbz9iBiV/mRVZ7cpeUcmPslLhNi56OjXiB3sOe1rzFWgT8J ngYtL9/6QId45B4ffbeRfg== 0000354964-00-000003.txt : 20000202 0000354964-00-000003.hdr.sgml : 20000202 ACCESSION NUMBER: 0000354964-00-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000119 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOUSEHOLD INTERNATIONAL INC CENTRAL INDEX KEY: 0000354964 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 363121988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08198 FILM NUMBER: 510288 BUSINESS ADDRESS: STREET 1: 2700 SANDERS RD CITY: PROSPECT HEIGHTS STATE: IL ZIP: 60070 BUSINESS PHONE: 8475645000 MAIL ADDRESS: STREET 1: 2700 SANDERS ROAD CITY: PROSPECT HEIGHTS STATE: IL ZIP: 60070 8-K 1 HI FORM 8-K DATED 01/19/2000 1 FORM 8-K 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: January 19, 2000 ---------------- HOUSEHOLD INTERNATIONAL, INC. ----------------------------- (Exact name of registrant as specified in its charter) Delaware 1-8198 36-3121988 - -------------------------------------------------------------- (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 ------------ 2 Item 5. Other Events Press release pertaining to the financial results of Household International, Inc., for the quarter and year ended December 31, 1999. Said release is filed as an exhibit hereto. Item 7. Financial Statements and Exhibits (a) Financial statements of businesses acquired. Not applicable. (b) Pro forma financial information. Not applicable. (c) Exhibits. No. Exhibit --- ------- 27 Financial Data Schedule. 99 Press release titled "Household International Reports Best Quarter and Year in its History" dated January 19, 2000. 3 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 INTERNATIONAL, INC. ---------------------------- (Registrant) By: /s/ John W. Blenke ------------------- John W. Blenke Assistant Secretary Dated: January 20, 2000 ---------------- EX-27 2 FINANCIAL DATA SCHEDULE
5 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. 1,000 YEAR DEC-31-1999 DEC-31-1999 270,600 3,128,100 52,289,400 2,666,600 0 0 1,324,100 847,700 60,749,400 0 34,887,300 0 164,400 550,400 6,275,500 60,749,400 0 9,499,100 0 2,785,400 0 1,716,400 2,776,600 2,220,700 734,300 1,486,400 0 0 0 1,486,400 3.10 3.07 FINANCIAL STATEMENTS OF THE COMPANY WERE PREPARED IN ACCORDANCE WITH FINANCIAL INSTITUTION INDUSTRY STANDARDS. ACCORDINGLY, THE COMPANY'S BALANCE SHEETS WERE NON-CLASSIFIED.
EX-99 3 HI PRESS RELEASE/EARNINGS SUPPLEMENT DTD 1/19/2000 1 Household International Reports Best Quarter and Year in its History - - Fourth quarter earnings per share of $.92, up 30 percent - - Core receivables grow $3.9 billion, or 5.9 percent, in the quarter - - 1999 full year earnings per share of $3.07, up 33 percent - - Core receivables up 12.5 percent for the year - - Return on Managed Assets reaches 1.99 percent for the year Prospect Heights, IL, January 19, 2000 -- Household International (NYSE: HI) today reported that fourth quarter earnings per share increased 30 percent to a record $.92, from $.71 a year ago. Fourth quarter net income rose 25 percent to a record $438.8 million, compared with $349.9 million a year ago. For the full year, Household reported record earnings per share of $3.07, which was 33 percent over 1998 operating earnings per share. Net income totaled $1.5 billion, or 29 percent above the prior year's operating net income. The company's core loan portfolio increased 12.5 percent in 1999, with growth accelerating each quarter of the year. This trend of improving receivable growth reflects momentum in the consumer finance business for all products. The company's MasterCard/Visa business also showed improving receivable growth trends each quarter and finished the year with strong receivable and account growth. William F. Aldinger, Household's chairman and chief executive officer, said, "We are very pleased to report another record quarter, the culmination of an absolutely outstanding year for Household. Growth and profitability in the quarter were excellent and exceeded our expectations. Revenues were particularly strong." Commenting on the full year results, Aldinger continued, "Our record earnings reflect an outstanding year in our consumer finance business, a dramatic turnaround in our MasterCard/Visa business, and strong results in all of our other businesses. We are particularly pleased with excellent receivable growth in 1999, particularly in our branches, while fully realizing all of the acquisition synergies of the Beneficial merger. We move into the new year with a real sense of excitement, great momentum throughout the company and strong competitive positions in each of our businesses." (more) 2 Fourth Quarter Highlights - - The company's managed portfolio grew $3.9 billion in the quarter, or 5.9 percent, with all core product lines reporting solid growth. Branch originated loans were up 3.1 percent and MasterCard/Visa receivables increased 5.6 percent. - - Revenues, excluding securitization related income, grew 5.2 percent in the quarter, driven by significant growth in average receivables and fee income. - - Fourth quarter operating expenses rose somewhat, reflecting marketing spending for new business initiatives, including the launch of marblesTM, the company's internet enabled credit card in the U.K. - - Credit performance improved in the quarter, as credit losses dropped 13 basis points in the quarter, reaching the lowest level since 1997. - - The company's return on managed assets expanded to 2.25 percent for the quarter, and return on equity reached 27.5 percent. Receivable Growth The company's managed portfolio grew $3.9 billion, or 5.9 percent, in the fourth quarter. Receivable growth in the U.S. consumer finance business was a very strong 5.6 percent, with approximately 85 percent of that growth in real estate secured loan products. During the quarter, the company entered into an agreement with a major credit card issuer to purchase home equity loans on an ongoing basis. As part of that agreement, the company acquired a $760 million portfolio of home equity receivables from this issuer. The company's MasterCard/Visa portfolio grew $832 million or 5.6 percent in the quarter, with the strongest results coming in the GM Card and Union Privilege portfolios. Account growth in the company's nonprime credit card business exceeded expectations, as the number of accounts at year end surpassed 500,000. In the fourth quarter, the company introduced marblesTM, an internet enabled credit card for the U.K. market. Within weeks of the launch, marblesTM generated over $90 million of receivables. Revenues The company's managed net interest margin was 8.29 percent compared to 8.36 percent in the third quarter and 8.03 percent a year ago. The sequential decline reflected higher funding costs. Managed fee income increased 11.1 percent from the third quarter and 12.8 percent compared to a year ago, principally reflecting higher levels of credit card interchange and other fees. Operating Expenses Operating expenses in the quarter rose slightly from the third quarter and year-ago levels. The increase compared to the third quarter was mainly driven by higher marketing expenses, including costs related to the launch of the marblesTM credit card in the U.K. The efficiency ratio improved to 31.3 percent in the fourth quarter from 33.9 percent a year ago. (more) 3 Credit Quality and Loss Reserves Credit quality improved from both the third quarter and a year ago. The annualized managed net chargeoff ratio for the fourth quarter fell 13 basis points to 3.96 percent, the lowest level since 1997. The chargeoff ratio was 4.09 percent in the third quarter and 4.39 percent in the year-ago quarter. The managed delinquency ratio (60+days) improved 23 basis points to 4.66 percent at December 31, compared with 4.89 percent at September 30 and 4.90 percent a year ago. The company's managed credit loss reserves totaled $2.7 billion, up slightly from September 30. Reserves as a percent of managed receivables at December 31 were 3.72 percent compared to 3.84 percent at September 30. Reserves to nonperforming loans were 100.1 percent at year end. Full Year Highlights - - The managed portfolio rose over $7.8 billion in 1999, with strongest growth in home equity receivables. - - The company's net interest margin widened to 8.23 percent from 7.86 percent in 1998, resulting from increased pricing in the unsecured and MasterCard/Visa portfolios coupled with lower funding costs. - - Operating expenses for the full year declined 5.4 percent. The efficiency ratio improved to 33.6 percent from 37.6 percent in 1998. The company achieved all of its expense savings goals related to the Beneficial merger. - - The company's full year chargeoff ratio improved 16 basis points to 4.13 percent. Share Repurchase Program In connection with its $2 billion share repurchase program, announced on March 9, 1999, the company bought back 3 million shares in the quarter. The company repurchased a total of 21.8 million shares in 1999 including 5 million shares to fund employee benefit plans. Household International, through its subsidiaries, is a leading provider of consumer finance, credit card, auto finance and credit insurance products in the United States, United Kingdom and Canada. In the United States, Household operates under the two oldest and most recognized names in consumer finance - HFC and Beneficial. Household is also one of the nation's largest issuers of private-label and general purpose credit cards, including the GM Card and the AFL-CIO's Union Privilege card. For more information, visit the company's web site at http://www.household.com. This press release contains certain estimates and projections that may be forward-looking in nature, as defined by the Private Securities Litigation Reform Act of 1995. A variety of factors may cause actual results to differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference are discussed in Household International's Annual Report on Form 10-K, filed with the SEC. # # # CONTACTS: Craig A. Streem, Vice President--Investor Relations, 847-564-6053, Celeste M. Murphy, Director -- Investor Relations, 847-564-7568, both of Household International 4 Quarterly Financial Supplement
December 31, 1999 - Quarterly Highlights - ------------------------------------------------------------------------------------------------------------------- Summary Managed Income Statement Three Months Ended % Change from Prior ------------------------------ ------------------- ($ millions) 12/31/99 9/30/99 12/31/98 Qtr. Year - ------------------------------------------------------------------------------------------------------------------- Managed-basis net interest margin $1,470.0 $1,409.9 $1,317.4 4.3% 11.6% Managed-basis other revenues 560.6 552.8 555.0 1.4 1.0 Managed-basis provision for credit losses 738.1 741.1 716.7 (0.4) 3.0 Operating expenses 634.7 626.9 631.2 1.2 0.6 - ------------------------------------------------------------------------------------------------------------------- Income before income taxes 657.8 594.7 524.5 10.6 25.4 Income taxes 219.0 194.8 174.6 12.4 25.4 - ------------------------------------------------------------------------------------------------------------------- Net income $ 438.8 $ 399.9 $ 349.9 9.7% 25.4% =================================================================================================================== Common Stock Data - ------------------------------------------------------------------------------------------------------------------- Basic earnings per common share $ 0.93 $ 0.84 $ 0.72 10.7% 29.2% Diluted earnings per common share 0.92 0.83 0.71 10.8 29.6 - ------------------------------------------------------------------------------------------------------------------- Average common shares (millions) 468.7 475.6 482.9 (1.5) (2.9) Average common and equivalent shares (millions) 472.7 480.2 489.0 (1.6) (3.3) - ------------------------------------------------------------------------------------------------------------------- Common stock price High $ 48.00 $ 50.19 $ 40.50 (4.4) 18.5 Low 35.81 36.19 23.00 (1.1) 55.7 Period end 37.25 40.13 39.63 (7.2) (6.0) - ------------------------------------------------------------------------------------------------------------------- Dividends declared per common share $ 0.17 $ 0.17 $ 0.15 - 13.3 Book value per common share 13.79 13.26 12.88 4.0 7.1 =================================================================================================================== Key Ratios - ------------------------------------------------------------------------------------------------------------------- Return on average common shareholders' equity 27.5% 25.3% 22.8% 8.7% 20.6% Return on average owned assets 2.96 2.80 2.64 5.7 12.1 Return on average managed assets 2.25 2.14 1.90 5.1 18.4 Managed efficiency ratio, normalized 31.3 31.9 33.9 (1.9) (7.7) Managed net interest margin 8.29 8.36 8.03 (0.8) 3.2 Total shareholders' equity as a percent of managed assets 8.72 8.91 9.31 (2.1) (6.3) Tangible equity to tangible managed assets 6.96 7.00 7.11 (0.6) (2.1) ===================================================================================================================
5 Quarterly Financial Supplement (continued)
Twelve Months Highlights - ----------------------------------------------------------------------------------------------- Summary Managed Income Statement Twelve Months Ended -------------------- ($ millions) 12/31/99 12/31/98 % Change - ----------------------------------------------------------------------------------------------- Managed-basis net interest margin $5,539.2 $5.094.1 8.7% Managed-basis other revenues 1,990.6 2,057.5 (3.3) Gain on sale of Beneficial Canada - 189.4 - Managed-basis provision for credit losses 2,781.8 2,716.0 2.4 Operating expenses 2,527.3 2,672.3 (5.4) Merger and integration related costs - 1,000.0 - - ----------------------------------------------------------------------------------------------- Income before income taxes 2,220.7 952.7 100+ Income taxes 734.3 428.6 71.3 - ----------------------------------------------------------------------------------------------- Net income $1,486.4 $ 524.1 100+ =============================================================================================== Common Stock Data - ----------------------------------------------------------------------------------------------- Basic earnings per common share $ 3.10 $ 1.04 100+ Diluted earnings per common share 3.07 1.03 100+ - ----------------------------------------------------------------------------------------------- Average common shares (millions) 477.0 487.2 (2.1) Average common and equivalent shares (millions) 481.8 496.4 (2.9) - ----------------------------------------------------------------------------------------------- Common stock price High 52.31 53.69 (2.6) Low 35.81 23.00 55.7 Dividends declared per common share 0.68 0.60 13.3 =============================================================================================== Key Ratios - ----------------------------------------------------------------------------------------------- Return on average common shareholders' equity 23.5% 8.1% 29.1% Return on average owned assets 2.64 1.04 15.3 Return on average managed assets 1.99 .72 24.4 Managed efficiency ratio, normalized 33.6 37.6 (10.6) Managed net interest margin 8.23 7.86 4.7 =============================================================================================== To aid analysis, net interest margin, other revenues and provision for credit losses are presented on a pro forma managed basis as if receivables securitized and sold with limited recourse were held in the portfolio. Policyholders' benefits have been netted against other revenues. Excluding merger and integration related costs of $751.0 million after-tax related to the Beneficial merger and the gain on sale of Beneficial Canada of $118.5 million after-tax ("Non-Recurring Items"), operating net income was $1,156.6 million, diluted operating earnings per share was $2.30, return on average common shareholders' equity was 18.2 percent, return on average owned assets was 2.29 percent, and return on average managed assets was 1.60 percent. See Management's Discussion and Analysis in our 1998 Annual Report on Form 10-K for further discussion of the merger and integration costs, the gain on sale of Beneficial Canada, and results excluding these items.
6 Consolidated Statements of Income - Owned Basis
Three Months - ----------------------------------------------------------------------------------- % Change Three Months Ended from Prior ---------------------------- -------------- ($ millions) 12/31/99 9/30/99 12/31/98 Qtr. Year - ----------------------------------------------------------------------------------- Finance income $1,773.2 $1,694.7 $1,492.2 4.6% 18.8% Other interest income 8.1 8.0 15.5 1.3 (47.7) Interest expense 762.8 703.7 659.9 8.4 15.6 - ----------------------------------------------------------------------------------- Net interest margin 1,018.5 999.0 847.8 2.0 20.1 Provision for credit losses on owned receivables 453.2 438.1 377.5 3.4 20.1 - ----------------------------------------------------------------------------------- Net interest margin after provision for credit losses 565.3 560.9 470.3 0.8 20.2 - ----------------------------------------------------------------------------------- Securitization income 398.2 357.9 365.3 11.3 9.0 Insurance revenues 129.2 130.6 126.3 (1.1) 2.3 Investment income 40.8 45.0 40.3 (9.3) 1.2 Fee income 174.3 155.7 155.6 11.9 12.0 Other income 43.8 32.4 60.1 35.2 (27.1) - ----------------------------------------------------------------------------------- Total other revenues 786.3 721.6 747.6 9.0 5.2 - ----------------------------------------------------------------------------------- Salaries and fringe benefits 307.2 304.7 268.0 0.8 14.6 Occupancy and equipment expense 70.9 66.6 69.9 6.5 1.4 Other marketing expenses 106.0 91.5 99.5 15.8 6.5 Other servicing and administrative expenses 114.5 128.5 155.5 (10.9) (26.4) Amortization of acquired intangibles and goodwill 36.1 35.5 38.3 1.7 (5.7) Policyholders' benefits 59.1 61.0 62.2 (3.1) (5.0) - ----------------------------------------------------------------------------------- Total costs and expenses 693.8 687.8 693.4 0.9 0.1 - ----------------------------------------------------------------------------------- Income before income taxes 657.8 594.7 524.5 10.6 25.4 Income taxes 219.0 194.8 174.6 12.4 25.4 - ----------------------------------------------------------------------------------- Net income 438.8 399.9 349.9 9.7 25.4 - ----------------------------------------------------------------------------------- Preferred dividends (2.3) (2.3) (2.6) - (11.5) - ----------------------------------------------------------------------------------- Earnings available to common shareholders $ 436.5 $ 397.6 $ 347.3 9.8% 25.7% =================================================================================== Effective tax rate 33.3% 32.8% 33.3% 1.5% 0.0% - -----------------------------------------------------------------------------------
7 Consolidated Statements of Income - Owned Basis (continued)
Twelve Months - ------------------------------------------------------------------------ Twelve Months Ended -------------------- ($ millions) 12/31/99 12/31/98 % Change - ------------------------------------------------------------------------ Finance income $6,549.5 $5,604.2 16.9% Other interest income 33.4 57.1 (41.5) Interest expense 2,776.6 2,517.0 10.3 - ------------------------------------------------------------------------ Net interest margin 3,806.3 3,144.3 21.1 Provision for credit losses on owned receivables 1,716.4 1,516.8 13.2 - ------------------------------------------------------------------------ Net interest margin after provision for credit losses 2,089.9 1,627.5 28.4 - ------------------------------------------------------------------------ Securitization income 1,393.5 1,548.9 (10.0) Insurance revenues 534.6 492.8 8.5 Investment income 168.8 161.2 4.7 Fee income 595.5 599.7 (0.7) Other income 223.8 243.7 (8.2) - ------------------------------------------------------------------------ Total other revenues 2,916.2 3,046.3 (4.3) - ------------------------------------------------------------------------ Gain on sale of Beneficial Canada - 189.4 - - ------------------------------------------------------------------------ Salaries and fringe benefits 1,194.6 1,127.5 6.0 Occupancy and equipment expense 270.9 316.1 (14.3) Other marketing expenses 370.0 403.2 (8.2) Other servicing and administrative expenses 547.9 654.9 (16.3) Amortization of acquired intangibles and goodwill 143.9 170.6 (15.7) Policyholders' benefits 258.1 238.2 8.4 - ------------------------------------------------------------------------ Costs and expenses before merger charge 2,785.4 2,910.5 (4.3) Merger and integration related costs - 1,000.0 - - ------------------------------------------------------------------------ Total costs and expenses 2,785.4 3,910.5 (28.8) - ------------------------------------------------------------------------ Income before income taxes 2,220.7 952.7 100+ Income taxes 734.3 428.6 71.3 - ------------------------------------------------------------------------ Net income 1,486.4 524.1 100+ - ------------------------------------------------------------------------ Preferred dividends (9.2) (15.0) (38.7) - ------------------------------------------------------------------------ Earnings available to common shareholders $1,477.2 $ 509.1 100+ ======================================================================== Effective tax rate 33.1% 45.0% (26.4)% ======================================================================== Excluding Non-Recurring Items, operating net income was $1,156.6 million and the effective tax rate was 34.4 percent.
8 Consolidated Statements of Income - Owned Basis (continued)
Balance Sheet Data - ------------------------------------------------------------------------------------ ($ millions) 12/31/99 9/30/99 12/31/98 - ------------------------------------------------------------------------------------ Owned assets $60,749.4 $57,585.5 $52,892.7 Managed assets 80,188.3 76,050.1 72,594.5 Managed receivables 71,728.3 67,807.1 63,907.7 Debt 50,645.1 47,234.7 42,461.5 Trust originated preferred securities 375.0 375.0 375.0 Preferred stock 164.4 164.4 164.4 Common shareholders' equity 6,450.9 6,240.0 6,221.4 Total shareholders' equity as a percent of managed assets 8.72% 8.91% 9.31% ====================================================================================
9 Consolidated Statements of Income - Managed Basis Securitizations and sales of consumer receivables are a source of liquidity and capital management for us. We continue to service the securitized receivables after such receivables are sold and we retain a limited recourse obligation. Securitizations impact the classification of revenues and expenses in the statement of operations. When reporting on a managed basis, net interest margin, provision for credit losses, fee income, and securitization related income related to receivables sold are reclassified from securitization income into the appropriate caption.
Three Months - ----------------------------------------------------------------------------------------------------------------------- % Change Three months ended from Prior ----------------------------------------------------------------- ------------ ($ millions) 12/31/99 9/30/99 12/31/98 Qtr. Year - ----------------------------------------------------------------------------------------------------------------------- Finance and other interest income $ 2,525.1 14.23% $ 2,368.2 14.04% $ 2,285.5 13.94% 6.6 % 10.5 % Interest expense 1,055.1 5.94 958.3 5.68 968.1 5.91 10.1 9.0 - ----------------------------------------------------------------------------------------------------------------------- Net interest margin 1,470.0 8.29% 1,409.9 8.36% 1,317.4 8.03% 4.3 11.6 Provision for credit losses 738.1 741.1 716.7 (0.4) 3.0 - ----------------------------------------------------------------------------------------------------------------------- Net interest margin after provision for credit losses 731.9 668.8 600.7 9.4 21.8 - ----------------------------------------------------------------------------------------------------------------------- Insurance revenues 129.2 130.6 126.3 (1.1) 2.3 Investment income 40.8 45.0 40.3 (9.3) 1.2 Fee income 344.3 309.8 305.3 11.1 12.8 Securitization related income 61.5 95.9 85.2 (35.9) (27.8) Other income 43.9 32.4 60.1 35.5 (27.0) - ----------------------------------------------------------------------------------------------------------------------- Total other revenues 619.7 613.7 617.2 1.0 0.4 Operating expenses and policyholders' benefits 693.8 687.8 693.4 0.9 0.1 - ----------------------------------------------------------------------------------------------------------------------- Income before income taxes 657.8 594.7 524.5 10.6 25.4 Income taxes 219.0 194.8 174.6 12.4 25.4 - ----------------------------------------------------------------------------------------------------------------------- Net income $ 438.8 $ 399.9 $ 349.9 9.7 % 25.4 % ======================================================================================================================= Average managed receivables: Home equity $26,436.8 $24,702.2 $22,080.5 7.0 % 19.7 % Auto finance 2,866.4 2,532.3 1,628.3 13.2 76.0 MasterCard/Visa 15,198.3 15,021.5 17,787.5 1.2 (14.6) Private label 10,800.6 10,109.9 9,980.6 6.8 8.2 Other unsecured 13,732.7 13,255.6 11,895.1 3.6 15.4 - ----------------------------------------------------------------------------------------------------------------------- Core products 69,034.8 65,621.5 63,372.0 5.2 8.9 - ----------------------------------------------------------------------------------------------------------------------- First mortgage 134.5 142.6 176.0 (5.7) (23.6) Commercial 686.4 659.5 746.8 4.1 (8.1) - ----------------------------------------------------------------------------------------------------------------------- Total 69,855.7 66,423.6 64,294.8 5.2 8.6 Average noninsurance investments 692.5 607.6 995.9 14.0 (30.5) Other interest-earning assets 421.6 418.0 313.4 0.9 34.5 - ----------------------------------------------------------------------------------------------------------------------- Average managed interest- earning assets $70,969.8 $67,449.2 $65,604.1 5.2 % 8.2 % =======================================================================================================================
10 Consolidated Statement of Income - Managed Basis (continued)
Twelve Months - --------------------------------------------------------------------------------------------- Twelve Months Ended ----------------------------------------- ($ millions) 12/31/99 12/31/98 % Change - --------------------------------------------------------------------------------------------- Finance income and other interest income $ 9,375.7 13.93% $ 8,975.4 13.85% 4.5 % Interest expense 3,836.5 5.70 3,881.3 5.99 (1.2) - --------------------------------------------------------------------------------------------- Net interest margin 5,539.2 8.23% 5,094.1 7.86% 8.7 Provision for credit losses 2,781.8 2,716.0 2.4 - --------------------------------------------------------------------------------------------- Net interest margin after provision for credit losses 2,757.4 2,378.1 15.9 - --------------------------------------------------------------------------------------------- Insurance revenues 534.6 492.8 8.5 Investment income 168.8 161.2 4.7 Fee income 1,205.4 1,181.2 2.0 Securitization related income 116.0 216.8 (46.5) Other income 223.9 243.7 (8.1) - --------------------------------------------------------------------------------------------- Total other revenues 2,248.7 2,295.7 (2.0) Gain on sale of Beneficial Canada - 189.4 - Operating expenses and policyholders' benefits 2,785.4 2,910.5 (4.3) Merger and integration related costs - 1,000.0 - - --------------------------------------------------------------------------------------------- Income before income taxes 2,220.7 952.7 100+ Income taxes 734.3 428.6 71.3 - --------------------------------------------------------------------------------------------- Net income $ 1,486.4 $ 524.1 100+ ============================================================================================= Average managed receivables: Home equity $24,574.5 $20,878.1 17.7 % Auto finance 2,370.4 1,260.2 88.1 MasterCard/Visa 15,295.7 18,742.2 (18.4) Private label 10,255.9 9,621.2 6.6 Other unsecured 13,008.6 11,847.8 9.8 - --------------------------------------------------------------------------------------------- Core products 65,505.1 62,349.5 5.1 - --------------------------------------------------------------------------------------------- First mortgage 149.3 296.7 (49.7) Commercial 660.3 783.4 (15.7) Discontinued products - 247.5 - - --------------------------------------------------------------------------------------------- Total 66,314.7 63,677.1 4.1 Average noninsurance investments 558.6 803.7 (30.5) Other interest-earning assets 416.4 302.6 37.6 - --------------------------------------------------------------------------------------------- Average managed interest- earning assets $67,289.7 $64,783.4 3.9% ============================================================================================== % Columns: comparison to average managed interest-earning assets, annualized. MasterCard and Visa are registered trademarks of MasterCard International, Incorporated and VISA USA Inc., respectively. Discontinued products include receivables relating to Beneficial's disposed Canadian and German operations. Excluding Non-Recurring Items, operating net income was $1,156.6 million.
11 Reconciliation of Securitization Related Income
- ----------------------------------------------------------------------------- Three Months Ended ------------------------------- ($ millions) 12/31/99 9/30/99 12/31/98 - ----------------------------------------------------------------------------- Gross gains $ 182.6 $ 172.0 $161.6 Amortization (121.1) (76.1) (76.4) - ----------------------------------------------------------------------------- Securitization related income 61.5 95.9 85.2 Over the life provision on new transactions 142.5 135.7 142.9 - ----------------------------------------------------------------------------- Net effect of securitization activity (81.0) (39.8) (57.7) ============================================================================= Receivables securitized $2,069.0 $1,670.0 $901.0 =============================================================================
- ------------------------------------------------------------------ Twelve Months Ended -------------------- ($ millions) 12/31/99 12/31/98 - ------------------------------------------------------------------ Gross gains $ 493.3 $ 494.5 Amortization (377.3) (277.7) - ------------------------------------------------------------------- Securitization related income 116.0 216.8 Over the life provision on new transactions 382.2 393.9 - ------------------------------------------------------------------ Net effect of securitization activity (266.2) (177.1) ================================================================== Receivables securitized $5,241.0 $3,639.0 ==================================================================
12 Receivables Analysis
End of Period Managed Receivables - ----------------------------------------------------------------------------------------------------------------------- % Change from Prior ------------------- ($ millions) 12/31/99 9/30/99 12/31/98 Qtr. Year - ----------------------------------------------------------------------------------------------------------------------- Home equity $26,935.5 $25,261.4 $22,330.1 6.6 % 20.6 % Auto finance 3,039.8 2,700.8 1,765.3 12.6 72.2 MasterCard/Visa 15,793.1 14,961.5 16,610.8 5.6 (4.9) Private label 11,269.7 10,456.2 10,377.5 7.8 8.6 Other unsecured 13,881.9 13,600.8 11,970.6 2.1 16.0 - ----------------------------------------------------------------------------------------------------------------------- Core products 70,920.0 66,980.7 63,054.3 5.9 12.5 - ----------------------------------------------------------------------------------------------------------------------- First mortgage 130.1 138.3 156.3 (5.9) (16.8) Commercial 678.2 688.1 697.1 (1.4) (2.7) - ----------------------------------------------------------------------------------------------------------------------- Managed portfolio $71,728.3 $67,807.1 $63,907.7 5.8% 12.2% ======================================================================================================================= Receivables (% of Managed Portfolio) - ----------------------------------------------------------------------------------------------------------------------- Home equity 37.6% 37.2% 34.9% Auto finance 4.2 4.0 2.8 MasterCard/Visa 22.0 22.1 26.0 Private label 15.7 15.4 16.2 Other unsecured 19.4 20.1 18.8 - ----------------------------------------------------------------------------------------------------------------------- Core products 98.9 98.8 98.7 - ----------------------------------------------------------------------------------------------------------------------- First mortgage 0.2 0.2 0.2 Commercial 0.9 1.0 1.1 - ----------------------------------------------------------------------------------------------------------------------- Total 100.0% 100.0% 100.0% ======================================================================================================================= End of Period Receivables ($ millions) - ----------------------------------------------------------------------------------------------------------------------- Owned receivables: First mortgage $ 130.1 $ 138.3 $ 156.3 (5.9)% (16.8)% Home equity 24,661.9 22,766.2 18,692.7 8.3 31.9 Auto finance 1,233.5 1,065.3 805.0 15.8 53.2 MasterCard/Visa 6,314.4 5,996.3 7,180.2 5.3 (12.1) Private label 10,119.7 9,806.2 9,566.0 3.2 5.8 Other unsecured 9,151.6 8,882.1 7,108.6 3.0 28.7 Commercial 678.2 688.1 697.1 (1.4) (2.7) - ----------------------------------------------------------------------------------------------------------------------- Total owned receivables 52,289.4 49,342.5 44,205.9 6.0 18.3 - ----------------------------------------------------------------------------------------------------------------------- Accrued finance charges 879.3 786.5 642.5 11.8 36.9 Credit loss reserve for owned receivables (1,757.0) (1,750.3) (1,734.2) 0.4 1.3 Unearned credit insurance premiums and claims reserves (569.3) (541.2) (505.1) 5.2 12.7 Amounts due and deferred from receivables sales 2,225.6 2,103.6 2,152.9 5.8 3.4 Reserve for receivables serviced with limited recourse (909.6) (855.5) (813.9) 6.3 11.8 - ----------------------------------------------------------------------------------------------------------------------- Total owned receivables, net 52,158.4 49,085.6 43,948.1 6.3 18.7 - ----------------------------------------------------------------------------------------------------------------------- Receivables serviced with limited recourse: Home equity 2,273.6 2,495.2 3,637.4 (8.9) (37.5) Auto finance 1,806.3 1,635.5 960.3 10.4 88.1 MasterCard/Visa 9,478.7 8,965.2 9,430.6 5.7 0.5 Private label 1,150.0 650.0 811.5 76.9 41.7 Other unsecured 4,730.3 4,718.7 4,862.0 0.2 (2.7) - ----------------------------------------------------------------------------------------------------------------------- Total receivables serviced with limited recourse 19,438.9 18,464.6 19,701.8 5.3 (1.3) - ----------------------------------------------------------------------------------------------------------------------- Total managed receivables, net $71,597.3 $67,550.2 $63,649.9 6.0% 12.5% =======================================================================================================================
13 Credit Quality/Credit Loss Reserves
Two-Months-and-Over Contractual Delinquency - ----------------------------------------------------------------------------------------------- As a percent of managed consumer receivables, excludes commercial. 12/31/99 9/30/99 12/31/98 - ----------------------------------------------------------------------------------------------- Home equity 3.27 3.46 3.67 Auto finance 2.43 2.26 2.29 MasterCard/Visa 2.78 3.10 3.75 Private label 5.97 6.66 6.20 Other unsecured 8.81 8.57 7.94 - ----------------------------------------------------------------------------------------------- Total 4.66% 4.89% 4.90% =============================================================================================== Quarter-to-Date Chargeoffs, Net of Recoveries - ----------------------------------------------------------------------------------------------- As a percent of average managed consumer receivables, annualized, excludes commercial. - ----------------------------------------------------------------------------------------------- Home equity 0.54 0.58 0.68 Auto finance 5.43 4.55 5.63 MasterCard/Visa 5.57 6.15 6.61 Private label 5.88 5.60 5.47 Other unsecured 6.98 7.06 6.94 - ----------------------------------------------------------------------------------------------- Total 3.96% 4.09% 4.39% =============================================================================================== Nonperforming Assets - ----------------------------------------------------------------------------------------------- ($ millions) - ----------------------------------------------------------------------------------------------- Nonaccrual managed receivables $1,912.6 $1,803.5 $1,439.2 Accruing managed receivables 90 or more days delinquent 739.9 751.5 874.6 Renegotiated commercial loans 12.3 12.3 12.3 - ----------------------------------------------------------------------------------------------- Total nonperforming managed receivables 2,664.8 2,567.3 2,326.1 Real estate owned 271.5 234.4 253.9 - ----------------------------------------------------------------------------------------------- Total nonperforming assets $2,936.3 $2,801.7 $2,580.0 =============================================================================================== Managed credit loss reserves as a percent of nonperforming managed receivables 100.1% 101.5% 109.5% - -----------------------------------------------------------------------------------------------
14 Credit Quality/Credit Loss Reserves (continued)
Credit Loss Reserves - ----------------------------------------------------------------------------------------------------------------- ($ millions) 12/31/99 9/30/99 12/31/98 - ----------------------------------------------------------------------------------------------------------------- Reserves for owned receivables at beginning of quarter $1,750.3 $1,737.6 $1,786.2 Provision for credit losses 453.2 438.2 377.5 Chargeoffs, net of recoveries (455.9) (441.4) (415.4) Portfolio acquisitions, net 9.4 15.9 (14.1) - ----------------------------------------------------------------------------------------------------------------- Reserves for owned receivables at end of quarter 1,757.0 1,750.3 1,734.2 - ----------------------------------------------------------------------------------------------------------------- Credit loss reserves for receivables serviced with limited recourse at beginning of quarter 855.5 786.4 876.7 Provision for credit losses 284.9 302.9 339.2 Chargeoffs, net of recoveries (229.2) (236.3) (282.7) Other, net (1.6) 2.5 (119.3) - ----------------------------------------------------------------------------------------------------------------- Credit loss reserves for receivables serviced with limited recourse at end of quarter 909.6 855.5 813.9 - ----------------------------------------------------------------------------------------------------------------- Total credit loss reserves at end of quarter $2,666.6 $2,605.8 $2,548.1 ================================================================================================================= Credit loss reserves Owned $1,757.0 3.36% $1,750.3 3.55% $1,734.2 3.92% Serviced with limited recourse 909.6 4.68 855.5 4.63 813.9 4.13 - ----------------------------------------------------------------------------------------------------------------- Total managed credit loss reserves $2,666.6 3.72% $2,605.8 3.84% $2,548.1 3.99% ================================================================================================================= % Columns: comparisons to appropriate receivables.
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