-----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, QoWtR10fL5SgUGLvgvUtjTSqOXZg8gWcUR7L/q7EE4EP+BlsRm3FSkYN5g+SVc5u 4BnafaoDWcwxDME95W5axA== 0000950131-03-003031.txt : 20030520 0000950131-03-003031.hdr.sgml : 20030520 20030520172314 ACCESSION NUMBER: 0000950131-03-003031 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030516 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030520 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: 1934 Act SEC FILE NUMBER: 001-08198 FILM NUMBER: 03713335 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 d8k.txt FORM 8-K FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report: May 16, 2003 HOUSEHOLD INTERNATIONAL, INC. ----------------------------- (Exact name of registrant as specified in its charter) Delaware 1-8198 86-1052062 -------- ------ ---------- (State of incorporation) Commission File (IRS Employer Number) Identification Number) 2700 Sanders Road, Prospect Heights, Illinois 60070 --------------------------------------------------- (Address of principal executive offices) (Zip Code) (847) 564-5000 -------------- Registrant's telephone number, including area code 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 99 Quarterly Financial Supplement for the quarter ended March 31, 2003. Item 9. Regulation FD Disclosure (and Item 12. Results of Operations and Financial Condition). Financial supplement pertaining to the financial results of Household International, Inc., for the quarter ended March 31, 2003. The information shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act except as otherwise expressly stated in such a filing. 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/ Patrick D. Schwartz ------------------------------- Patrick D. Schwartz Vice President-General Counsel Treasury and Corporate Law Dated: May 20, 2003 EX-99 3 dex99.txt SELECTED FINANCIAL DATA Exhibit 99 Household International, Inc. - -------------------------------------------------------------------------------- Quarterly Financial Supplement - March 31, 2003 We monitor our operations and evaluate trends on a managed basis which assumes that securitized receivables have not been sold and are still on our balance sheet. We manage our operations on a managed basis because the receivables that we securitize are subjected to underwriting standards comparable to our owned portfolio, are serviced by operating personnel without regard to ownership and result in a similar credit loss exposure for us. In addition, we fund our operations, review our operating results and make decisions about allocating resources such as employees and capital on a managed basis. As a result, we believe this information will facilitate investors' understanding of our results and trends.
Quarterly Highlights - -------------------------------------------------------------------------------------------------------------- Summary Owned Income Statement Three Months Ended % Change from Prior -------------------------------- ------------------- ($ millions) 3/31/03(1) 12/31/02 3/31/02 Qtr. Year - -------------------------------------------------------------------------------------------------------------- Owned-basis net interest margin and other revenues, excluding loss on disposition of Thrift assets and deposits $2,873.6 $2,922.9 $2,736.0 (1.7)% 5.0% Loss on disposition of Thrift assets and deposits -- 378.2 -- 100.0 -- Owned-basis provision for credit losses 1,009.6 985.1 923.0 2.5 9.4 Costs and expenses, excluding acquisition related costs 1,223.6 1,111.6 1,067.5 10.1 14.6 HSBC acquisition related costs incurred by Household 198.2 -- -- 100.0 100.0 - -------------------------------------------------------------------------------------------------------------- Income before income taxes 442.2 448.0 745.5 (1.3) (40.7) Income taxes 186.8 109.8 254.5 70.1 (26.6) - -------------------------------------------------------------------------------------------------------------- Net income $ 255.4 $ 338.2 $ 491.0 (24.5)% (48.0)% ============================================================================================================== Operating net income, excluding non-recurring charges (2) $ 422.7 $ 578.2 $ 491.0 (26.9)% (13.9)% - -------------------------------------------------------------------------------------------------------------- Selected Financial Ratios - -------------------------------------------------------------------------------------------------------------- Owned Basis: Return on average common shareholder's (s') equity 9.8% 13.9% 23.5% (29.5)% (58.3)% Return on average common shareholder's (s') equity, excluding non-recurring charges (2) 17.1 23.4 23.5 (26.9) (27.2) Return on average owned assets 1.02 1.33 2.18 (23.3) (53.2) Return on average owned assets, excluding non-recurring charges (2) 1.69 2.27 2.18 (25.6) (22.5) Net interest margin 7.29 7.42 7.82 (1.8) (6.8) - -------------------------------------------------------------------------------------------------------------- Managed Basis: Return on average managed assets .82% 1.07% 1.76% (23.4)% (53.4)% Return on average managed assets, excluding non-recurring charges (2) 1.36 1.84 1.76 (26.1) (22.7) Efficiency ratio 41.7 33.8 31.8 23.4 31.1 Efficiency ratio, excluding non-recurring charges (2) 35.5 30.0 31.8 18.3 11.6 Net interest margin 8.30 8.28 8.74 0.2 (5.0) Tangible equity to tangible managed assets (3)(4) 6.98 9.08 8.10 (23.1) (13.8) Tangible common equity to tangible managed assets (3) 4.79 6.83 6.44 (29.9) (25.6) - --------------------------------------------------------------------------------------------------------------
(1) In accordance with the guidelines for accounting for business combinations, the purchase price paid by HSBC plus related purchase accounting adjustments have been "pushed-down" and recorded in our financial statements for periods subsequent to March 28, 2003, resulting in a new basis of accounting reflecting the fair market value of our assets and liabilities for the "successor" period beginning March 29, 2003. To assist in the comparability of our financial results, the quarterly financial supplement combines the "predecessor period" (January 1 to March 28, 2003) with the "successor period" (March 29 to March 31, 2003) to present "combined" quarterly results for the three months ended March 31, 2003. (2) Represents a non-GAAP financial measure which is provided for comparison of our operating trends only and should be read in conjunction with our owned basis GAAP financial information contained herein and in our Form 10-Q for the quarterly period ended March 31, 2003. For 2003, the operating results, percentages and ratios presented exclude the $170.9 million (after-tax) of HSBC acquisition related costs which include payments to executives under existing employment agreements and investment banking, legal and other costs resulting from HSBC's acquisition of Household, and $3.6 million of net income relating to amortization of preliminary purchase accounting adjustments. For the fourth quarter 2002, the operating results, percentages and ratios presented exclude the $240.0 million (after-tax) loss on the disposition of Household Bank, f.s.b. (the "Thrift") assets and deposits. (3) Represents a non-GAAP financial ratio that is used by certain rating agencies as a measure of capital adequacy. The ratio may differ from similarly named measures presented by other companies. (4) Excluding the impact of "push-down" accounting on our assets and common shareholder's equity, TETMA would have been 8.78 percent at March 31, 2003. Page 1 of 8 Household International, Inc. - -------------------------------------------------------------------------------- Consolidated Statements of Income - Owned Basis
Three Months - ------------------------------------------------------------------------------------------------------------- Three Months Ended % Change from Prior -------------------------------- ------------------- ($ millions) 3/31/03 12/31/02 3/31/02 Qtr. Year - ------------------------------------------------------------------------------------------------------------- Finance and other interest income $2,545.0 $2,669.1 $2,535.7 (4.6)% 0.4% Interest expense 912.0 952.6 938.8 (4.3) (2.9) - ------------------------------------------------------------------------------------------------------------- Net interest margin 1,633.0 1,716.5 1,596.9 (4.9) 2.3 Provision for credit losses on owned receivables 1,009.6 985.1 923.0 2.5 9.4 - ------------------------------------------------------------------------------------------------------------- Net interest margin after provision for credit losses 623.4 731.4 673.9 (14.8) (7.5) - ------------------------------------------------------------------------------------------------------------- Securitization revenue 441.1 536.0 518.3 (17.7) (14.9) Insurance revenue 177.3 188.0 170.1 (5.7) 4.2 Investment income 81.3 44.2 46.2 83.9 76.0 Fee income 297.1 279.9 216.5 6.1 37.2 Other income 243.8 158.3 188.0 54.0 29.7 Loss on disposition of Thrift assets and deposits - (378.2) - 100.0 - - ------------------------------------------------------------------------------------------------------------- Total other revenues 1,240.6 828.2 1,139.1 49.8 8.9 - ------------------------------------------------------------------------------------------------------------- Salaries and fringe benefits 508.6 462.1 445.3 10.1 14.2 Sales incentives 39.1 73.6 54.1 (46.9) (27.7) Occupancy and equipment expense 101.2 91.5 92.2 10.6 9.8 Other marketing expenses 143.5 121.7 140.4 17.9 2.2 Other servicing and administrative expenses 322.9 253.8 231.7 27.2 39.4 Amortization of acquired intangibles 14.3 12.7 19.8 12.6 (27.8) HSBC acquisition related costs incurred by Household 198.2 - - 100.0 100.0 Policyholders' benefits 94.0 96.2 84.0 (2.3) 11.9 - ------------------------------------------------------------------------------------------------------------- Total costs and expenses 1,421.8 1,111.6 1,067.5 27.9 33.2 - ------------------------------------------------------------------------------------------------------------- Income before income taxes 442.2 448.0 745.5 (1.3) (40.7) Income taxes 186.8 109.8 254.5 70.1 (26.6) - ------------------------------------------------------------------------------------------------------------- Net income $ 255.4 $ 338.2 $ 491.0 (24.5) (48.0) - ------------------------------------------------------------------------------------------------------------- Operating net income, excluding non-recurring charges (1) $ 422.7 $ 578.2 $ 491.0 (26.9)% (13.9)% - ------------------------------------------------------------------------------------------------------------- Effective tax rate 42.2% 24.5% 34.1% 72.2% 23.8% - ------------------------------------------------------------------------------------------------------------- Effective tax rate, excluding non-recurring charges (1) 33.3% 30.0% 34.1% 11.3% (2.1)% - -------------------------------------------------------------------------------------------------------------
Securitization Revenue (2) - ------------------------------------------------------------------------------------------ Three Months Ended ------------------------------------ ($ millions) 3/31/03 12/31/02 3/31/02 - ------------------------------------------------------------------------------------------ Net initial gain $ 35.3 $ 95.2 $ 74.4 Net replenishment gains 136.9 139.8 124.2 Servicing revenue and excess spread 268.9 301.0 319.7 - ------------------------------------------------------------------------------------------ Total $441.1 $536.0 $518.3 - ------------------------------------------------------------------------------------------
Receivables Securitized - ---------------------------------------------------------------- Three Months Ended --------------------------------- ($ millions) 3/31/03 12/31/02 3/31/02 - ---------------------------------------------------------------- Auto finance $ 410.8 $ 952.6 $ 425.0 MasterCard/Visa (3) 320.0 184.0 600.0 Private label - 857.2 500.0 Personal non-credit card 510.0 1,208.0 902.7 - ----------------------------------------------------------------- Total $1,240.8 $3,201.8 $2,427.7 - ----------------------------------------------------------------- (1) Represents a non-GAAP financial measure which is provided for comparison of our operating trends only and should be read in conjunction with our owned basis GAAP financial information contained herein and in our Form 10-Q for the quarterly period ended March 31, 2003. For 2003, the operating results, percentages and ratios presented exclude the $170.9 million (after-tax) of HSBC acquisition related costs which include payments to executives under existing employment agreements and investment banking, legal and other costs resulting from HSBC's acquisition of Household, and $3.6 million of net income relating to amortization of preliminary purchase accounting adjustments. For the fourth quarter 2002, the operating results, percentages and ratios presented exclude the $240.0 million (after-tax) loss on the disposition of Thrift assets and deposits. (2) The change in our interest-only strip receivables, net of the related loss reserve and excluding the mark-to-market adjustment recorded in accumulated other comprehensive income, was ($41.5) million for the quarter ended 03/31/03, $29.3 million for the quarter ended 12/31/02, and $29.0 million for the quarter ended 03/31/02. (3) MasterCard and Visa are registered trademarks of MasterCard International, Incorporated and VISA USA Inc., respectively. Page 2 of 8
Household International, Inc. - ----------------------------------------------------------------------------------------------------- Credit Quality/Credit Loss Reserves - Owned Basis Two-Months-and-Over Contractual Delinquency - ----------------------------------------------------------------------------------------------------- As a percent of owned consumer receivables, excludes commercial. 3/31/03 12/31/02(1) 3/31/02 (1) - ----------------------------------------------------------------------------------------------------- Real estate secured 4.15% 3.91% 2.88% Auto finance 2.75 3.96 2.04 MasterCard/Visa 6.87 5.97 6.54 Private label 6.06 6.36 6.33 Personal non-credit card 9.23 8.95 8.78 - ----------------------------------------------------------------------------------------------------- Total 5.50% 5.34% 4.63% =====================================================================================================
(1) Owned two-months-and-over contractual delinquency for personal non-credit card in prior periods was overstated due to a calculation error. The correct percentages are included in the table above. The managed two-months-and-over contractual delinquency ratios reported for prior periods were correct. The tables below set out the previously reported and actual owned two-months-and-over contractual delinquency ratio for total owned receivables, including personal non-credit card, for each of the specified dates: Delinquency - Owned Basis - ------------------------------------------------------------------------------------------------------------------ 12/31/02 09/30/02 06/30/02 03/31/02 --------------------- --------------------- -------------------- --------------------- As previously As previously As previously As previously reported Actual reported Actual reported Actual reported Actual - ------------------------------------------------------------------------------------------------------------------ Real estate secured 3.91% 3.91% 3.22% 3.22% 2.78% 2.78% 2.88% 2.88% Auto finance 3.96 3.96 3.33 3.33 2.99 2.99 2.04 2.04 MasterCard/Visa 5.97 5.97 6.36 6.36 6.13 6.13 6.54 6.54 Private label 6.36 6.36 6.84 6.84 6.19 6.19 6.33 6.33 Personal non-credit card 10.31 8.95 9.18 8.38 9.12 8.69 9.60 8.78 - ------------------------------------------------------------------------------------------------------------------ Total Owned 5.57% 5.34% 5.01% 4.87% 4.61% 4.53% 4.77% 4.63% - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ Total Managed 5.24% 5.24% 4.82% 4.82% 4.53% 4.53% 4.63% 4.63% - ------------------------------------------------------------------------------------------------------------------ 12/31/01 09/30/01 06/30/01 03/31/01 --------------------- --------------------- -------------------- --------------------- As previously As previously As previously As previously reported Actual reported Actual reported Actual reported Actual - ------------------------------------------------------------------------------------------------------------------ Real estate secured 2.63% 2.63% 2.71% 2.71% 2.59% 2.59% 2.55% 2.55% Auto finance 2.92 2.92 2.43 2.43 2.35 2.35 1.74 1.74 MasterCard/Visa 5.67 5.67 5.22 5.22 4.80 4.80 5.02 5.02 Private label 5.99 5.99 6.57 6.57 6.54 6.54 5.62 5.62 Personal non-credit card 9.04 8.44 8.75 8.38 8.79 8.47 8.79 8.46 - ------------------------------------------------------------------------------------------------------------------ Total Owned 4.53% 4.43% 4.58% 4.52% 4.48% 4.43% 4.36% 4.30% - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ Total Managed 4.46% 4.46% 4.43% 4.43% 4.27% 4.27% 4.25% 4.25% - ------------------------------------------------------------------------------------------------------------------
Quarter-to-Date Charge-offs, Net of Recoveries - ------------------------------------------------------------------------------------------------------------------ As a percent of average owned consumer receivables, annualized, excludes commercial. 3/31/03 12/31/02 3/31/02 - ------------------------------------------------------------------------------------------------------------------ Real estate secured 1.12% 1.10% .65% Auto finance 7.71 8.50 5.63 MasterCard/Visa 9.26 9.02 9.73 Private label 6.27 6.35 6.25 Personal non-credit card 9.04 7.74 7.71 - ------------------------------------------------------------------------------------------------------------------ Total 4.22% 3.87% 3.61% - ------------------------------------------------------------------------------------------------------------------ Real estate charge-offs and REO expense as a percent of average owned real estate secured receivables 1.52% 1.47% 1.05% - ------------------------------------------------------------------------------------------------------------------ Credit Loss Reserves - ------------------------------------------------------------------------------------------------------------------ ($ millions) 3/31/03 12/31/02 3/31/02 - ------------------------------------------------------------------------------------------------------------------ Reserves for owned receivables at beginning of quarter $3,332.6 $3,127.3 $2,663.1 Provision for credit losses 1,009.6 985.1 923.0 Charge-offs, net of recoveries (873.9) (808.3) (718.7) Other, net 14.8 28.5 9.2 - ------------------------------------------------------------------------------------------------------------------ Reserves for owned receivables at end of quarter $3,483.1 $3,332.6 $2,876.6 - ------------------------------------------------------------------------------------------------------------------ Reserves as a percent of owned receivables 4.17% 4.04% 3.61% - ------------------------------------------------------------------------------------------------------------------
Page 3 of 8 Household International, Inc. - -------------------------------------------------------------------------------- Credit Quality/Credit Loss Reserves - Owned Basis continued
Nonperforming Assets - ------------------------------------------------------------------------------------------------------------ ($ millions) 3/31/03 12/31/02 (1) 3/31/02 (1) - ------------------------------------------------------------------------------------------------------------ Nonaccrual owned receivables $ 2,880.3 $ 2,665.9 $ 2,185.0 Accruing owned receivables 90 or more days delinquent 877.9 860.7 839.3 Renegotiated commercial loans 1.4 1.3 1.3 - ------------------------------------------------------------------------------------------------------------ Total nonperforming owned receivables 3,759.6 3,527.9 3,025.6 Real estate owned 444.9 427.1 459.4 - ------------------------------------------------------------------------------------------------------------ Total nonperforming assets $ 4,204.5 $ 3,955.0 $ 3,485.0 - ------------------------------------------------------------------------------------------------------------ Owned credit loss reserves as a percent of nonperforming owned receivables 92.7% 94.5% 95.1% - ------------------------------------------------------------------------------------------------------------
(1) Nonaccrual receivables, total nonperforming receivables and total nonperforming assets for personal non-credit card in prior periods were overstated due to a calculation error. As a result, credit loss reserves as a percentage of nonperforming receivables was understated in those periods. The correct amounts are included in the table above. The managed nonperforming assets statistics reported for prior periods were correct. The tables below set out the previously reported and actual owned nonperforming assets statistics for total owned receivables, including personal non-credit card, for each of the specified dates:
Nonperforming Assets - ------------------------------------------------------------------------------------------------------------------------------------ 12/31/02 09/30/02 06/30/02 03/31/02 -------------------------------------------------------------------------------------------------- As As As As previously previously previously previously reported Actual reported Actual reported Actual reported Actual - ------------------------------------------------------------------------------------------------------------------------------------ Nonaccrual receivables $2,811.9 $2,665.9 $2,569.5 $2,484.5 $2,356.4 $2,316.4 $2,261.0 $2,185.0 Accruing consumer receivables 90 or more days delinquent 860.7 860.7 824.2 824.2 750.6 750.6 839.3 839.3 Renegotiated commercial loans 1.3 1.3 1.3 1.3 1.4 1.4 1.3 1.3 - ------------------------------------------------------------------------------------------------------------------------------------ Total nonperforming receivables 3,673.9 3,527.9 3,395.0 3,310.0 3,108.4 3,068.4 3,101.6 3,025.6 Real estate owned 427.1 427.1 451.1 451.1 456.7 456.7 459.4 459.4 - ------------------------------------------------------------------------------------------------------------------------------------ Total nonperforming assets $ 4,101.0 $3,955.0 $ 3,846.1 $3,761.1 $ 3,565.1 $3,525.1 $ 3,561.0 $3,485.0 - ------------------------------------------------------------------------------------------------------------------------------------ Credit loss reserves as a percent of nonperforming receivables 90.7% 94.5% 92.1% 94.5% 96.0% 97.2% 92.7% 95.1% - ------------------------------------------------------------------------------------------------------------------------------------
12/31/01 09/30/01 06/30/01 03/31/01 -------------------------------------------------------------------------------------------------- As As As As previously previously previously previously reported Actual reported Actual reported Actual reported Actual - ------------------------------------------------------------------------------------------------------------------------------------ Nonaccrual receivables $ 2,079.5 $2,027.5 $2,009.6 $1,979.6 $1,855.2 $1,832.2 $1,825.1 $ 1,803.1 Accruing consumer receivables 90 or more days delinquent 844.1 844.1 806.6 806.6 743.6 743.6 669.3 669.3 Renegotiated commercial loans 2.1 2.1 - - 12.3 12.3 12.3 12.3 - ------------------------------------------------------------------------------------------------------------------------------------ Total nonperforming receivables 2,925.7 2,873.7 2,816.2 2,786.2 2,611.1 2,588.1 2,506.7 2,484.7 Real estate owned 398.9 398.9 363.0 363.0 365.2 365.2 350.2 350.2 - ------------------------------------------------------------------------------------------------------------------------------------ Total nonperforming assets $3,324.6 $3,272.6 $3,179.2 $3,149.2 $2,976.3 $2,953.3 $2,856.9 $2,834.9 - ------------------------------------------------------------------------------------------------------------------------------------ Credit loss reserves as a percent of nonperforming receivables 91.0% 92.7% 87.9% 88.9% 91.0% 91.8% 91.1% 91.9% - ------------------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data - -------------------------------------------------------------------------------------------------------------------------- ($ millions) 3/31/03 12/31/02 3/31/02 - -------------------------------------------------------------------------------------------------------------------------- Owned assets $107,415.8 $97,860.6 $89,842.7 Owned receivables 83,438.4 82,562.3 79,594.5 Investment securities (2) 7,081.2 7,584.0 5,035.8 Managed assets 131,671.5 122,794.1 111,425.9 Managed receivables 107,694.1 107,495.8 101,177.7 Debt 84,658.2 81,725.7 74,462.8 Trust originated preferred securities 1,021.9 975.0 975.0 Preferred stock 1,100.0 1,193.2 843.2 Common shareholder's (s') equity 14,622.2 9,222.9 8,495.4 - --------------------------------------------------------------------------------------------------------------------------
(2) Includes amounts held in our credit card bank and other liquidity-related portfolios as well as our insurance business. Page 4 of 8 Household International, Inc. - -------------------------------------------------------------------------------- Receivables Analysis
End-of-Period Receivables % Change from Prior ------------------- ($ millions) 3/31/03 12/31/02 3/31/02 Qtr. Year - ------------------------------------------------------------------------------------------------------------------------ Owned receivables: Real estate secured $ 47,256.6 $ 45,818.5 $ 45,628.9 3.1% 3.6% Auto finance 2,156.2 2,023.8 2,602.9 6.5 (17.2) MasterCard/Visa 8,452.5 8,946.5 6,970.2 (5.5) 21.3 Private label 11,189.4 11,339.6 10,688.4 (1.3) 4.7 Personal non-credit card 13,927.0 13,970.9 13,213.0 (0.3) 5.4 Commercial and other 456.7 463.0 491.1 (1.4) (7.0) - ------------------------------------------------------------------------------------------------------------------------ Total owned receivables 83,438.4 82,562.3 79,594.5 1.1 4.8 - ------------------------------------------------------------------------------------------------------------------------- Purchase accounting fair value adjustments 1,773.8 - - 100.0 100.0 Accrued finance charges 1,503.5 1,537.6 1,515.3 (2.2) (0.8) Credit loss reserve for owned receivables (3,483.1) (3,332.6) (2,876.6) 4.5 21.1 Unearned credit insurance premiums and claims reserves (847.2) (799.0) (886.4) 6.0 (4.4) Interest-only strip receivables (1) 1,109.4 1,147.8 1,034.5 (3.3) 7.2 Amounts due and deferred from receivables sales 832.9 934.4 243.0 (10.9) 100+ - ------------------------------------------------------------------------------------------------------------------------ Total owned receivables, net 84,327.7 82,050.5 78,624.3 2.8 7.3 - ------------------------------------------------------------------------------------------------------------------------ Receivables serviced with limited recourse: Real estate secured 339.2 456.2 619.8 (25.6) (45.3) Auto finance 5,226.8 5,418.6 4,012.7 (3.5) 30.3 MasterCard/Visa 9,941.8 10,006.1 9,378.3 (0.6) 6.0 Private label 3,577.1 3,577.1 2,634.0 - 35.8 Personal non-credit card 5,170.8 5,475.5 4,938.4 (5.6) 4.7 - ------------------------------------------------------------------------------------------------------------------------ Total receivables serviced with limited recourse 24,255.7 24,933.5 21,583.2 (2.7) 12.4 - ------------------------------------------------------------------------------------------------------------------------ Total managed receivables, net $108,583.4 $106,984.0 $100,207.5 1.5% 8.4% - ------------------------------------------------------------------------------------------------------------------------ End-of-Period Managed Receivables % Change from Prior ------------------- ($ millions) 3/31/03 12/31/02 3/31/02 Qtr. Year - ------------------------------------------------------------------------------------------------------------------------ Real estate secured $ 47,595.8 $ 46,274.7 $ 46,248.7 2.9% 2.9% Auto finance 7,383.0 7,442.4 6,615.6 (0.8) 11.6 MasterCard/Visa 18,394.3 18,952.6 16,348.5 (2.9) 12.5 Private label 14,766.5 14,916.7 13,322.4 (1.0) 10.8 Personal non-credit card (2) 19,097.8 19,446.4 18,151.4 (1.8) 5.2 Commercial and other 456.7 463.0 491.1 (1.4) (7.0) - ------------------------------------------------------------------------------------------------------------------------ Managed portfolio $107,694.1 $107,495.8 $101,177.7 0.2% 6.4% - ------------------------------------------------------------------------------------------------------------------------ Percent of managed portfolio 3/31/03 12/31/02 3/31/02 - --------------------------------------------------------------------------------------------------- Real estate secured 44.2% 43.0% 45.7% Auto finance 6.9 6.9 6.5 MasterCard/Visa 17.1 17.6 16.2 Private label 13.7 13.9 13.2 Personal non-credit card 17.7 18.2 17.9 Commercial and other .4 .4 .5 - --------------------------------------------------------------------------------------------------- Managed portfolio 100.0% 100.0% 100.0% - --------------------------------------------------------------------------------------------------- (1) Our estimate of the recourse obligation totaled $1,776.2 million at 03/31/03, $1,759.5 million at 12/31/02, and $1,269.9 million at 03/31/02. (2) Personal non-credit card managed receivables are comprised of the following: ($ millions) 3/31/03 12/31/02 3/31/02 - --------------------------------------------------------------------------------------------------- Domestic personal unsecured $ 10,093.3 $10,156.1 $ 9,547.1 Union Plus personal unsecured 977.6 1,095.4 1,065.0 Personal homeowner loans 4,927.3 5,131.7 4,926.4 Foreign unsecured 3,099.6 3,063.2 2,612.9 - --------------------------------------------------------------------------------------------------- Total $ 19,097.8 $19,446.4 $ 18,151.4 - ---------------------------------------------------------------------------------------------------
Page 5 of 8 Household International, Inc. - -------------------------------------------------------------------------------- Supplemental Managed Basis Information Securitizations and sales of consumer receivables are a source of liquidity 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. When reporting on a managed basis, net interest margin, provision for credit losses, fee income, and securitization revenue related to receivables sold are reclassified from securitization revenue into the appropriate caption.
Three Months - ------------------------------------------------------------------------------------------------------------------------------------ Three Months Ended % Change from Prior --------------------------------------------------------------------- ------------------- ($ millions) 3/31/03 (1) 12/31/02 (1) 3/31/02 (1) Qtr. Year - ------------------------------------------------------------------------------------------------------------------------------------ Finance and other interest income $ 3,423.0 12.04% $ 3,534.0 12.11% $ 3,377.2 13.10% (3.1)% 1.4 % Interest expense 1,064.4 3.74 1,119.0 3.83 1,124.0 4.36 (4.9) (5.3) - ------------------------------------------------------------------------------------------------------------------------------------ Net interest margin 2,358.6 8.30% 2,415.0 8.28% 2,253.2 8.74% (2.3) 4.7 Provision for credit losses 1,416.9 1,543.0 1,362.3 (8.2) 4.0 - ------------------------------------------------------------------------------------------------------------------------------------ Net interest margin after provision for credit losses $ 941.7 $ 872.0 $ 890.9 8.0 % 5.7 % - ------------------------------------------------------------------------------------------------------------------------------------ Insurance revenue $ 177.3 $ 188.0 $ 170.1 (5.7) 4.2 % Investment income 81.3 44.2 46.2 83.9 76.0 Fee income 451.8 463.8 372.0 (2.6) 21.5 Securitization revenue (31.9) 211.4 145.8 (100)+ (100)+ Other income 243.8 158.3 188.0 54.0 29.7 Loss on disposition of Thrift assets and deposits - (378.2) - 100.0 - - ------------------------------------------------------------------------------------------------------------------------------------ Total other revenues $ 922.3 $ 687.5 $ 922.1 34.2 % 0.0 % - ------------------------------------------------------------------------------------------------------------------------------------ Average managed receivables: Real estate secured $ 46,801.4 $ 48,669.9 $ 45,800.7 (3.8)% 2.2 % Auto finance 7,364.0 7,417.9 6,530.6 (0.7) 12.8 MasterCard/Visa 18,681.4 18,081.1 16,890.8 3.3 10.6 Private label 14,840.4 13,936.5 13,621.4 6.5 8.9 Personal non-credit card 19,402.7 19,567.1 18,030.3 (0.8) 7.6 Commercial and other 458.6 467.9 496.5 (2.0) (7.6) - ------------------------------------------------------------------------------------------------------------------------------------ Total 107,548.5 108,140.4 101,370.3 (0.5) 6.1 Average noninsurance investments 5,551.9 8,009.4 1,178.6 (30.7) 100+ Other interest-earning assets 619.9 579.1 538.3 7.0 15.2 - ------------------------------------------------------------------------------------------------------------------------------------ Average managed interest-earning assets $113,720.3 $116,728.9 $103,087.2 (2.6)% 10.3 % - ------------------------------------------------------------------------------------------------------------------------------------ (1) % Columns: comparison to average managed interest-earning assets, annualized.
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Household International, Inc. - ---------------------------------------------------------------------------------------------------------- Credit Quality/Credit Loss Reserves Information - Managed Basis Two-Months-and-Over Contractual Delinquency - ---------------------------------------------------------------------------------------------------------- As a percent of managed consumer receivables, excludes commercial. 3/31/03 12/31/02 3/31/02 - ---------------------------------------------------------------------------------------------------------- Real estate secured 4.18% 3.94% 2.93% Auto finance 2.90 3.65 2.51 MasterCard/Visa 4.57 4.12 4.39 Private label 5.77 6.03 5.82 Personal non-credit card 9.65 9.41 9.02 - ---------------------------------------------------------------------------------------------------------- Total 5.36% 5.24% 4.63% - ---------------------------------------------------------------------------------------------------------- Quarter-to-Date Charge-offs, Net of Recoveries - ---------------------------------------------------------------------------------------------------------- As a percent of average managed consumer receivables, annualized, excludes commercial. 3/31/03 12/31/02 3/31/02 - ---------------------------------------------------------------------------------------------------------- Real estate secured 1.12% 1.11% .65% Auto finance 8.10 7.62 6.70 MasterCard/Visa 7.01 6.98 7.17 Private label 5.91 5.91 5.57 Personal non-credit card 9.18 7.84 7.86 - ---------------------------------------------------------------------------------------------------------- Total 4.75% 4.39% 4.09% - ---------------------------------------------------------------------------------------------------------- Real estate charge-offs and REO expense as a percent of average managed real estate secured receivables 1.52% 1.48% 1.05% - ---------------------------------------------------------------------------------------------------------- Credit Loss Reserves - ---------------------------------------------------------------------------------------------------------- ($ millions) 3/31/03 12/31/02 3/31/02 - ---------------------------------------------------------------------------------------------------------- Reserves for managed receivables at beginning of quarter $ 5,092.1 $ 4,688.8 $ 3,811.4 Provision for credit losses 1,416.9 1,543.0 1,362.3 Charge-offs, net of recoveries (1,272.3) (1,181.0) (1,031.5) Other, net 22.6 41.3 4.3 - ---------------------------------------------------------------------------------------------------------- Reserves for managed receivables at end of quarter $ 5,259.3 $ 5,092.1 $ 4,146.5 - ---------------------------------------------------------------------------------------------------------- Reserves as a percent of managed receivables 4.88% 4.74% 4.10% - ---------------------------------------------------------------------------------------------------------- Nonperforming Assets - ---------------------------------------------------------------------------------------------------------- ($ millions) 3/31/03 12/31/02 3/31/02 - ---------------------------------------------------------------------------------------------------------- Nonaccrual managed receivables $ 3,517.8 $ 3,347.2 $ 2,722.6 Accruing managed receivables 90 or more days delinquent 1,207.1 1,173.5 1,104.3 Renegotiated commercial loans 1.4 1.3 1.3 - ---------------------------------------------------------------------------------------------------------- Total nonperforming managed receivables 4,726.3 4,522.0 3,828.2 Real estate owned 444.9 427.1 459.4 - ---------------------------------------------------------------------------------------------------------- Total nonperforming assets $ 5,171.2 $ 4,949.1 $ 4,287.6 - ---------------------------------------------------------------------------------------------------------- Managed credit loss reserves as a percent of nonperforming managed receivables 111.3% 112.6% 108.3% - ----------------------------------------------------------------------------------------------------------
Page 7 of 8 Household International, Inc. - -------------------------------------------------------------------------------- Restructuring Statistics Our policies and practices for the collection of consumer receivables, including our restructuring policies and practices, permit us to reset the contractual delinquency status of an account to current, based on indicia or criteria which, in our judgement, evidence continued payment probability. Such restructuring policies and practices vary by product and are designed to manage customer relationships, maximize collections and avoid foreclosure or repossession if reasonably possible. The following tables summarize restructuring statistics in our domestic managed basis portfolio. Total Restructured by Restructure Period - Domestic Portfolio (1)
(Managed Basis) - --------------------------------------------------------------------------------------------------- 3/31/03 12/31/02 3/31/02 - --------------------------------------------------------------------------------------------------- Never restructured 83.3% 84.4% 82.8% Restructured: Restructured in the last 6 months 7.5 6.5 8.6 Restructured in the last 7-12 months 3.6 4.1 4.6 Previously restructured beyond 12 months 5.6 5.0 4.0 - --------------------------------------------------------------------------------------------------- Total ever restructured (2) 16.7 15.6 17.2 - --------------------------------------------------------------------------------------------------- Total 100.0% 100.0% 100.0% - ---------------------------------------------------------------------------------------------------
Total Restructured by Product - Domestic Portfolio (1) (Managed Basis) - --------------------------------------------------------------------------------------------------- ($ millions) 3/31/03 12/31/02 3/31/02 - --------------------------------------------------------------------------------------------------- Real estate secured $ 9,163.4 20.0% $ 8,473.2 19.0% $ 8,880.6 19.8% Auto finance 1,247.7 16.9 1,242.9 16.7 1,005.6 15.2 MasterCard/Visa 549.2 3.4 540.8 3.2 526.3 3.5 Private label 1,225.8 9.6 1,255.4 9.7 1,269.2 10.9 Personal non-credit card 4,127.5 25.8 3,768.1 23.0 4,288.6 27.6 - --------------------------------------------------------------------------------------------------- Total (2) $16,313.6 16.7% $15,280.4 15.6% $15,970.3 17.2% - ---------------------------------------------------------------------------------------------------
(1) Excludes foreign businesses, commercial and other. Amounts also include accounts as to which the delinquency status has been reset to current for reasons other than restructuring (e.g. correcting the misapplication of a timely payment). (2) Total including foreign businesses was 15.8 percent at 03/31/03, 14.8 percent at 12/31/02, and 16.4 percent at 03/31/02. The amount of managed receivables in forbearance, modification, Credit Card Services consumer credit counseling accommodations, rewrites or other account management techniques for which we have reset delinquency and that is not included in the restructured statistics above was approximately $1.0 billion or .93 percent of managed receivables at March 31, 2003, $900 million or .84 percent of managed receivables at December 31, 2002 and approximately $600 million or .59 percent of managed receivables at March 31, 2002. Page 8 of 8 -----END PRIVACY-ENHANCED MESSAGE-----