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: November 12, 2004

HOUSEHOLD INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-8198	86-1052062
(State of incorporation)	(Commission File Number)	(IRS Employer 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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition

Financial supplement pertaining to the financial results of Household International, Inc., for the quarter and nine months ended September 30, 2004. 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.

Item 9.01.  Financial Statements, Pro Forma Financial Information 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 September 30, 2004.

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-Deputy General Counsel-Corporate

Dated: November 12, 2004

EX-99

Exhibit 99

Quarterly Financial Supplement—September 30, 2004

Index	Page No.
Basis of Reporting	2
Consolidated Statements of Income—Owned Basis:
Three Months	4
Nine Months	6
Receivables Analysis	8
Financial Highlights—Managed Basis:
Three Months	9
Nine Months	10
Credit Quality/Credit Loss Reserves—Managed Basis	11
Reconciliations to GAAP Financial Measures:
Revenues, Average Interest-Earning Assets and Net Interest Income:
Three Months	12
Nine Months	13
Selected Financial Ratios	14
Credit Quality/Credit Loss Reserves:
Two-Months-and-Over Contractual Delinquency	15
Quarter-to-Date Charge-offs, Net of Recoveries	15
Real Estate Charge-offs and REO Expense	17
Credit Loss Reserves	18
Nonperforming Assets	19

1

Household International, Inc.

Basis of Reporting

Non-GAAP Financial Measures

This Quarterly Financial Supplement includes financial information which is presented on a non-GAAP basis as discussed below. Information included in this Quarterly Financial Supplement is intended to supplement and should not be considered a substitute for owned basis reporting. This Quarterly Financial Supplement should be read in conjunction with the owned basis information reported in our Quarterly Reports on Form 10-Q.

See “Reconciliations to GAAP Financial Measures” for quantitative reconciliations of non-GAAP financial information to the equivalent owned basis GAAP financial information.

Managed basis reporting We monitor our operations and evaluate trends on a managed basis (a non-GAAP financial measure), which assumes that securitized receivables have not been sold and are still on our balance sheet. We manage and evaluate 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.

When reporting on a managed basis, net interest income, provision for credit losses and fee income related to receivables securitized are reclassified from securitization revenue in our owned statements of income into the appropriate caption. Additionally, charge-off and delinquency associated with these receivables are included in our managed basis credit quality statistics.

Debt analysts, rating agencies and others also evaluate our operations on a managed basis for the reasons discussed above and have historically requested managed basis information from us. We believe that managed basis information enables investors and other interested parties to better understand the performance and quality of our entire managed loan portfolio and is important to understanding the quality of originations and the related credit risk inherent in our owned and securitized portfolios. As the level of our securitized receivables falls over time, managed basis and owned basis results will eventually converge, and we will only report owned basis results.

Operating results, percentages and ratios Certain percentages and ratios have been presented on an operating basis and have been calculated using “operating net income”, a non-GAAP financial measure. “Operating net income” is net income excluding $167 million, after-tax, of HSBC acquisition related costs and other merger related items incurred by Household in the first quarter of 2003. This nonrecurring item is also excluded in calculating our operating basis efficiency ratios. We believe that excluding this nonrecurring item helps readers of our financial statements to better understand the results and trends of our underlying business.

A reconciliation of net income to operating net income follows:

	Three Months Ended						Nine Months Ended
	9/30/04		6/30/04		9/30/03		9/30/04		9/30/03
	($ millions)
Net income	$	322	$	395	$	472	$	1,198	$	1,091
HSBC acquisition related costs and other merger related items incurred by Household, after-tax		—		—		—		—		167
Operating net income	$	322	$	395	$	472	$	1,198	$	1,258

2

Household International, Inc.

Predecessor and Successor Periods

Household’s acquisition by HSBC on March 28, 2003 has resulted in a new basis of accounting reflecting the fair value of our assets and liabilities for the “successor” period beginning March 29, 2003. Information for all “predecessor” periods prior to the merger are presented using our historical basis of accounting, which impacts comparability with the “successor” period beginning March 29, 2003. To assist in the comparability of our financial results and to make it easier to discuss and understand our results of operations, this Quarterly Financial Supplement combines the “predecessor” period (January 1 to March 28, 2003) with the “successor” period (March 29 to September 30, 2003) to present “combined” results for the nine months ended September 30, 2003.

Reclassifications

Certain reclassifications have been made to prior period amounts to conform to the current period presentation. Immaterial adjustments have been made to decrease finance income and increase securitization revenue as reported in prior periods. These adjustments reflect corrections after discovery of a system programming error in the posting of finance income between owned receivables and receivables serviced with limited recourse. Reported net income for all prior periods was not affected.

3

Household International, Inc.

Consolidated Statements of Income—Owned Basis

Three Months

	Three Months Ended						% Change from Prior
	9/30/04		6/30/04		9/30/03		Qtr.		Year
	(dollars are in millions)
Finance and other interest income	$	2,779	$	2,637	$	2,571	5.4	%	8.1	%
Interest expense		744		640		557	16.3		33.6
Net interest income		2,035		1,997		2,014	1.9		1.0
Provision for credit losses		1,123		997		1,001	12.6		12.2
Net interest income after provision for credit losses		912		1,000		1,013	(8.8	)	(10.0	)
Other revenues:
Securitization revenue		267		266		387	.4		(31.0	)
Insurance revenue		203		204		193	(.5	)	5.2
Investment income		36		30		37	20.0		(2.7	)
Fee income		302		242		266	24.8		13.5
Other income		161		184		68	(12.5	)	100+
Total other revenues		969		926		951	4.6		1.9
Costs and expenses:
Salaries and fringe benefits		472		457		493	3.3		(4.3	)
Sales incentives		91		90		77	1.1		18.2
Occupancy and equipment expenses		77		77		95	—		(18.9	)
Other marketing expenses		174		131		128	32.8		35.9
Other servicing and administrative expenses		235		198		282	18.7		(16.7	)
Support services from affiliates		183		196		—	(6.6	)	100.0
Amortization of acquired intangibles		83		79		82	5.1		1.2
Policyholders’ benefits		93		93		95	—		(2.1	)
Total costs and expenses		1,408		1,321		1,252	6.6		12.5
Income before income tax expense		473		605		712	(21.8	)	(33.6	)
Income tax expense		151		210		240	(28.1	)	(37.1	)
Net income	$	322	$	395	$	472	(18.5	)%	(31.8	)%

4

Household International, Inc.

Consolidated Statements of Income—Owned Basis

Securitization Revenue

	Three Months Ended
	9/30/04		6/30/04		9/30/03
	(in millions)
Net initial gains	$	—	$	22	$	25
Net replenishment gains		112		113		138
Servicing revenue and excess spread		155		131		224
Total	$	267	$	266	$	387

Receivables Securitized

	Three Months Ended
	9/30/04		6/30/04		9/30/03
	(in millions)
Auto finance	$	—	$	300	$	—
MasterCard/Visa(1)		—		500		350
Private label		—		190		—
Personal non-credit card		—		—		885
Total	$	—	$	990	$	1,235

(1) MasterCard and Visa are registered trademarks of MasterCard International, Incorporated and VISA USA Inc., respectively.

5

Household International, Inc.

Consolidated Statements of Income—Owned Basis

Nine Months

	Nine Months Ended
	9/30/04		9/30/03(1)		% Change
	(dollars are in millions)
Finance and other interest income	$	7,945	$	7,616	4.3	%
Interest expense		2,021		2,027	(.3	)
Net interest income		5,924		5,589	6.0
Provision for credit losses		3,048		3,050	(.1	)
Net interest income after provision for credit losses		2,876		2,539	13.3
Other revenues:
Securitization revenue		881		1,114	(20.9	)
Insurance revenue		618		553	11.8
Investment income		107		151	(29.1	)
Fee income		808		783	3.2
Other income		650		484	34.3
Total other revenues		3,064		3,085	(.7	)
Costs and expenses:
Salaries and fringe benefits		1,415		1,490	(5.0	)
Sales incentives		260		199	30.7
Occupancy and equipment expenses		237		297	(20.2	)
Other marketing expenses		437		407	7.4
Other servicing and administrative expenses		659		869	(24.2	)
Support services from affiliates		556		—	100.0
Amortization of acquired intangibles		278		175	58.9
Policyholders’ benefits		299		287	4.2
HSBC acquisition related costs incurred by Household		—		198	(100.0	)
Total costs and expenses		4,141		3,922	5.6
Income before income tax expense		1,799		1,702	5.7
Income tax expense		601		611	(1.6	)
Net income	$	1,198	$	1,091	9.8	%
HSBC acquisition related costs incurred by Household		—		167	(100.0	)
Operating net income(2)	$	1,198	$	1,258	(4.8	)%

(1) To assist in the comparability of our financial results, the “predecessor” period (January 1 to March 28, 2003) has been combined with the “successor” period (March 29 to September 30, 2003) to present “combined” results for the nine months ended September 30, 2003. See “Basis of Reporting” for additional information regarding the “successor” period and “predecessor” period.

(2) Operating net income is a non-GAAP financial measure which is provided for comparison of our operating trends and should be read in conjunction with our owned basis GAAP financial information. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information and “Reconciliations to GAAP Financial Measures” for quantitative reconciliations to the equivalent GAAP basis financial measure.

6

Household International, Inc.

Consolidated Statements of Income—Owned Basis

Securitization Revenue

	Nine Months Ended
	9/30/04		9/30/03(1)
	(in millions)
Net initial gains	$	25	$	92
Net replenishment gains		344		410
Servicing revenue and excess spread		512		612
Total	$	881	$	1,114

Receivables Securitized

	Nine Months Ended
	9/30/04		9/30/03(1)
	(in millions)
Auto finance	$	—	$	1,007
MasterCard/Visa		550		670
Private label		190		250
Personal non-credit card		—		1,700
Total	$	740	$	3,627

(1) To assist in the comparability of our financial results, the “predecessor” period (January 1 to March 28, 2003) has been combined with the “successor” period (March 29 to September 30, 2003) to present “combined” results for the nine months ended September 30, 2003. See “Basis of Reporting” for additional information regarding the “successor” period and “predecessor” period.

(2) Operating net income is a non-GAAP financial measure which is provided for comparison of our operating trends and should be read in conjunction with our owned basis GAAP financial information. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information and “Reconciliations to GAAP Financial Measures” for quantitative reconciliations to the equivalent GAAP basis financial measure.

7

Household International, Inc.

Receivables Analysis

End-of-Period Receivables

							% Change from Prior
	9/30/04		6/30/04		9/30/03		Qtr.		Year
	(dollars are in millions)
Owned receivables:
Real estate secured(1)	$	58,726	$	56,033	$	52,769	4.8	%	11.3	%
Auto finance		6,823		5,459		3,701	25.0		84.4
MasterCard/Visa		11,666		10,816		9,892	7.9		17.9
Private label		14,000		12,759		12,407	9.7		12.8
Personal non-credit card		14,888		14,019		13,850	6.2		7.5
Commercial and other		334		346		409	(3.5	)	(18.3	)
Total owned receivables		106,437		99,432		93,028	7.0		14.4
Receivables serviced with limited recourse:
Real estate secured		165		176		214	(6.3	)	(22.9	)
Auto finance		3,060		3,877		4,700	(21.1	)	(34.9	)
MasterCard/Visa		8,843		9,345		9,927	(5.4	)	(10.9	)
Private label		3,921		4,723		4,261	(17.0	)	(8.0	)
Personal non-credit card		4,186		4,715		5,007	(11.2	)	(16.4	)
Total receivables serviced with limited recourse		20,175		22,836		24,109	(11.7	)	(16.3	)
Managed receivables: (2)
Real estate secured		58,891		56,209		52,983	4.8		11.2
Auto finance		9,883		9,336		8,401	5.9		17.6
MasterCard/Visa		20,509		20,161		19,819	1.7		3.5
Private label		17,921		17,482		16,668	2.5		7.5
Personal non-credit card(3)		19,074		18,734		18,857	1.8		1.2
Commercial and other		334		346		409	(3.5	)	(18.3	)
Total managed receivables	$	126,612	$	122,268	$	117,137	3.6	%	8.1	%

(1) Real estate secured receivable levels reflect sales to HSBC Bank USA, N.A. of $.9 billion on March 31, 2004 and $2.8 billion on December 31, 2003.

(2) Managed basis reporting is a non-GAAP financial measure. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information.

(3) Personal non-credit card receivables are comprised of the following:

	9/30/04		6/30/04		9/30/03
	(in millions)
Domestic personal unsecured	$	10,054	$	9,788	$	10,046
Union Plus personal unsecured		510		576		755
Personal homeowner loans		4,587		4,555		4,692
Foreign unsecured		3,923		3,815		3,364
Total	$	19,074	$	18,734	$	18,857

8

Household International, Inc.

Financial Highlights—Managed Basis(1)

Revenues, Average Interest-Earning Assets and Net Interest Income

Three Months

	Three Months Ended															% Change from Prior
	9/30/04			(2)		6/30/04			(2)		9/30/03			(2)		Qtr.		Year
	(dollars are in millions)
Finance and other interest income	$	3,494		10.79	%	$	3,417		10.95	%	$	3,419		11.43	%	2.3	%	2.2	%
Interest expense		877		2.71			768		2.46			690		2.31		14.2		27.1
Net interest income		2,617		8.08	%		2,649		8.49	%		2,729		9.12	%	(1.2	)	(4.1	)
Provision for credit losses		891					1,145					1,421				(22.2	)	(37.3	)
Net interest income after provision for credit losses	$	1,726				$	1,504				$	1,308				14.8	%	32.0	%
Other revenues:
Insurance revenue	$	203				$	204				$	193				(.5	)%	5.2	%
Investment income		36					30					37				20.0		(2.7	)
Fee income		497					440					458				13.0		8.5
Securitization revenue		(742	)				(436	)				(100	)			70.2		100+
Other income		161					184					68				(12.5	)	100+
Total other revenues	$	155				$	422				$	656				(63.3	)%	(76.4	)%
Average managed receivables
Real estate secured	$	57,741				$	54,398				$	51,274				6.1	%	12.6	%
Auto finance		9,598					9,178					8,082				4.6		18.8
MasterCard/Visa		20,441					20,212					19,300				1.1		5.9
Private label		17,626					17,362					16,348				1.5		7.8
Personal non-credit card		18,928					18,568					18,849				1.9		.4
Commercial and other		336					367					418				(8.4	)	(19.6	)
Purchase accounting fair value adjustments		295					346					505				(14.7	)	(41.6	)
Average managed receivables	$	124,965				$	120,431				$	114,776				3.8	%	8.9	%
Average noninsurance investments		3,878					3,728					4,309				4.0		(10.0	)
Other interest-earning assets		654					647					633				1.1		3.3
Average managed interest-earning assets	$	129,497				$	124,806				$	119,718				3.8	%	8.2	%
Selected Financial Ratios:
Return on average managed assets		.88	%				1.12	%				1.39	%			(21.4	)%	(36.7	)%
Efficiency ratio		49.1					41.3					35.2				18.9		39.5
Net interest margin		8.08					8.49					9.12				(4.8	)	(11.4	)
Risk adjusted revenue		6.64					6.86					7.19				(3.2	)	(7.6	)

(1) Managed basis reporting is a non-GAAP financial measure. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information and “Reconciliations to GAAP Financial Measures” for quantitative reconciliations to the equivalent GAAP basis financial measure.

(2) % Columns: comparison to average managed interest-earning assets, annualized.

9

Household International, Inc.

Financial Highlights—Managed Basis(1)

Revenues, Average Interest-Earning Assets and Net Interest Income

Nine Months

	Nine Months Ended
	9/30/04			(2)		9/30/03(3)			(2)		% Change
	(dollars are in millions)
Finance and other interest income	$	10,327		10.89	%	$	10,210		11.71	%	1.1	%
Interest expense		2,417		2.55			2,459		2.82		(1.7	)
Net interest income		7,910		8.34	%		7,751		8.89	%	2.1
Provision for credit losses		3,217					4,494				(28.4	)
Net interest income after provision for credit losses	$	4,693				$	3,257				44.1	%
Other revenues:
Insurance revenue	$	618				$	553				11.8	%
Investment income		107					151				(29.1	)
Fee income		1,399					1,297				7.9
Securitization revenue		(1,527	)				(118	)			100+
Other income		650					484				34.3
Total other revenues	$	1,247				$	2,367				(47.3	)%
Average managed receivables
Real estate secured	$	54,768				$	48,883				12.0	%
Auto finance		9,226					7,682				20.1
MasterCard/Visa		20,492					18,922				8.3
Private label		17,486					15,668				11.6
Personal non-credit card		18,784					19,099				(1.6	)
Commercial and other		365					440				(17.0	)
Purchase accounting fair value adjustments		344					381				(9.7	)
Average managed receivables	$	121,465				$	111,075				9.4	%
Average noninsurance investments		4,307					4,604				(6.5	)
Other interest-earning assets		647					626				3.4
Average managed interest-earning assets	$	126,419				$	116,305				8.7	%
Selected Financial Ratios:
Return on average managed assets		1.11	%				1.11	%			—	%
Efficiency ratio		43.4					37.0				17.3
Net interest margin		8.34					8.89				(6.2	)
Risk adjusted revenue		6.87					7.21				(4.7	)
Excluding Nonrecurring Items/Operating Basis: (4)
Return on average managed assets		1.11					1.27				(12.6	)
Efficiency ratio		43.4					35.0				24.0

(1) Managed basis reporting is a non-GAAP financial measure. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information and “Reconciliations to GAAP Financial Measures” for quantitative reconciliations to the equivalent GAAP basis financial measure.

(2) % Columns: comparison to average managed interest-earning assets, annualized.

(3) To assist in the comparability of our financial results, the “predecessor” period (January 1 to March 28, 2003) has been combined with the “successor” period (March 29 to September 30, 2003) to present “combined” results for the nine months ended September 30, 2003. See “Basis of Reporting” for additional information regarding the “successor” period and “predecessor” period.

(4) Operating net income is a non-GAAP financial measure which is provided for comparison of our operating trends and should be read in conjunction with our owned basis GAAP financial information. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information and “Reconciliations to GAAP Financial Measures” for quantitative reconciliations to the equivalent GAAP basis financial measure.

10

Household International, Inc.

Credit Quality/Credit Loss Reserves—Managed Basis(1)

Two-Months-and-Over Contractual Delinquency

As a percent of managed consumer receivables, excludes commercial.	9/30/04			6/30/04			9/30/03
Real estate secured		3.30	%		3.41	%		4.23	%
Auto finance		2.74			3.03			3.82
MasterCard/Visa		4.44			4.21			4.29
Private label		4.76			4.81			5.24
Personal non-credit card		9.52			9.81			10.42
Total		4.59	%		4.70	%		5.36	%
Quarter-to-Date Charge-offs, Net of Recoveries
As a percent of average managed consumer receivables, annualized, excludes commercial.	9/30/04			6/30/04			9/30/03
Real estate secured		1.19	%		1.04	%		.91	%
Auto finance		6.04			5.04			7.08
MasterCard/Visa		6.92			7.62			7.12
Private label		4.85			4.92			5.46
Personal non-credit card		10.12			11.00			10.72
Total		4.38	%		4.57	%		4.68	%
Real estate charge-offs and REO expense as a percent of average managed real estate secured receivables		1.31	%		1.47	%		1.36	%
Credit Loss Reserves
	9/30/04			6/30/04			9/30/03
	(dollars are in millions)
Reserves for managed receivables at beginning of quarter	$	5,699		$	5,912		$	5,639
Provision for credit losses		891			1,145			1,421
Charge-offs, net of recoveries		(1,363	)		(1,367	)		(1,334	)
Other, net		(28	)		9			7
Reserves for managed receivables at end of quarter	$	5,199		$	5,699		$	5,733
Reserves as a percent of managed receivables		4.11	%		4.66	%		4.89	%
Nonperforming Assets
	9/30/04			6/30/04			9/30/03
	(dollars are in millions)
Nonaccrual managed receivables	$	3,476		$	3,506		$	3,944
Accruing managed receivables 90 or more days delinquent		1,201			1,135			1,188
Renegotiated commercial loans		1			1			2
Total nonperforming managed receivables		4,678			4,642			5,134
Real estate owned		601			624			543
Total nonperforming assets	$	5,279		$	5,266		$	5,677
Managed credit loss reserves as a percent of nonperforming managed receivables		111.1	%		122.8	%		111.7	%

(1) Managed basis reporting is a non-GAAP financial measure. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information and “Reconciliations to GAAP Financial Measures” for quantitative reconciliations to the equivalent GAAP basis financial measure.

11

Household International, Inc.

Reconciliation to GAAP Financial Measures

Revenues, Average Interest-Earning Assets and Net Interest Income

Three Months

	Three Months Ended 9/30/04									Three Months Ended 6/30/04									Three Months Ended 9/30/03
	Owned			Serviced with Limited Recourse(1)			Managed			Owned			Serviced with Limited Recourse(1)			Managed			Owned			Serviced with Limited Recourse(1)			Managed
	(dollars are in millions)
Finance and other interest income	$	2,779		$	715		$	3,494		$	2,637		$	780		$	3,417		$	2,571		$	848		$	3,419
Interest expense		744			133			877			640			128			768			557			133			690
Net interest income		2,035			582			2,617			1,997			652			2,649			2,014			715			2,729
Provision for credit losses		1,123			(232	)		891			997			148			1,145			1,001			420			1,421
Net interest income after provision for credit losses	$	912		$	814		$	1,726		$	1,000		$	504		$	1,504		$	1,013		$	295		$	1,308
Other revenues:
Securitization revenue	$	267		$	(1,009	)	$	(742	)	$	266		$	(702	)	$	(436	)	$	387		$	(487	)	$	(100	)
Insurance revenue		203			—			203			204			—			204			193			—			193
Investment income		36			—			36			30			—			30			37			—			37
Fee income		302			195			497			242			198			440			266			192			458
Other income		161			—			161			184			—			184			68			—			68
Total other revenues	$	969		$	(814	)	$	155		$	926		$	(504	)	$	422		$	951		$	(295	)	$	656
Average receivables:
Real estate secured	$	57,570		$	171		$	57,741		$	54,220		$	178		$	54,398		$	51,047		$	227		$	51,274
Auto finance		6,238			3,360			9,598			5,197			3,981			9,178			3,113			4,969			8,082
MasterCard/Visa		11,251			9,190			20,441			10,913			9,299			20,212			9,697			9,603			19,300
Private label		13,310			4,316			17,626			12,249			5,113			17,362			12,107			4,241			16,348
Personal non-credit card		14,423			4,505			18,928			13,571			4,997			18,568			14,170			4,679			18,849
Commercial and other		336			—			336			367			—			367			418			—			418
Purchase accounting fair value adjustments		295			—			295			346			—			346			505			—			505
Average receivables	$	103,423		$	21,542		$	124,965		$	96,863		$	23,568		$	120,431		$	91,057		$	23,719		$	114,776
Average noninsurance investments		3,878			—			3,878			3,728			—			3,728			4,309			—			4,309
Other interest-earning assets		654			—			654			647			—			647			633			—			633
Average interest-earning assets	$	107,955		$	21,542		$	129,497		$	101,238		$	23,568		$	124,806		$	95,999		$	23,719		$	119,718
Net interest income as a percentage of average interest-earning assets		7.54	%		10.81	%		8.08	%		7.89	%		11.06	%		8.49	%		8.39	%		12.06	%		9.12	%

(1) When reporting on a managed basis, finance and other interest income, interest expense, provision for credit losses and fee income related to securitized receivables are reclassified from securitization revenue in our owned statements of income into the appropriate caption.

12

Household International, Inc.

Reconciliation to GAAP Financial Measures

Revenues, Average Interest-Earning Assets and Net Interest Income

Nine Months

	Nine Months Ended 9/30/04									Nine Months Ended 9/30/03
	Owned			Serviced with Limited Recourse(1)			Managed			Owned			Serviced with Limited Recourse(1)			Managed
	(dollars are in millions)
Finance and other interest income	$	7,945		$	2,382		$	10,327		$	7,616		$	2,594		$	10,210
Interest expense		2,021			396			2,417			2,027			432			2,459
Net interest income		5,924			1,986			7,910			5,589			2,162			7,751
Provision for credit losses		3,048			169			3,217			3,050			1,444			4,494
Net interest income after provision for credit losses	$	2,876		$	1,817		$	4,693		$	2,539		$	718		$	3,257
Other revenues:
Securitization revenue	$	881		$	(2,408	)	$	(1,527	)	$	1,114		$	(1,232	)	$	(118	)
Insurance revenue		618			—			618			553			—			553
Investment income		107			—			107			151			—			151
Fee income		808			591			1,399			783			514			1,297
Other income		650			—			650			484			—			484
Total other revenues	$	3,064		$	(1,817	)	$	1,247		$	3,085		$	(718	)	$	2,367
Average receivables:
Real estate secured	$	54,589		$	179		$	54,768		$	48,588		$	295		$	48,883
Auto finance		5,315			3,911			9,226			2,573			5,109			7,682
MasterCard/Visa		11,097			9,395			20,492			9,229			9,693			18,922
Private label		12,589			4,897			17,486			11,735			3,933			15,668
Personal non-credit card		13,703			5,081			18,784			14,144			4,955			19,099
Commercial and other		365			—			365			440			—			440
Purchase accounting fair value adjustments		344			—			344			381			—			381
Average receivables	$	98,002		$	23,463		$	121,465		$	87,090		$	23,985		$	111,075
Average noninsurance investments		4,307			—			4,307			4,604			—			4,604
Other interest-earning assets		647			—			647			626			—			626
Average interest-earning assets	$	102,956		$	23,463		$	126,419		$	92,320		$	23,985		$	116,305
Net interest income as a percentage of average interest-earning assets		7.67	%		11.29	%		8.34	%		8.07	%		12.02	%		8.89	%

(1) When reporting on a managed basis, finance and other interest income, interest expense, provision for credit losses and fee income related to securitized receivables are reclassified from securitization revenue in our owned statements of income into the appropriate caption.

13

Household International, Inc.

Reconciliation to GAAP Financial Measures

Selected Financial Ratios

	Three Months Ended									Nine Months Ended
	9/30/04			6/30/04			9/30/03			9/30/04			9/30/03
	(dollars are in millions)
Return on Average Common Shareholder’s(s’) Equity:
Net income	$	322		$	395		$	472		$	1,198		$	1,091
Dividends on preferred stock		(18	)		(18	)		(18	)		(54	)		(58	)
Net income available to common shareholders	$	304		$	377		$	454		$	1,144		$	1,033
HSBC acquisition related costs incurred by Household		—			—			—			—			167
Operating net income available to common shareholders	$	304		$	377		$	454		$	1,144		$	1,200
Average common shareholder’s(s’) equity	$	17,573		$	17,345		$	15,434		$	17,239		$	13,266
Return on average common shareholder’s(s’) equity		6.9	%		8.7	%		11.8	%		8.8	%		10.4	%
Return on average common shareholder’s(s’) equity, operating basis		6.9			8.7			11.8			8.8			12.1
Return on Average Assets:
Net income	$	322		$	395		$	472		$	1,198		$	1,091
Operating net income		322			395			472			1,198			1,258
Average assets:
Owned basis	$	124,531		$	117,523		$	112,095		$	120,506		$	107,632
Serviced with limited recourse		21,542			23,568			23,719			23,462			23,985
Managed basis	$	146,073		$	141,091		$	135,814		$	143,968		$	131,617
Return on average owned assets		1.03	%		1.34	%		1.68	%		1.33	%		1.35	%
Return on average owned assets, operating basis		1.03			1.34			1.68			1.33			1.56
Return on average managed assets		.88			1.12			1.39			1.11			1.11
Return on average managed assets, operating basis		.88			1.12			1.39			1.11			1.27
Efficiency Ratio:
Total costs and expenses less policyholders’ benefits	$	1,315		$	1,229		$	1,157		$	3,842		$	3,635
HSBC acquisition related costs incurred by Household		—			—			—			—			(198	)
Total costs and expenses less policyholders’ benefits, excluding nonrecurring items	$	1,315		$	1,229		$	1,157		$	3,842		$	3,437
Net interest income and other revenues less policyholders’ benefits:
Owned basis	$	2,911		$	2,831		$	2,870		$	8,689		$	8,387
Serviced with limited recourse		(232	)		148			420			169			1,444
Managed basis	$	2,679		$	2,979		$	3,290		$	8,858		$	9,831
Owned basis efficiency ratio		45.2	%		43.4	%		40.3	%		44.2	%		43.3	%
Owned basis efficiency ratio, operating basis		45.2			43.4			40.3			44.2			41.0
Managed basis efficiency ratio		49.1			41.3			35.2			43.4			37.0
Managed basis efficiency ratio, operating basis		49.1			41.3			35.2			43.4			35.0
Managed Basis Risk Adjusted Revenue:
Net interest income	$	2,617		$	2,649		$	2,729		$	7,910		$	7,751
Other revenues, excluding securitization revenue		897			858			756			2,774			2,485
Less: Net charge-offs		(1,363	)		(1,367	)		(1,334	)		(4,172	)		(3,950	)
Risk adjusted revenue	$	2,151		$	2,140		$	2,151		$	6,512		$	6,286
Average interest-earning assets		129,497			124,806			119,718			126,419			116,305
Managed basis risk adjusted revenue		6.64	%		6.86	%		7.19	%		6.87	%		7.21	%

14

Household International, Inc.

Reconciliation to GAAP Financial Measures

Credit Quality/Credit Loss Reserves

	Two-Months-and-Over Contractual Delinquency						Quarter-to-Date Charge-offs, Net of Recoveries
	Two-Months- and-Over Contractual Delinquency		Consumer Receivables Outstanding		Two-Months- and-Over Contractual Delinquency(1)		Net Charge- offs		Average Consumer Receivables		Net Charge-offs(1)
	(dollars are in millions)
September 30, 2004
Owned:
First mortgage	$	2	$	27	5.78	%	$	—	$	28	.41	%
Real estate secured		1,921		58,726	3.27			171		57,570	1.19
Auto finance		124		6,823	1.81			57		6,238	3.66
MasterCard/Visa		681		11,666	5.84			239		11,251	8.50
Private label		660		14,000	4.72			159		13,310	4.79
Personal non-credit card		1,314		14,888	8.83			343		14,423	9.50
Total	$	4,702	$	106,130	4.43	%	$	969	$	102,820	3.77	%
Serviced with Limited Recourse:
Real estate secured	$	21	$	165	12.73	%	$	—	$	171	—	%
Auto finance		146		3,060	4.77			88		3,360	10.48
MasterCard/Visa		230		8,843	2.60			115		9,190	5.01
Private label		193		3,921	4.92			55		4,316	5.10
Personal non-credit card		502		4,186	11.99			136		4,505	12.08
Total	$	1,092	$	20,175	5.41	%	$	394	$	21,542	7.32	%
Managed:
First mortgage	$	2	$	27	5.78	%	$	—	$	28	.41	%
Real estate secured		1,942		58,891	3.30			171		57,741	1.19
Auto finance		270		9,883	2.74			145		9,598	6.04
MasterCard/Visa		911		20,509	4.44			354		20,441	6.92
Private label		853		17,921	4.76			214		17,626	4.85
Personal non-credit card		1,816		19,074	9.52			479		18,928	10.12
Total	$	5,794	$	126,305	4.59	%	$	1,363	$	124,362	4.38	%
June 30, 2004
Owned:
First mortgage	$	2	$	29	5.57	%	$	—	$	39	3.05	%
Real estate secured		1,897		56,033	3.39			142		54,220	1.04
Auto finance		116		5,459	2.12			40		5,197	3.05
MasterCard/Visa		631		10,816	5.83			270		10,913	9.91
Private label		638		12,759	5.00			155		12,249	5.06
Personal non-credit card		1,250		14,019	8.92			359		13,571	10.59
Total	$	4,534	$	99,115	4.57	%	$	966	$	96,189	4.02	%
Serviced with Limited Recourse:
Real estate secured	$	21	$	175	11.87	%	$	—	$	178	.67	%
Auto finance		167		3,877	4.31			76		3,981	7.64
MasterCard/Visa		217		9,345	2.32			115		9,299	4.94
Private label		202		4,723	4.28			59		5,113	4.58
Personal non-credit card		587		4,716	12.45			151		4,997	12.11
Total	$	1,194	$	22,836	5.23	%	$	401	$	23,568	6.81	%
Managed:
First mortgage	$	2	$	29	5.57	%	$	—	$	39	3.05	%
Real estate secured		1,918		56,208	3.41			142		54,398	1.04
Auto finance		283		9,336	3.03			116		9,178	5.04
MasterCard/Visa		848		20,161	4.21			385		20,212	7.62
Private label		840		17,482	4.81			214		17,362	4.92
Personal non-credit card		1,837		18,735	9.81			510		18,568	11.00
Total	$	5,728	$	121,951	4.70	%	$	1,367	$	119,757	4.57	%

(1) Certain percentages may not recompute from the dollar figures presented due to rounding

15

Household International, Inc.

Reconciliation to GAAP Financial Measures

Credit Quality/Credit Loss Reserves (continued)

	Two-Months-and-Over Contractual Delinquency						Quarter-to-Date Charge-offs, Net of Recoveries
	Two-Months- and-Over Contractual Delinquency		Consumer Receivables Outstanding		Two-Months-and- Over Contractual Delinquency(1)		Net Charge- offs		Average Consumer Receivables		Net Charge-offs(1)
	(dollars are in millions)
September 30, 2003
Owned:
First mortgage	$	4	$	37	11.65	%	$	—	$	38	1.06	%
Real estate secured		2,217		52,769	4.20			116		51,047	.91
Auto finance		79		3,701	2.14			36		3,113	4.62
MasterCard/Visa		593		9,892	5.99			209		9,697	8.61
Private label		694		12,407	5.59			162		12,107	5.35
Personal non-credit card		1,379		13,850	9.96			374		14,170	10.55
Total	$	4,966	$	92,656	5.36	%	$	897	$	90,172	3.98	%
Serviced with Limited Recourse:
Real estate secured	$	25	$	214	11.68	%	$	1	$	227	1.94	%
Auto finance		242		4,700	5.15			107		4,969	8.61
MasterCard/Visa		257		9,927	2.59			135		9,603	5.61
Private label		179		4,261	4.21			61		4,241	5.79
Personal non-credit card		586		5,007	11.71			131		4,679	11.22
Total	$	1,289	$	24,109	5.35	%	$	435	$	23,719	7.34	%
Managed:
First mortgage	$	4	$	37	11.65	%	$	—	$	38	1.06	%
Real estate secured		2,242		52,983	4.23			117		51,274	.91
Auto finance		321		8,401	3.82			143		8,082	7.08
MasterCard/Visa		850		19,819	4.29			344		19,300	7.12
Private label		873		16,668	5.24			223		16,348	5.46
Personal non-credit card		1,965		18,857	10.42			505		18,849	10.72
Total	$	6,255	$	116,765	5.36	%	$	1,332	$	113,891	4.68	%

(1) Certain percentages may not recompute from the dollar figures presented due to rounding.

16

Household International, Inc.

Reconciliation to GAAP Financial Measures

Credit Quality/Credit Loss Reserves (continued)

	Owned			Serviced with Limited Recourse			Managed
	(dollars are in millions)
Real Estate Charge-offs and REO Expense:
Three months ended September 30, 2004
Real estate charge-offs and REO expense	$	189		$	—		$	189
Average real estate secured receivables		57,570			171			57,741
Real estate charge-offs and REO expense as a percentage of average real estate secured receivables(1)		1.31	%		—			1.31	%
Three months ended June 30, 2004
Real estate charge-offs and REO expense	$	199		$	—		$	199
Average real estate secured receivables		54,220			178			54,398
Real estate charge-offs and REO expense as a percentage of average real estate secured receivables(1)		1.47	%		.67	%		1.47	%
Three months ended September 30, 2003
Real estate charge-offs and REO expense	$	173		$	1		$	174
Average real estate secured receivables		51,047			227			51,274
Real estate charge-offs and REO expense as a percentage of average real estate secured receivables(1)		1.35	%		1.94	%		1.36	%

(1) Certain percentages may not recompute from the dollar figures presented due to rounding.

17

Household International, Inc.

Reconciliation to GAAP Financial Measures

Credit Quality/Credit Loss Reserves (continued)

	Owned			Serviced with Limited Recourse			Managed
	(dollars are in millions)
Credit Loss Reserves:
Three months ended September 30, 2004
Reserves for receivables at beginning of quarter	$	3,795		$	1,904		$	5,699
Provision for credit losses		1,123			(232	)		891
Charge-offs, net of recoveries		(969	)		(394	)		(1,363	)
Other, net		4			(32	)		(28	)
Reserves for receivables at end of quarter	$	3,953		$	1,246		$	5,199
Receivables	$	106,437		$	20,175		$	126,612
Credit loss reserves as a percent of receivables		3.71	%		6.18	%		4.11	%
Three months ended June 30, 2004
Reserves for receivables at beginning of quarter	$	3,753		$	2,159		$	5,912
Provision for credit losses		997			148			1,145
Charge-offs, net of recoveries		(966	)		(401	)		(1,367	)
Other, net		11			(2	)		9
Reserves for receivables at end of quarter	$	3,795		$	1,904		$	5,699
Receivables	$	99,432		$	22,836		$	122,268
Credit loss reserves as a percent of receivables		3.82	%		8.34	%		4.66	%
Three months ended September 30, 2003
Reserves for receivables at beginning of quarter	$	3,659		$	1,980		$	5,639
Provision for credit losses		1,001			420			1,421
Charge-offs, net of recoveries		(899	)		(435	)		(1,334	)
Other, net		18			(11	)		7
Reserves for receivables at end of quarter	$	3,779		$	1,954		$	5,733
Receivables	$	93,028		$	24,109		$	117,137
Credit loss reserves as a percent of receivables		4.06	%		8.10	%		4.89	%

18

Household International, Inc.

Reconciliation to GAAP Financial Measures

Credit Quality/Credit Loss Reserves (continued)

	Owned			Serviced with Limited Recourse		Managed
	(dollars are in millions)
Nonperforming Assets:
September 30, 2004
Nonaccrual receivables	$	2,891		$	585	$	3,476
Accruing receivables 90 or more days delinquent		905			296		1,201
Renegotiated commercial loans		1			—		1
Total nonperforming receivables		3,797			881		4,678
Real estate owned		601			—		601
Total nonperforming assets	$	4,398		$	881	$	5,279
Credit loss reserves as a percent of nonperforming receivables		104.1	%		—		111.1	%
June 30, 2004
Nonaccrual receivables	$	2,833		$	673	$	3,506
Accruing receivables 90 or more days delinquent		850			285		1,135
Renegotiated commercial loans		1			—		1
Total nonperforming receivables		3,684			958		4,642
Real estate owned		624			—		624
Total nonperforming assets	$	4,308		$	958	$	5,266
Credit loss reserves as a percent of nonperforming receivables		103.0	%		—		122.8	%
September 30, 2003
Nonaccrual receivables	$	3,197		$	747	$	3,944
Accruing receivables 90 or more days delinquent		883			305		1,188
Renegotiated commercial loans		2			—		2
Total nonperforming receivables		4,082			1,052		5,134
Real estate owned		543			—		543
Total nonperforming assets	$	4,625		$	1,052	$	5,677
Credit loss reserves as a percent of nonperforming receivables		92.6	%		—		111.7	%

19