-----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, IktHrJNXbVAupQYDMApfh4OEAfp/pu3gGJCBVsMU8sflVlCwDKkAjP7HZyldiZiZ XflYXBDcf3bc1+hmFo1N/g== 0000893220-02-000499.txt : 20020424 0000893220-02-000499.hdr.sgml : 20020424 ACCESSION NUMBER: 0000893220-02-000499 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020423 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANTA CORP CENTRAL INDEX KEY: 0000096638 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 231462070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14120 FILM NUMBER: 02619341 BUSINESS ADDRESS: STREET 1: P.O. BOX 844 STREET 2: WELSH & MCKEAN ROADS CITY: SPRING HOUSE STATE: PA ZIP: 19477 BUSINESS PHONE: 2154445051 MAIL ADDRESS: STREET 1: C/O WELSH & MCKEAN ROADS STREET 2: P.O. BOX 844 CITY: SPRING HOUSE STATE: PA ZIP: 19477-0844 FORMER COMPANY: FORMER CONFORMED NAME: TSO FINANCIAL CORP DATE OF NAME CHANGE: 19880306 FORMER COMPANY: FORMER CONFORMED NAME: TEACHERS SERVICE ORGANIZATION INC DATE OF NAME CHANGE: 19850812 8-K 1 w56764a2e8-k.txt ADVANTA CORP. FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) April 23, 2002 ---------------------------- Advanta Corp. - ------------------------------------------------------------------------------ (Exact Name of Registrant as Specified in Charter) Delaware 0-14120 23-1462070 - ------------------------------------------------------------------------------ (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) Welsh & McKean Roads, P.O. Box 844, Spring House, Pennsylvania 19477 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (215) 657-4000 --------------------------- - ------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 5. OTHER EVENTS. On April 23, 2002, Advanta Corp. (the "Company" or "Advanta") announced Business Card net income of $8.5 million for the first quarter of 2002, compared to $8.3 million first quarter last year. Operating results from continuing business segments were $0.30 per diluted share for Class A and Class B shares combined, as compared to $0.29 for the first quarter of 2001, consistent with previously announced guidance that earnings in the first half of 2002 would be comparable with the first half of 2001. Advanta reported consolidated net income for the quarter of $4.2 million or $0.16 per share on a diluted basis for its Class A and Class B shares combined. This compares to a net loss of $29.4 million or $1.17 per share on a diluted basis reported for the first quarter of 2001. "During the quarter we furthered our initiatives designed to capitalize on the tremendous opportunity presented by the small business market," said Chairman and Chief Executive Officer Dennis Alter. "Talent has been drawn from all disciplines across the organization to develop new customer-centric ways to approach the market and our existing customers. The resulting products and services will be more finely attuned to our customers' individualized needs and preferences." Business Card results for the quarter reflect risk-adjusted revenues of 12.5% as compared to 12.4% for the quarter ended March 31, 2001. Consistent with the Company's expectations, charge-offs for the first quarter were 9.6% on an annualized basis and over 30 day delinquencies were 7.2% at March 31, 2002. The on-balance sheet loan loss reserve as a percent of owned receivables was 10.7% at March 31, 2002. Business Cards managed receivables ended the quarter at just over $2 billion, as compared to $1.8 billion for first quarter 2001. Consolidated net income for the quarter includes an asset valuation charge associated with the Company's venture capital portfolio and net interest expense not associated with continuing business segments. The Company continued its stock repurchase plan, bringing total purchases to approximately 925,000 shares of its Class B Common Stock through April 22, 2002. The Company intends further stock repurchases under its previously announced repurchase plan. Advanta management held a conference call, publicly announced in the Company's press release dated April 9, 2002, on April 23, 2002, at 9:00 am Eastern time. The call was broadcast simultaneously for the public over the Internet through www.advanta.com and www.vcall.com. Replays are available on the Vcall site for 30 days from the date of the call. During the first quarter earnings conference call, management indicated the following: - - Management expects that the marketing campaign will contribute to an increase in second quarter balances of 5 to 10%. This translates into approximately 30% annualized growth and is right in line with the Company's 20% to 35% growth target for 2002. - - Management announced that Henry Schein Inc., the largest distributor of healthcare products to office-based practitioners in the combined North American and European market will be offering a co-branded card to their approximately 200,000 U.S. customers. These customers include dental practices and laboratories, physician practices, and veterinary clinics. - - Management indicated that the Company is seeing favorable trends in both the over-30 day and over-90 day delinquency rates in March and into April. For March and April combined, the Company expects the 30+ day rate to decline 30 to 60 basis points and the 90+ day rate to remain essentially flat. - - Management expects the level of negative carry to be flat between the first and second quarters and then to drop in the third quarter to below $1 million, and zero in the fourth quarter. - - Management indicated that with the Company's focus on acquiring higher credit quality customers it expects that over time its results will reflect lower credit losses and lower interest yields. Advanta is a highly focused financial services company which has been providing innovative financial solutions since 1951. Advanta leverages its first-class direct marketing and information based expertise to develop state-of-the-art data warehousing and statistical modeling tools that identify potential customers and new target markets. It has used these distinctive capabilities to become one of the nation's largest issuers of MasterCard business credit cards to small businesses. Learn more about Advanta at www.advanta.com. This Report and the press release dated April 23, 2002 (included in this report as Exhibit 99.1) contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The most significant among these risks and uncertainties are: (1) the Company's managed net interest margin; (2) competitive pressures; (3) political, social and/or general economic conditions that affect the level of new account acquisitions, customer spending, delinquencies and charge-offs; (4) factors affecting fluctuations in the number of accounts or loan balances; (5) interest rate fluctuations; (6) the level of expenses; (7) the timing of the securitizations of the Company's receivables; (8) factors affecting the value of investments held by the Company; (9) the effects of government regulation, including restrictions and limitations imposed by banking laws, regulators, examinations, and the agreements between the Company's bank subsidiaries and their regulators; (10) relationships with customers, significant vendors and business partners; (11) the amount and cost of financing available to the Company; (12) the ratings on the debt of the Company and its subsidiaries; (13) revisions to estimated charges associated with the discontinued operations of our mortgage and leasing businesses; and (14) the impact of litigation. Additional risks that may affect the Company's future performance are detailed in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits. 99.1 Press Release dated April 23, 2002. SIGNATURES Pursuant to the requirements 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. Advanta Corp. ----------------------------------- (Registrant) Date: April 23, 2002 By: /s/ Elizabeth Mai ------------------------------- Elizabeth H. Mai Senior Vice President, Secretary and General Counsel EXHIBIT INDEX
Exhibit Description Method of Filing - ------- ----------- ---------------- 99.1 Press Release, dated April 23, 2002 Filed Electronically Herewith
EX-99.1 3 w56764a2ex99-1.txt PRESS RELEASE EXHIBIT 99.1 01/07 David Weinstock Vice President, Investor Relations (215) 444-5335 dweinstock@advanta.com Catherine Reid Vice President, Communications (215) 444-5073 creid@advanta.com FOR IMMEDIATE RELEASE ADVANTA FIRST QUARTER EARNINGS ON TARGET Spring House, PA, April 23, 2002 - Advanta Corporation (NASDAQ: ADVNB; ADVNA) today announced Business Card net income of $8.5 million for the first quarter of 2002, compared to $8.3 million first quarter last year. Operating results from continuing business segments were $0.30 per diluted share for Class A and Class B shares combined, as compared to $0.29 for the first quarter of 2001, consistent with previously announced guidance that earnings in the first half of 2002 would be comparable with the first half of 2001. Advanta reported consolidated net income for the quarter of $4.2 million or $0.16 per share on a diluted basis for its Class A and Class B shares combined. This compares to a net loss of $29.4 million or $1.17 per share on a diluted basis reported for the first quarter of 2001. "During the quarter we furthered our initiatives designed to capitalize on the tremendous opportunity presented by the small business market," said Chairman and Chief Executive Officer Dennis Alter. "Talent has been drawn from all disciplines across the organization to develop new customer-centric ways to approach the market and our existing customers. The resulting products and services will be more finely attuned to our customers' individualized needs and preferences." Business Card results for the quarter reflect risk-adjusted revenues of 12.5% as compared to 12.4% for the quarter ended March 31, 2001. Consistent with the Company's expectations, charge-offs for the first quarter were 9.6% on an annualized basis and over 30 day delinquencies were 7.2% at March 31, 2002. The on-balance -more- sheet loan loss reserve as a percent of owned receivables was 10.7% at March 31, 2002. Business Cards managed receivables ended the quarter at just over $2 billion, as compared to $1.8 billion for first quarter 2001. Consolidated net income for the quarter includes an asset valuation charge associated with the Company's venture capital portfolio and net interest expense not associated with continuing business segments. The Company continued its stock repurchase plan, bringing total purchases to approximately 925,000 shares of its Class B Common Stock through April 22, 2002. The Company intends further stock repurchases under its previously announced repurchase plan. Advanta management will hold a conference call with analysts and institutional investors today, April 23, 2002, at 9:00 am Eastern time. The call will be broadcast simultaneously for the public over the Internet through www.advanta.com or www.vcall.com. To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. For those unable to listen to the live broadcast, replays will be available shortly after the call on the Vcall site. Advanta is a highly focused financial services company which has been providing innovative financial solutions since 1951. Advanta leverages its first-class direct marketing and information based expertise to develop state-of-the-art data warehousing and statistical modeling tools that identify potential customers and new target markets. It has used these distinctive capabilities to become one of the nation's largest issuers of MasterCard business credit cards to small businesses. Learn more about Advanta at www.advanta.com. This Press Release contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The most significant among these risks and uncertainties are: (1) the Company's managed net interest margin; (2) competitive pressures; (3) political, social and/or general economic conditions that affect the level of new account acquisitions, customer spending, delinquencies and charge-offs; (4) factors affecting fluctuations in the number of accounts or loan balances; (5) interest rate fluctuations; (6) the level of expenses; (7) the timing of the securitizations of the Company's receivables; (8) factors affecting the value of investments held by the Company; (9) the effects of government regulation, including restrictions and limitations imposed by banking laws, regulators, examinations, and the agreements between the Company's bank subsidiaries and their regulators; (10) relationships with customers, significant vendors and business partners; (11) the amount and cost of financing available to the Company; (12) the ratings on the debt of the Company and its subsidiaries; (13) revisions to estimated charges associated with the discontinued operations of our mortgage and leasing businesses; and (14) the impact of litigation. Additional risks that may affect the Company's future performance are detailed in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. -more- ADVANTA CORP. SUPPLEMENTAL CONSOLIDATING INCOME STATEMENT (IN THOUSANDS)
Three Months Ended March 31, 2002 - ---------------------------------------------------------------------------------------------------------------------- Advanta Venture Business Cards Capital Other (A) Total ----------------- ---------------- ---------------- -------------- Interest income $ 22,778 $ 2 $ 3,626 $ 26,406 Interest expense 8,771 205 4,134 13,110 ----------------- ---------------- ---------------- -------------- Net interest income 14,007 (203) (508) 13,296 Provision for credit losses 10,500 0 200 10,700 ----------------- ---------------- ---------------- -------------- Net interest income after provision for credit losses 3,507 (203) (708) 2,596 Noninterest revenues: Securitization income 29,647 0 0 29,647 Servicing revenues 7,942 0 0 7,942 Interchange income 20,193 0 0 20,193 Other revenues, net 357 (2,579) (93) (2,315) ----------------- ---------------- ---------------- -------------- Total noninterest revenues 58,139 (2,579) (93) 55,467 Expenses: Operating expenses 47,902 653 403 48,958 Minority interest in income of consolidated subsidiary 0 0 2,220 2,220 ----------------- ---------------- ---------------- -------------- Total expenses 47,902 653 2,623 51,178 ----------------- ---------------- ---------------- -------------- Income (loss) before income taxes 13,744 (3,435) (3,424) 6,885 Income tax expense (benefit) 5,292 (1,323) (1,318) 2,651 ----------------- ---------------- ---------------- -------------- Net income (loss) $ 8,452 $ (2,112) $ (2,106) $ 4,234 ================= ================ ================ ==============
(A) Other includes insurance operations, investment and other activities not attributable to other segments. -more- ADVANTA CORP. SUPPLEMENTAL NON-GAAP DISCLOSURE MANAGED INCOME STATEMENT (A) (IN THOUSANDS)
Three Months Ended March 31, 2002 - --------------------------------------------------------------------------------------------------------------------- Advanta Venture Business Cards Capital Other (C) Total ----------------- -------------- ---------------- ------------ Interest income $ 102,421 $ 2 $ 3,626 $ 106,049 Interest expense 17,830 205 4,134 22,169 ----------------- -------------- ---------------- ------------ Net interest income 84,591 (203) (508) 83,880 Provision for credit losses (B) 49,486 0 200 49,686 ----------------- -------------- ---------------- ------------ Net interest income after provision for credit losses 35,105 (203) (708) 34,194 Noninterest revenues: Interchange income 20,193 0 0 20,193 Other revenues, net 6,348 (2,579) (93) 3,676 ----------------- -------------- ---------------- ------------ Total noninterest revenues 26,541 (2,579) (93) 23,869 Expenses: Operating expenses 47,902 653 403 48,958 Minority interest in income of consolidated subsidiary 0 0 2,220 2,220 ----------------- -------------- ---------------- ------------ Total expenses 47,902 653 2,623 51,178 ----------------- -------------- ---------------- ------------ Income (loss) before income taxes 13,744 (3,435) (3,424) 6,885 Income tax expense (benefit) 5,292 (1,323) (1,318) 2,651 ----------------- -------------- ---------------- ------------ Net income (loss) $ 8,452 $ (2,112) $ (2,106) $ 4,234 ----------------- -------------- ---------------- ------------
(A) We analyze the financial performance of Advanta Business Cards on a managed receivable portfolio basis. To do so, we adjust the Advanta Business Cards income statement to reverse the effects of securitization. Our managed business credit card receivable portfolio is comprised of owned and securitized business credit card receivables. (B) The provision for credit losses includes the amount by which the provision for credit losses would have been higher had the securitized receivables remained as owned and the provision for credit losses on securitized receivables been equal to actual reported charge-offs. (C) Other includes insurance operations, investment and other activities not attributable to other segments. -more- ADVANTA CORP. HIGHLIGHTS (IN THOUSANDS EXCEPT PER SHARE DATA)
Three Months Ended ------------------------------------------------------- Percent Change from Mar. 31 Dec. 31, Mar. 31, Prior Prior EARNINGS 2002 2001 2001 Quarter Year - ---------------------------------------------------------------------------------------------------------------------------------- Gross revenues $ 81,873 $ 88,463 $ 64,003 (7.4) % 27.9 % Basic income (loss) from continuing operations per common share 0.16 0.30 (1.48) (46.7) N/M Diluted income (loss) from continuing operations per common share 0.16 0.30 (1.48) (46.7) N/M Basic net income (loss) per common share 0.16 0.30 (1.17) (46.7) N/M Diluted net income (loss) per common share 0.16 0.30 (1.17) (46.7) N/M Return on average common equity 4.47 % 8.52 % (27.10) % (47.5) N/M Diluted net income per common share from continuing business segments (A) $ 0.30 $ 0.42 $ 0.29 (28.6) 3.4 COMMON STOCK DATA - ---------------------------------------------------------------------------------------------------------------------------------- Weighted average common shares used to compute: Basic earnings per common share 25,434 25,677 25,303 (0.9) % 0.5 % Diluted earnings per common share 26,119 25,844 25,303 1.1 3.2 Ending shares outstanding 28,562 26,633 27,274 7.2 4.7 Stock price: Class A High $ 12.900 $ 11.720 $ 16.000 10.1 (19.4) Low 8.470 8.000 8.750 5.9 (3.2) Closing 12.760 9.940 15.813 28.4 (19.3) Class B High 11.990 10.790 14.000 11.1 (14.4) Low 7.900 6.850 7.156 15.3 10.4 Closing 11.990 9.100 13.688 31.8 (12.4) Cash dividends declared Class A 0.063 0.063 0.063 0.0 0.0 Class B 0.076 0.076 0.076 0.0 0.0 Book value per common share 14.33 14.20 16.05 0.9 (10.7) BUSINESS CREDIT CARDS - ---------------------------------------------------------------------------------------------------------------------------------- Origination volume $ 1,102,984 $ 1,157,491 $1,003,735 (4.7) % 9.9 % Securitization volume 5,000 0 100,000 N/M (95.0) Average managed receivables 2,013,103 1,998,428 1,691,479 0.7 19.0 Ending managed receivables 2,026,075 2,042,974 1,781,005 (0.8) 13.8 Managed net interest margin 16.81 % 16.57 % 13.75 % 1.4 22.3 As a percentage of gross managed receivables: Total loans 30 days or more delinquent 7.18 6.66 5.20 7.8 38.1 Net charge-offs 9.59 8.67 6.50 10.6 47.5
(A) Includes net income of the Advanta Business Cards segment and expenses, net of tax, of the venture capital segment. Excludes venture capital valuation adjustments, net income of the Other segment and results of discontinued operations. -######- -----END PRIVACY-ENHANCED MESSAGE-----