-----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, RHxxUaJwUlpBiVV5pZijF7UunYdM95jYnKnKnbvZYL3Z6QXSsC64PuvrlNmlh6tD swPSdbAIVQzT0MiOaBRsgA== 0000893220-02-001283.txt : 20021024 0000893220-02-001283.hdr.sgml : 20021024 20021024164705 ACCESSION NUMBER: 0000893220-02-001283 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021024 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021024 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: 02797572 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: TEACHERS SERVICE ORGANIZATION INC DATE OF NAME CHANGE: 19850812 FORMER COMPANY: FORMER CONFORMED NAME: TSO FINANCIAL CORP DATE OF NAME CHANGE: 19880306 8-K 1 w64853e8vk.txt ADVANTA CORP. 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) October 24, 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 October 24, 2002, Advanta Corp. (the "Company" or "Advanta") announced operating results from continuing business segments of $0.38 per diluted share for Class A and Class B shares combined, for the quarter ended September 30, 2002, unchanged from the third quarter of 2001. Advanta reported consolidated net income for the quarter of $6.3 million or $0.25 per share on a diluted basis for its Class A and Class B shares combined. This compares to a net loss of $41.7 million or $1.59 per share on a diluted basis reported for the third quarter of 2001. Business Card results for the third quarter included a favorable decline in charge-offs to 8.9% on an annualized basis as compared to 9.0% at June 30, 2002. Over 90 day delinquencies declined 37 basis points to 2.99% while over 30 day delinquencies increased 7 basis points to 6.66% at the end of the third quarter. The on-balance sheet loan loss reserve as a percent of owned receivables was 9.8% at September 30, 2002, representing approximately 14 months of estimated losses based on third quarter net charge-offs. Managed receivables grew to $2.3 billion at September 30, 2002 as compared to $2 billion at September 30, 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 also announced that its full-year 2002 earnings from continuing business segments are expected to be within a range of $1.42 and $1.50 per diluted share, the upper end of which is within analysts' estimates. "We continue to have declining loss rates despite a difficult economic environment," said Dennis Alter, Chairman and CEO. "While prudent growth rates and the environment are now expected to keep earnings somewhat below our goals for the year, we are pleased with the solid developments in credit quality and the quality of the customer base we are building." The Company completed the repurchase of the 1.5 million shares initially authorized under its stock repurchase plan, and in connection with a second authorization has repurchased an additional 210,000 shares, for a total repurchased through October 23, 2002 of approximately 1,710,000 shares of its Class B Common Stock. The Company intends further stock repurchases under the remaining unused authorization of approximately 1,290,000 shares. Advanta management held a conference call, publicly announced in its press release dated October 10, 2002, at 9:00 a.m. Eastern time. The call was broadcast for the public simultaneously over the Internet through www.advanta.com or www.vcall.com. Replays of the call are available on the Vcall site for 30 days from the date of the call. During the third quarter earnings conference call, management indicated the following: - - Management reported that Rosemary Cauchon, who joined the Company approximately one year ago to head marketing and analytical activities, was no longer with the Company. - - Management reported that during the quarter the Company changed its accounting estimates for the bonus rewards accrual and amortization of deferred card acquisition costs, which together favorably impacted the Company's earnings for the quarter by approximately $1.2 million, or approximately $.03 per diluted share. - - Management commented that with respect to its Business Card business, the favorable decline in over 90-day delinquencies reported this quarter is expected to result in a lower charge-off rate in the fourth quarter of 2002. - - Management also announced that the Company plans to hold a conference call to discuss its guidance for 2003 on November 26, 2002. Advanta is a highly focused financial services company serving the small business market. Advanta leverages direct marketing and information based expertise to identify potential customers and new target markets and to provide a high level of service tailored to the unique needs of small business. Using these distinctive capabilities, Advanta has become one of the nation's largest issuers of MasterCard business credit cards to small businesses. Since 1951, Advanta has pioneered many of the marketing techniques common in the financial services industry today, including remote lending, direct mail, and affinity and relationship marketing. Learn more about Advanta at www.advanta.com. This Current Report on Form 8-K contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The most significant among these risks and uncertainties are: (1) the Company's managed net interest margin; (2) competitive pressures; (3) 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 October 24, 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: October 24, 2002 By: /s/ Elizabeth H. Mai -------------------- Elizabeth H. Mai Senior Vice President, Secretary and General Counsel EXHIBIT INDEX
Exhibit Description Method of Filing - ------- ----------- ---------------- 99.1 Press Release, dated October 24, 2002 Filed Electronically Herewith
EX-99.1 3 w64853exv99w1.txt PRESS RELEASE, DATED OCTOBER 24, 2002. Exhibit 99.1 02/18 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 REPORTS THIRD QUARTER EARNINGS Spring House, PA, October 24, 2002 - Advanta Corporation (NASDAQ: ADVNB; ADVNA) today announced operating results from continuing business segments of $0.38 per diluted share for Class A and Class B shares combined, for the quarter ended September 30, 2002, unchanged from the third quarter of 2001. Advanta reported consolidated net income for the quarter of $6.3 million or $0.25 per share on a diluted basis for its Class A and Class B shares combined. This compares to a net loss of $41.7 million or $1.59 per share on a diluted basis reported for the third quarter of 2001. Business Card results for the third quarter included a favorable decline in charge-offs to 8.9% on an annualized basis as compared to 9.0% at June 30, 2002. Over 90 day delinquencies declined 37 basis points to 2.99% while over 30 day delinquencies increased 7 basis points to 6.66% at the end of the third quarter. The on-balance sheet loan loss reserve as a percent of owned receivables was 9.8% at September 30, 2002, representing approximately 14 months of estimated losses based on third quarter net charge-offs. Managed receivables grew to $2.3 billion at September 30, 2002 as compared to $2 billion at September 30, 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 also announced that its full-year 2002 earnings from continuing business segments are expected to be within a range of $1.42 and $1.50 per diluted share, the upper end of which is within analysts' estimates. "We continue to have declining loss rates despite a difficult economic environment," said Dennis Alter, Chairman and CEO. "While prudent growth rates and the environment are now expected to keep earnings somewhat below our goals for the year, we are pleased with the solid developments in credit quality and the quality of the customer base we are building." The Company completed the repurchase of the 1.5 million shares initially authorized under its stock repurchase plan, and in connection with a second authorization has repurchased an additional 210,000 shares, for a total repurchased through October 23, 2002 of approximately 1,710,000 shares of its Class B Common Stock. The Company intends further stock repurchases under the remaining unused authorization of approximately 1,290,000 shares. Advanta management will hold a conference call with analysts and institutional investors today, October 24, 2002, at 9:00 a.m. 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. Replays of the call will be available beginning at noon today on the Internet at www.advanta.com or www.vcall.com or by dialing (719) 457-0820 and referring to confirmation code 309038. Advanta is a highly focused financial services company serving the small business market. Advanta leverages direct marketing and information based expertise to identify potential customers and new target markets and to provide a high level of service tailored to the unique needs of small business. Using these distinctive capabilities, Advanta has become one of the nation's largest issuers of MasterCard business credit cards to small businesses. Since 1951, Advanta has pioneered many of the marketing techniques common in the financial services industry today, including remote lending, direct mail, and affinity and relationship marketing. 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. ADVANTA CORP. SUPPLEMENTAL CONSOLIDATING INCOME STATEMENT (IN THOUSANDS)
Three Months Ended September 30, 2002 - ------------------------------------------------------------------------------------------ Advanta Business Venture Cards Capital Other (A) Total -------- -------- -------- -------- Interest income $ 21,082 $ 0 $ 2,837 $ 23,919 Interest expense 8,978 176 1,898 11,052 -------- -------- -------- -------- Net interest income 12,104 (176) 939 12,867 Provision for credit losses 9,179 0 242 9,421 -------- -------- -------- -------- Net interest income after provision for credit losses 2,925 (176) 697 3,446 Noninterest revenues: Securitization income 29,168 0 0 29,168 Interchange income 24,237 0 0 24,237 Servicing revenues 8,334 0 0 8,334 Other revenues, net (87) (3,505) (126) (3,718) -------- -------- -------- -------- Total noninterest revenues 61,652 (3,505) (126) 58,021 Expenses: Operating expenses 47,983 688 306 48,977 Minority interest in income of consolidated subsidiary 0 0 2,220 2,220 -------- -------- -------- -------- Total expenses 47,983 688 2,526 51,197 -------- -------- -------- -------- Income (loss) before income taxes 16,594 (4,369) (1,955) 10,270 Income tax expense (benefit) 6,388 (1,682) (752) 3,954 -------- -------- -------- -------- Net income (loss) $ 10,206 $ (2,687) $ (1,203) $ 6,316 ======== ======== ======== ========
(A) Other includes insurance operations, investment and other activities not attributable to other segments. ADVANTA CORP. SUPPLEMENTAL NON-GAAP DISCLOSURE MANAGED INCOME STATEMENT (A) (IN THOUSANDS)
Three Months Ended September 30, 2002 - ------------------------------------------------------------------------------------------ Advanta Business Venture Cards Capital Other (C) Total -------- -------- -------- -------- Interest income $102,719 $ 0 $ 2,837 $105,556 Interest expense 19,314 176 1,898 21,388 -------- -------- -------- -------- Net interest income 83,405 (176) 939 84,168 Provision for credit losses (B) 49,762 0 242 50,004 -------- -------- -------- -------- Net interest income after provision for credit losses 33,643 (176) 697 34,164 Noninterest revenues: Interchange income 24,237 0 0 24,237 Other revenues, net 6,697 (3,505) (126) 3,066 -------- -------- -------- -------- Total noninterest revenues 30,934 (3,505) (126) 27,303 Expenses: Operating expenses 47,983 688 306 48,977 Minority interest in income of consolidated subsidiary 0 0 2,220 2,220 -------- -------- -------- -------- Total expenses 47,983 688 2,526 51,197 -------- -------- -------- -------- Income (loss) before income taxes 16,594 (4,369) (1,955) 10,270 Income tax expense (benefit) 6,388 (1,682) (752) 3,954 -------- -------- -------- -------- Net income (loss) $ 10,206 $ (2,687) $ (1,203) $ 6,316 ======== ======== ======== ========
(A) In addition to analyzing the financial performance of Advanta Business Cards under generally accepted accounting principles, we analyze Advanta Business Cards' performance 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. ADVANTA CORP. Highlights (IN THOUSANDS EXCEPT PER SHARE DATA)
Three Months Ended ---------------------------------------------- Percent Change from Sept. 30, June 30, Sept. 30, Prior Prior EARNINGS 2002 2002 2001 Quarter Year - -------- ----------- ----------- ----------- ------- ----- Gross revenues $ 81,940 $ 87,400 $ 75,679 (6.2)% 8.3% Basic income from continuing operations per common share 0.25 0.28 0.09 (10.7) N/M Diluted income from continuing operations per common share 0.25 0.27 0.09 (7.4) N/M Basic net income (loss) per common share 0.25 (0.06) (1.61) N/M N/M Diluted net income (loss) per common share 0.25 (0.06) (1.59) N/M N/M Return on average common equity 6.99% (1.62)% (42.07)% N/M N/M Diluted net income per common share from continuing business segments (A) $ 0.38 $ 0.32 $ 0.38 18.8 0.0 COMMON STOCK DATA - ----------------- Weighted average common shares used to compute: Basic earnings per common share 25,038 25,320 25,936 (1.1)% (3.5)% Diluted earnings per common share 25,664 26,790 26,241 (4.2) (2.2) Ending shares outstanding 28,240 28,562 27,024 (1.1) 4.5 Stock price: Class A High $ 11.450 $ 14.550 $ 19.100 (21.3) (40.1) Low 7.600 10.400 8.000 (26.9) (5.0) Closing 10.050 10.860 9.400 (7.5) 6.9 Class B High 11.440 14.040 17.100 (18.5) (33.1) Low 7.350 10.240 8.100 (28.2) (9.3) Closing 10.330 10.930 8.950 (5.5) 15.4 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 14.44 14.20 14.10 1.7 2.4 BUSINESS CREDIT CARDS - --------------------- Origination volume $ 1,348,154 $ 1,305,479 $ 1,138,747 3.3% 18.4% Securitization volume 65,000 110,000 75,000 (40.9) (13.3) Average managed receivables 2,230,089 2,110,420 1,946,737 5.7 14.6 Ending managed receivables 2,253,513 2,188,046 1,996,963 3.0 12.8 Managed net interest margin 14.96% 15.64% 15.24% (4.3) (1.8) As a percentage of gross managed receivables: Total receivables 30 days or more delinquent 6.66 6.59 5.92 1.1 12.5 Net charge-offs 8.93 9.00 7.90 (0.8) 13.0
(A) Includes net income of the Advanta Business Cards segment and the Venture Capital segment with the exception of venture capital valuation adjustments, net of tax. Excludes net income of the Other segment and results of discontinued operations. - Statistical Supplement available at www.advanta.com - - ##### - -----END PRIVACY-ENHANCED MESSAGE-----