-----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, S+23FBI/PrNvf8qLCPtuZPGRIPuc8smC4zp+QyAVYu1QeF2H3fjrRqftZik5rtl1 NQHtykZVMy7SiF9OJur6IA== 0001157523-05-000527.txt : 20050125 0001157523-05-000527.hdr.sgml : 20050125 20050125074517 ACCESSION NUMBER: 0001157523-05-000527 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050125 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050125 DATE AS OF CHANGE: 20050125 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: 05545821 BUSINESS ADDRESS: STREET 1: P.O. BOX 844 STREET 2: WELSH & MCKEAN ROADS CITY: SPRING HOUSE STATE: PA ZIP: 19477 BUSINESS PHONE: 2154445341 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 a4806310.txt ADVANTA CORP. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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) January 25, 2005 ---------------- Advanta Corp. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its 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.) 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 Operation and Financial Condition. The information in this Current Report on Form 8-K is to be considered "filed" under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). On January 25, 2005, Advanta Corp. (the "Company") issued a press release describing its results for the quarter ended December 31, 2004 and for the full year ended December 31, 2004. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. On January 25, 2005 at 9:00 a.m. Eastern time, Company management also will hold a conference call, publicly announced in its press release dated January 12, 2005. The call will be 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. In addition to historical information, 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 from those projected. 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 9.01 Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. The following exhibit relating to Item 2.02 shall be deemed "filed" under the Exchange Act: 99.1 Press Release issued January 25, 2005 regarding financial results for the quarter ended December 31, 2004 and the full year ended December 31, 2004. 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: January 25, 2005 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 issued January 25, 2005 Filed herewith regarding financial results for the quarter ended December 31, 2004 and full year ended December 31, 2004 EX-99.1 2 a4806310ex991.txt PRESS RELEASE Exhibit 99.1 Advanta Reports Fourth Quarter and Full Year 2004 Earnings; 2004 Advanta Business Cards Net Income Increased 33% SPRING HOUSE, Pa.--(BUSINESS WIRE)--Jan. 25, 2005--Advanta Corp. (NASDAQ:ADVNB;ADVNA) today reported net income for Advanta Business Cards of $13.2 million for fourth quarter and $46.0 million for full year 2004. This compares to $11.6 million for fourth quarter 2003 and $34.6 million for full year 2003. "The increased profitability of Advanta Business Cards in 2004 reflects our continued success in attracting and retaining high credit quality customers and building strong relationships with these customers through the services we offer," said Dennis Alter, Chairman and CEO. "The benefits of our strategy are evident in the asset quality of our portfolio, which ended the year with the best metrics that we have reported since we began focusing exclusively on the small business credit card market." Advanta reported consolidated net income for fourth quarter 2004 of $13.7 million or $0.48 per diluted share for Class A and Class B shares combined as compared to consolidated net income of $11.2 million or $0.44 per combined diluted share for fourth quarter 2003. Consolidated net income for fourth quarter 2004 includes a $0.01 per diluted share asset valuation gain associated with the Company's venture capital portfolio and a $0.01 per diluted share net gain on discontinued operations. On a full year basis, Advanta reported consolidated net income of $44.7 million or $1.62 per combined diluted share as compared to $28.2 million or $1.13 per combined diluted share for 2003. Consolidated net income for 2004 includes a $0.03 per diluted share asset valuation charge associated with the Company's venture capital portfolio, a $0.02 per diluted share charge associated with the closure of the Company's New York venture capital office in the first quarter of 2004 and a $0.02 per diluted share net gain on discontinued operations. Consolidated net income for 2003 includes a $0.09 per diluted share asset valuation charge associated with the Company's venture capital portfolio and an $0.08 per diluted share net loss on discontinued operations. Advanta Business Card results for fourth quarter 2004 reflect a 127 basis point decline in net principal charge-offs on managed receivables to 6.04% on an annualized basis as compared to 7.31% for fourth quarter 2003. Over 30 day delinquencies on managed receivables declined 170 basis points to 4.12% and over 90 day delinquencies on managed receivables decreased 94 basis points to 1.99%, each as compared to fourth quarter 2003. Business Cards ended the quarter with managed receivables of $3.3 billion as compared to $3.0 billion at December 31, 2003. Net principal charge-offs on owned receivables decreased 90 basis points to 5.94% on an annualized basis for fourth quarter 2004 as compared to 6.84% for fourth quarter 2003. Over 30 day delinquencies on owned receivables declined 101 basis points to 3.87% and over 90 day delinquencies on owned receivables decreased 58 basis points to 1.87%, each as compared to fourth quarter 2003. Owned Business Card receivables were $730 million at December 31, 2004 as compared to $518 million at December 31, 2003. Conference Call Details Advanta management will hold a conference call with analysts and institutional investors today, January 25, 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 website at least 15 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 4677504. The conference call may include a discussion of non-GAAP financial measures, which are reconciled to the most directly comparable GAAP financial measure in this press release or our statistical supplements, both available at www.advanta.com in the "Corporate Info" section. About Advanta Advanta focuses on the small business market and related community, providing funding and support to the nation's small businesses through innovative products and services. Using its direct marketing and information based expertise, Advanta identifies potential customers and provides a high level of service tailored to the unique needs of small businesses. Advanta is one of the nation's largest issuers (through Advanta Bank Corp.) 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 and direct mail, 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 from those projected. 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. In addition to the GAAP results provided throughout this document, the Company has provided managed receivable data and other non-GAAP financial measurements. Management believes that these non-GAAP financial measures used in managing the business may provide users additional useful information. The tables attached to this press release include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure and a description of why the non-GAAP financial measures are useful to investors. ADVANTA SEGMENT INCOME STATEMENT (in thousands) Three Months Ended December 31, 2004 - ---------------------------------------------------------------------- Advanta Business Venture Cards Capital Other (A) Total -------- ------- --------- -------- Interest income $27,694 $ 7 $ 2,513 $30,214 Interest expense 8,842 60 3,059 11,961 -------- ------- --------- -------- Net interest income 18,852 (53) (546) 18,253 Provision for credit losses 10,721 0 (16) 10,705 -------- ------- --------- -------- Net interest income after provision for credit losses 8,131 (53) (530) 7,548 Noninterest revenues: Securitization income 28,192 0 0 28,192 Servicing revenues 12,502 0 0 12,502 Other revenues, net 28,898 510 1,748 31,156 -------- ------- --------- -------- Total noninterest revenues 69,592 510 1,748 71,850 Operating expenses 56,872 27 1,218 58,117 -------- ------- --------- -------- Income before income taxes 20,851 430 0 21,281 Income tax expense 7,688 191 0 7,879 -------- ------- --------- -------- Income from continuing operations 13,163 239 0 13,402 Gain, net, on discontinuance of mortgage and leasing businesses, net of tax 0 0 308 308 -------- ------- --------- -------- Net income $13,163 $ 239 $ 308 $13,710 ======== ======= ========= ======== Three Months Ended December 31, 2003 - ---------------------------------------------------------------------- Advanta Business Venture Cards Capital Other (A) Total -------- ------- --------- -------- Interest income $24,464 $ 0 $ 1,890 $26,354 Interest expense 9,859 90 1,012 10,961 -------- ------- --------- -------- Net interest income 14,605 (90) 878 15,393 Provision for credit losses 10,163 0 (14) 10,149 -------- ------- --------- -------- Net interest income after provision for credit losses 4,442 (90) 892 5,244 Noninterest revenues: Securitization income 32,896 0 0 32,896 Servicing revenues 11,298 0 0 11,298 Other revenues, net 25,995 (6) 2,651 28,640 -------- ------- --------- -------- Total noninterest revenues 70,189 (6) 2,651 72,834 Expenses: Operating expenses 55,790 573 1,323 57,686 Minority interest in income of consolidated subsidiary 0 0 2,220 2,220 -------- ------- --------- -------- Total expenses 55,790 573 3,543 59,906 -------- ------- --------- -------- Income (loss) before income taxes 18,841 (669) 0 18,172 Income tax expense (benefit) 7,254 (258) 0 6,996 -------- ------- --------- -------- Net income (loss) $11,587 $ (411) $ 0 $11,176 ======== ======= ========= ======== (A) Other includes investment and other activities not attributable to the Advanta Business Cards or Venture Capital segments. ADVANTA SUPPLEMENTAL NON-GAAP DISCLOSURE ADVANTA BUSINESS CARDS MANAGED INCOME STATEMENT (in thousands) In addition to evaluating the financial performance of the Advanta Business Cards segment under U.S. generally accepted accounting principles (GAAP), we evaluate Advanta Business Cards' performance on a managed basis. Our managed business credit card receivable portfolio is comprised of both owned and securitized business credit card receivables. We sell business credit card receivables through securitizations accounted for as sales under GAAP. We continue to own and service the accounts that generate the securitized receivables. Managed data presents performance as if the securitized receivables had not been sold. We believe that performance on a managed basis provides useful supplemental information because we retain interests in the securitized receivables and, therefore, we have a financial interest in and exposure to the performance of the securitized receivables. Revenue and credit data on the managed portfolio provides additional information useful in understanding the performance of the retained interests in business credit card securitizations. A reconciliation of these managed financial measures to the most directly comparable GAAP financial measures is included in this press release. Three Months Ended ----------------------- Dec. 31, Dec. 31, 2004 2003 ---------- ---------- Interest income $ 116,673 $ 114,504 Interest expense 26,127 20,946 ---------- ---------- Net interest income 90,546 93,558 Provision for credit losses 49,178 54,053 ---------- ---------- Net interest income after provision for credit losses 41,368 39,505 Noninterest revenues 36,355 35,126 ---------- ---------- Risk-adjusted revenues (A) 77,723 74,631 Operating expenses 56,872 55,790 ---------- ---------- Income before income taxes 20,851 18,841 Income tax expense 7,688 7,254 ---------- ---------- Net income $ 13,163 $ 11,587 ========== ========== Average managed business credit card receivables $3,258,799 $2,958,835 (A) Risk-adjusted revenues represent net interest income and noninterest revenues, less provision for credit losses. ADVANTA HIGHLIGHTS (in thousands, except per share data) Percent Three Months Ended Change From --------------------------- Dec. 31, Sept. 30, Dec. 31, Prior Prior EARNINGS 2004 2004 2003 Quarter Year - ---------------------------------------------------------------------- Basic income from continuing operations per common share: Class A $ 0.51 $ 0.40 $ 0.45 27.5 % 13.3 % Class B 0.54 0.43 0.47 25.6 14.9 Combined (A) 0.53 0.42 0.47 26.2 12.8 Diluted income from continuing operations per common share: Class A 0.46 0.37 0.43 24.3 7.0 Class B 0.48 0.38 0.44 26.3 9.1 Combined (A) 0.47 0.38 0.44 23.7 6.8 Basic net income per common share: Class A 0.52 0.40 0.45 30.0 15.6 Class B 0.55 0.43 0.47 27.9 17.0 Combined (A) 0.54 0.42 0.47 28.6 14.9 Diluted net income per common share: Class A 0.47 0.37 0.43 27.0 9.3 Class B 0.49 0.38 0.44 28.9 11.4 Combined (A) 0.48 0.38 0.44 26.3 9.1 Return on average common equity 14.24 % 11.38 % 13.41 % 25.1 6.2 COMMON STOCK DATA - ---------------------------------------------------------------------- Weighted average common shares used to compute: Basic earnings per common share Class A 8,811 8,803 8,803 0.1 % 0.1 % Class B 16,630 16,479 15,186 0.9 9.5 ------- ------- -------- Total 25,441 25,282 23,989 0.6 6.1 Diluted earnings per common share Class A 8,811 8,803 8,803 0.1 0.1 Class B 19,589 19,303 16,704 1.5 17.3 ------- ------- -------- Total 28,400 28,106 25,507 1.0 11.3 Ending shares outstanding Class A 9,607 9,607 9,607 0.0 0.0 Class B 18,350 18,264 17,344 0.5 5.8 ------- ------- -------- Total 27,957 27,871 26,951 0.3 3.7 Stock price: Class A High $ 24.19 $ 23.55 $ 13.48 2.7 79.5 Low 20.34 19.73 10.60 3.1 91.9 Closing 22.62 22.80 12.93 (0.8) 74.9 Class B High 26.07 24.44 13.42 6.7 94.3 Low 21.68 20.30 10.55 6.8 105.5 Closing 24.27 24.19 12.72 0.3 90.8 Cash dividends declared: Class A 0.095 0.095 0.063 0.0 50.0 Class B 0.113 0.113 0.076 0.0 50.0 Book value per common share 14.90 14.54 13.87 2.5 7.4 (A) Combined represents income available to common stockholders divided by the combined total of Class A and Class B weighted average common shares outstanding. ADVANTA BUSINESS CREDIT CARD STATISTICS ($ in thousands) Three Months Ended Percent Change ----------------------------------- From Dec. 31, Sept. 30, Dec. 31, Prior Prior 2004 2004 2003 Quarter Year ----------- ----------- ----------- ------- -------- New account originations 40,663 24,578 42,083 65.4 % (3.4)% Average number of active accounts (A) 575,204 578,162 589,648 (0.5) (2.4) Ending number of accounts 777,943 770,195 786,700 1.0 (1.1) Transaction volume $2,214,215 $2,125,757 $1,944,617 4.2 13.9 Securitization volume increase (decrease) excluding replenishment sales $ 55,000 $ (35,000) $ 119,750 N/M (54.1) Average managed receivables: Owned $ 722,088 $ 646,934 $ 594,034 11.6 21.6 Securitized 2,536,711 2,513,053 2,364,801 0.9 7.3 ----------- ----------- ----------- Managed (B) 3,258,799 3,159,987 2,958,835 3.1 10.1 Ending managed receivables: Owned $ 730,483 $ 709,991 $ 518,040 2.9 41.0 Securitized 2,564,147 2,511,030 2,463,747 2.1 4.1 ----------- ----------- ----------- Managed (B) 3,294,630 3,221,021 2,981,787 2.3 10.5 - ---------------------------------------------------------------------- CREDIT QUALITY - OWNED - ----------------- Receivables 30 days or more delinquent $ 28,287 $ 29,552 $ 25,301 Receivables 90 days or more delinquent 13,638 14,305 12,696 As a percentage of gross receivables: Receivables 30 days or more delinquent 3.87% 4.16% 4.88% (7.0)% (20.7)% Receivables 90 days or more delinquent 1.87 2.01 2.45 (7.0) (23.7) Net principal charge-offs: Amount $ 10,721 $ 10,448 $ 10,163 As a percentage of average gross receivables (annualized) 5.94% 6.46% 6.84% (8.0) (13.2) CREDIT QUALITY - SECURITIZED - ----------------- Receivables 30 days or more delinquent $ 107,546 $ 112,674 $ 148,177 Receivables 90 days or more delinquent 51,770 54,354 74,762 As a percentage of gross receivables: Receivables 30 days or more delinquent 4.19% 4.49% 6.01% (6.7)% (30.3)% Receivables 90 days or more delinquent 2.02 2.16 3.03 (6.5) (33.3) Net principal charge-offs: Amount $ 38,457 $ 40,740 $ 43,890 As a percentage of average gross receivables (annualized) 6.06% 6.48% 7.42% (6.5) (18.3) CREDIT QUALITY - MANAGED (B) - ----------------- Receivables 30 days or more delinquent $ 135,833 $ 142,226 $ 173,478 Receivables 90 days or more delinquent 65,408 68,659 87,458 As a percentage of gross receivables: Receivables 30 days or more delinquent 4.12% 4.42% 5.82% (6.8)% (29.2)% Receivables 90 days or more delinquent 1.99 2.13 2.93 (6.6) (32.1) Net principal charge-offs: Amount $ 49,178 $ 51,188 $ 54,053 As a percentage of average gross receivables (annualized) 6.04% 6.48% 7.31% (6.8) (17.4) (A) Active accounts are defined as accounts with a balance at month- end. Active account statistics do not include charged-off accounts. The statistics reported above represent the average number of active accounts for the periods presented. (B) Managed statistics are non-GAAP financial measures and represent the sum of owned (GAAP) business credit card statistics and securitized business credit card statistics. We believe that performance on a managed basis provides useful supplemental information because we retain interests in the securitized receivables and, therefore, we have a financial interest in and exposure to the performance of the securitized receivables. N/M - Not Meaningful ADVANTA RECONCILIATION OF MANAGED INCOME STATEMENT AND BALANCE SHEET MEASURES TO GAAP FINANCIAL MEASURES (in thousands) In addition to evaluating the financial performance of the Advanta Business Cards segment under U.S. generally accepted accounting principles (GAAP), we evaluate Advanta Business Cards' performance on a managed basis. Our managed business credit card receivable portfolio is comprised of both owned and securitized business credit card receivables. We sell business credit card receivables through securitizations accounted for as sales under GAAP. We continue to own and service the accounts that generate the securitized receivables. Managed data presents performance as if the securitized receivables had not been sold. We believe that performance on a managed basis provides useful supplemental information because we retain interests in the securitized receivables and, therefore, we have a financial interest in and exposure to the performance of the securitized receivables. Revenue and credit data on the managed portfolio provides additional information useful in understanding the performance of the retained interests in business credit card securitizations. Three Months Ended December 31, 2004 ------------------------------------- Advanta Advanta Business Business Cards Securitization Cards GAAP Adjustments Managed --------- -------------- ---------- INCOME STATEMENT MEASURES Interest income $ 27,694 $ 88,979 $ 116,673 Interest expense 8,842 17,285 26,127 Net interest income 18,852 71,694 90,546 Securitization income 28,192 (28,192) 0 Servicing revenues 12,502 (12,502) 0 Other revenues, net 28,898 7,457 36,355 Total noninterest revenues 69,592 (33,237) 36,355 Provision for credit losses 10,721 38,457 (A) 49,178 ------------------------------------- BALANCE SHEET MEASURES Average business credit card receivables 722,088 2,536,711 3,258,799 Ending business credit card receivables 730,483 2,564,147 3,294,630 Business credit card receivables: 30 days or more delinquent 28,287 107,546 135,833 90 days or more delinquent 13,638 51,770 65,408 Net principal charge-offs 10,721 38,457 49,178 Three Months Ended December 31, 2003 ------------------------------------- Advanta Advanta Business Business Cards Securitization Cards GAAP Adjustments Managed --------- -------------- ---------- INCOME STATEMENT MEASURES Interest income $ 24,464 $ 90,040 $ 114,504 Interest expense 9,859 11,087 20,946 Net interest income 14,605 78,953 93,558 Securitization income 32,896 (32,896) 0 Servicing revenues 11,298 (11,298) 0 Other revenues, net 25,995 9,131 35,126 Total noninterest revenues 70,189 (35,063) 35,126 Provision for credit losses 10,163 43,890 (A) 54,053 ------------------------------------- BALANCE SHEET MEASURES Average business credit card receivables 594,034 2,364,801 2,958,835 Ending business credit card receivables 518,040 2,463,747 2,981,787 Business credit card receivables: 30 days or more delinquent 25,301 148,177 173,478 90 days or more delinquent 12,696 74,762 87,458 Net principal charge-offs 10,163 43,890 54,053 (A) 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. -Statistical supplement available at www.advanta.com- CONTACT: Advanta Corp. Chris Curran Vice President, Investor Relations 215-444-5335 ccurran@advanta.com or Jennifer Lyons Communications 215-444-5073 AdvantaCommunications@advanta.com -----END PRIVACY-ENHANCED MESSAGE-----