Back to GetFilings.com
1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-8198
HOUSEHOLD INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3121988
(State of incorporation) (I.R.S. Employer Identification No.)
2700 SANDERS ROAD,
PROSPECT HEIGHTS, ILLINOIS 60070
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 564-5000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
----------------------------
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE AND
CHICAGO STOCK EXCHANGE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK PURCHASE NEW YORK STOCK EXCHANGE AND
RIGHTS (ATTACHED TO AND TRANSFERABLE ONLY WITH THE CHICAGO STOCK EXCHANGE
COMMON STOCK)
$6.25 CUMULATIVE CONVERTIBLE VOTING PREFERRED STOCK, NEW YORK STOCK EXCHANGE
NO PAR, $50 STATED VALUE
DEPOSITARY SHARES (EACH REPRESENTING ONE-QUARTER SHARE NEW YORK STOCK EXCHANGE
OF 9 1/2% CUMULATIVE PREFERRED STOCK, SERIES 1989-A,
NO PAR, $100 STATED VALUE)
DEPOSITARY SHARES (EACH REPRESENTING ONE-TENTH SHARE OF NEW YORK STOCK EXCHANGE
9 1/2% CUMULATIVE PREFERRED STOCK, SERIES 1991-A, NO
PAR, $100 STATED VALUE)
DEPOSITARY SHARES (EACH REPRESENTING ONE-FORTIETH SHARE NEW YORK STOCK EXCHANGE
OF 8 1/4% CUMULATIVE PREFERRED STOCK, SERIES 1992-A,
NO PAR, $1,000 STATED VALUE)
DEPOSITARY SHARES (EACH REPRESENTING ONE-FORTIETH SHARE NEW YORK STOCK EXCHANGE
OF 7.35% CUMULATIVE PREFERRED STOCK, SERIES 1993-A, NO
PAR, $1,000 STATED VALUE)
Securities registered pursuant to Section 12(g) of the Act:
NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. Yes/X/ No/ /
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. / /
AT MARCH 16, 1994, THERE WERE 94,598,901 SHARES OF REGISTRANT'S COMMON
STOCK OUTSTANDING, AND THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
NONAFFILIATES OF THE REGISTRANT WAS APPROXIMATELY $3.2 BILLION.
DOCUMENTS INCORPORATED BY REFERENCE
CERTAIN PORTIONS OF THE REGISTRANT'S 1993 ANNUAL REPORT TO SHAREHOLDERS FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1993: PARTS I, II AND IV.
CERTAIN PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT FOR ITS
1994 ANNUAL MEETING SCHEDULED TO BE HELD MAY 11, 1994: PART I AND PART III.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
PART I.
ITEM 1. BUSINESS.
GENERAL
Household International, Inc. ("Household International" or the "Company")
is a publicly owned corporation which, with its subsidiaries, provides a broad
range of diversified financial services for individuals and businesses. The
Company employs approximately 16,900 people and serves approximately 17 million
customers in the United States, Canada, the United Kingdom and Australia. In
1993 Household International was ranked as the 61st largest publicly owned
company, based on total assets by Forbes magazine which annually lists the 500
largest public corporations in the United States. The Company's operations are
divided into three business segments: Finance and Banking, Individual Life
Insurance, and Liquidating Commercial Lines.
Household International was created in 1981 as a result of a shareholder
approved restructuring of Household Finance Corporation ("HFC"), a publicly
owned corporation since 1925, whereby Household International became a holding
company for various subsidiaries, including HFC. At that time Household
International had operations in the financial services, manufacturing,
transportation and merchandising industries.
In 1985 the Company began to restructure its operations away from being a
diversified conglomerate. This action resulted in the disposition of its
merchandising (1985), transportation (1986) and manufacturing (1989-1990)
businesses, including the spin-off to its common stock shareholders of three
manufacturing companies in 1989: Eljer Industries, Inc., Schwitzer, Inc. and
Scotsman Industries, Inc.
The products offered by Household International, a description of the
geographic markets in which the Company operates and summary financial
information for each of the Company's business segments is set forth in the
Company's Annual Report to Shareholders (the "1993 Annual Report"), portions of
which are incorporated herein by reference. See pages 12, 13 and 33 through 80
of the 1993 Annual Report. The Company markets its products to its customers
through a number of different distribution channels, including consumer finance
branch offices, consumer bank branch offices, loan origination offices, retail
merchants, independent insurance agents, direct mail and telemarketing, and
retail securities brokerage offices.
1993 DEVELOPMENTS. In 1993 the Company's bankcard operations continued to
grow, principally through the continuing success of the GM Card(sm). The GM Card
is a general-purpose credit card which allows the users thereof to earn credit
toward the purchase of new General Motors vehicles. The GM Card was publicly
introduced in September 1992 and as of December 31, 1993, there were
approximately 5.9 million accounts which had generated approximately $4.9
billion credit card receivables. As of this date, the GM Card accounts are
generally active and are of high credit quality. In the fourth quarter, the
Company announced expansion of its alliance with General Motors Corporation with
the introduction of a GM Card from Vauxhall in the United Kingdom, permitting
users to earn rebates toward the purchase of a new Vauxhall vehicle. The card
will be issued by HFC Bank plc, the Company's principal operating subsidiary in
the United Kingdom. Also in the fourth quarter, the Company announced an
alliance to issue a new co-branded credit card with Charles Schwab & Co.
In 1993 Household International strengthened its capital base through the
issuance of additional equity securities. In March 1993 the Company raised
additional capital of approximately $269 million (net of issuance costs) through
the sale of 4,025,000 shares of common stock (on a pre-split basis). In
addition, during the year the Company issued approximately $44 million of common
stock through employee benefit and dividend reinvestment plans. The Company also
issued 4,000,000 depositary shares, with each depositary share representing a
one-fortieth interest in a share of the Company's 7.35% Cumulative Preferred
Stock, Series 1993-A. The underwritten public offering raised approximately $97
million (net of issuance costs) for the Company. The issuance of this common and
preferred stock, together with a conservative growth posture, strengthened its
capital ratios.
In October, the Company's common stock was split 2-for-1 through a 100%
stock dividend. The split doubled the number of shares of common stock
outstanding and was affected for the primary purpose of making the common stock
more affordable to a broader base of investors.
1
3
The lowest interest rates in the United States in over twenty years
contributed to high prepayment rates in the first mortgage portfolio, resulting
in write-downs of capitalized servicing rights and lower earnings for the
mortgage banking operation.
In foreign operations, despite continuing weak economic growth in the
United Kingdom, Household International's United Kingdom operation was
profitable for the first time in five years. The improvement was primarily
attributable to actions taken in prior years such as implementing tightened
underwriting standards and improved collections efforts. For the year, the
United Kingdom operation earned $10.3 million compared to a 1992 loss of $45.9
million. The Company's operation in Canada was adversely affected by a
continuing poor economic environment resulting in low receivables origination
volume. The Company's performance in Canada was also impacted by establishment
of higher loss reserves during the fourth quarter as a result of the completion
of the first phase of a strategic assessment of the Canadian market, economic
conditions, products and the Company's Canadian cost structure and policies. The
Company's Australian operation was profitable, comparable with its 1992 results.
FINANCE AND BANKING
Total Finance and Banking receivables at December 31, classified by type,
consisted of the following (in millions):
1993 1992 1991
--------- --------- ---------
First mortgage................ $ 3,534.1 $ 4,513.8 $ 4,717.7
Home equity................... 2,850.9 2,943.6 3,108.0
Other secured................. 875.4 827.9 942.3
Bankcard...................... 4,356.9 3,416.9 1,549.7
Merchant participation........ 2,636.5 2,063.8 2,389.9
Other unsecured............... 4,320.8 3,850.6 3,884.2
--------- --------- ---------
Subtotal--Consumer............ 18,574.6 17,616.6 16,591.8
Equipment financing and
other....................... 765.9 832.7 966.1
--------- --------- ---------
Finance and Banking
receivables................. $19,340.5 $18,449.3 $17,557.9
========= ========= =========
CONSUMER OPERATIONS. Household International is primarily a consumer
financial services company, with consumer receivables of $18.6 billion,
representing approximately 96 percent of Finance and Banking owned receivables
and approximately 59 percent of total assets at December 31, 1993, excluding the
discontinued commercial product lines. The Company's primary target customer for
consumer lending is generally between 25 and 50 years of age with a household
income of $15,000 to $50,000. Approximately 82 percent of the Company's Finance
and Banking receivables are located in the United States.
Through its consumer lending businesses, the Company competes with banks,
thrifts, finance companies and other financial institutions through the offering
of a variety of products, a strong service orientation and innovative marketing
programs. The Company believes that the fragmented nature of the consumer
financial services industry provides ample opportunity for the Company to
increase market share, and therefore profitability. The Company has focused on
being a low-cost producer in its consumer financial services businesses. Highly
automated processing facilities have been developed to support underwriting,
loan administration and collection functions across business lines. By
supporting its multiple-distribution networks with centralized processing
centers, the Company has improved efficiency through specialization and
economies of scale. In addition, by removing such functions from branch offices,
the Company is able to concentrate on sales activities in the branch offices.
Underwriting and collection of consumer credit products and internal
controls over these functions have been improved over the last few years through
the segregation of the sales, underwriting and collection functions. For
example, loan approvals are handled by non-sales personnel located in regional
servicing centers ("RSC") whose primary concern is credit quality, not volume.
Underwriting and collections are supported by automated systems which analyze
the likelihood of delinquency or bankruptcy. The Company believes it is an
industry leader in implementing automated underwriting and collection management
systems which improve its ability to manage credit quality. The Company
considers factors such as the applicant's income, expenses,
2
4
paying habits, value of collateral, if any, and length and stability of
employment, in its effort to determine whether the borrower has the ability to
support the loan.
The objective of the Company's program to automate and centralize the back
office processing of U.S. consumer finance accounts has been to transfer the
record keeping and collection tasks necessary to service accounts from its
branch offices to an RSC. The RSCs were created to provide higher quality
customer service and cost savings resulting from greater efficiency through
economies of scale. By doing so, the Company's branch offices have been able to
focus on sales and marketing efforts. The Company's first RSC began operations
in Illinois in 1987. By the first quarter of 1990, all U.S. branch offices of
HFC were served by RSCs. As a result of efficiencies achieved since that time,
the operations of the servicing centers have been further consolidated, and in
1993 the servicing operation for all HFC originated loans was moved to a single
servicing center located in Illinois. The former western region RSC, which began
operations in the first quarter of 1989, now supports HFC's portfolio
acquisition business and services acquired consumer credit receivables. The
former eastern region RSC, which opened in Virginia in the fourth quarter of
1989, now supports the GM Card exclusively. Additional facilities exist to
provide the Company's bankcard and merchant participation business with
centralized automated support. The Company has also established regional
processing centers ("RPC") in California, Illinois, Maryland, Nevada and Ohio to
perform payment processing, check processing, statement billings and other
administrative tasks for all domestic consumer operations. In the United
Kingdom, HFC Bank plc's Birmingham Business Center provides operating and
administrative functions in centers modeled after the RSCs and RPCs used in the
United States. In 1990, the Canadian operation opened two centers similar to the
United Kingdom center and the Australian operation opened one center.
Over the last few years, the Company has invested in the development of its
bankcard, private-label credit card and consumer and mortgage banking services
which have been an important contributor to the Company's growth. Net income on
an operating basis from these newer businesses increased from $7 million in 1988
to $201 million in 1993. At December 31, 1993, the Company had acquired
intangibles associated with acquisitions of thrift institutions and bankcard
portfolios of approximately $473 million. The Company amortizes purchased credit
card intangibles on a straight-line basis, not to exceed 10 years and other
intangibles over their estimated life not exceeding 15 years. The average
amortization period for the acquired intangibles was approximately 7 years in
1993.
Since 1988 the Company has increased significantly its portfolio of
receivables sold and serviced with limited recourse. This portfolio has grown to
$9.8 billion at year-end 1993 from none at the beginning of 1988. The Company
was the first public issuer of home equity loan asset-backed securities in 1988
and continues to be one of the largest issuers of asset-backed securities. In
1993, including replenishments of certificateholders interests, the Company
securitized and sold $9.4 billion of receivables. In addition, the Company sells
first mortgages with no recourse and retains the servicing and also acquires
servicing rights for first mortgages. This portfolio of first mortgage
receivables serviced with no recourse has grown to $13.9 billion at year-end
1993 from $500 million at year-end 1986. In the third quarter of 1993, the
Company began servicing an unsecured consumer portfolio without recourse which
totaled $1.3 billion at December 31, 1993.
Major consumer business units within the Finance and Banking segment are
described below.
Household Finance Corporation
Household Finance Corporation, the Company's principal business, traces its
origins to a loan office established in 1878. HFC offers a variety of secured
and unsecured lending products to middle-income customers through a network of
432 branch lending offices throughout the United States. This business is
conducted primarily through state-licensed companies.
Home equity loans, and to a lesser extent, unsecured credit products have
been HFC's primary focuses over the last several years as these products are
preferred by consumers due to the flexible nature of the credit relationship,
where the timing and amount of borrowing can be tailored to the borrower's
particular circumstances. These products also are advantageous to HFC due to
lower relative administrative costs and typically have variable rate terms which
move with market rates of interest. Home equity loans and unsecured consumer
credit products in the HFC domestic network represented approximately 30 percent
of total Finance and Banking managed receivables at December 31, 1993. Home
equity loans, representing approximately
3
5
27 percent of total Finance and Banking managed receivables at December 31,
1993, have lower chargeoff rates than the unsecured credit products.
In 1992, HFC launched a new portfolio acquisition business focusing on
open-end and closed-end home equity loan products. In 1993, HFC acquired
approximately 3,800 new accounts aggregating $430 million in such receivables.
In addition, in 1993 HFC acquired the right to service without recourse
approximately 1.1 million accounts aggregating approximately $2.0 billion in
unsecured loans. The Company believes that the portfolio acquisition business
provides an additional source for developing new customer relationships.
Household Retail Services
Household Retail Services ("HRS") is a revolving credit merchant
participation business. HRS purchases and services merchants' revolving charge
accounts. These accounts result from consumer purchases of furniture,
appliances, home improvement products and other durable merchandise, and
generally are without credit recourse to the originating merchant. Loans are
underwritten by HRS based on its credit standards. This business is an important
source of new customers to HFC's direct lending business. HRS became a separate
business unit in 1988 and is currently the second largest provider of
private-label credit cards in the United States. This business is conducted
through state-licensed companies and through Household Bank (Illinois), National
Association.
Household Bank, f.s.b.
Household Bank, f.s.b. (the "Bank"), a federally chartered savings bank,
comprises the majority of the Company's consumer banking and mortgage business.
At December 31, 1993, the Bank's assets totaled $9.1 billion, which includes
$2.2 billion of receivables attributable to the GM Card. Although there was a
slight decline in deposits in 1993 from $6.5 billion at December 31, 1992,
deposits have increased to $6.2 billion at December 31, 1993 from $1.6 billion
at year-end 1986. Much of the strategic growth of the Company has been through
its consumer banking operations, where the Company believes the most efficient
use of capital can be achieved. The Company's consumer banking strategy is
intended to diversify its funding base, provide a stable and relatively low-cost
funding source, create a more competitively leveraged entity and market
financial service products to a different customer base.
In 1988, the Company formalized its consumer banking strategy and launched
its consumer bank development program with a geographic focus on California and
the arc of states from Illinois to Maryland. At December 31, 1993 the Bank had
171 branches in 7 states: California (54); Illinois (44); Ohio (26); Maryland
(24); Virginia (15); Indiana (5); and Kansas (3).
The Bank is a full-service consumer bank, marketing itself as "America's
Family Bank"(R). It operates as a single institution in all states where it is
active, with common marketing programs and processing systems. The Company
believes the Bank is one of the few consumer banks of its size to operate in
this manner.
The Bank's acquisition strategy involves identification of institutions
which complement the existing network in target markets. The ideal acquisition
includes only deposits, customer relationships and branches. Acquired
institutions are quickly integrated into the existing network. The integration
process includes new signage, decor, product offerings, pricing and back office
systems. Since the Bank generally does not need acquired administrative and
executive personnel and facilities, operating expenses of the acquired entity
have been reduced in most acquisitions.
First mortgages are originated in branch locations and loan production
offices by Household Mortgage Services, a division of the Bank, or may be
acquired from correspondents and other wholesale sources. In 1993, Household
Mortgage Services originated approximately $4 billion in first mortgages.
However, refinancing resulting from the record low interest rates caused the
first mortgage portfolio to decline by approximately $1 billion in 1993. At
December 31, 1993, $2 billion, or approximately 28 percent, of the Bank's owned
receivables represented first mortgages for single-family residences.
Adjustable-rate mortgage loans represented approximately 43 percent of this
portfolio. This first mortgage portfolio is well-diversified geographically and
the Bank has originated no negative amortization loans. The weighted average
loan-to-value ratio at the origination of the loan for the entire portfolio was
approximately 70 percent. While emphasizing single-family mortgage lending, the
Bank also provides mortgage loans for various multi-family
4
6
and income-producing properties and makes various types of consumer loans,
including savings account secured loans and secured and unsecured lines of
credit.
Household Credit Services
Household Credit Services is the tradename used for the marketing of
bankcards throughout the United States issued by one of the Company's subsidiary
national credit card banks, the Bank, or one of the other financial institutions
affiliated with Household International. The Company had $8.8 billion of
bankcard receivables owned and serviced with limited recourse at December 31,
1993, up from $207 million at year-end 1986. The Company is one of the top 6
issuers of VISA and MasterCard credit cards in the United States.
The Company strives to build its bankcard business by developing strategic
alliances with industry leaders to effectively create and market general purpose
credit cards to targeted consumers. In accordance with this philosophy, in 1991
the Company established a program with Ameritech Corporation, in 1992
established a program with General Motors Corporation and in 1993 expanded the
relationship through an agreement with General Motors to issue the GM Card from
Vauxhall in the United Kingdom. Also in 1993 the Company announced an alliance
with Charles Schwab & Co. See "1993 Developments." The Company intends to
continue to explore other co-branding relationships of this type with various
entities.
The Company also seeks to build its bankcard business by selectively
purchasing portfolios while managing geographic concentrations. The Company
evaluates bankcard acquisitions utilizing criteria related to strategic fit and
economic value. To assess strategic fit, the Company considers the following:
the composition and behavior of the customer franchise; product pricing
compatibility with the Company's pricing strategies; geographic distribution of
the customer base; and opportunities to add value through improved portfolio
management. To assess economic value, the Company evaluates the risk/return
characteristics of the portfolio, particularly with respect to revenue
generating potential and asset quality, and identifies and quantifies legitimate
opportunities to add value through price changes, more efficient servicing,
improved collections, and credit line management. The Company also applies
traditional financial analysis techniques to evaluate financial returns in
relation to the proposed investment.
The bankcard business is a highly competitive and fragmented industry
currently in the process of consolidation. The Company believes that its
relatively large size in the industry provides substantial competitive
advantages over smaller credit card issuers through reduced operating expense
ratios. The Company's focus is to develop a nationally diverse customer
franchise that contains three to four hubs of concentration while employing
value-based pricing. These hubs are expected to promote operating and marketing
efficiencies without creating overdependence on a single geographic area that
would potentially expose the Company to regional credit risk and usage patterns.
Currently, the Company's largest account base is in California supplemented by
significant hubs in the Midwest and on the East coast.
International Operations
International operations in Canada, the United Kingdom and Australia
accounted for approximately 18 percent of the Finance and Banking owned
receivables at December 31, 1993. In Canada, the Company operates consumer
finance, private-label credit card and consumer banking operations similar to
its businesses in the United States. With 30 offices at December 31, 1993, the
Canadian consumer finance business operates under the HFC tradename. The
Canadian consumer banking business, with 12 branches, operates as Household
Trust Company. At December 31, 1993, the Canadian operations had $1.9 billion of
receivables. In the United Kingdom, the Company owns HFC Bank plc, a fully
licensed United Kingdom bank. HFC Bank plc had 150 branches at December 31, 1993
and approximately $1.2 billion of receivables. In Australia, the Company
operates primarily as a consumer finance company under the HFC tradename. The
Company had 22 offices in Australia at December 31, 1993 and approximately $375
million of consumer receivables.
Credit Insurance
In conjunction with its consumer lending operations and where applicable
laws permit, the Company makes credit life, credit accident and health, term and
specialty insurance products available to its customers. This insurance
generally is directly written by or reinsured with Alexander Hamilton Life
Insurance Company
5
7
of America ("Alexander Hamilton"). Financial results for sales of these types of
products through affiliated operations are reported as part of the Finance and
Banking segment.
Hamilton Investments
Hamilton Investments was acquired by Household International during 1989 as
part of the Bank's acquisition of a savings institution. Hamilton Investments is
a retail-oriented investment banking and brokerage firm. It has 24 branch
offices which are located in the following states: Illinois (9); Wisconsin (6);
Minnesota (5); Michigan (2); and one each in Indiana and Nebraska. In addition,
Hamilton operates through 150 Household Bank locations. In 1992 Hamilton
Investments acquired Craig-Hallum, Inc., a Minneapolis-based investment banking
and brokerage firm with 100 registered representatives and 26,000 customer
accounts. Hamilton Investments is registered as a broker-dealer with the
Securities and Exchange Commission and as a futures commission merchant with the
Commodities Futures Trading Commission. It is a member of the National
Association of Securities Dealers, the New York Stock Exchange, the American
Stock Exchange, the Chicago Stock Exchange and the National Futures Association.
A subsidiary of Hamilton Investments acts as the investment adviser to the
Oberweis Emerging Growth Fund, the Household Personal Portfolios and General
Securities, Inc., mutual funds with assets of approximately $101, $26 and $28
million, respectively, at year-end 1993.
COMMERCIAL OPERATIONS. Approximately 3 percent of the Finance and Banking
managed receivables portfolio at December 31, 1993 consisted of leveraged
leases, other equipment financing, and specialized corporate lending. Products
in these areas include loan and lease financing for aircraft, other
transportation equipment, capital equipment and specialized secured corporate
loans. In addition, the Company invests in term preferred stocks. See also
"Liquidating Commercial Lines" below.
The commercial finance business of the Company has been operated under
Household Commercial Financial Services ("Household Commercial") since 1974. The
industry in which Household Commercial operates is highly competitive and the
Company's position in this market is relatively small.
Commercial loans are underwritten based upon specific criteria by product,
which include the following items: borrower's financial strength; underlying
value of any collateral; ability of the property/business to generate cash flow
and pricing considerations. For financing commitments in excess of $1 million,
the loan request must be approved by an investment committee consisting of
senior management. The financial and operating performance of all borrowers is
monitored and reported to management on an ongoing basis. Additionally, the
conclusions of this monitoring process are reported to the senior management of
the Company on a quarterly basis. A description of Household's operational
policy with respect to commercial receivables is set forth on page 41 of the
1993 Annual Report.
INDIVIDUAL LIFE INSURANCE
The Company's individual life insurance operations are conducted by
Alexander Hamilton Life Insurance Company of America. Alexander Hamilton markets
universal life, term life and annuity products to a higher income category
consumer than that targeted by the consumer lending businesses. Alexander
Hamilton also underwrites credit life, credit accident and health, and other
specialty products sold through the Company's consumer businesses. The Alexander
Hamilton products sold by affiliated entities are included in results of the
Finance and Banking segment.
Alexander Hamilton offers universal life insurance, term life insurance and
annuity products through approximately 16,300 independent agents and 1,790
licensed consumer finance and banking employees. These individual products are
sold in all states, with the largest concentration in 10 states (California,
Florida, Illinois, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania
and Wisconsin) accounting for 63 percent of premium income in 1993. The Company
also sells credit insurance to customers of banks and retail merchants which are
not affiliated with Household International. Alexander Hamilton has been
assigned a claims-paying ability rating of "AA" from three nationally recognized
statistical rating organizations.
6
8
LIQUIDATING COMMERCIAL LINES
As of December 31, 1991, Household International ceased offering certain
commercial product lines. The decision to withdraw from these product lines was
made to enable Household International to concentrate its resources on
operations it believes offer the opportunity for more consistent financial
returns relative to risks assumed. These liquidating commercial lines are:
speculative real estate secured lending; highly leveraged acquisition finance
transactions; subordinated corporate lending; higher-risk equipment loans and
leases and other commercial assets. These discontinued product lines are managed
by Household Commercial separately from continuing commercial lines. The Company
intends to liquidate this portfolio over time in a manner that will maximize the
value of these assets and believes that, depending on the economic environment,
it should be able to liquidate these portfolios over the next several years.
Liquidating commercial assets at December 31, 1993 consisted of the
following (in millions):
Receivables:
Commercial real estate................................................... $ 297.1
Highly leveraged acquisition finance and other........................... 892.8
--------
Receivables owned.......................................................... 1,189.9
Accrued finance charges.................................................... 9.2
Reserve for credit losses.................................................. (172.9)
--------
Total receivables owned, net............................................... 1,026.2
Real estate owned.......................................................... 256.6
Other assets............................................................... 272.9
--------
Total liquidating commercial assets.............................. $1,555.7
========
INVESTMENT SECURITIES
Investment securities of the Company are principally held by Alexander
Hamilton. At December 31, 1993, Alexander Hamilton had $6.4 billion or
approximately 73 percent of the Company's $8.8 billion total investment
portfolio. The composition of this portfolio is set forth on pages 59 and 60 of
the 1993 Annual Report.
Investment securities are also held by the Bank, Household Global Funding,
Inc., the United States holding company for Household's operations in Canada and
the United Kingdom, and Household Commercial and represent approximately 14, 6
and 4 percent, respectively, of the Company's total investment portfolio.
FUNDING RESOURCES
As a financial services organization, Household International must have
access to funds at competitive rates, terms and conditions to be successful.
Household International and its subsidiaries fund their operations in the global
capital markets, primarily through the use of commercial paper, medium-term
notes and long-term debt, and have used financial instruments to hedge their
currency and interest-rate exposure. Four nationally recognized statistical
rating organizations currently assign investment grade ratings to the debt and
preferred stock issued by the Company and its subsidiaries. In addition, these
organizations rated the commercial paper of HFC in their highest rating
category.
The securitization and sale of consumer receivables is an important source
of liquidity for HFC and the Bank. During 1993 the Company's subsidiaries
securitized and sold, including replenishments of certificateholder interests,
approximately $9.4 billion of home equity, merchant participation and bankcard
receivables compared to $4.8 billion in 1992.
To diversify its funding base and add more stability to funding costs, the
Company developed a retail deposit base in recent years through its consumer
banking business. Customer deposits have grown from $3.9 billion at year-end
1988 to $7.5 billion at December 31, 1993. The Company intends to continue to
expand this deposit base through selective acquisitions of savings institutions.
See "Finance and Banking-- Household Bank, f.s.b.".
7
9
REGULATION AND COMPETITION
REGULATION. The Company's businesses are subject to various regulations
covering their conduct. Generally, HFC's consumer branch lending offices are
regulated by legislation and licensed in those jurisdictions where they operate.
Such licenses have limited terms but are renewable, and are revocable for cause.
In addition to licensing provisions, statutes in some jurisdictions may provide
that a loan not exceed a certain period of time, or may place limits on the size
or interest rate of the loan. HFC's sales finance business is also subject to
regulatory legislation in certain jurisdictions which, among other things, may
limit the interest rates or fees which may be charged or which may inhibit HFC's
ability to collect or foreclose upon delinquent loans. All of Household
International's consumer finance operations are subject to federal laws relating
to discrimination in credit extensions, use of credit reports, disclosure of
credit terms, and correction of billing errors.
The Bank is chartered by the Office of Thrift Supervision ("OTS") and is a
member of the Federal Home Loan Bank System. The Bank has its customer deposit
accounts insured for up to $100,000 per insured depositor by the Federal Deposit
Insurance Corporation ("FDIC"), for which the Bank is assessed a fee. The Bank
is subject to examination and supervision by the OTS and FDIC and to federal
regulations governing such matters as general investment authority, acquisitions
of financial institutions, transactions with affiliates, establishment of branch
offices, subsidiaries' investments and activities, and restrictions on dividend
payments to Household International. The Bank is also subject to regulatory
requirements setting forth minimum capital and liquidity levels. In addition,
regulations of the Federal Reserve Board require the Bank to maintain non-
interest bearing reserves against the Bank's transaction accounts (primarily NOW
and money-market checking accounts) and non-personal time deposits. Because of
its ownership of the Bank, Household International is a savings and loan holding
company subject to reporting and other regulations of the OTS. Household
International has agreed with the OTS to maintain the regulatory capital of the
Bank at certain specified levels. This agreement between Household International
and the OTS was amended in 1989 to reflect regulatory changes in the methodology
of calculating the Bank's regulatory capital.
Household Bank, National Association, Household Bank (Illinois), National
Association, Household Bank (Nevada), National Association and Household Bank
(SB), National Association are chartered by the Comptroller of the Currency and
are members of the Federal Reserve System. The deposit accounts of these
national banks are insured by the FDIC. National banks are generally subject to
the same type of regulatory supervision and restrictions as the Bank, although
these national banks only engage in credit card operations.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), enacted in December 1991, significantly expanded the regulatory and
enforcement powers of federal banking regulators, in particular the FDIC. FDICIA
also created additional reporting, disclosure and independent auditing
requirements, changed FDIC insurance premiums from flat amounts to a new system
of risk-based assessments, and placed limits on the ability of depository
institutions to acquire brokered deposits.
Under FDICIA, there are five tiers of capital measurement for regulatory
purposes ranging from "Well-Capitalized" to "Critically Undercapitalized".
FDICIA directs banking regulators to take increasingly strong corrective steps,
based on the capital tier of any subject insured depository institution, to
cause such bank to achieve and maintain capital adequacy. Even if an insured
depository institution is adequately capitalized, the banking regulators are
authorized to apply corrective measures if the insured depository institution is
determined to be in an unsafe or unsound condition or engaging in an unsafe or
unsound activity. FDICIA grants the banking regulators broad powers to require
undercapitalized institutions to adopt and implement a capital restoration plan
and to restrict or prohibit a number of activities, including the payment of
cash dividends, which may impair or threaten the capital adequacy of the insured
depository institution. FDICIA also expanded the grounds upon which a receiver
or conservator may be appointed for an insured depository institution. Pursuant
to FDICIA, federal banking regulatory agencies have proposed new safety and
soundness standards governing operational and managerial activities of insured
depository institutions and their holding companies, regarding internal
controls, loan documentation, credit underwriting, interest rate exposure, asset
growth and compensation.
8
10
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA"), among other things, provides generally that, upon the default of any
insured institution, the FDIC may assess an affiliated insured depository
institution for the estimated losses incurred by the FDIC. Specifically, FIRREA
provides that a depository institution insured by the FDIC can be held liable
for any loss incurred by, or reasonably expected to be incurred by, the FDIC in
connection with (i) the default of a commonly controlled FDIC-insured depository
institution or (ii) any assistance provided by the FDIC to a commonly controlled
FDIC-insured depository institution in danger of default. "In danger of default"
is defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance.
As an insurance company, Alexander Hamilton is subject to regulatory
supervision under the laws of the states in which it operates. Regulations vary
from state to state but generally cover licensing of insurance companies,
premium rates, dividend restrictions, types of insurance that may be sold,
permissible investments, policy reserve requirements, and insurance marketing
practices.
COMPETITION. The consumer credit industry is highly fragmented, with
thousands of banks, thrifts and other financial institutions competing in the
United States alone. The industry has been consolidating in recent years, and
the Company expects this consolidation to continue. The Company believes it has
positioned itself to compete effectively and benefit from this consolidation
because of its centralized distribution, processing and marketing capabilities,
and advanced technology to support these activities.
The financial services industry is highly competitive, and the Company's
financial services businesses compete with a number of institutions that extend
credit to consumers and businesses, some of which are larger than the Company.
The Company competes not only with other finance companies, banks, and savings
and loan companies, but also with credit unions and retailers. Alexander
Hamilton competes with many other life insurance companies offering similar
products.
ITEM 2. PROPERTIES.
Household International has operations in 35 states in the United States,
10 provinces in Canada, 6 states and 2 territories in Australia and in the
United Kingdom with principal facilities located in Anaheim, California;
Chesapeake, Virginia; Chicago, Illinois; Elmhurst, Illinois; Farmington Hills,
Michigan; Hanover, Maryland; Las Vegas, Nevada; North York, Ontario, Canada;
Pomona, California; Prospect Heights, Illinois; St. Leonards, New South Wales,
Australia; Salinas, California; Windsor, Berkshire, United Kingdom; Wood Dale,
Illinois; and Worthington, Ohio.
Substantially all branch offices, bank branches, divisional offices,
corporate offices, RPC and RSC space is operated under lease with the exception
of the principal executive offices of Household International in Prospect
Heights, Illinois, the headquarters building for HFC Bank plc in the United
Kingdom, Alexander Hamilton's headquarters building in Farmington Hills,
Michigan, and administration buildings in Northbrook, Illinois and Salinas,
California. An additional administrative facility is currently under
construction in Las Vegas, Nevada. The Company believes that such properties are
in good condition and are adequate to meet Household International's current and
reasonably anticipated needs.
Household International has, and will continue to, invest in property and
technological improvements to achieve greater efficiencies in the marketing,
servicing and production of its loan products. During 1993 the Company invested
$110 million in capital expenditures, compared to $90 million in 1992.
Automobiles, office equipment and real estate properties owned and in use by the
Company are not significant in relation to the total assets of the Company.
ITEM 3. LEGAL PROCEEDINGS.
The Company and its subsidiaries are parties to various legal proceedings,
including product liability and environmental claims, resulting from ordinary
business activities related to its current operations and/or former businesses
which were managed as independent subsidiaries of the Company. Certain of these
actions are or purport to be class actions seeking damages in very large
amounts. Due to the uncertainties in litigation and other factors, no assurance
can be given that the Company or its subsidiaries will ultimately prevail in
each instance. However, for all litigation involving the Company and/or its
subsidiaries, the Company believes that amounts, if any, that may ultimately be
paid by the Company as damages in any such proceedings will not have a material
adverse effect on the consolidated financial position of the Company.
9
11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT.
The following information on executive officers of Household International
is included pursuant to Item 401(b) of Regulation S-K. Information with respect
to Mr. Clark is incorporated herein by reference to "Election of Household
Directors--Information Regarding Nominees" in Household International's
definitive Proxy Statement for its 1994 Annual Meeting of Stockholders scheduled
to be held May 11, 1994 (the "1994 Proxy Statement"). References herein to
"Household" refer to Household International, Inc. for all periods after June
26, 1981 (the date of the corporate restructuring by which Household
International became the holding company of Household Finance Corporation) and
to Household Finance Corporation on and before such date.
Robert F. Elliott, age 53, was appointed Group Executive-Office of the
President in 1993. Prior thereto he was the Group Executive-U.S. Consumer
Finance and Australia. Mr. Elliott joined Household in 1964 and has served in
various capacities in the Company's consumer finance business during his career
with Household.
Joseph W. Saunders, age 48, was appointed Group Executive-Office of the
President in 1993, having previously served as Group Executive-U.S. BankCard and
Canada: He is also President of the Company's subsidiary, Household Bank,
National Association. Prior to joining Household in 1985, Mr. Saunders was Vice
President-Credit Card Operations of Bank of America.
Antonia Shusta, age 44, was appointed to her present position as Group
Executive-Office of the President in 1993. Ms. Shusta joined Household in 1988
as Group Executive-Mortgage Banking and Acquisitions and most recently served as
Group Executive-U.S. Consumer and Mortgage Banking and the United Kingdom. Prior
to joining Household, she was employed with Citicorp for 16 years, most recently
as division executive for its Northern Latin American operation.
Glen O. Fick, age 47, was appointed Group Executive-Commercial Finance and
President of Household Commercial in 1991. Mr. Fick joined Household in 1971 and
has served in various capacities in the Company's treasury, corporate finance
and investor relations departments, as well as the specialty commercial services
division of its commercial finance business.
Gary D. Gilmer, age 43, was appointed President and Chief Executive Officer
of Alexander Hamilton in 1993. Mr. Gilmer joined Household in 1972 and has
served in various capacities within the consumer finance and banking divisions,
most recently as President of Household Retail Services.
Richard H. Headlee, age 63, has been Chairman of the Board of Alexander
Hamilton since 1988. Mr. Headlee joined Alexander Hamilton in 1970 and served as
its Chief Executive Officer from 1972 to 1993.
Gaylen N. Larson, age 54, is Group Vice President of Household. Mr. Larson
has previously served Household as Chief Accounting Officer, Controller and
Group Vice President-Finance. Mr. Larson was a partner of the accounting firm of
Deloitte & Touche prior to joining Household in 1979.
David B. Barany, age 50, was appointed to his present position as Vice
President-Chief Information Officer of Household in 1988. Mr. Barany joined
Household in 1985 as Vice President/Controller of Household's financial services
business. Prior to joining Household, he was employed by Four Phase Systems,
Inc., a subsidiary of Motorola, Inc., as Vice President/Finance.
John W. Blenke, age 38, is Assistant General Counsel and Secretary of
Household. Mr. Blenke joined Household in 1989 as Corporate Finance Counsel, was
promoted to Assistant General Counsel-Securities & Corporate Law and Assistant
Secretary in 1991 and was appointed Secretary in 1993. Prior to joining
Household, Mr. Blenke was employed with a subsidiary of Transamerica
Corporation.
Michael A. DeLuca, age 45, joined Household in 1985 as Director of Tax
Planning and Tax Counsel and was appointed to his present position as Vice
President-Taxes in 1988.
10
12
Colin P. Kelly, age 51, is Vice President-Human Resources of Household. Mr.
Kelly joined Household in 1965 and has served in various management positions,
most recently as Senior Vice President-Human Resources of Household's financial
services business. Mr. Kelly was appointed to his present position in 1988.
Michael H. Morgan, age 39, was appointed to his present position as Vice
President-Corporate Communications in 1989. Mr. Morgan joined Household in 1984,
and has served in various capacities within the planning and analysis and
investor relations areas. From 1978 until joining Household, Mr. Morgan was
employed with Arthur Andersen & Co.
Randall L. Raup, age 40, was appointed Vice President-Planning in 1992,
having most recently served as Vice President-Financial Control Treasury. Since
joining Household in 1984, Mr. Raup has held positions in the treasury control,
corporate reporting and internal audit areas. Prior to joining Household, he
served as an auditor with Esmark, Inc. and KPMG Peat Marwick.
Kenneth H. Robin, age 47, was appointed Vice President-General Counsel of
Household in 1993, having previously served as Assistant General
Counsel -- Financial Services. Prior to joining Household in 1989, Mr. Robin was
employed with Citicorp from 1977 to 1989, most recently as a vice president
responsible for legal policies for its operations in 23 countries in the
Caribbean, Central America and South America.
David A. Schoenholz, age 42, was appointed Vice President-Chief Accounting
Officer of Household in 1993, Vice President in 1989 and Controller in 1987. He
joined Household in 1985 as Director-Internal Audit. Prior to joining Household,
Mr. Schoenholz was employed with The Commodore Corporation, a manufacturer of
mobile homes, as Vice President/Controller from 1983 to 1985.
Charles R. Wallace, age 45, was appointed Corporate Controller of Household
in 1993, having previously served as Executive Vice President-Chief Operating
Officer of Hamilton Investments since 1989. Prior to joining Household, Mr.
Wallace was employed with Clayton Brown & Associates, Inc. and Ernst & Young.
There are no family relationships among the executive officers of the
Company. The term of office of each executive officer is at the discretion of
the Board of Directors.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The number of record holders of Household International's Common Stock, as
of March 16, 1994, was 14,679. Additional information required by this Item is
incorporated by reference to page 32 of Household International's 1993 Annual
Report.
ITEM 6. SELECTED FINANCIAL DATA.
Information required by this Item is incorporated by reference to page 34
of Household International's 1993 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Information required by this Item is incorporated by reference to pages 38
through 51 of Household International's 1993 Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial Statements of Household International and subsidiaries meeting
the requirements of Regulation S-X, and supplementary financial information
specified by Item 302 of Regulation S-K, is incorporated by reference to pages
35 through 37 and pages 52 through 80 of Household International's 1993 Annual
Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
11
13
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this Item is incorporated by reference to "Election
of Household Directors-- Information Regarding Nominees" and "Shares of
Household Stock Beneficially Owned by Directors and Executive Officers" in
Household International's 1994 Proxy Statement. Also, information on certain
Executive Officers appears in Part I of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this Item is incorporated by reference to
"Remuneration of Executive Officers", "Savings--Stock Ownership and Pension
Plans", "Incentive and Stock Option Plans", and "Directors' Compensation" in
Household International's 1994 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this Item is incorporated by reference to "Shares
of Household Stock Beneficially Owned by Directors and Executive Officers" and
"Security Ownership of Certain Beneficial Owners" in Household International's
1994 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this Item is incorporated by reference to
"Remuneration of Executive Officers" in Household International's 1994 Proxy
Statement.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) FINANCIAL STATEMENTS.
The following financial statements, together with the opinion thereon of
Arthur Andersen & Co., dated February 1, 1994, appearing on pages 35 through 37
and pages 52 through 80 of Household International's 1993 Annual Report are
incorporated herein by reference. An opinion of Arthur Andersen & Co. is
included in this Annual Report on Form 10-K.
Household International, Inc. and Subsidiaries:
Statements of Income for the Three Years Ended December 31, 1993.
Balance Sheets, December 31, 1993 and 1992.
Statements of Cash Flows for the Three Years Ended December 31, 1993.
Statements of Changes in Preferred Stock and Common Shareholders' Equity
for the Three Years Ended December 31, 1993.
Business Segment Data.
Notes to Financial Statements.
Independent Auditors' Report.
Selected Quarterly Financial Data (Unaudited).
(B) REPORTS ON FORM 8-K.
During the three months ended December 31, 1993, the Company did not file
with the Securities and Exchange Commission any Current Report on Form 8-K.
12
14
(C) EXHIBITS.
2 Reorganization and Distribution Agreement dated as of March 15, 1989 by
and among Household International, Eljer Industries, Inc., Schwitzer,
Inc., and Scotsman Industries, Inc. (incorporated by reference to Exhibit
2 of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989).
3(i) Restated Certificate of Incorporation of Household International, as
amended (incorporated by reference to Exhibit 3(i) of the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
3(ii) Bylaws of Household International, as amended April 13, 1993
(incorporated by reference to Exhibit 3(ii) of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993).
4(a) Rights Agreement dated as of August 14, 1984, between the Company and
Harris Trust and Savings Bank, as Rights Agent, as supplemented and
amended (incorporated by reference to Exhibit 4 of the Company's Current
Report on Form 8-K dated August 28, 1984, Exhibit 4(a) of the Company's
Current Report on Form 8-K dated January 14, 1986, and Exhibit 4 of the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1988).
4(b) The principal amount of debt outstanding under each instrument defining
the rights of holders of long-term senior and senior subordinated debt of
Household International and its subsidiaries does not exceed 10 percent
of the total assets of Household International and its subsidiaries on a
consolidated basis. Household International agrees to furnish to the
Securities and Exchange Commission, upon request, a copy of each
instrument defining the rights of holders of long-term senior and senior
subordinated debt of Household International and its subsidiaries.
10.1 Household International Corporate Executive Bonus Plan.
10.2 1976 Employee Stock Option Plan, as amended (incorporated by reference to
Exhibit 10(b) of the Company's Annual Report on Form 10-K for the fiscal
year ended on December 31, 1991).
10.3 Household International Long-Term Executive Incentive Compensation Plan,
as amended (incorporated by reference to Exhibit 10(c) of the Company's
Annual Report on Form 10-K for the fiscal year ended on December 31,
1991).
10.4 Forms of stock option and restricted stock rights agreements under the
Household International Long-Term Executive Incentive Compensation Plan.
10.5 Household International Directors' Retirement Income Plan.
10.6 Form of restricted stock compensation agreement for the Company's
non-management directors (incorporated by reference to Exhibit 10(f) of
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989).
10.7 Executive Employment Agreement between the Company and D. C. Clark
(incorporated by reference to Exhibit 10.7 of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993).
10.8 Executive Employment Agreement between the Company and A. Shusta
(incorporated by reference to Exhibit 10.9 of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993).
10.9 Executive Employment Agreement between the Company and J. W. Saunders.
10.10 Executive Employment Agreement between the Company and R. F. Elliott.
10.11 Executive Employment Agreement between Alexander Hamilton and R. H.
Headlee (incorporated by reference to Exhibit 10.11 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993).
12 Statement of Computation of Ratio of Earnings to Fixed Charges and to
Combined Fixed Charges and Preferred Stock Dividends.
13
15
13 Material incorporated by reference to the Company's 1993 Annual Report to
Shareholders.
21 List of Household International subsidiaries.
23 Consent of Arthur Andersen & Co., Certified Public Accountants.
99(a) Annual Report on Form 11-K for the Household International Tax Reduction
Investment Plan (to be filed by amendment).
Copies of exhibits referred to above will be furnished to stockholders upon
written request at a cost of fifteen cents per page. Requests should be made to
Household International, Inc., 2700 Sanders Road, Prospect Heights, Illinois
60070, Attention: Office of the Secretary.
(D) SCHEDULES.
Report of Independent Public Accountants.
III--Condensed Financial Information of Registrant.
VIII--Valuation and Qualifying Accounts.
X--Supplementary Statement of Income Information.
14
16
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, HOUSEHOLD INTERNATIONAL, INC. HAS DULY CAUSED THIS REPORT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
HOUSEHOLD INTERNATIONAL, INC.
Dated: March 28, 1994
By /s/ D. C. CLARK
------------------------------------
D. C. Clark, Chairman of the Board
and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF HOUSEHOLD
INTERNATIONAL, INC. AND IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE
--------------------
/s/ D. C. CLARK Chairman of the Board, }
- --------------------------------------------- Chief Executive Officer }
(D. C. Clark) and Director }
}
/s/ J. C. BIEGLER Director }
- --------------------------------------------- }
(J. C. Biegler) }
}
/s/ R. J. DARNALL Director }
- --------------------------------------------- }
(R. J. Darnall) }
} March 28, 1994
/s/ G. G. DILLON Director }
- --------------------------------------------- }
(G. G. Dillon) }
}
/s/ M. J. EVANS Director }
- --------------------------------------------- }
(M. J. Evans) }
}
/s/ C. F. FREIDHEIM, JR. Director }
- --------------------------------------------- }
(C. F. Freidheim, Jr.) }
15
17
SIGNATURE TITLE DATE
--------------------
/s/ L. E. LEVY Director }
- --------------------------------------------- }
(L. E. Levy) }
}
/s/ J. D. NICHOLS Director }
- --------------------------------------------- }
(J. D. Nichols) }
}
/s/ G. P. OSLER Director }
- --------------------------------------------- }
(G. P. Osler) }
}
/s/ A. E. RASMUSSEN Director }
- --------------------------------------------- } March 28, 1994
(A. E. Rasmussen) }
}
/s/ L. W. SULLIVAN, M.D. Director }
- --------------------------------------------- }
(L. W. Sullivan, M.D.) }
}
/s/ R. C. TOWER Director }
- --------------------------------------------- }
(R. C. Tower) }
}
/s/ D. A. SCHOENHOLZ Vice President-- }
- --------------------------------------------- Chief Accounting Officer }
(D. A. Schoenholz) (A Principal Financial }
Officer) }
16
18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Household International, Inc.:
We have audited in accordance with generally accepted auditing standards,
the financial statements included in Household International, Inc.'s 1993 annual
report to shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated February 1, 1994. Our audits were made for the
purpose of forming an opinion on those statements taken as a whole. The
schedules listed in Item 14(d) are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Chicago, Illinois
February 1, 1994
F-1
19
SCHEDULE III
HOUSEHOLD INTERNATIONAL, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDENSED STATEMENTS OF INCOME
(ALL DOLLAR AMOUNTS EXCEPT PER SHARE DATA ARE STATED IN MILLIONS.)
YEAR ENDED DECEMBER 31
------------------------------
1993 1992 1991
------ ------ ------
Equity in income of subsidiaries............................... $326.7 $221.2 $161.9
Finance and other income....................................... 36.1 26.1 41.7
------ ------ ------
Total income.............................................. 362.8 247.3 203.6
------ ------ ------
Costs and expenses:
Administrative............................................ 41.8 20.2 17.5
Provision for credit losses............................... 19.1 26.6 5.4
Interest.................................................. 25.2 35.7 41.5
Income tax benefits....................................... (22.0) (26.1) (10.6)
------ ------ ------
Total expenses............................................ 64.1 56.4 53.8
------ ------ ------
Net income..................................................... $298.7 $190.9 $149.8
====== ====== ======
Earnings per common share*:
Fully diluted................................................ $ 2.85 $ 1.93 $ 1.55
====== ====== ======
Primary...................................................... $ 2.91 $ 1.97 $ 1.57
====== ====== ======
- ---------------
* Amounts have been restated to reflect the two-for-one stock split in the form
of a 100 percent stock dividend, effective October 15, 1993.
See accompanying notes to condensed financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-2
20
SCHEDULE III (CONTINUED)
HOUSEHOLD INTERNATIONAL, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDENSED BALANCE SHEETS
(IN MILLIONS)
DECEMBER 31
----------------------
1993 1992
-------- --------
Assets:
Investments in and advances from subsidiaries..................... $2,534.2 $2,207.1
Finance receivables............................................... 98.4 102.7
Other assets...................................................... 356.2 229.7
-------- --------
Total assets...................................................... $2,988.8 $2,539.5
======== ========
Liabilities and shareholders' equity:
Bank borrowings................................................... $ 153.8 $ 63.1
Senior debt (with original maturities over one year).............. 200.0 300.0
-------- --------
Total debt........................................................ 353.8 363.1
Other liabilities................................................. 217.4 294.8
Convertible preferred stock subject to mandatory redemption....... 19.3 36.0
Preferred stock................................................... 320.0 300.0
Common shareholders' equity....................................... 2,078.3 1,545.6
-------- --------
Total liabilities and shareholders' equity........................ $2,988.8 $2,539.5
======== ========
See accompanying notes to condensed financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-3
21
SCHEDULE III (CONTINUED)
HOUSEHOLD INTERNATIONAL, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
YEAR ENDED DECEMBER 31
-------------------------------
1993 1992 1991
------- ------- -------
CASH PROVIDED BY (USED IN) OPERATIONS......................... $(127.9) $ 28.8 $ 110.2
------- ------- -------
INVESTMENT IN OPERATIONS
Dividends from subsidiaries................................... 100.0 175.3 93.0
Investment in and advances to/from subsidiaries, net.......... (153.3) (229.3) (155.1)
Investment securities sold (purchased), net................... 16.0 (16.0) --
Finance receivables originated, net of collections............ (17.2) 16.3 (18.7)
Purchase of property and equipment............................ (.2) (.6) (14.2)
------- ------- -------
Cash decrease from investment in operations................... (54.7) (54.3) (95.0)
------- ------- -------
FINANCING AND CAPITAL TRANSACTIONS
Net increase (decrease) in bank borrowings.................... 90.7 (133.5) (31.7)
Retirement of debt............................................ (100.0) -- (157.6)
Issuance of debt.............................................. -- 200.0 100.0
Dividends to shareholders..................................... (141.3) (124.6) (115.0)
Common stock issued........................................... 313.3 33.0 134.5
Preferred stock issued........................................ 100.0 50.0 55.0
Preferred stock repurchased................................... (80.0) -- --
------- ------- -------
Cash increase (decrease) from financing and capital
transactions................................................ 182.7 24.9 (14.8)
------- ------- -------
Increase (decrease) in cash................................... .1 (.6) .4
Cash at January 1............................................. 1.6 2.2 1.8
------- ------- -------
CASH AT DECEMBER 31........................................... $ 1.7 $ 1.6 $ 2.2
======= ======= =======
See accompanying notes to condensed financial statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-4
22
SCHEDULE III (CONTINUED)
HOUSEHOLD INTERNATIONAL, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS OF REGISTRANT
1. FINANCE RECEIVABLES
Receivables at December 31 consisted of the following (in millions):
1993 1992
------ ------
Other unsecured........................................ $128.8 $120.4
Credit loss reserve.................................... (30.4) (17.7)
------ ------
Total........................................ $ 98.4 $102.7
====== ======
2. SENIOR DEBT (WITH ORIGINAL MATURITIES OVER ONE YEAR)
Debt at December 31 consisted of the following (in millions):
1993 1992
------ ------
7.00% notes; due 1993.................................. -- $100.0
5.75% notes; due 1994.................................. $100.0 100.0
7.35% notes; due 1995.................................. 100.0 100.0
------ ------
Total........................................ $200.0 $300.0
====== ======
3. COMMITMENTS
Under an agreement with the Office of Thrift Supervision, the Company will
maintain the net worth of Household Bank, f.s.b., at a level consistent with
certain minimum net worth requirements.
The Company has guaranteed payment of all debt obligations issued
subsequent to 1989 (excluding deposits) of Household Financial Corporation
Limited ("HFCL"), a Canadian subsidiary. The amount of guaranteed debt
outstanding at HFCL on December 31, 1993 was approximately $853 million.
The Company has also guaranteed payment of all debt obligations (excluding
certain deposits) of Household International (U.K.) Limited ("HIUK"). The amount
of guaranteed debt outstanding at HIUK on December 31, 1993 was approximately
$936 million.
The Company has guaranteed payment of a $62 million deposit held by one of
its operating subsidiaries on behalf of another operating subsidiary.
4. CONVERTIBLE PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
At December 31, 1993 and 1992, the Company had outstanding 385,439 and
720,415 shares, respectively, of the $6.25 cumulative convertible preferred
stock subject to mandatory redemption provisions (the "$6.25 stock"). Each share
of the $6.25 stock is convertible, at the option of its holder, into 4.654
shares of common stock, is entitled to one vote, as are common shares, and has a
liquidation value of $50 per share. Holders of such stock are entitled to
payment before any capital distribution is made to common shareholders. The
Company is required to call for redemption, on an annual basis through 2010, a
minimum of 4 percent to a maximum of 8 percent of the 3.5 million originally
issued shares and is required to redeem all of the remaining unconverted and
unredeemed shares in 2011. The Company called for redemption 8 percent of the
originally issued shares in both 1993 and 1992. The Company redeemed 2,323 and
4,711 shares for $50 per share in 1993
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-5
23
SCHEDULE III (CONTINUED)
HOUSEHOLD INTERNATIONAL, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS OF REGISTRANT -- (CONTINUED)
and 1992, respectively. The remaining shares called, but not redeemed for cash,
were converted into common stock. If certain conditions are met, the Company may
redeem the entire $6.25 stock issue at $50 per share plus accrued and unpaid
dividends. At December 31, 1993, 1.8 million shares of common stock were
reserved for conversion of the $6.25 stock.
5. COMMON STOCK
On September 14, 1993 the Board of Directors of the Company declared a
two-for-one stock split in the form of a 100 percent stock dividend effective
October 15, 1993. The stock split resulted in an increase in common stock and a
reduction in additional paid-in capital of $56.6 million. All share and per
share data, except as otherwise indicated, have been restated to give
retroactive effect to the stock split.
On March 8, 1993 the Company sold 4,025,000 shares of common stock at
$68.88 per share, on a pre-split basis. Net proceeds of approximately $269
million were used for general corporate purposes, including investments in the
Company's subsidiaries and reduction of short-term debt. Assuming the additional
shares of common stock had been issued on January 1, 1993 and the proceeds
resulted in after-tax interest savings from reduction of short-term debt since
that date, earnings per share for 1993 would have been $2.82 per share on a
fully diluted basis.
Common stock at December 31 consisted of the following (millions of
shares):
1993 1992
----- ----
Authorized -- $1 par value........................................... 150.0 67.5
===== ====
Issued............................................................... 113.3 55.5
===== ====
Outstanding.......................................................... 94.4 41.4
===== ====
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-6
24
SCHEDULE III (CONTINUED)
HOUSEHOLD INTERNATIONAL, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS OF REGISTRANT -- (CONTINUED)
6. PREFERRED STOCK
Preferred stock at December 31 consisted of the following (in millions):
1993 1992
------ ------
Fixed rate and enhanced rate preferred stock:
9.50% Preferred stock
Series 1989-A, 3,000,000 depositary shares(1)................. $ 75.0 $ 75.0
9.50% Preferred stock
Series 1991-A, 5,500,000 depositary shares(2)................. 55.0 55.0
8.25% Preferred stock
Series 1992-A, 2,000,000 depositary shares(3)................. 50.0 50.0
7.35% Preferred stock
Series 1993-A, 4,000,000 depositary shares(3)................. 100.0 --
11.25% Enhanced rate preferred stock
4,500,000 depositary shares(2)................................ -- 45.0
Flexible rate auction preferred stock:
Series A, 350,000 shares......................................... -- 35.0
Series B, 400,000 shares......................................... 40.0 40.0
------ ------
Total preferred stock.............................................. $320.0 $300.0
====== ======
- ---------------
(1) Depositary share represents 1/4 share of preferred stock.
(2) Depositary share represents 1/10 share of preferred stock.
(3) Depositary share represents 1/40 share of preferred stock.
Dividends on the 9.50 percent preferred stock, Series 1989-A, are
cumulative and payable quarterly. The Company may, at its option, redeem in
whole or in part the 9.50 percent preferred stock, Series 1989-A, at $26.19 per
depositary share beginning on November 9, 1994 and at amounts declining to $25
per depositary share thereafter, plus accrued and unpaid dividends.
Dividends on the 9.50 percent preferred stock, Series 1991-A, are
cumulative and payable quarterly. The Company may, at its option, redeem in
whole or in part the 9.50 percent preferred stock, Series 1991-A, on any date
after August 13, 1996 for $10 per depositary share plus accrued and unpaid
dividends.
Dividends on the 8.25 percent preferred stock, Series 1992-A, are
cumulative and payable quarterly. The Company may, at its option, redeem in
whole or in part the 8.25 percent preferred stock, Series 1992-A, on any date
after October 15, 2002 for $25 per depositary share plus accrued and unpaid
dividends.
Dividends on the 7.35 percent preferred stock, Series 1993-A, are
cumulative and payable quarterly. The Company may, at its option, redeem in
whole or in part the 7.35 percent preferred stock, Series 1993-A, on any date
after October 15, 1998 for $25 per depositary share plus accrued and unpaid
dividends.
On October 1, 1993 the Company redeemed 450,000 shares (equivalent to
4,500,000 depositary shares) of the 11.25 percent Enhanced Rate Cumulative
Preferred Stock for $102.50 per share plus accrued and unpaid dividends.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-7
25
SCHEDULE III (CONTINUED)
HOUSEHOLD INTERNATIONAL, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS OF REGISTRANT -- (CONTINUED)
On July 13, 1993 the Company redeemed 350,000 shares of the Flexible Rate
Auction Preferred Stock ("Flex APS"), Series A, for $100 per share plus accrued
and unpaid dividends.
Dividends on the Flex APS are cumulative and payable when and as declared
by the Board of Directors of the Company. The initial dividend rate on the Flex
APS, Series B, is 9.50 percent. The initial rate on the Flex APS, Series B,
extends through July 15, 1995, with subsequent dividend rates determined in
accordance with a formula based on orders placed in a dutch auction generally
held every 49 days. The Company may, at its option, redeem in whole or in part
the Flex APS, Series B, for $100 per share plus accrued and unpaid dividends
beginning on July 15, 1995.
Each preferred stock issue ranks equally with the $6.25 stock and has a
liquidation value of $100 per share except for the 8.25 percent preferred stock,
Series 1992-A, and the 7.35 percent preferred stock, Series 1993-A, each of
which have a liquidation value of $1,000 per share. Holders of all issues of
preferred stock are entitled to payment before any capital distribution is made
to common shareholders. The Company is authorized to issue cumulative
nonconvertible preferred stock in one or more series in an amount not to exceed
$620 million, and currently has $320 million of such preferred stock
outstanding.
7. INCOME TAXES
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS No. 109"). As
a result of implementing FAS No. 109, retained earnings for all periods between
1986 and 1992 have been reduced by approximately $63 million from amounts
previously reported. The statements of income for those periods subsequent to
December 31, 1986 have not been restated as the impact of FAS No. 109 on net
income is immaterial to any such year and in total.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-8
26
SCHEDULE VIII
HOUSEHOLD INTERNATIONAL, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1993 1992 1991
------- ------- -------
(IN MILLIONS)
Insurance reserves applicable to receivables:
Policy:
Balance at January 1............................... $ 61.3 $ 83.1 $ 118.2
Earned premiums.................................... (134.2) (138.6) (149.3)
Net premiums written and reinsurance assumed....... 131.7 127.8 122.7
Other items........................................ .4 (11.0) (8.5)
------- ------- -------
Balance at December 31............................. 59.2 61.3 83.1
------- ------- -------
Claims:
Balance at January 1............................... 52.4 50.6 27.5
Provision for claims............................... 74.1 77.3 91.6
Benefits paid...................................... (67.9) (71.7) (69.6)
Other items........................................ (.3) (3.8) 1.1
------- ------- -------
Balance at December 31............................. 58.3 52.4 50.6
------- ------- -------
Total insurance reserves at December 31............ $ 117.5 $ 113.7 $ 133.7
======= ======= =======
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-9
27
SCHEDULE X
HOUSEHOLD INTERNATIONAL, INC.
SUPPLEMENTARY STATEMENT OF INCOME INFORMATION
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COLUMN B
---------------------------
CHARGED TO COSTS
COLUMN A AND EXPENSES
- ------------------------------------------------------------------ ---------------------------
ITEM 1993 1992 1991
- ------------------------------------------------------------------ ------ ----- ------
(IN MILLIONS)
Depreciation and amortization of intangible assets and similar
deferral:
Amortization of insurance policy acquisition costs.............. $ 67.8 $30.3 $ 36.8
Amortization of acquired intangibles............................ 81.0 64.0 64.1
------ ----- ------
Total........................................................ $148.8 $94.3 $100.9
====== ===== ======
Advertising costs................................................. * $13.6 $ 22.2
====== ===== ======
- ---------------
* Represents less than 1 percent of total revenues as reported in the related
consolidated statements of income.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-10
28
EXHIBIT INDEX
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGES
- ----------- ---------------------------------------------------------------------- ------------
2 Reorganization and Distribution Agreement dated as of March 15, 1989
by and among Household International, Eljer Industries, Inc.,
Schwitzer, Inc., and Scotsman Industries, Inc. (incorporated by
reference to Exhibit 2 of the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1989).
3(i) Restated Certificate of Incorporation of Household International, as
amended (incorporated by reference to Exhibit 3(i) of the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1993).
3(ii) Bylaws of Household International, as amended April 13, 1993
(incorporated by reference to Exhibit 3(ii) of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993).
4(a) Rights Agreement dated as of August 14, 1984, between the Company and
Harris Trust and Savings Bank, as Rights Agent, as supplemented and
amended (incorporated by reference to Exhibit 4 of the Company's
Current Report on Form 8-K dated August 28, 1984, Exhibit 4(a) of the
Company's Current Report on Form 8-K dated January 14, 1986, and
Exhibit 4 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1988).
4(b) The principal amount of debt outstanding under each instrument
defining the rights of holders of long-term senior and senior
subordinated debt of Household International and its subsidiaries does
not exceed 10 percent of the total assets of Household International
and its subsidiaries on a consolidated basis. Household International
agrees to furnish to the Securities and Exchange Commission, upon
request, a copy of each instrument defining the rights of holders of
long-term senior and senior subordinated debt of Household
International and its subsidiaries.
10.1 Household International Corporate Executive Bonus Plan.
10.2 1976 Employee Stock Option Plan, as amended (incorporated by reference
to Exhibit 10(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended on December 31, 1991).
10.3 Household International Long-Term Executive Incentive Compensation
Plan, as amended (incorporated by reference to Exhibit 10(c) of the
Company's Annual Report on Form 10-K for the fiscal year ended on
December 31, 1991).
10.4 Forms of stock option and restricted stock rights agreements under the
Household International Long-Term Executive Incentive Compensation
Plan.
10.5 Household International Directors' Retirement Income Plan.
10.6 Form of restricted stock compensation agreement for the Company's
non-management directors (incorporated by reference to Exhibit 10(f)
of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989).
10.7 Executive Employment Agreement between the Company and D. C. Clark
(incorporated by reference to Exhibit 10.7 of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993).
10.8 Executive Employment Agreement between the Company and A. Shusta
(incorporated by reference to Exhibit 10.9 of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993).
10.9 Executive Employment Agreement between the Company and J. W. Saunders.
10.10 Executive Employment Agreement between the Company and R. F. Elliott.
29
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGES
- ----------- ---------------------------------------------------------------------- ------------
10.11 Executive Employment Agreement between Alexander Hamilton and R. H.
Headlee (incorporated by reference to Exhibit 10.11 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993).
12 Statement of Computation of Ratio of Earnings to Fixed Charges and to
Combined Fixed Charges and Preferred Stock Dividends.
13 Material incorporated by reference to the Company's 1993 Annual Report
to Shareholders.
21 List of Household International subsidiaries.
23 Consent of Arthur Andersen & Co., Certified Public Accountants.
99(a) Annual Report on Form 11-K for the Household International Tax
Reduction Investment Plan (to be filed by amendment).