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 (Fee Required)
For the fiscal year ended December 31, 1993.
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from _______ to _______.
Commission file number 33-50351.
HOUSEHOLD INTERNATIONAL NETHERLANDS B.V.
(Exact name of registrant as specified in its charter)
The Netherlands Not Applicable
(State or other jurisdiction (I.R.S.Employer
incorporation or organization) Identification No.)
Hoekenrode 6
1102 BR
Amsterdam, Netherlands
(Address of principal executive offices)
Registrant's Telephone number, including
area code: 011-31-20-6298033
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
5.25% Senior Notes Due October 15, 1998
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. / X /
At March 25, 1994, there were 400 shares of the registrants
voting securities outstanding, all of which are owned by
Household Overseas Limited.
2
HOUSEHOLD INTERNATIONAL NETHERLANDS B.V.
PART I.
Item 1. Business.
Household International Netherlands B.V. (the "Company") was
organized under the Dutch Civil Code on September 14, 1990. All
of the outstanding voting securities of the Company are owned by
Household Overseas Limited, which is a wholly-owned subsidiary of
Household International (U.K.) Limited ("HIUK"). The Company was
created solely to act as a non-operating special purpose
financing subsidiary of HIUK. The Company will only enter into
agreements or arrangements to obtain funds for, or to provide
financing options to, HFC Bank plc ("HFC Bank"), also a wholly-
owned subsidiary of HIUK. The Company will not engage in any
other type of business activity.
Item 2. Properties.
The Company does not and will not have any material physical
properties.
Item 3. Legal Proceedings.
There is no litigation pending against the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
All voting securities of the Company are owned by Household
Overseas Limited.
3
Item 6. Selected Financial Data.
In thousands. 1993 1992 1991 1990*
- ----------------------------------------------------------------
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31:
Net interest margin $93.9 - - -
General and administrative
expenses 13.7 $ 3.1 $ 3.0 $ 0.7
Income taxes 32.1 - - -
- -----------------------------------------------------------------
Net income (loss) $48.1 $(3.1) $(3.0) $(0.7)
=================================================================
BALANCE SHEET DATA AS OF DECEMBER 31:
Total assets $126,187.4 $20.0 $20.0 $20.0
Senior notes payable 124,711.7 - - -
Shareholder's equity 61.3 13.2 16.3 19.3
- -----------------------------------------------------------------
*Household International Netherlands B.V. was incorporated on
September 14, 1990. Therefore, there is no operating data
for 1989.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
In October, 1993 the Company issued $125 million of 5.25%
Senior Notes Due October 15, 1998 (the "Notes"). The Notes are
unconditionally guaranteed, as to the payment of principal and
interest, by Household International, Inc., a Delaware
Corporation ("Household International"). Household International
may, at any time, assume all the obligations of the Company with
respect to Notes without the consent of any holder of the Notes.
Household International files periodic reports under the
Securities Exchange Act of 1934, as amended, with the Securities
and Exchange Commission (File No. 1-8198), including audited
financial statements which include the financial results of HIUK
and its subsidiaries, including the Company.
The Company loaned the proceeds of the above referenced
Notes to HFC Bank pursuant to an intercompany loan agreement at
the semi-annual rate of 5.50%. The Company anticipates that it
will have no other source of income other than a lending
relationship with HFC Bank.
4
Item 8. Financial Statements and Supplementary Data.
STATEMENTS OF OPERATIONS
In thousands.
- --------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991
- --------------------------------------------------------------
Interest income $1,499.5 - -
Interest expense 1,405.6 - -
- --------------------------------------------------------------
Net interest margin 93.9 - -
General and administrative expenses 13.7 $ 3.1 $ 3.0
- --------------------------------------------------------------
Net income (loss) before income taxes 80.2 (3.1) (3.0)
Income taxes 32.1 - -
- --------------------------------------------------------------
Net income (loss) $ 48.1 $(3.1) $(3.0)
==============================================================
The accompanying notes are an integral part of these financial
statements.
5
BALANCE SHEETS
In thousands.
- ---------------------------------------------------------------
DECEMBER 31 1993 1992
- ---------------------------------------------------------------
ASSETS
Cash $ 14.7 $20.0
Accrued interest receivable 1,461.1 -
Intercompany loan 124,050.9 -
Deferred issuance costs 660.7 -
- ---------------------------------------------------------------
Total assets $126,187.4 $20.0
===============================================================
LIABILITIES AND SHAREHOLDER'S EQUITY
Accrued interest payable and
accrued liabilities $ 1,414.4 $ 6.8
Senior notes payable 124,711.7 0
- ---------------------------------------------------------------
Total liabilities 126,126.1 6.8
Shareholder's equity 61.3 13.2
- ---------------------------------------------------------------
Total liabilities and shareholder's equity $126,187.4 $20.0
===============================================================
The accompanying notes are an integral part of these financial
statements.
6
STATEMENTS OF CASH FLOWS
In thousands.
- ---------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991
- ---------------------------------------------------------------
CASH PROVIDED BY OPERATIONS
Net income (loss) $ 48.1 $(3.1) $(3.0)
Adjustments to reconcile net income
to net cash provided by operations:
Accrued interest receivable (1,461.1) - -
Arrangement fee 987.5 - -
Deferred issuance costs (687.5) - -
Accrued interest payable
and accrued liabilities 1,407.7 3.1 3.0
- ---------------------------------------------------------------
Cash provided by operations 294.7 0.0 0.0
- ---------------------------------------------------------------
INVESTMENT IN OPERATIONS
Intercompany loan originated (125,000.0) - -
- ---------------------------------------------------------------
Cash decrease from investments
in operations (125,000.0) - -
- ---------------------------------------------------------------
FINANCING TRANSACTIONS
Senior notes payable issued 124,700.0 - -
- ---------------------------------------------------------------
Cash increase from
financing transactions 124,700.0 - -
- ---------------------------------------------------------------
Decrease in cash (5.3) 0.0 0.0
CASH AT JANUARY 1 20.0 20.0 20.0
- ---------------------------------------------------------------
Cash at December 31 $ 14.7 $20.0 $20.0
===============================================================
The accompanying notes are an integral part of these financial
statements.
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STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
All dollar amounts are stated in thousands.
- ---------------------------------------------------------------
Issued
Number and Accumu-
of Paid-in lated
Shares Capital Deficit Total
- ---------------------------------------------------------------
Balance at December 31, 1990 400 $20.0 $ (.7) $19.3
Net loss - - (3.0) (3.0)
- ---------------------------------------------------------------
Balance at December 31, 1991 400 20.0 (3.7) 16.3
Net loss - - (3.1) (3.1)
- ---------------------------------------------------------------
Balance at December 31, 1992 400 20.0 (6.8) 13.2
Net income - - 48.1 48.1
- ---------------------------------------------------------------
Balance at December 31, 1993 400 $20.0 $41.3 $61.3
===============================================================
The accompanying notes are an integral part of these financial
statements.
Notes to Financial Statements
Household International Netherlands B.V. (the "Company") was
organized under the Dutch Civil Code on September 14, 1990. All
of the outstanding voting securities of the company are owned by
Household Overseas Limited, which is a wholly-owned subsidiary of
Household International (U.K.) Limited ("HIUK"). The ultimate
parent company is Household International, Inc. ("Household
International"), a Delaware corporation. The Company was
organized solely to serve as a source of financing, directly or
indirectly, for HFC Bank plc ("HFC Bank"), also a wholly-owned
subsidiary of HIUK. The Company's functional currency is the
U.S. dollar, as the majority of the Company's activities are
denominated in U.S. dollars.
1. EXPLANATION ADDED TO FINANCIAL STATEMENTS PREPARED FOR USE IN
THE UNITED STATES
The Company maintains its accounts in accordance with
accounting principles and practices employed by enterprises
in the Netherlands. The accompanying financial statements
reflect certain adjustments not recorded on the Company's
books, to present these statements in accordance with
generally accepted accounting principles of the U.S., and
therefore differ from the statements prepared for use in the
Netherlands. These adjustments, which only affect 1993 and
had no impact on either net income for the year ended
December 31, 1993 or shareholder's equity at that date, were
as follows:
A. Deferral of a $987,500 loan arrangement fee. This amount
has been netted against the intercompany loan and is being
amortized over the expected term of the loan. The
amortization was included in interest income in the
accompanying statements of operations.
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B. Deferral of $687,500 in senior notes payable issuance
costs. These costs have been recorded as an asset and are
being amortized over the expected term of the notes. The
amortization was included in interest expense in the
accompanying statements of operations.
C. Deferral of $300,000 in senior notes payable discount.
The discount has been netted against the senior notes
payable and is being amortized over the expected term of
the notes. The amortization was included in interest
expense in the accompanying statements of operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Debt discount and deferred issuance costs - Debt discount and
deferred issuance costs are amortized using a method which
approximates the effective yield method over the expected
term of the related senior notes payable.
Income taxes - The Company has obtained a ruling from the tax
authorities of the Netherlands. Under this ruling a certain
minimum taxable income is to be reported during the year.
Income tax expense as included in the accompanying statements
of operations has been calculated in accordance with this tax
ruling.
3. INTERCOMPANY LOANS
In thousands.
---------------------------------------------------------
AT DECEMBER 31 1993 1992
---------------------------------------------------------
Due from HFC Bank plc $125,000.0 -
Unamortized arrangement fee (949.1) -
---------------------------------------------------------
Total $124,050.9 -
=========================================================
The Company granted a long-term loan to HFC Bank. The loan
bears an annual interest rate of 5.50 percent and matures on
October 15, 1998. HFC Bank has entered into an agreement
("arrangement fee") to reimburse the Company for the discount
on the senior notes payable and issuance costs. This
arrangement fee is netted against the principal balance and
is amortized into interest income using a method which
approximates the effective yield method over the expected
term of the loan.
4. SENIOR NOTES PAYABLE
In thousands.
---------------------------------------------------------
AT DECEMBER 31 1993 1992
---------------------------------------------------------
Notes payable, 5.25%
due October 15, 1998 $125,000.0 -
Unamortized discounted (288.3) -
---------------------------------------------------------
Total notes payable $124,711.7 -
=========================================================
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The senior notes payable, which were issued in the U.S., are
guaranteed as to the payment of principal and interest until
maturity by Household International.
5. SHAREHOLDER'S EQUITY
The Company is authorized to issue 2,000 shares of common
stock with a stated par value of 100 Netherland guilders. At
December 31, 1993 and 1992, 400 shares were issued and
outstanding.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Household International Netherlands B.V.:
We have audited the accompanying balance sheets of Household
International Netherlands B.V. (a Netherlands corporation) as of
December 31, 1993 and 1992, and the related statements of
operations, changes in shareholder's equity and cash flows for
each of the three years in the period ended December 31, 1993.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Household International Netherlands B.V. as of December 31,
1993 and 1992, and the results of its operations and its cash
flows for each of the three years in the period ended December
31, 1993 in conformity with generally accepted accounting
principles (see Note 1).
ARTHUR ANDERSEN & CO.
Chicago, Illinois,
February 25, 1994
11
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The following individuals are executive officers and/or
directors of the Company:
John W. Blenke, age 38, is President, Chairman of the Board,
Chief Executive Officer and Secretary of the Company since March
1994. Mr. Blenke was elected Secretary in October 1993. Mr.
Blenke is also currently an Assistant General Counsel and
Secretary of Household International, having been appointed
Secretary in 1993. Mr. Blenke joined Household International in
1989 as Corporate Finance Counsel, was promoted to Assistant
General Counsel-Securities & Corporate Law and Assistant
Secretary in 1991. Prior to joining Household, Mr. Blenke was
employed with a subsidiary of Transamerica Corporation.
Joseph P. Hoff, age 43, was appointed the Vice President,
Treasurer and Chief Financial Officer, as well as a Director of
the Company on September 8, 1993. Mr. Hoff is also currently an
Assistant Treasurer of Household International and a Vice
President and Assistant Treasurer of Household Finance
Corporation, also a subsidiary of Household, positions which he
has held since 1989. Prior to 1989, Mr. Hoff was a Senior Vice
President of Household Commercial Financial Services.
David A. Schoenholz, age 42, was appointed Vice President,
Controller and Chief Accounting Officer of the Company on
September 8, 1993. Mr. Schoenholz is also currently the Vice
President-Chief Accounting Officer of Household International,
having been so appointed in 1993. Mr. Schoenholz was appointed
Vice President in 1989 and Controller in 1987. He joined
Household International in 1985 as Director-Internal Audit.
Prior to joining Household International, Mr. Schoenholz was
employed by the Commodore Corporation, a manufacturer of mobile
homes, as Vice President/Controller from 1983 to 1985.
ABN-AMRO Trust Company (Nederland) B.V. was apppointed a
Director of the Company on September 8, 1993, and is a limited
liability company incorporated on August 27, 1991 in Amsterdam,
Netherlands. ABN-AMRO Trust Company (Nederland) B.V. and its
subsidiaries serve as director to approximately 1,000 Netherlands
incorporated holding and finance companies. ABN-AMRO Trust
Company (Nederland) B.V. acts as a manager, administrator and
advisor with respect to various financial and commercial
activities of companies located or operating in the Netherlands.
Item 11. Executive Compensation.
None of the officers of the Company receive compensation for
serving as officers of the Company.
12
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Not applicable.
Item 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) Financial Statements.
The following financial statements, together with the report
of Arthur Andersen & Co., dated February 25, 1994, appearing
on pages 4 through 10 hereof.
Household International Netherlands B.V.:
Statements of Operations 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 Shareholder's Equity for the Three
Years Ended December 31, 1993.
Notes to Financial Statements.
(b) Reports on Form 8-K.
During the three months ended December 31, 1993, the Company
filed no Reports on Form 8-K.
(c) Exhibits.
3(a) Articles of Incorporation of the Company.
4(a) Indenture dated as of September 9, 1993, between
the Company, Household and The First National
Bank of Boston, as Trustee (incorporated by reference
to Exhibit 4(a) of the Company's Registration
Statement on Form S-3 (No. 33-50351), filed on
September 21, 1993).
10(a) Loan Agreement dated October 21, 1993 between
the Company and HFC Bank plc.
12(a) Statement on the Computation of Ratio of Earnings
to Fixed Charges of the Company.
13
12(b) Statement on the Computation of Ratio of Earnings to
Fixed Charges and to Combined Fixed Charges and
Preferred Stock Dividends of Household International
(incorporated by reference to Exhibit 12 of Household
International's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993).
23 Consent of Independent Public Accountants
(d) Schedules.
None.
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Household International
Netherlands B.V. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
HOUSEHOLD INTERNATIONAL NETHERLANDS B.V.
Dated: March 31, 1994
By: /s/ John W. Blenke
--------------------------------
President, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of Household International Netherlands B.V. and
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ John W. Blenke President, March 31, 1994
- ----------------------- Chairman of the Board
(John W. Blenke) and Chief Executive
Officer
/s/ Joseph W. Hoff Vice President, March 31, 1994
- ----------------------- Treasurer, Chief
(Joseph W. Hoff) Financial Officer
and Director
/s/ David A. Schoenholz Vice President, March 31, 1994
- ----------------------- Controller and
(David A. Schoenholz) Chief Accounting
Officer
Director March 31, 1994
- -----------------------
ABN-AMRO Trust Company
(Nederland) B.V.
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
3(a) Articles of Incorporation of the Company.
4(a) Indenture dated as of September 9, 1993, between
the Company, Household and The First National
Bank of Boston, as Trustee (incorporated by reference
to Exhibit 4(a) of the Company's Registration
Statement on Form S-3 (No. 33-50351), filed on
September 21, 1993).
10(a) Loan Agreement dated October 21, 1993 between
the Company and HFC Bank plc.
12(a) Statement on the Computation of Ratio of Earnings
to Fixed Charges of the Company.
12(b) Statement on the Computation of Ratio of Earnings to
Fixed Charges and to Combined Fixed Charges and
Preferred Stock Dividends of Household International
(incorporated by reference to Exhibit 12 of Household
International's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993).
23 Consent of Independent Public Accountants