1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994.
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/ / 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
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Commission file number 33-50351.
HOUSEHOLD INTERNATIONAL NETHERLANDS B.V.
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(Exact name of registrant as specified in its charter)
The Netherlands Not Applicable
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(State or other jurisdiction (I.R.S.Employer
incorporation or organization) Identification No.)
Hoekenrode 6
1102 BR
Amsterdam, Netherlands
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(Address of principal executive offices)
Registrant's telephone number,
including area code: 011-31-20-6298033
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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
6.00% Senior Notes Due March 15, 1999
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 / /
At April 30, 1994, there were 400 shares of the registrant's
voting securities outstanding, all of which are owned by
Household Overseas Limited.
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PART 1. FINANCIAL INFORMATION
1. Financial Statements
Household International Netherlands B.V.
STATEMENTS OF INCOME
- --------------------
In thousands.
- --------------------------------------------------------------
Three months ended March 31 1994 1993
- --------------------------------------------------------------
Interest income $2,718.5 -
Interest expense 2,591.5 -
- --------------------------------------------------------------
Net interest margin 127.0 -
General and administrative expenses 8.5 -
- --------------------------------------------------------------
Net income before income taxes 118.5 -
Income taxes 47.4 -
- --------------------------------------------------------------
Net income $ 71.1 -
==============================================================
See notes to condensed financial statements.
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Household International Netherlands B.V.
BALANCE SHEETS
- --------------
In thousands.
- ---------------------------------------------------------------
March 31, December 31,
1994 1993
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ASSETS
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Cash $ 10.5 $ 14.7
Accrued interest receivable 4,103.6 1,461.1
Intercompany loan 297,534.3 124,050.9
Deferred issuance costs 1,486.8 660.7
- ---------------------------------------------------------------
Total assets $303,135.2 $126,187.4
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LIABILITIES AND SHAREHOLDER'S EQUITY
- ------------------------------------
Accrued interest payable and
accrued liabilities $ 3,981.7 $ 1,414.4
Senior notes payable 299,021.1 124,711.7
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Total liabilities 303,002.8 126,126.1
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Shareholder's equity:
Common stock .4 .4
Additional paid-in capital 19.6 19.6
Retained earnings 112.4 41.3
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Total shareholder's equity 132.4 61.3
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Total liabilities and
shareholder's equity $303,135.2 $126,187.4
===============================================================
See notes to condensed financial statements.
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Household International Netherlands B.V.
STATEMENTS OF CASH FLOWS
- ------------------------
In thousands.
- --------------------------------------------------------------
Three months ended March 31 1994 1993
- --------------------------------------------------------------
CASH PROVIDED BY OPERATIONS
Net income $ 71.1 -
Adjustments to reconcile net income
to net cash provided by operations:
Accrued interest receivable (2,642.5) -
Arrangement fee 1,592.5 -
Deferred issuance costs (875.0) -
Accrued interest payable
and accrued liabilities 2,567.2 -
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Cash provided by operations 713.3 -
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INVESTMENT IN OPERATIONS
Intercompany loan originated (175,000.0) -
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Cash decrease from investments
in operations (175,000.0) -
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FINANCING TRANSACTIONS
Senior notes payable issued 174,282.5 -
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Cash increase from
financing transactions 174,282.5 -
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Decrease in cash (4.2) -
CASH AT JANUARY 1 14.7 $20.0
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Cash at March 31 $ 10.5 $20.0
==============================================================
See notes to condensed financial statements.
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NOTES TO CONDENSED FINANCIAL STATEMENTS
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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.
Accounting policies used in preparation of the quarterly
condensed financial statements are consistent with accounting
policies described in the notes to financial statements contained
in the Company's Annual Report on Form 10-K for its fiscal year
ended December 31, 1993. The information furnished herein
reflects all adjustments which are, in the opinion of management,
necessary for a fair statement of the results for the interim
periods. All such adjustments are of a normal recurring nature.
1. EXPLANATION ADDED TO FINANCIAL STATEMENTS PREPARED FOR USE IN
THE UNITED STATES
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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 had no impact on
either net income or shareholder's equity in 1994 or 1993,
were as follows:
A. Deferral of loan arrangement fees totaling $2,580,000.
These amounts have been netted against the intercompany
loans and are being amortized over the expected terms of
the loans. The amortization was included in interest
income in the accompanying statements of income.
B. Deferral of senior notes payable issuance costs totaling
$1,562,500. These costs have been recorded as an asset
and are being amortized over the expected terms of the
notes. The amortization was included in interest expense
in the accompanying statements of income.
C. Deferral of senior notes payable discounts totaling
$1,017,500. These discounts have been netted against the
senior notes payable and are being amortized over the
expected terms of the notes. The amortization was
included in interest expense in the accompanying
statements of income.
2. INTERCOMPANY LOANS
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In thousands.
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March 31, December 31,
1994 1993
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Due from HFC Bank plc $300,000.0 $125,000.0
Unamortized arrangement fee (2,465.7) (949.1)
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Total intercompany loans $297,534.3 $124,050.9
===========================================================
In March 1994 the Company granted a long-term loan of $175
million to HFC Bank. The loan bears an annual interest rate of
6.175 percent and matures on March 15, 1999. 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.
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3. SENIOR NOTES PAYABLE
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In thousands.
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March 31, December 31,
1994 1993
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Notes payable, 5.25%
due October 15, 1998 $125,000.0 $125,000.0
Notes payable, 6.00%
due March 15, 1999 175,000.0 -
Unamortized discount (978.9) (288.3)
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Total senior notes payable $299,021.1 $124,711.7
===========================================================
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.
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2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
-------------------------------------------------
In March 1994 the Company issued $175 million of 6.00
percent Senior Notes due March 15, 1999 (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 the 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 annual rate of 6.175 percent. The Company anticipates
that it will have no other source of income other than a lending
relationship with HFC Bank.
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PART II
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
4(a) Indenture dated as of September 9, 1993, between
the Company, Household and BankAmerica National
Trust Company, as Trustee (incorporated by reference
to Exhibit 4(b) of the Company's Registration
Statement on Form S-3 (No. 33-50351), filed on
September 21, 1993).
10(a) Loan Agreement dated March 2, 1994 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 Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1994).
(b) Reports on Form 8-K.
During the three months ended March 31, 1994, the Company
filed no Reports on Form 8-K.
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SIGNATURES
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Pursuant to the requirements 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: May 13, 1994 By: /s/ John W. Blenke
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President, Chairman of the Board
and Chief Executive Officer
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EXHIBIT INDEX
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EXHIBIT
NO. DESCRIPTION
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4(a) Indenture dated as of September 9, 1993, between the
Company, Household and BankAmerica National Trust
Company, as Trustee (incorporated by reference to
Exhibit 4(b) of the Company's Registration Statement
on Form S-3 (No. 33-50351), filed on September 21,
1993).
10(a) Loan Agreement dated March 2, 1994 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 Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1994).
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