Press Release
Household International Certifies Accuracy of SEC Filings in 2002
Restates Certain Prior Period Accounts
Prospect Heights, IL, August 14, 2002 -- Household International, Inc. (NYSE:HI) announced today that the company's chairman and chief executive officer, William F. Aldinger, and its president and chief operating officer, David A. Schoenholz (as the company's principal financial officer), had certified under oath to the accuracy of the company's most recent SEC filings. Copies of the signed certifications are available on the company's website at www.household.com.
Commenting on the company's recent results, Aldinger said, "Household's results for the year-to-date have been fueled by strong demand for our loan products throughout our businesses. Our loan underwriting approach continues to be conservative in these times of economic uncertainty, and we remain committed to strong reserve and capital levels. The company's operating performance in the first half of the year has been very strong, and our businesses are well-positioned for the remainder of the year."
Aldinger continued, "Household has undergone a thorough review of our financial statements and related accounting policies in conjunction with our new auditors, KPMG LLP. As part of this review, we have determined to adopt certain revisions to the accounting treatment of our Mastercard/Visa co-branding and affinity credit card relationships, and a credit card marketing agreement with a third party. We are restating earnings to reflect the cumulative impact of the adjusted items over the period in which the adjustments are applicable as determined in consultation with our new auditors at KPMG. The restatement associated with these matters has the effect of reducing second quarter earnings per share by $.01, or approximately 1 percent, and EPS for the six months ended June 30, 2002 by $.06, or 2.8 percent, versus what was reported in the company's earnings release of July 17, 2002. These changes are not expected to have any significant impact on our future results of operations."
The cumulative restatement relates to the following periods:
| Net Income Effect of Restatement |
Dollar amounts in millions. |
% Change from Prior Year |
| Restatement Amount* |
% |
As Reported |
As Restated |
|||||||
Second quarter, 2002 |
$ (6.1) |
(1.2)% |
17.0% |
20.0% |
||||||
First quarter, 2002 |
(20.0) |
(3.9) |
18.3 |
21.0 |
||||||
Six months ended |
(26.1) |
(2.5) |
17.7 |
20.5 |
||||||
Full year 2001 |
(75.9) |
(3.9) |
13.1 |
13.3 |
||||||
Full year 2000 |
(70.1) |
(4.1) |
14.4 |
14.2 |
||||||
Full year 1999 |
(58.1) |
(3.9) |
28.5 |
28.3 |
||||||
Years 1994 -1998 |
(155.8) |
(3.8) |
||||||||
Total effect |
$(386.0) |
|||||||||
*Represents the difference between Net Income as originally reported and as restated for the respective periods.
Additional detail is available in a supplemental schedule attached to this press release.
Aldinger further said, "The restatement, while disappointing, is small relative to the results we have reported over the period 1993 through 2001, as well as to the earnings growth trend that we have recorded. As restated, our earnings over the affected period have grown by a compounded rate of 22 percent, which is the same as the growth rate as originally reported. Further, these changes have no effect on our business model, cash flow or our on-going operations."
In the second quarter Household also announced that it was adopting the fair value method of accounting for stock options and employee stock purchase plans, commencing in 2002. The impact of this change is not expected to have a significant effect on the company's future results of operations.
Household has filed a restated Form 10-Q for the period ended March 31, 2002 and included as an exhibit to its Form 10-Q for the period ended June 30, 2002, a restated Form 10-K for the year-ended December 31, 2001 containing unaudited financial information. Household expects KPMG to complete the audit of the restated financials contained in the Form 10-K on or about August 31, 2002. Pending the completion of the audit, Household has suspended the issuance of unsecured debt and equity securities under its applicable shelf registrations. In any case, no significant issuances had been planned until September, 2002.
Household will hold a conference call today, August 14, 2002, at 8:30 a.m. Eastern Daylight Time, to answer questions from the investment community. The call will be available live on our website at www.household.com, and will be available for replay until August 28, 2002. A telephonic replay will also be available beginning today at noon Eastern Daylight Time through midnight, August 16, 2002 at 719-457-0820, confirmation code 619668.
About Household
Household's businesses are leading providers of consumer loan, credit cards, auto finance and credit insurance products in the United States, United Kingdom and Canada. In the United States, Household's largest business, founded in 1878, operates under the two oldest and most recognized names in consumer finance - HFC and Beneficial. Household is also one of the nation's largest issuers of private label and general purpose credit cards, including The GM Card® and the AFL-CIO's Union Plus® card. For more information, visit the company's web site at www.household.com.
This press release contains certain estimates and projections that may be forward-looking in nature, as defined by the Private Securities Litigation Reform Act of 1995. A variety of factors may cause actual results to differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference are discussed in Household International's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the SEC.
CONTACTS:
Craig A. Streem, Vice President - Corporate Relations and Communications: 847 564-6053,
Celeste M. Murphy, Director - Investor Relations: (847)564-7568, or
Megan Hayden, Manager - Corporate Communications: (847)291-2101
of Household International.
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