EX-99 2 factbkfinal.htm FINANCIAL AND STATISTICAL REVIEW 2000 HI FINANCIAL AND STATISTICAL REVIEW 2000

Household International, Inc.

FINANCIAL AND STATISTICAL REVIEW
2000

 

Household International, Inc. is a leading provider of consumer lending, credit cards, auto finance and credit insurance products in the United States, United Kingdom and Canada. Household has served the financial needs of middle-market consumers since 1878. Today, Household is:

 
  • The largest independent consumer finance company in the United States.
    		•
  • The second largest third-party, private label credit card issuer in the United States.
    		•
  • The nation's third largest non-captive provider of non-prime auto finance.
    		•
  • The eighth largest issuer of MasterCard and VISA credit cards in the United States.
    		•
  • The largest provider of tax refund anticipation loans in the United States.
    		•
  • The nation's third largest credit insurance company.
    		•
  • One of the United Kingdom's largest pure consumer finance providers, a leading provider of retail finance and the fifth largest issuer of credit cards.

    • COVER PAGE
    ********************************************************************************

    INTRODUCTION

    Household International, Inc.'s ("Household" or "HI") 2000 Financial and Statistical Review is provided to assist investors, including financial analysts, portfolio managers and interested debt and equity holders in better understanding Household's legal entities, capital structure and operations.

    Unaudited financial statements and selected summary and statistical data are provided for Household and its primary legal entities. A thorough review of Household should also include a review of its annual report, as well as the Annual Reports to the Securities and Exchange Commission on Form 10-K of both Household International, Inc. and Household Finance Corporation. In addition, Household Bank, f.s.b. submits an Annual Report to the Office of Thrift Supervision on Form 10-K.

    This Financial and Statistical Review is not connected with any sale, solicitation or offer to sell or buy any security of Household or any of its affiliates. It is not a representation, prospectus or circular with respect to any stock or security of any corporation, and is not part of, or incorporated by reference in, any such document.

    Investor Inquiries

    Security analysts, investors and investment professionals should direct questions regarding Household and its subsidiaries to:

    Craig A. Streem
    Vice President - Investor Relations
    847.564.6053
    castreem@household.com

    Celeste M. Murphy
    Director - Investor Relations
    847.564.7568
    crmurphy@household.com

    Inquiries regarding commercial paper, domestic and foreign medium-term notes, senior and senior subordinated debt, preferred securities and thrift notes of Household and certain of its subsidiaries, including Household Finance Corporation and Household Bank, f.s.b., should be directed to:

    Bruce A. Foster
    Vice President - Money and Capital Markets
    847.564.6278
    bafoster@household.com

    Table of Contents

    Financial Highlights

    2

    Business Product Lines

    4

    Products by Legal Entity

    5

    Financial Management

    6

    Capital Structure

    7

    2000 - Key Financing Transactions

    8

    Key Guarantees and Other Credit Support

    8

    Debt Issuers

    9

    Consolidating Information

    10

    Quarterly Income Data

    12

    Parent Company Information

    14

    Household Finance Corporation

    16

    Household Bank, f.s.b.

    26

    Household Global Funding, Inc.

    32

    Glossary of Terms

    39

    Corporate Information

    40

    Page 1

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    Page 2

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    FINANCIAL HIGHLIGHTS

    Household International, Inc. and Subsidiaries

    In millions, except per share data and ratios.

    Statement of Income Data - Year Ended December 31 (1)

    2000

    1999

    1998

    1997

    1996

    Net interest margin and other revenues

    $

    8,032.0

    $

    6,722.5

    $

    6,380.0

    $

    6,036.2

    $

    5,451.6

    Provision for credit losses on owned receivables

    2,116.9

    1,716.4

    1,516.8

    1,493.0

    1,144.2

    Operating expenses

    3,042.9

    2,527.3

    2,672.3

    2,884.8

    2,714.7

    Policyholders' benefits

    261.7

    258.1

    238.2

    255.9

    311.9

    Merger and integration related costs

    -

    -

    1,000.0

    -

    -

    Income taxes

    909.8

    734.3

    428.6

    462.2

    461.2

    Net income

    $

    1,700.7

    $

    1,486.4

    $

    524.1

    $

    940.3

    $

    819.6

    Operating net income (2)

    $

    1,700.7

    $

    1,486.4

    $

    1,156.6

    $

    940.3

    $

    819.6

    Per Common Share Data (1)

    Basic earnings

    3.59

    $

    3.10

    $

    1.04

    $

    1.97

    $

    1.76

    Diluted earnings

    3.55

    3.07

    1.03

    1.93

    1.73

    Diluted operating earnings (2)

    3.55

    3.07

    2.30

    1.93

    1.73

    Dividends declared

    .74

    .68

    .60

    .54

    .49

    Book value

    16.88

    13.79

    12.88

    12.81

    9.96

    Average number of common and

    Common equivalent shares outstanding

    476.2

    481.8

    496.4

    479.1

    462.3

    Balance Sheet Data at December 31 (1)

    Total assets:

    Owned

    $

    76,706.3

    $

    60,749.4

    $

    52,892.7

    $

    46,817.0

    $

    45,332.0

    Managed

    96,955.8

    80,188.3

    72,594.6

    71,295.5

    66,183.2

    Managed receivables: (3)

    Real estate secured

    $

    36,637.5

    $

    $

    26,935.5

    $

    22,330.1

    $

    19,824.8

    $

    16,197.5

    Auto finance (4)

    4,563.3

    3,039.8

    1,765.3

    883.4

    -

    MasterCard/Visa

    17,583.4

    15,793.1

    16,610.8

    19,211.7

    19,528.2

    Private label

    11,997.3

    11,269.7

    10,377.5

    10,381.9

    10,252.5

    Other unsecured

    16,227.3

    13,881.9

    11,970.6

    11,505.1

    11,557.6

    Commercial and other

    598.6

    808.3

    853.4

    1,353.6

    1,762.9

    Total managed receivables

    87,607.4

    71,728.3

    63,907.7

    63,160.5

    59,298.7

    Receivables serviced with limited recourse

    (20,249.5)

    (19,438.9)

    (19,701.9)

    (24,478.5)

    (20,851.2)

    Owned receivables

    $

    67,357.9

    $

    52,289.4

    $

    44,205.8

    $

    38,682.0

    $

    38,447.5

    Deposits

    $

    8,676.9

    $

    4,980.0

    $

    2,105.0

    $

    2,344.2

    $

    3,000.1

    Commercial paper, bank and other borrowings

    10,787.9

    10,777.8

    9,917.9

    10,666.1

    10,597.4

    Senior and senior subordinated debt

    45,053.0

    34,887.3

    30,438.6

    23,736.2

    23,433.1

    Company obligated mandatorily redeemable

    Preferred securities of subsidiary trusts

    675.0

    375.0

    375.0

    175.0

    175.0

    Preferred stock

    164.4

    164.4

    164.4

    264.5

    319.5

    Common shareholders' equity (5)

    7,951.2

    6,450.9

    6,221.4

    6,174.0

    4,521.5

    Selected Financial Ratios (1)

    Return on average owned assets (2)

    2.44

    %

    2.64

    %

    2.29

    %

    2.03

    %

    1.82

    %

    Return on average managed assets (2)

    1.93

    1.99

    1.60

    1.38

    1.30

    Return on average common shareholders' equity (2)

    23.4

    23.5

    18.2

    17.3

    18.7

    Total shareholders' equity as a percent of owned assets (6)

    11.46

    11.51

    12.78

    14.13

    11.07

    Total shareholders' equity as a percent of managed assets (6)

    9.07

    8.72

    9.31

    9.28

    7.58

    Tangible shareholders' equity to tangible managed assets (7)

    7.41

    6.96

    7.11

    6.92

    6.20

    Managed net interest margin

    8.10

    8.23

    7.86

    7.72

    7.45

    Managed consumer net chargeoff ratio

    3.64

    4.13

    4.29

    3.84

    2.96

    Managed basis efficiency ratio, normalized

    34.2

    33.6

    37.6

    41.0

    45.0

    Common dividend payout ratio (2)

    20.8

    22.1

    26.1

    28.0

    28.3

    Branches at December 31

    1,693

    1,639

    1,631

    1,880

    1,696

    (1) On June 30, 1998, Household merged with Beneficial Corporation ("Beneficial"), a consumer finance holding company. In connection with the merger, Household issued approximately 168.4 million shares of its common stock and three series of preferred stock. The transaction was accounted for as a pooling of interests and, accordingly, the consolidated financial statements for all periods prior to the merger have been restated to include the financial results of Beneficial.

    (2) 1998 excludes merger and integration related costs of $751.0 million after - tax related to the Beneficial merger and the $118.5 million after - tax gain on the sale of Beneficial's Canadian operations. Including the merger and integration related costs and the gain on sale of Beneficial's Canadian operations, the return on average owned assets was 1.04 percent, the return on average managed assets was .72 percent, the return on average common shareholders' equity was 8.1 percent, and the common dividend payout ratio was 58.3 percent.

    (3) In 2000, real estate secured portfolios totaling $3.7 billion were acquired. In 1998, $1.9 billion of non - core MasterCard and Visa receivables and Beneficial's German and Canadian operations which had net receivables of $272 million and $775 million, respectively, were sold. In 1997, the capital stock of Transamerica Financial Services Holding Company ("TFS"), which included $3.1 billion of real estate secured receivables, was acquired. In 1997, the student loan business was exited and the related $900 million portfolio sold.

    (4) In October 1997, ACC Consumer Finance Corporation ("ACC"), an auto finance company, was purchased.

    (5) During 2000, Household repurchased 5.4 million shares of its common stock for a total of $209.3 million pursuant to its share repurchase program. During 1999, Household repurchased 21.8 million shares of its common stock for a total of $915.9 million of which 16.8 million shares were repurchased pursuant to its share repurchase program and 5.0 million shares were repurchased to fund various employee benefit programs. In 1998, Household repurchased 10.5 million shares of its common stock for a total of $412 million to fund various employee benefit programs. In 1997, Household issued 27.3 million shares of common stock in a public offering, raising about $1.0 billion. The net proceeds were used to repay certain short - term borrowings incurred in connection with the acquisition of TFS.

    (6) Total shareholders' equity includes common shareholders' equity, preferred stock and company obligated mandatorily redeemable preferred securities of subsidiary trusts.

    (7) Tangible shareholders' equity consists of total shareholders' equity, excluding unrealized gains and losses on investments, less acquired intangibles and goodwill. Tangible managed assets represents total managed assets less acquired intangibles and goodwill.

    Page 3

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    A Broad, Customer-Responsive Product Line

    Consumer Lending

    Under HFC and Beneficial, the two oldest and most recognized names in consumer finance in the United States, Household provides a wide variety of real estate secured, unsecured and personal homeowner loans and lines of credit tailored to the borrowing needs and situations of average, working Americans. Beneficial also provides sales finance contracts to customers of independent merchants in its local markets.

    Through correspondent relationships, Household purchases and services residential real estate secured loans that do not fit conforming guidelines. Through a separate unit, Household also originates real estate secured loans which are sold to institutional investors.

    In the United Kingdom, HFC Bank plc offers secured and unsecured consumer loans and credit lines under the HFC and Beneficial brands. In Canada, Household offers secured and unsecured consumer loans and credit lines under the HFC brand.

    Credit Card Services

    Household issues MasterCard* and Visa* credit cards with value-added features and benefits to customers in the United States and United Kingdom. Household also offers specialized credit card products to consumers underserved by traditional providers in the United States. Household's principal programs in the United States are serviced by Household Credit Services and include the GM Cardâ , which enables customers to earn discounts on the purchase or lease of a new GM vehicle, and the AFL-CIO's Union Privilege affinity card program, which provides benefits and services to members of 67 labor unions.

    In the United Kingdom, Household's card programs are offered through HFC Bank plc and include the GM Card® from Vauxhall and the marblesä card, one of Europe's first Internet-enabled credit cards, offering on-line approval and other customer services.

    Retail Services

    Household offers customized financing programs for national-scale merchants and manufacturers. Many of these merchants and manufacturers have widely recognized and respected brand names. Household's private label programs enable customers to finance purchases such as furniture, home and building products, consumer electronics, powersport vehicles and other goods. In the United States, private label programs are serviced by Household Retail Services USA. In the U.K. and Canada, retail services are offered through HFC Bank plc and HFC Retail Services, respectively.

    Auto Finance

    In the United States, Household Automotive Finance provides financing for the purchase of new and used vehicles for consumers who do not have access to traditional, prime-based lending sources.

    Insurance Services

    Household offers credit, specialty and other insurance products to its customers. Credit insurance products are offered in the United States and Canada through Household Insurance Group and in the United Kingdom through Hamilton Insurance and Hamilton Life Assurance.

    Tax Services

    Household Tax Masters offers tax refund anticipation loans to U.S. taxpayers based upon the amount of their Federal income tax refund. Tax refund loans can be made within 24 hours after Internal Revenue Service acceptance of a customer's electronically filed return.

    *MasterCard is a registered trademark of MasterCard International, Incorporated and Visa is a registered trademark of Visa USA, Inc.

    Page 4

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    PRODUCTS BY LEGAL ENTITY

     

     

    HOUSEHOLD
    INTERNATIONAL INC
    .

     

     

    HOUSEHOLD FINANCE CORPORATION

     

    HOUSEHOLD
    BANK, F.S.B.

     

    HOUSEHOLD
    GLOBAL FUNDING, INC.

    CONSUMER
    LENDING

     

    CONSUMER
    LENDING

     

    UNITED KINGDOM:
    CONSUMER LENDING
    CREDIT CARD SERVICES
    RETAIL SERVICES

    CREDIT CARD SERVICES

     

    CREDIT CARD SERVICES

     

    CANADA:
    CONSUMER LENDING
    RETAIL SERVICES

    RETAIL SERVICES

     

    RETAIL SERVICES

     

     

    AUTO FINANCE

     

    AUTO FINANCE

     

     

    INSURANCE SERVICES

     

    TAX SERVICES

     

     

    TAX SERVICES

     

     

     

     

    Page 5

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    FINANCIAL MANAGEMENT

    To effectively manage capital, Household develops targets for its tangible equity to tangible managed assets ratio based on discussions with rating agencies, reviews of regulatory requirements and competitors' capital positions, credit loss reserve strength, risks inherent in the projected operating environment and acquisition objectives. It also specifically considers the level of intangibles arising from completed acquisitions. To protect debt investors, Household sets capital targets for each legal entity that raises funds. These targets include capital levels against both on-balance sheet assets and the off-balance sheet portfolio. Household's principal legal entities are Household International, Inc., Household Finance Corporation ("HFC"), Household Bank, f.s.b. ("the Bank") and Household Global Funding, Inc. ("Global").

    Household actively manages its liquidity and capital resources. The parent company's main sources of funds are cash received from its subsidiaries in the form of dividends and intercompany borrowings. In addition, the parent receives cash from third parties by issuing debt, preferred equity and common stock. The parent company uses its available cash to service its debt, meet the capital needs of its subsidiaries, pay dividends on its preferred stock, and may pay dividends to its common stockholders.

    Household allocates capital to its operating companies based on their earnings and capital needs. The main sources of cash for its subsidiaries are the collection of receivable balances; maturities or sales of investment securities; proceeds from the issuance of debt and deposits and from the securitization of receivables; capital contributions from the parent company; and cash provided by operations. Subsidiaries use cash to originate loans, purchase loans or investment securities or acquire businesses .

    Household obtains most of its funding through wholesale markets and has the capacity to raise capital from wholesale sources in order to refinance maturing obligations and fund business growth.

    Securitizations of consumer receivables have been, and will continue to be, a source of liquidity for Household. Household believes the market for securities issued by an investment grade issuer and backed by receivables is a reliable and cost-effective source of funds. During 2000 and 1999, excluding replenishments of prior securitizations, Household securitized approximately $7.0 billion and $5.2 billion, respectively, of receivables.

    Household has a comprehensive program to address potential financial risks, including interest rate, counterparty and currency risk. The Finance Committee of its Board of Directors sets acceptable limits for each of these risks annually and reviews the limits semi-annually. Household generally funds its assets with liabilities that have similar interest rate features. This reduces structural interest rate risk. Household uses cash market borrowings, together with derivative instruments such as interest rate swaps and other interest rate instruments, to manage interest rate risk and does not use exotic or leveraged derivatives. The adoption of FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", on January 1, 2001 will not have a significant impact on Household's interest rate risk management strategy.

    Debt Ratings

    At December 31, 2000

    Standard & Poor's
    Corporation

    Moody's
    Investor Service


    Fitch, Inc.

    Household International, Inc.

     

     

     

    Senior debt

    A

    A3

    A

    Commercial paper

    A-1

    P-2

    F-1

    Preferred stock

    BBB+

    baa1

    A-

     

     

     

     

    Household Finance Corporation

     

     

     

    Senior debt

    A

    A2

    A+

    Senior subordinated debt

    A-

    A3

    A

    Commercial paper

    A-1

    P-1

    F-1

     

     

     

     

    Household Bank, f.s.b.

     

     

     

    Senior debt

    A

    A2

    A

    Subordinated debt

    A-

    A3

    A-

    Certificates of deposit (long/short-term)

    A/A-1

    A2/P-1

    A/F-1

    Thrift notes

    A-1

    P-1

    F-1

    Page 6

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    CAPITAL STRUCTURE

    Household International, Inc. and Subsidiaries

    All dollar amounts are stated in millions.

    At December 31, unless otherwise indicated.

    2000

    1999

    1998

    1997

    1996

    Consolidated Capital Structure

    Deposits

    $

    8,676.9

    $

    4,980.0

    $

    2,105.0

    $

    2,344.2

    $

    3,000.1

    Commercial paper

    9,371.5

    8,822.2

    7,713.2

    9,064.7

    9,114.1

    Bank and other borrowings

    1,416.4

    1,955.6

    2,204.7

    1,601.4

    1,483.3

    Senior and senior subordinated debt

    (with original maturities over one year)

    45,053.0

    34,887.3

    30,438.6

    23,736.2

    23,433.1

    Company obligated mandatorily redeemable

    preferred securities of subsidiary trusts

    675.0

    375.0

    375.0

    175.0

    175.0

    Preferred stock

    164.4

    164.4

    164.4

    264.5

    319.5

    Common shareholders' equity

    7,951.2

    6,450.9

    6,221.4

    6,174.0

    4,521.5

    Total

    $

    73,308.4

    $

    57,635.4

    $

    49,222.3

    $

    43,360.0

    $

    42,046.6

    Maturity Distribution

    Senior and senior subordinated debt

    (with original maturities over one year)

    Less than 1 year

    $

    8,278.2

    $

    6,571.2

    $

    6,808.6

    $

    4,627.5

    $

    5,830.4

    1-5 years

    23,687.3

    17,714.9

    15,404.3

    13,639.1

    13,016.2

    Over 5 years

    13,087.5

    10,601.2

    8,225.7

    5,469.6

    4,586.5

    Total

    $

    45,053.0

    $

    34,887.3

    $

    30,438.6

    $

    23,736.2

    $

    23,433.1

    Weighted-Average Interest Rates (1)

    Deposits

    6.2

    %

    5.5

    %

    5.7

    %

    6.0

    %

    5.2

    %

    Commercial paper, bank and other borrowings

    6.2

    5.2

    5.5

    5.7

    5.7

    Senior and senior subordinated debt

    (with original maturities over one year)

    6.9

    6.3

    6.4

    6.8

    7.1

    Composite

    6.7

    6.0

    6.1

    6.4

    6.4

    Key Financial Ratios

    Debt to equity (2)

    7.3:1

    7.2:1

    6.3:1

    5.6:1

    7.4:1

    Ratio of earnings to fixed charges (3)

    1.65:1

    1.79:1

    1.75:1

    1.58:1

    1.54:1

    Equity to owned assets (2)

    11.46

    %

    11.51

    %

    12.78

    %

    14.13

    %

    11.07

    %

    Equity to managed assets (2)

    9.07

    8.72

    9.31

    9.28

    7.58

    Tangible equity to tangible managed assets (4)

    7.41

    6.96

    7.11

    6.92

    6.20

    All dollar amounts are stated in millions.

    At December 31, 2000

    Household

    Other (5)

    HFC

    The Bank

    Global

    Consolidating Capital Structure

    Debt:

    Deposits

    $

    8,676.9

    $

    (451.2)

    -

    $

    7,416.1

    $

    1,712.0

    Commercial paper, bank and other borrowings

    10,787.9

    (500.9)

    $

    8,829.4

    1,374.2

    1,085.2

    Senior and senior subordinated debt

    (with original maturities over one year)

    45,053.0

    184.9

    40,575.9

    1,120.5

    3,171.7

    Total debt

    64,517.8

    (767.2)

    49,405.3

    9,910.8

    5,968.9

    Company obligated mandatorily redeemable

    preferred securities of subsidiary trusts

    675.0

    675.0

    -

    -

    -

    Preferred stock

    164.4

    164.4

    -

    -

    -

    Common shareholders' equity:

    Common stock

    551.1

    530.1

    -

    1.4

    19.6

    Additional paid-in capital

    1,926.0

    (2,674.3)

    3,503.3

    529.7

    567.3

    Retained earnings

    7,680.5

    2,881.6

    3,813.8

    489.7

    495.4

    Accumulated other comprehensive income

    (214.7)

    (32.8)

    32.1

    -

    (214.0)

    Common stock in treasury

    (1,991.7)

    (1,991.7)

         -        

         -        

         -        

    Total common shareholders' equity

    7,951.2

    (1,287.1)

    7,349.2

    1,020.8

    868.3

    Total debt and shareholders' equity

    $

    73,308.4

    $

    (1,214.9)

    $

    56,754.5

    $

    10,931.6

    $

    6,837.2

    (1) For the year. Includes the impact of interest - rate swap agreements.

    (2) Equity includes common shareholders' equity, preferred stock and company obligated mandatorily redeemable preferred securities of subsidiary trusts.

    (3) 1998 excludes merger and integration related costs of $751.0 million after-tax related to the Beneficial merger. Including these items, the ratio of earnings to fixed charges was 1.37:1.

    (4) Tangible equity consists of total shareholders' equity, excluding unrealized gains and losses on investments, less acquired intangibles and goodwill. Tangible managed assets represent total managed assets less acquired intangibles and goodwill.

    (5) Includes corporate, other Household subsidiaries and eliminations.

    Page 7

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    2000 -KEY FINANCING TRANSACTIONS

    Household International, Inc.

    • In June, a wholly-owned special purpose trust subsidiary issued $300 million of company obligated mandatorily redeemable preferred securities (representing the minority interest in the trust) increasing Household's total of such issuances to $675 million.

    • On February 7, Household purchased all of the outstanding capital stock of Renaissance Holdings, Inc. ("Renaissance"), a privately held issuer of credit cards to non-prime customers, for approximately $300 million in common stock and cash. The acquisition provided Household with an established platform for growing the non-prime credit card business and an ability to expand product offerings to customers and prospects in other businesses.

    • Repurchased 5.4 million shares under Household's $2 billion share repurchase program for a total of $209.3 million. Offsetting these repurchases were issuances totaling approximately $325 million for employee benefit plans and the Renaissance acquisition. Since inception of the program, Household has repurchased a total of 22.2 million shares for $922.2 million.

    Household Finance Corporation

    • Issued domestic medium-term notes of $9.9 billion.
    • Issued U.S. dollar, global long-term debt of $4.8 billion. The weighted-average maturity of the total debt issued was 6.98 years.
    • Issued $2.1 billion of debt in foreign markets, including Euro-denominated debt and HFC's first Japanese and Australian issuances.
    • Is an active seller of commercial paper through an in-house sales force. Commercial paper outstanding at year - end was $8.7 billion.
    • Securitized approximately $2.0 billion of other unsecured receivables, $1.9 billion of auto finance loans, $1.4 billion of MasterCard and Visa receivables and $.5 billion of private label receivables.

    Household Bank, f.s.b.

    • Issued $3.2 billion in retail CD's.
    • In October, its subsidiary bank sold $6.7 billion in managed GM receivables to HFC.

    Household Global Funding, Inc.

    • Household Financial Corporation Limited, Household's Canadian subsidiary, had $360.9 million in commercial paper outstanding at year - end.
    • HFC Bank plc, Household's United Kingdom subsidiary, securitized about $600 million of other unsecured receivables.

    KEY GUARANTEES AND OTHER CREDIT SUPPORT

    Household International, Inc.

    Guarantees payment of the debt obligations of :

    • Household Financial Corporation Limited, Household's Canadian subsidiary, issued prior to March 1, 1999.
    • Household International (U.K.) Limited, HFC Bank plc and Household International Netherlands, B.V., Household's United Kingdom subsidiaries, issued prior to March 1, 1999.
    • Household Capital Trust III.

    Guarantees payment of the trust preferred securities issued by Household Capital Trust I, II, IV and V.

    Household Finance Corporation

    Guarantees the payment of debt obligations of:

    • Beneficial Corporation.
    • Household Bank (Nevada), N.A.'s Euro-medium term note program.
    • Household Financial Corporation Limited, Household's Canadian subsidiary, issued after March 1, 1999.
    • Household International (U.K.) Limited, HFC Bank plc and Household International Netherlands, B.V, Household's United Kingdom subsidiaries, issued after March 1, 1999.

    Household International, Inc. and Household Finance Corporation

    • Have a Regulatory Capital Maintenance/Dividend Agreement with the Office of Thrift Supervision pertaining to Household Bank f.s.b.

    Page 8

     

    ********************************************************************************

    Page 9

    ********************************************************************************

     

    CONSOLIDATING FINANCIAL STATEMENTS

    In millions.

    Year ended December 31, 2000

    Household

    Other (1)

    HFC

    The Bank

    Global

    CONSOLIDATING STATEMENT OF INCOME

    Finance income

    $

    8,660.3

    $

    5.1

    $

    6,438.3

    $

    1,364.9

    $

    852.0

    Other interest income

    34.0

    (60.1)

    58.0

    16.3

    19.8

    Interest expense

    3,928.9

    29.1

    2,895.2

    600.5

    404.1

    Net interest margin

    4,765.4

    (84.1)

    3,601.1

    780.7

    467.7

    Provision for credit losses on owned receivables

    2,116.9

    (36.9)

    1,564.2

    409.0

    180.6

    Net interest margin after provision for credit losses

    2,648.5

    (47.2)

    2,036.9

    371.7

    287.1

    Securitization revenue

    1,476.6

    114.2

    932.8

    303.2

    126.4

    Insurance revenue

    561.2

    -

    394.8

    -

    166.4

    Investment income

    174.2

    0.1

    159.0

    -

    15.1

    Fee income

    825.8

    (41.9)

    361.0

    429.7

    61.0

    Other income

    228.8

    (19.1)

    108.5

    115.6

    39.8

    Total other revenues

    3,266.6

    53.3

    1,956.1

    848.5

    408.7

    Salaries and fringe benefits

    1,312.1

    200.5

    955.5

    5.9

    150.2

    Sales incentives

    203.6

    -

    193.5

    -

    10.1

    Other operating expenses

    1,527.2

    (80.8)

    784.6

    650.5

    172.9

    Policyholders' benefits

    261.7

    0.1

    231.7

         -        

    29.9

    Total costs and expenses

    3,304.6

    119.8

    2,165.3

    656.4

    363.1

    Income before income taxes

    2,610.5

    (113.7)

    1,827.7

    563.8

    332.7

    Income taxes

    909.8

    (43.9)

    642.2

    212.1

    99.4

    Net income

    $

    1,700.7

    $

    (69.8)

    $

    1,185.5

    $

    351.7

    $

    233.3

    (1) Includes corporate expenses, other Household subsidiaries and eliminations.

    In millions.

    At December 31, 2000

    Household

    Other (1)

    HFC

    The Bank

    Global

    Consolidating Balance Sheet

    Assets

    Cash

    $

    490.2

    $

    (376.7)

    $

    269.5

    $

    523.9

    $

    73.5

    Investment securities

    3,259.0

    (771.1)

    3,217.4

    52.1

    760.6

    Receivables, net

    67,161.7

    4.6

    50,498.5

    10,255.5

    6,403.1

    Acquired intangibles and goodwill, net

    1,705.7

    262.5

    1,426.0

    -

    17.2

    Properties and equipment, net

    517.6

    41.2

    368.0

    5.9

    102.5

    Real estate owned

    337.1

    -

    332.1

    1.4

    3.6

    Other assets

    3,235.0

    21.0

    2,479.6

    268.9

    465.5

    Total assets

    $

    76,706.3

    $

    (818.5)

    $

    58,591.1

    $

    11,107.7

    $

    7,826.0

    Liabilities and Shareholders' Equity

    Debt

    $

    64,517.8

    $

    (767.2)

    $

    49,405.3

    $

    9,910.8

    $

    5,968.9

    Insurance policy and claim reserves

    1,106.6

    -

    891.8

    -

    214.8

    Other liabilities

    2,291.3

    396.4

    944.8

    176.1

    774.0

    Total liabilities

    67,915.7

    (370.8)

    51,241.9

    10,086.9

    6,957.7

    Company obligated mandatorily redeemable preferred securities of subidiary trusts

    675.0

    675.0

    -

    -

    -

    Preferred stock

    164.4

    164.4

    -

    -

    -

    Common shareholders' equity

    7,951.2

    (1,287.1)

    7,349.2

    1,020.8

    868.3

    Total liabilities and shareholders' equity

    $

    76,706.3

    $

    (818.5)

    $

    58,591.1

    $

    11,107.7

    $

    7,826.0

    (1) Includes corporate, other Household subsidiaries and eliminations.

    Page 10

    ********************************************************************************

    CONSOLIDATING RECEIVABLES

    In millions.

    At December 31, 2000

    Household

    Other (1)

    HFC

    The Bank

    Global

    Owned Receivables

    Real estate secured

    $

    35,179.7

    $

    (10.5)

    $

    30,147.9

    $

    3,782.6

    $

    1,259.7

    Auto finance

    1,850.6

    -

    1,643.0

    207.6

    -

    MasterCard/Visa

    8,053.6

    (31.7)

    4,495.0

    1,383.6

    2,206.7

    Private label

    10,347.3

    38.9

    4,588.1

    4,044.5

    1,675.8

    Other unsecured

    11,328.1

    8.4

    8,887.2

    1,054.8

    1,377.7

    Commercial and other

    598.6

         -        

    508.1

    88.1

    2.4

    Total owned receivables

    67,357.9

    5.1

    50,269.3

    10,561.2

    6,522.3

    Accrued finance charges

    1,302.6

    5.5

    1,095.9

    94.6

    106.6

    Credit loss reserve for owned receivables

    (2,111.9)

    35.6

    (1,603.9)

    (400.3)

    (143.3)

    Unearned credit insurance premiums

    and claims reserves

    (725.2)

    -

    (622.3)

    -

    (102.9)

    Amounts due and deferred from receivables sales

    2,420.6

    (41.6)

    2,360.9

    -

    101.3

    Reserve for receivables serviced with

    limited recourse

    (1,082.3)

         -        

    (1,001.4)

         -        

    (80.9)

    Total owned receivables, net

    67,161.7

        4.6

    50,498.5

    10,255.5

    6,403.1

    Receivables Serviced with Limited Recourse

    Real estate secured

    1,457.8

    -

    1,457.8

    -

    -

    Auto finance

    2,712.7

    -

    2,712.7

    -

    -

    MasterCard/Visa

    9,529.8

    -

    9,311.7

    -

    218.1

    Private label

    1,650.0

    -

    1,650.0

    -

    -

    Other unsecured

    4,899.2

         -        

    3,791.1

         -        

    1,108.1

    Total receivables serviced with limited recourse

    20,249.5

         -        

    18,923.3

         -        

    1,326.2

    Total managed receivables, net

    $

    87,411.2

    $

    4.6

    $

    69,421.8

    $

    10,255.5

    $

    7,729.3



    At December 31, 2000



    Total


    Consumer Lending


    Auto Finance


    Retail Services

    Credit Card Services

    MANAGED DOMESTIC CONSUMER RECEIVABLES BY GEOGRAPHIC AREA

    California

    16

    %

    17

    %

    15

    %

    14

    %

    13

    %

    Midwest

    22

    21

    16

    20

    27

    Mid Atlantic

    14

    15

    14

    11

    14

    Northeast

    11

    11

    3

    10

    15

    Southeast

    18

    17

    30

    24

    13

    West, excluding California

    8

    10

    3

    6

    7

    Southwest

    11

    9

    19

    15

    11

    Total

    100

    %

    100

    %

    100

    %

    100

    %

    100

    %

    (1) Includes corporate, other Household subsidiaries and eliminations.

    Page 11

    ********************************************************************************

    2000 QUARTERLY INCOME DATA

    Securitizations of consumer receivables have been, and will continue to be, a source of liquidity. Household continues to service securitized receivables after they have been sold and retains a limited recourse liability for future credit losses. Revenues and credit-related expenses related to the off-balance sheet portfolio are included in one line item in the owned statements of income. Specifically, Household reports net interest margin, provision for credit losses, fee income, and securitization related revenue as a net amount in securitization revenue.

    Household monitors its operations on a managed basis as well as on the owned basis shown in its statements of income. The pro forma managed income statement assumes that the securitized receivables have not been sold and are still on the balance sheet. Consequently, the income and expense items discussed above are reclassified from securitization revenue into the appropriate caption in the pro forma managed basis income statement as if the receivables had not been securitized. Household's pro forma managed basis income statement is not intended to reflect the differences between accounting policies for owned receivables and the off-balance sheet portfolio, but merely to report net interest margin, fees and provision for losses as if the securitized loans were held in portfolio. Therefore, net income on a pro forma managed basis equals net income on an owned basis.

    All dollar amounts except per share data are stated in millions.

    Full Year

    4th Quarter

    3rd Quarter

    2nd Quarter

    1st Quarter

    Pro Forma Managed Statements of Income

    Finance and other interest income

    $

    11,702.7

    $

    3,183.5

    $

    3,033.9

    $

    2,839.6

    $

    2,645.7

    Interest expense

    5,212.7

    1,457.1

    1,390.6

    1,244.8

    1,120.2

    Net interest margin

    6,490.0

    1,726.4

    1,643.3

    1,594.8

    1,525.5

    Provision for credit losses

    3,252.4

    917.0

    774.9

    744.3

    816.2

    Net interest margin after provision for credit losses

    3,237.6

    809.4

    868.4

    850.5

    709.3

    Insurance revenue

    561.2

    147.7

    146.7

    131.8

    135.0

    Investment income

    174.2

    47.0

    43.9

    42.5

    40.8

    Fee income

    1,470.4

    404.0

    380.3

    353.3

    332.8

    Securitization related revenue

    242.9

    139.5

    36.2

    2.5

    64.7

    Other income

    228.8

    33.5

    30.1

    31.9

    133.3

    Total other revenues

    2,677.5

    771.7

    637.2

    562.0

    706.6

    Salaries and fringe benefits

    1,312.1

    355.5

    333.0

    321.5

    302.1

    Sales incentives

    203.6

    50.3

    53.1

    57.4

    42.8

    Occupancy and equipment expense

    306.6

    77.1

    78.4

    75.6

    75.5

    Other marketing expenses

    470.9

    104.3

    108.2

    125.3

    133.1

    Other servicing and administrative expenses

    589.7

    122.8

    136.0

    144.1

    186.8

    Amortization of acquired intangibles and goodwill

    160.0

    38.9

    39.0

    38.9

    43.2

    Policyholders' benefits

    261.7

    63.4

    67.1

    64.3

    66.9

    Total costs and expenses

    3,304.6

    812.3

    814.8

    827.1

    850.4

    Income before income taxes

    2,610.5

    768.8

    690.8

    585.4

    565.5

    Income taxes

    909.8

    276.1

    239.6

    201.5

    192.6

    Net income

    $

    1,700.7

    $

    492.7

    $

    451.2

    $

    383.9

    $

    372.9

    Average Managed Receivables:

    Real estate secured

    $

    32,530.2

    $

    35,934.4

    $

    34,617.3

    $

    31,912.0

    $

    27,657.1

    Auto finance

    3,842.3

    4,455.4

    4,116.9

    3,602.6

    3,194.4

    MasterCard/Visa

    16,111.2

    16,833.7

    16,193.1

    15,748.2

    15,669.8

    Private label

    11,194.2

    11,552.4

    11,088.1

    10,964.8

    11,171.5

    Other unsecured

    14,760.8

    15,880.1

    15,123.7

    14,154.5

    13,885.0

    Commercial and other

    693.5

    620.0

    664.3

    719.5

    770.0

    Total

    79,132.2

    85,276.0

    81,803.4

    77,101.6

    72,347.8

    Average noninsurance investments

    539.3

    464.9

    471.4

    563.0

    657.9

    Other interest-earning assets

    434.1

    442.5

    436.7

    431.2

    426.0

    Average managed interest-earning assets

    $

    80,105.6

    $

    86,183.4

    $

    82,711.5

    $

    78,095.8

    $

    73,431.7

    Other Quarterly Data

    Basic earnings per common share

    $

    3.59

    $

    1.05

    $

    .95

    $

    .80

    $

    .79

    Diluted earnings per common share

    3.55

    1.03

    .94

    .80

    .78

    Dividends declared per common share

    .74

    .19

    .19

    .19

    .17

    Book value per common share

    16.88

    16.88

    16.00

    15.28

    14.78

    Return on average managed assets

    1.93

    %

    2.09

    %

    1.98

    %

    1.78

    %

    1.82

    Managed net interest margin

    8.10

    8.01

    7.95

    8.17

    8.31

    Managed basis efficiency ratio

    34.2

    30.8

    33.8

    36.5

    36.2

    Risk adjusted revenue

    7.55

    7.60

    7.45

    7.37

    7.82

    Page 12

    ********************************************************************************

    1999 QUARTERLY INCOME DATA

    All dollar amounts except per share data are stated in millions.

    Full
    Year

    4th Quarter

    3rd Quarter

    2nd Quarter

    1st Quarter

    Pro Forma Managed Statements of Income

    Finance and other interest income

    $

    9,375.7

    $

    2,525.1

    $

    2,368.2

    $

    2,273.1

    $

    2,209.3

    Interest expense

    3,836.5

    1,055.1

    958.3

    908.9

    914.2

    Net interest margin

    5,539.2

    1,470.0

    1,409.9

    1,364.2

    1,295.1

    Provision for credit losses

    2,781.8

    738.1

    741.1

    631.1

    671.5

    Net interest margin after provision for credit losses

    2,757.4

    731.9

    668.8

    733.1

    623.6

    Insurance revenue

    534.6

    129.2

    130.6

    132.6

    142.2

    Investment income

    168.8

    40.8

    45.0

    41.8

    41.2

    Fee income

    1,205.5

    344.4

    309.8

    282.9

    268.4

    Securitization related revenue (expense)

    116.0

    61.5

    95.9

    (45.8)

    4.4

    Other income

    223.8

    43.8

    32.4

    38.4

    109.2

    Total other revenues

    2,248.7

    619.7

    613.7

    449.9

    565.4

    Salaries and fringe benefits

    1,048.7

    270.2

    262.6

    262.0

    253.9

    Sales incentives

    145.9

    37.0

    42.1

    36.6

    30.2

    Occupancy and equipment expense

    270.9

    70.9

    66.6

    66.6

    66.8

    Other marketing expenses

    370.0

    106.0

    91.5

    84.0

    88.5

    Other servicing and administrative expenses

    547.9

    114.5

    128.5

    142.3

    162.6

    Amortization of acquired intangibles and goodwill

    143.9

    36.1

    35.5

    36.0

    36.3

    Policyholders' benefits

    258.1

    59.1

    61.0

    69.4

    68.6

    Total costs and expenses

    2,785.4

    693.8

    687.8

    696.9

    706.9

    Income before income taxes

    2,220.7

    657.8

    594.7

    486.1

    482.1

    Income taxes

    734.3

    219.0

    194.8

    159.2

    161.3

    Net income

    $

    1,486.4

    $

    438.8

    $

    399.9

    $

    326.9

    $

    320.8

    Average Managed Receivables:

    Real estate secured

    $

    24,574.5

    $

    26,436.8

    $

    24,702.2

    $

    23,994.1

    $

    23,165.0

    Auto finance

    2,370.4

    2,866.4

    2,532.3

    2,192.5

    1,890.3

    MasterCard/Visa

    15,295.7

    15,198.3

    15,021.5

    15,104.6

    15,858.4

    Private label

    10,255.9

    10,800.6

    10,109.9

    9,928.5

    10,184.5

    Other unsecured

    13,008.6

    13,732.7

    13,255.6

    12,867.6

    12,178.6

    Commercial and other

    809.6

    820.9

    802.1

    793.6

    821.9

    Total

    66,314.7

    69,855.7

    66,423.6

    64,880.9

    64,098.7

    Average noninsurance investments

    558.6

    692.5

    607.6

    376.5

    557.6

    Other interest-earning assets

    416.4

    421.6

    418.0

    420.6

    405.5

    Average managed interest-earning assets

    $

    67,289.7

    $

    70,969.8

    $

    67,449.2

    $

    65,678.0

    $

    65,061.8

    Other Quarterly Data

    Basic earnings per common share

    $

    3.10

    $

    .93

    $

    .84

    $

    .67

    $

    .66

    Diluted earnings per common share

    3.07

    .92

    .83

    .67

    .65

    Dividends declared per common share

    .68

    .17

    .17

    .17

    .17

    Book value per common share

    13.79

    13.79

    13.26

    13.02

    12.92

    Return on average managed assets

    1.99

    %

    2.25

    %

    2.14

    %

    1.78

    %

    1.75

    Managed net interest margin

    8.23

    8.29

    8.36

    8.31

    7.96

    Managed basis efficiency ratio

    33.6

    31.3

    31.9

    36.0

    35.6

    Risk adjusted revenue

    7.37

    7.57

    7.41

    7.31

    7.15

    Page 13

    ********************************************************************************

    PARENT COMPANY

    In millions.

    Year ended December 31

    2000

    1999

    1998

    1997

    1996

    CONDENSED STATEMENTS OF INCOME

    Revenues:

    Equity in earnings of subsidiaries

    $

    1,747.9

    $

    1,521.4

    $

    546.3

    (1)

    $

    970.9

    $

    877.1

    Other income

    34.6

    32.5

    24.6

    26.3

    24.4

    Total income

    1,782.5

    1,553.9

    570.9

    997.2

    901.5

    Costs and expenses:

    Administrative

    72.7

    62.8

    49.2

    59.0

    99.1

    Interest

    61.3

    50.6

    45.2

    37.9

    28.9

    Total expenses

    134.0

    113.4

    94.4

    96.9

    128.0

    Income before income tax benefit

    1,648.5

    1,440.5

    476.5

    900.3

    773.5

    Income tax benefit

    52.2

    45.9

    47.6

    40.0

    46.1

    Net income

    $

    1,700.7

    $

    1,486.4

    $

    524.1

    (1)

    $

    940.3

    $

    819.6

    (1) Includes merger and integration related costs of $751.0 million after-tax related to the Beneficial merger and the $118.5 million after-tax gain on the sale of Beneficial's Canadian operations.

    In millions.

    At December 31

    2000

    1999

    1998

    1997

    1996

    CONDENSED BALANCE SHEETS

    Assets

    Cash

    -

    $

    2.2

    $

    2.1

    $

    2.1

    $

    1.7

    Investment in and advances to subsidiaries

    $

    9,034.7

    7,400.7

    7,142.2

    7,015.7

    5,334.5

    Other assets

    604.9

    533.7

    473.7

    412.9

    396.5

    Total assets

    $

    9,639.6

    $

    7,936.6

    $

    7,618.0

    $

    7,430.7

    $

    5,732.7

    Liabilities and Shareholders' Equity

    Commercial paper and bank borrowings

    $

    292.3

    $

    397.7

    $

    315.6

    $

    281.5

    $

    203.3

    Senior debt (with original maturities over one year)

    185.0

    185.6

    189.7

    189.7

    189.7

    Other liabilities

    371.7

    363.0

    351.9

    346.0

    323.7

    Total liabilities

    849.0

    946.3

    857.2

    817.2

    716.7

    Company obligated mandatorily redeemable

    preferred securities of subsidiary trusts

    675.0

    375.0

    375.0

    175.0

    175.0

    Preferred stock

    164.4

    164.4

    164.4

    264.5

    319.5

    Common shareholders' equity

    7,951.2

    6,450.9

    6,221.4

    6,174.0

    4,521.5

    Total liabilities and shareholders' equity

    $

    9,639.6

    $

    7,936.6

    $

    7,618.0

    $

    7,430.7

    $

    5,732.7

    Page 14

    ********************************************************************************

    PARENT COMPANY

    In millions.

    Year ended December 31

    2000

    1999

    1998

    1997

    1996

    CONDENSED STATEMENTS OF CASH FLOWS

    Cash provided by operations:

    Net income

    $

    1,700.7

    $

    1,486.4

    $

    524.1

    $

    940.3

    $

    819.6

    Adjustments to reconcile net income to net cash provided by (used in) operations:

    Equity in earnings of subsidiaries

    (1,747.9)

    (1,521.4)

    (546.3)

    (970.9)

    (877.1)

    Other operating activities

    (10.5)

    (11.6)

    193.8

    53.5

    367.1

    Cash provided by (used in) operations

    (57.7)

    (46.6)

    171.6

    22.9

    309.6

    Investment in operations:

    Dividends from subsidiaries

    648.0

    1,160.5

    1,067.3

    313.1

    265.0

    Dividends from pooled affiliate

    -

    -

    75.4

    200.7

    110.5

    Investment in and advances to (from) subsidiaries, net

    (282.5)

    8.7

    (709.3)

    (1,047.7)

    (322.0)

    Other investing activities

    (.8)

    2.5

    1.9

    2.1

    (9.4)

    Cash increase (decrease) from investment in operations

    364.7

    1,171.7

    435.3

    (531.8)

    44.1

    Financing and capital transactions:

    Net increase (decrease) in commercial paper and bank borrowings

    (105.4)

    82.1

    34.1

    78.2

    (83.2)

    Net decrease in senior debt

    -

    (4.1)

    -

    -

    (60.1)

    Shareholders' dividends

    (358.9)

    (332.1)

    (256.5)

    (186.5)

    (163.6)

    Shareholders' dividends - pooled affiliate

    -

    -

    (61.8)

    (115.5)

    (105.3)

    Issuance of company obligated mandatorily redeemable preferred

    securities of subsidiary trusts

    300.0

    -

    200.0

    -

    100.0

    Purchase of treasury stock

    (209.3)

    (915.9)

    (412.0)

    (155.7)

    (56.7)

    Treasury stock activity - pooled affiliate

    -

    -

    (11.4)

    (80.0)

    -

    Issuance (redemption) of common and preferred stock, net

    64.4

    45.0

    (99.3)

    968.8

    16.6

    Cash increase (decrease) from financing and capital transactions

    (309.2)

    (1,125.0)

    (606.9)

    509.3

    (352.3)

    Increase (decrease) in cash

    (2.2)

    .1

    -

    .4

    1.4

    Cash at January 1

    2.2

    2.1

    2.1

    1.7

    .3

    Cash at December 31

    $

         -        

    $

    2.2

    $

    2.1

    $

    2.1

    $

    1.7

    Page 15

    ********************************************************************************

    Household Finance Corporation

    Household Finance Corporation ("HFC") is Household's oldest and largest legal entity. Its principal products include:

    • Real estate secured and unsecured consumer loans through HFC and Beneficial branch offices.
    • Real estate secured loans originated through correspondent relationships.
    • MasterCard and Visa credit cards serviced by Household Credit Services.
    • Private label credit cards serviced by Household Retail Services USA.
    • Auto finance loans, primarily for used vehicles, through Household Automotive Finance.
    • Credit life insurance products through Household Insurance Group.

    Refund anticipation loans, through Household Tax Masters, to customers entitled to federal income tax refunds.

    HFC obtains the majority of its funding through wholesale markets. With $8.7 billion outstanding in commercial paper and $40.7 billion outstanding in total other debt, HFC is a familiar and accepted name in commercial paper and debt markets worldwide.

    HFC's commercial paper is sold directly to over 300 investors through an in-house sales force. HFC also markets medium-term notes through investment banks and its in-house sales force. During 2000, HFC issued $9.9 billion of domestic medium-term notes. In addition, HFC issued $4.8 billion of U.S. dollar denominated, global long-term debt with a weighted-average maturity of 6.98 years and $2.1 billion of debt in foreign markets. In 2000, HFC also securitized consumer receivables totaling $5.8 billion.

    HFC purchased real estate secured portfolios of $2.2 billion in the first quarter of 2000 and $1.5 billion in the second quarter. On October 1, 2000, HFC acquired $6.7 billion in managed GM Card® receivables, at fair market value, from Household Bank (SB) N.A., ("SB"), a subsidiary of the Bank. SB remains the designated issuer of the GM Card® under a written contractual agreement with Household. HFC periodically acquires additional GM Card® receivables from SB.

    On June 30, 1998, Household merged with Beneficial, a consumer finance company. Upon completion of the merger, substantially all of the net assets of Beneficial were contributed to HFC. The merger was accounted for as a pooling of interests and, therefore, the financial statements were restated to include Beneficial in all periods prior to the merger. In connection with the merger, HFC recorded pre-tax merger and integration related costs of approximately $1 billion ($751 million after-tax) which have been reflected in the statement of income in total costs and expenses.

    In 1998, HFC's wholly-owned subsidiary, Beneficial, had foreign subsidiaries in the United Kingdom, Canada and Germany. Prior to the merger, Beneficial sold its German and Canadian operations. In 1997, Beneficial announced its intent to sell the German operations and recorded an after-tax loss of about $27.8 million after consideration of a $31 million tax benefit. The sale was completed in April 1998. During the first quarter of 1998, Beneficial sold its Canadian operations, resulting in an after-tax gain of approximately $118.5 million. Operating results from Beneficial's German and Canadian subsidiaries are included in HFC's results prior to their respective sale dates.

    Additionally, Beneficial's United Kingdom operations were merged with and into Global on December 22, 1998, effective June 30, 1998. In accordance with the guidance established for mergers involving affiliates under common control, the operating results of Beneficial's United Kingdom subsidiary are excluded from HFC's results subsequent to June 30, 1998.

    Page 16

    ********************************************************************************

    Page 17

    ********************************************************************************

    HOUSEHOLD FINANCE CORPORATION

    All dollar amounts are stated in millions.

    2000

    1999

    1998

    1997

    1996

    FINANCIAL HIGHLIGHTS

    Statement of Income Data - Year Ended December 31

    Net interest margin and other revenues

    $

    5,557.2

    $

    4,940.4

    $

    4,918.4

    $

    4,949.5

    $

    4,247.5

    Gain on sale of Beneficial Canada

    -

    -

    189.4

    -

    -

    Provision for credit losses on owned receivables

    1,564.2

    1,407.4

    1,253.1

    1,252.1

    907.4

    Operating expenses

    1,933.6

    1,737.6

    1,980.4

    2,301.8

    2,045.2

    Policyholders' benefits

    231.7

    224.7

    207.6

    236.6

    286.8

    Merger and integration related costs

    -

    -

    1,000.0

    -

    -

    Income taxes

    642.2

    550.8

    361.8

    391.9

    358.1

    Net income

    $

    1,185.5

    $

    1,019.9

    $

    304.9

    $

    767.1

    $

    650.0

    Operating net income (1)

    $

    1,185.5

    $

    1,019.9

    $

    937.4

    $

    767.1

    $

    650.0

    Balance Sheet Data at December 31

    Total assets

    $

    58,591.1

    $

    46,815.2

    $

    42,363.0

    $

    39,448.9

    $

    36,324.9

    Receivables: (2)

    Owned

    $

    50,269.3

    $

    38,250.1

    $

    34,446.0

    $

    32,383.3

    $

    30,467.3

    Serviced with limited recourse

    18,923.3

    12,711.8

    12,699.2

    18,043.0

    14,834.2

    Managed receivables

    $

    69,192.6

    $

    50,961.9

    $

    47,145.2

    $

    50,426.3

    $

    45,301.5

    Commercial paper

    $

    8,721.3

    $

    8,065.0

    $

    7,074.8

    $

    8,349.0

    $

    8,520.6

    Selected Financial Ratios

    Return on average owned assets (1)

    2.23

    %

    2.25

    %

    2.24

    %

    2.01

    %

    1.88

    %

    Return on average managed assets (1)

    1.77

    1.78

    1.64

    1.42

    1.39

    Return on average common shareholder's equity (1)

    18.06

    17.50

    15.59

    15.39

    16.84

    Tangible equity to tangible managed assets (3)

    7.75

    7.64

    7.69

    7.21

    6.87

    Managed net interest margin

    8.29

    8.42

    8.09

    8.03

    7.98

    Managed consumer net chargeoff ratio

    3.93

    4.20

    4.21

    3.69

    2.79

    Commercial paper as a percent of total debt

    17.7

    20.6

    21.0

    27.0

    29.0

    Debt to equity

    6.7:1

    6.6:1

    5.9:1

    5.3:1

    6.7:1

    U.S. Branches at December 31

    1,413

    1,378

    1,377

    1,663

    1,498

    (1) 1998 excludes merger and integration related costs of $751.0 million after-tax related to the Beneficial merger and the $118.5 million after tax gain on the sale of Beneficial's Canadian operations. Including the merger and integration related costs and the gain on sale of Beneficial's Canadian operations, the return on average owned assets was .73 percent, the return on average managed assets was .53 percent and the return on average common shareholder's equity was 5.1 percent.

    (2) Excludes reserves, accrued finance charges and amounts due and deferred from sales of receivables.

    (3) Tangible equity consists of total shareholders' equity, excluding unrealized gains and losses on investments, less acquired intangibles and goodwill. Tangible managed assets represent total managed assets less acquired intangibles and goodwill

    Page 18

    ********************************************************************************

    HOUSEHOLD FINANCE CORPORATION

    In millions.

    Year ended December 31

    2000

    1999

    1998

    1997

    1996

    STATEMENTS OF INCOME

    Finance income

    $

    6,438.3

    $

    5,139.8

    $

    4,581.4

    $

    4,205.1

    $

    3,913.8

    Other interest income

    58.0

    67.3

    36.5

    35.1

    48.6

    Interest expense

    2,895.2

    2,152.7

    1,995.5

    1,853.5

    1,723.9

    Net interest margin

    3,601.1

    3,054.4

    2,622.4

    2,386.7

    2,238.5

    Provision for credit losses on owned receivables

    1,564.2

    1,407.4

    1,253.1

    1,252.1

    907.4

    Net interest margin after provision for credit losses

    2,036.9

    1,647.0

    1,369.3

    1,134.6

    1,331.1

    Securitization revenue

    932.8

    794.9

    1,058.5

    1,232.0

    912.4

    Insurance revenue

    394.8

    357.7

    352.9

    352.9

    336.6

    Investment income

    159.0

    154.4

    146.7

    152.6

    212.7

    Fee income

    361.0

    414.1

    498.7

    514.8

    290.3

    Other income

    108.5

    164.9

    239.2

    310.5

    257.0

    Gain on sale of Beneficial Canada

         -        

         -        

    189.4

         -      

         -      

    Total other revenues

    1,956.1

    1,886.0

    2,485.4

    2,562.8

    2,009.0

    Salaries, sales incentives and fringe benefits

    1,149.0

    964.9

    921.7

    925.3

    805.4

    Other operating expenses

    637.6

    629.4

    889.9

    1,233.1

    1,118.7

    Amortization of acquired intangibles and goodwill

    147.0

    143.3

    168.8

    143.4

    121.1

    Policyholders' benefits

    231.7

    224.7

    207.6

    236.6

    286.8

    Merger and integration related costs (1)

         -        

         -        

    1,000.0

         -      

         -     

    Total costs and expenses

    2,165.3

    1,962.3

    3,188.0

    2,538.4

    2,332.0

    Income before income taxes

    1,827.7

    1,570.7

    666.7

    1,159.0

    1,008.1

    Income taxes

    642.2

    550.8

    361.8

    391.9

    358.1

    Net income

    $

    1,185.5

    $

    1,019.9

    $

    304.9

    $

    767.1

    $

    650.0

    (1) On June 30, 1998, Household merged with Beneficial. In connection with the merger, HFC recorded pretax merger and integration related costs of approximately $1 billion ($751 million after-tax).

    Page 19

    ********************************************************************************

    HOUSEHOLD FINANCE CORPORATION

    In millions.

    At December 31

    2000

    1999

    1998

    1997

    1996

    BALANCE SHEETS

    Assets

    Cash

    $

    269.5

    $

    1,487.2

    $

    428.4

    $

    545.3

    $

    508.1

    Investment securities

    3,217.4

    2,257.2

    2,944.4

    2,336.8

    2,281.0

    Receivables, net

    50,498.5

    38,187.6

    34,283.2

    32,152.5

    30,335.0

    Advances to parent company and affiliates

    504.6

    691.8

    494.0

    10.5

    -

    Acquired intangibles and goodwill, net

    1,426.0

    1,572.9

    1,682.7

    1,777.9

    952.8

    Properties and equipment, net

    368.0

    360.3

    376.9

    464.8

    473.6

    Real estate owned

    332.1

    266.6

    235.1

    187.8

    212.3

    Other assets

    1,975.0

    1,991.6

    1,918.3

    1,973.3

    1,562.1

    Total assets

    $

    58,591.1

    $

    46,815.2

    $

    42,363.0

    $

    39,448.9

    $

    36,324.9

    Liabilities and Shareholder's Equity

    Debt:

    Commercial paper, bank and other borrowings

    $

    8,829.4

    $

    8,780.2

    $

    7,143.1

    $

    10,102.4

    $

    10,027.8

    Senior and senior subordinated debt (with

    original maturities over one year)

    40,575.9

    30,383.6

    27,186.1

    20,909.2

    19,279.4

    Total debt

    49,405.3

    39,163.8

    34,329.2

    31,011.6

    29,307.2

    Insurance policy and claim reserves

    891.8

    1,077.2

    1,076.2

    1,182.3

    1,183.2

    Other liabilities

    944.8

    643.0

    1,147.2

    1,451.3

    1,446.9

    Total liabilities

    51,241.9

    40,884.0

    36,552.6

    33,645.2

    31,937.3

    Common shareholder's equity

    7,349.2

    5,931.2

    5,810.4

    5,803.7

    4,387.6

    Total liabilities and shareholder's equity

    $

    58,591.1

    $

    46,815.2

    $

    42,363.0

    $

    39,448.9

    $

    36,324.9

    Page 20

    ********************************************************************************

    HOUSEHOLD FINANCE CORPORATION

    All dollar amounts are stated in millions.

    At December 31

    2000

    1999

    1998

    1997

    1996

    RECEIVABLES ANALYSIS

    Owned receivables

    $

    50,269.3

    $

    38,250.1

    $

    34,446.0

    $

    32,383.3

    $

    30,467.3

    Accrued finance charges

    1,095.9

    698.0

    470.8

    400.1

    371.5

    Credit loss reserve for owned receivables

    (1,603.9)

    (1,470.7)

    (1,448.9)

    (1,417.5)

    (1,169.7)

    Unearned credit insurance premiums and claims reserves

    (622.3)

    (479.4)

    (410.6)

    (344.2)

    (279.8)

    Amounts due and deferred from receivables sales

    2,360.9

    1,927.0

    1,882.3

    1,838.6

    1,521.9

    Reserve for receivables serviced with limited recourse

    (1,001.4)

    (737.4)

    (656.4)

    (707.8)

    (576.2)

    Total owned receivables, net

    50,498.5

    38,187.6

    34,283.2

    32,152.5

    30,335.0

    Receivables serviced with limited recourse

    18,923.3

    12,711.8

    12,699.2

    18,043.0

    14,834.2

    Total managed receivables, net

    $

    69,421.8

    $

    50,899.4

    $

    46,982.4

    $

    50,195.5

    $

    45,169.2

    Managed Portfolio

    Real estate secured

    $

    31,605.7

    $

    23,503.3

    $

    20,796.1

    $

    18,844.7

    $

    15,063.5

    Auto finance (1)

    4,355.7

    3,031.8

    1,765.3

    872.4

    -

    MasterCard/Visa

    13,806.7

    6,567.2

    7,203.0

    11,828.1

    12,143.2

    Private label (2)

    6,238.1

    6,497.5

    7,852.9

    9,064.2

    8,989.5

    Other unsecured

    12,678.3

    10,686.8

    8,845.8

    8,879.1

    8,113.2

    Commercial and other

    508.1

    675.3

    682.1

    937.8

    992.1

    Total

    $

    69,192.6

    $

    50,961.9

    $

    47,145.2

    $

    50,426.3

    $

    45,301.5

    RECEIVABLES BY PRODUCT - AS A PERCENT OF TOTAL MANAGED PORTFOLIO

    Real estate secured

    45.7

    %

    46.1

    %

    44.1

    %

    37.4

    %

    33.3

    %

    Auto finance (1)

    6.3

    6.0

    3.7

    1.7

    -

    MasterCard/Visa

    20.0

    12.9

    15.3

    23.4

    26.8

    Private label (2)

    9.0

    12.7

    16.7

    18.0

    19.8

    Other unsecured

    18.3

    21.0

    18.8

    17.6

    17.9

    Commercial and other

    .7

    1.3

    1.4

    1.9

    2.2

    Total

    100

    %

    100

    %

    100

    %

    100

    %

    100

    %

    (1) Prior to the fourth quarter of 1997, auto finance receivables were not significant and were included in other unsecured receivables.

    (2) Beginning in late 1998, the Bank began originating substantially all private label receivables generated from new merchant relationships.

    Although HFC subsequently purchases a portion of these receivables from the Bank, this change has resulted in an overall decrease in private label receivables.

    Page 21

    ********************************************************************************

    HOUSEHOLD FINANCE CORPORATION

    All dollar amounts are stated in millions.

    At December 31

    2000

    1999

    1998

    1997

    1996

    AVERAGES - YEAR ENDED DECEMBER 31

    Assets

    $

    53,156.8

    $

    45,419.8

    $

    41,835.6

    $

    38,223.1

    $

    34,815.1

    Owned receivables

    44,604.4

    36,977.7

    34,037.8

    31,422.2

    28,110.9

    Receivables serviced with limited recourse

    13,687.6

    11,952.3

    15,253.0

    15,802.9

    12,059.5

    Managed Portfolio

    Real estate secured

    $

    28,016.0

    $

    22,581.3

    $

    19,625.7

    $

    16,929.1

    $

    14,721.8

    Auto finance (1)

    3,744.3

    2,369.0

    1,259.8

    274.7

    -

    MasterCard/Visa

    8,265.7

    6,498.0

    10,437.8

    11,598.4

    9,401.5

    Private label (2)

    6,146.4

    6,947.5

    8,199.0

    8,912.6

    7,607.2

    Other unsecured

    11,539.0

    9,879.8

    9,020.0

    8,485.8

    7,276.5

    Commercial and other

    580.6

    654.4

    748.5

    1,024.5

    1,163.4

    Total

    $

    58,292.0

    $

    48,930.0

    $

    49,290.8

    $

    47,225.1

    $

    40,170.4

    Equity

    $

    6,528.0

    $

    5,829.3

    $

    6,013.4

    $

    5,112.5

    $

    4,079.7

    (1) Prior to the fourth quarter of 1997, auto finance receivables were not significant and were included in other unsecured receivables.

    (2) Beginning in late 1998, the Bank began originating substantially all private label receivables generated from new merchant relationships.

    Although HFC subsequently purchases a portion of these receivables from the Bank, this change has resulted in an overall decrease in private label receivables.

    Page 22

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    HOUSEHOLD FINANCE CORPORATION

    All dollar amounts are stated in millions.

    At December 31

    2000

    1999

    1998

    1997

    1996

    MANAGED RECEIVABLES

    Owned Receivables

    Real estate secured

    $

    30,147.9

    $

    21,229.7

    $

    17,158.7

    $

    12,806.1

    $

    8,401.2

    Auto finance (1)

    1,643.0

    1,225.5

    805.0

    476.5

    -

    MasterCard/Visa

    4,495.0

    2,956.8

    3,805.5

    5,052.4

    7,099.7

    Private label (2)

    4,588.1

    5,347.5

    7,041.4

    8,039.2

    8,472.5

    Other unsecured

    8,887.2

    6,815.3

    4,953.3

    5,071.3

    5,501.8

    Commercial

    508.1

    675.3

    682.1

    937.8

    992.1

    Total

    50,269.3

    38,250.1

    34,446.0

    32,383.3

    30,467.3

    Receivables Serviced With Limited Recourse

    Real estate secured

    1,457.8

    2,273.6

    3,637.4

    6,038.6

    6,662.3

    Auto finance (1)

    2,712.7

    1,806.3

    960.3

    395.9

    -

    MasterCard/Visa

    9,311.7

    3,610.4

    3,397.5

    6,775.7

    5,043.5

    Private label

    1,650.0

    1,150.0

    811.5

    1,025.0

    517.0

    Other unsecured

    3,791.1

    3,871.5

    3,892.5

    3,807.8

    2,611.4

    Total

    18,923.3

    12,711.8

    12,699.2

    18,043.0

    14,834.2

    Total managed receivables

    $

    69,192.6

    $

    50,961.9

    $

    47,145.2

    $

    50,426.3

    $

    45,301.5

    RECEIVABLES BY PRODUCT - AS A PERCENT OF TOTAL MANAGED PORTFOLIO

    Owned Receivables

    Real estate secured

    43.7

    %

    41.6

    %

    36.5

    %

    25.4

    %

    18.5

    %

    Auto finance (1)

    2.4

    2.4

    1.7

    .9

    -

    MasterCard/Visa

    6.5

    5.8

    8.1

    10.0

    15.8

    Private label (2)

    6.6

    10.5

    14.9

    15.9

    18.7

    Other unsecured

    12.8

    13.4

    10.5

    10.1

    12.1

    Commercial

    .7

    1.3

    1.4

    1.9

    2.2

    Total

    72.7

    75.0

    73.1

    64.2

    67.3

    Receivables Serviced With Limited Recourse

    Real estate secured

    2.1

    4.5

    7.7

    12.0

    14.7

    Auto finance (1)

    3.8

    3.5

    2.0

    .8

    -

    MasterCard/Visa

    13.5

    7.1

    7.2

    13.4

    11.1

    Private label

    2.4

    2.3

    1.7

    2.0

    1.1

    Other unsecured

    5.5

    7.6

    8.3

    7.6

    5.8

    Total

    27.3

    25.0

    26.9

    35.8

    32.7

    Total

    100

    %

    100

    %

    100

    %

    100

    %

    100

    %


    Consumer


    Auto


    Retail

    Credit Card

    At December 31, 2000

    Total

    Lending

    Finance

    Services

    Services

    MANAGED RECEIVABLES BY GEOGRAPHIC AREA

    California

    16

    %

    17

    %

    15

    %

    14

    %

    13

    %

    Midwest

    22

    21

    16

    20

    27

    Mid Atlantic

    15

    16

    14

    11

    14

    Northeast

    12

    12

    3

    10

    15

    Southeast

    17

    16

    30

    25

    13

    West, excluding California

    8

    10

    3

    5

    7

    Southwest

               10

              8

            19

            15

            11

    Total

    100

    %

    100

    %

    100

    %

    100

    %

    100

    %

    (1) Prior to the fourth quarter of 1997, auto finance receivables were not significant and were included in other unsecured receivables.

    (2) Beginning in late 1998, the Bank began originating substantially all private label receivables generated from new merchant relationships. Although HFC subsequently purchases a portion of these receivables from the Bank, this change has resulted in an overall decrease in private label receivables.

    Page 23

    ********************************************************************************

    HOUSEHOLD FINANCE CORPORATION

    All dollar amounts are stated in millions.

    At December 31, unless otherwise indicated

    2000

    1999

    1998

    1997

    1996

    CONSUMER CREDIT QUALITY DATA

    Managed Consumer Two-Month-and-Over Contractual Delinquency

    Real estate secured

    $

    889.1

    $

    783.3

    $

    738.6

    $

    676.2

    $

    424.8

    Auto finance (1)

    114.3

    73.9

    40.3

    17.2

    -

    MasterCard/Visa

    375.1

    227.0

    374.0

    387.8

    352.9

    Private label

    593.4

    604.5

    579.2

    544.8

    421.1

    Other unsecured

    1,126.7

    1,050.5

    783.6

    733.2

    554.5

    Total

    $

    3,098.6

    $

    2,739.2

    $

    2,515.7

    $

    2,359.2

    $

    1,753.3

    Managed Consumer Two-Month-and-Over Contractual Delinquency Ratios

    Real estate secured

    2.82

    %

    3.34

    %

    3.55

    %

    3.59

    %

    2.82

    %

    Auto finance (1)

    2.63

    2.44

    2.29

    1.97

    -

    MasterCard/Visa

    2.72

    3.46

    5.19

    3.28

    2.91

    Private label

    9.51

    9.30

    7.38

    6.01

    4.69

    Other unsecured

    8.89

    9.83

    8.86

    8.25

    6.83

    Total

    4.51

    %

    5.45

    %

    5.41

    %

    4.77

    %

    3.96

    %

    Managed Net Chargeoffs for the Year

    Real estate secured

    $

    134.5

    $

    126.5

    $

    112.9

    $

    98.5

    $

    81.6

    Auto finance (1)

    183.6

    117.6

    67.9

    12.8

    -

    MasterCard/Visa

    456.1

    522.4

    656.2

    620.0

    373.0

    Private label

    548.2

    521.0

    496.3

    431.1

    265.8

    Other unsecured

    947.4

    741.5

    712.3

    540.2

    368.6

    Total

    $

    2,269.8

    $

    2,029.0

    $

    2,045.6

    $

    1,702.6

    $

    1,089.0

    Ratio of Managed Net Chargeoffs to Average Managed Receivables for the Year

    Real estate secured

    .48

    %

    .56

    %

    .58

    %

    .58

    %

    .55

    %

    Auto finance (1)

    4.90

    4.96

    5.39

    4.68

    -

    MasterCard/Visa

    5.52

    8.04

    6.29

    5.35

    3.97

    Private label

    8.92

    7.50

    6.05

    4.84

    3.49

    Other unsecured

    8.21

    7.51

    7.90

    6.37

    5.07

    Total

    3.93

    %

    4.20

    %

    4.21

    %

    3.69

    %

    2.79

    %

    (1) Prior to the fourth quarter of 1997, credit quality statistics for auto finance receivables were not significant and were included in other unsecured receivables.

    Page 24

    ********************************************************************************

    HOUSEHOLD FINANCE CORPORATION

    All dollar amounts are stated in millions.

    At December 31

    2000

    1999

    1998

    1997

    1996

    DEBT STRUCTURE

    Commercial paper

    $

    8,721.3

    $

    8,065.0

    $

    7,074.8

    $

    8,349.0

    $

    8,520.6

    Bank and other borrowings

    108.1

    715.2

    68.3

    1,753.4

    1,507.2

    Senior and senior subordinated debt

    (with original maturities over one year)

    40,575.9

    30,383.6

    27,186.1

    20,909.2

    19,279.4

    Total

    $

    49,405.3

    $

    39,163.8

    $

    34,329.2

    $

    31,011.6

    $

    29,307.2

    Debt Structure as a Percent of Total

    Commercial paper

    17.7

    %

    20.6

    %

    20.6

    %

    26.9

    %

    29.1

    %

    Bank and other borrowings

    .2

    1.8

    .2

    5.7

    5.2

    Senior and senior subordinated debt

    (with original maturities over one year)

    82.1

    77.6

    79.2

    67.4

    65.7

    Total

    100

    %

    100

    %

    100

    %

    100

    %

    100

    %

    Maturity Distribution

    Senior and senior subordinated debt

    (with original maturities over one year)

    Less than 1 year

    $

    7,554.6

    $

    6,148.0

    $

    5,937.5

    $

    4,175.1

    $

    4,932.8

    1 - 5 years

    20,050.0

    13,889.0

    13,168.5

    11,684.2

    10,277.3

    Over 5 years

    12,971.3

    10,346.6

    8,080.1

    5,049.9

    4,069.3

    Total

    $

    40,575.9

    $

    30,383.6

    $

    27,186.1

    $

    20,909.2

    $

    19,279.4

    KEY FINANCIAL RATIOS

    Debt to equity

    6.7:1

    6.6:1

    5.9:1

    5.3:1

    6.7:1

    Ratio of earnings to fixed charges (1)

    1.62:1

    1.72:1

    1.81:1

    1.61:1

    1.57:1

    Weighted-average interest rates: (2)

    Commercial paper, bank and other borrowings

    6.4

    %

    5.3

    %

    5.4

    %

    5.5

    %

    5.4

    %

    Senior and senior subordinated debt

    6.5

    5.9

    6.2

    6.7

    6.7

    Composite

          6.4

          5.8

          6.0

          6.3

          6.3

    (1) 1998 excludes merger and integration related costs of $751.0 million after-tax related to the Beneficial merger. Including these items, the ratio of earnings to fixed charges was 1.32:1.

    (2) For the year. Includes the impact of interest-rate swap agreements.

    Page 25

    ********************************************************************************

    HOUSEHOLD BANK, f.s.b.

    Household Bank, f.s.b. ("the Bank") is a federally chartered savings bank. The Bank's principal products include unsecured consumer loans, real estate secured loans, auto finance loans and credit cards. Credit cards are offered through the Bank's subsidiary, Household Bank (SB), N.A., ("SB"), and include MasterCard, Visa and private label credit cards. Under an agreement with HFC, the Bank also temporarily funds tax refund anticipation loans ("RAL"). RAL loans are sold to HFC within two days of origination with no recourse to the Bank. The Bank earns a fee on each loan sold to HFC.

    On October 1, 2000, SB sold GM Card® receivables, including $1.0 billion in owned receivables and $5.7 billion in serviced with limited recourse receivables, at fair market value, to HFC. SB remains the designated issuer of the GM Card® under a written contractual agreement with Household. Following this initial sale, receivables related to previously sold accounts are sold to HFC on a daily basis and new account originations are sold periodically at fair market value.

    On February 7, 2000, Household, through its wholly owned subsidiary, Renaissance Credit Services, Inc. ("RCS"), purchased Renaissance Holdings, Inc. ("Renaissance"), a privately held issuer of secured and unsecured credit cards to non-prime customers. Immediately after the purchase, the operations of Renaissance's subsidiary savings bank were merged with and into the Bank.

    In 1999, the Bank began originating auto finance receivables primarily through direct mail, alliance relationships and the Internet. Beginning in late 1998, SB also began originating substantially all private label receivables generated from new merchant relationships. Certain delinquent private label receivables are subsequently sold to HFC. In 1997, the Bank sold its student loan portfolio and in 1996, completed the sale of its consumer banking branches.

    The Bank funds its operations with retail certificates of deposit, collection of receivable balances, and various wholesale funding sources including federal funds borrowings, domestic and European medium-term notes and underwritten senior debt.

    The Bank is regulated by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. At year-end 2000 the leverage, tier 1 and risk-based capital ratio levels for a "well capitalized" institution were 5.0, 6.0 and 10.0  percent, respectively. The Bank's ratios for each of these categories at December 31, 2000 were 9.2, 10.0 and 11.8 percent, respectively.

    All dollar amounts are stated in millions.

    2000

    1999

    1998

    1997

    1996

    FINANCIAL HIGHLIGHTS

    Statement of Income Data - Year Ended December 31 (1)

    Net interest margin and other revenues

    $

    1,629.2

    $

    908.5

    $

    573.3

    $

    527.2

    $

    726.6

    Provision for credit losses on owned receivables

    409.0

    121.3

    128.5

    131.3

    126.1

    Operating expenses

    656.4

    345.7

    309.7

    249.1

    305.5

    Income taxes

    212.1

    163.6

    49.8

    53.9

    118.7

    Net income

    $

    351.7

    $

    277.9

    $

    85.3

    $

    92.9

    $

    176.3

    Balance Sheet Data at December 31 (1)

    Total assets

    $

    11,107.7

    $

    8,845.5

    $

    4,297.0

    $

    3,398.3

    $

    5,101.6

    Receivables:

    Owned (2)

    $

    10,561.2

    $

    7,511.3

    $

    3,612.0

    $

    2,920.4

    $

    4,594.0

    Serviced with limited recourse - MasterCard/Visa (2)

             

    6,046.4

    6,066.8

    5,299.9

    5,106.2

    Managed receivables

    $

    10,561.2

    $

    13,557.7

    $

    9,678.8

    $

    8,220.3

    $

    9,700.2

    Selected Financial Ratios (1)

    Return on average owned assets

    3.37

    %

    5.15

    %

    2.43

    %

    2.15

    %

    2.65

    %

    Return on average managed assets (2)

    2.39

    2.49

    .93

    1.00

    1.47

    Return on average shareholder's equity

    41.4

    42.1

    13.1

    15.3

    26.4

    Managed net interest margin

    7.46

    6.94

    7.28

    6.45

    5.87

    Managed net chargeoff ratio

    2.79

    4.37

    5.65

    5.37

    3.49

    Leverage ratio

    9.2

    7.0

    14.3

    18.4

    11.4

    Risk-based capital ratio

    11.8

          10.6 

         20.2 

        31.0

        24.4

    (1) 1999 results reflect various changes in the Bank's operations including the purchase of $2.1 billion in real estate secured loans, origination of auto finance and private label receivables, and the sale of certain loans to HFC.

    (2) On October 1, 2000, SB sold its GM Card Portfolio, including $1.0 billion in owned receivables and $5.7 billion in serviced with limited recourse receivables, at fair market value to HFC. SB remains the designated issuer of the GM Card. Following this initial sale, future charges on accounts previously sold are sold to HFC on a daily basis and new account originations are sold periodically at fair market value.

    Page 26

    ********************************************************************************

    Page 27

    ********************************************************************************

    HOUSEHOLD BANK, f.s.b.

    In millions.

    Year ended December 31

    2000

    1999

    1998

    1997

    1996

    STATEMENTS OF INCOME

    Finance income

    $

    1,364.9

    $

    563.9

    $

    357.0

    $

    438.0

    $

    599.1

    Other interest income

    16.3

    3.6

    9.1

    7.2

    36.2

    Interest expense

    600.5

    244.4

    160.9

    232.8

    358.7

    Net interest margin

    780.7

    323.1

    205.2

    212.4

    276.6

    Provision for credit losses on owned receivables

    409.0

    121.3

    128.5

    131.3

    126.1

    Net interest margin after provision for credit losses

    371.7

    201.8

    76.7

    81.1

    150.5

    Securitization revenue

    303.2

    402.1

    277.9

    218.8

    250.8

    Fee income

    429.7

    120.6

    46.1

    44.2

    27.4

    Other income

    115.6

    62.7

    44.1

    51.8

    171.8

    Total other revenues

    848.5

    585.4

    368.1

    314.8

    450.0

    Salaries, sales incentives, and fringe benefits

    5.9

    2.0

    5.1

    7.4

    18.4

    Other operating expenses

    650.5

    343.7

    304.6

    241.7

    287.1

    Total costs and expenses

    656.4

    345.7

    309.7

    249.1

    305.5

    Income before income taxes

    563.8

    441.5

    135.1

    146.8

    295.0

    Income taxes

    212.1

    163.6

    49.8

    53.9

    118.7

    Net income

    $

    351.7

    $

    277.9

    $

    85.3

    $

    92.9

    $

    176.3

    Page 28

    ********************************************************************************

    HOUSEHOLD BANK, f.s.b.

    In millions.

    At December 31

    2000

    1999

    1998

    1997

    1996

    BALANCE SHEETS

    Assets

    Cash

    $

    523.9

    $

    475.6

    $

    453.6

    $

    261.4

    $

    290.6

    Investment securities

    52.1

    634.6

    22.5

    46.0

    80.9

    Receivables, net

    10,255.5

    7,517.2

    3,591.7

    2,907.7

    4,543.7

    Other assets

    276.2

    218.1

    229.2

    183.2

    186.4

    Total assets

    $

    11,107.7

    $

    8,845.5

    $

    4,297.0

    $

    3,398.3

    $

    5,101.6

    Liabilities and Shareholder's Equity

    Debt:

    Deposits

    $

    7,416.1

    $

    5,498.8

    $

    1,417.2

    $

    1,323.0

    $

    1,787.0

    Federal funds

    1,300.0

    944.0

    1,389.0

    26.0

    50.0

    Subordinated debt and other long-term borrowings

    1,120.5

    1,164.1

    718.5

    945.5

    2,147.0

    Other

    74.2

    465.9

    76.1

    367.1

    441.0

    Total debt

    9,910.8

    8,072.8

    3,600.8

    2,661.6

    4,425.0

    Other liabilities

    176.1

    146.9

    78.0

    108.5

    91.5

    Total liabilities

    10,086.9

    8,219.7

    3,678.8

    2,770.1

    4,516.5

    Total shareholder's equity

    1,020.8

    625.8

    618.2

    628.2

    585.1

    Total liabilities and shareholder's equity

    $

    11,107.7

    $

    8,845.5

    $

    4,297.0

    $

    3,398.3

    $

    5,101.6

    DEBT STRUCTURE AS A PERCENT OF TOTAL DEBT

    Deposits

    74.8

    %

    68.1

    %

    39.4

    %

    49.7

    %

    40.4

    %

    Federal funds

    13.2

    11.7

    38.5

    1.0

    1.1

    Subordinated debt and other long-term borrowings

    11.3

    14.4

    20.0

    35.5

    48.5

    Other

    .7

    5.8

    2.1

    13.8

    10.0

    Total debt

    100

    %

    100

    %

    100

    %

    100

    %

    100

    %

    Page 29

    ********************************************************************************

    HOUSEHOLD BANK, f.s.b.

    All dollar amounts are stated in millions.

    At December 31

    2000

    1999

    1998

    1997

    1996

    RECEIVABLES ANALYSIS

    Owned Receivables

    First mortgage

    $

    87.9

    $

    129.1

    $

    153.2

    $

    385.7

    $

    699.9

    Real estate secured (1)

    3,782.6

    2,342.0

    315.4

    496.9

    649.1

    Auto finance (2)

    207.6

    8.0

    -

    -

    -

    MasterCard/Visa (3)

    1,383.6

    1,187.0

    1,515.9

    1,163.4

    1,703.8

    Private label (4)

    4,044.5

    3,199.2

    1,009.7

    -

    -

    Other unsecured (5)

    1,054.8

    645.9

    609.0

    873.9

    1,539.2

    Commercial

    .2

    .1

    8.8

    .5

    2.0

    Total owned receivables

    10,561.2

    7,511.3

    3,612.0

    2,920.4

    4,594.0

    Accrued finance charges

    94.6

    71.9

    43.5

    42.9

    85.0

    Credit loss reserve for owned receivables

    (400.3)

    (137.9)

    (135.1)

    (118.5)

    (130.5)

    Amounts due and deferred from receivables sales

    -

    178.8

    178.2

    194.1

    102.1

    Reserve for receivables serviced with limited recourse

         -        

    (106.9)

    (106.9)

    (131.2)

    (106.9)

    Total owned receivables, net

    10,255.5

    7,517.2

    3,591.7

    2,907.7

    4,543.7

    Receivables serviced with limited recourse

         -        

    6,046.4

    6,066.8

    5,299.9

    5,106.2

    Total managed receivables, net

    $

    10,255.5

    $

    13,563.6

    $

    9,658.5

    $

    8,207.6

    $

    9,649.9

    Managed Portfolio

    First mortgage

    $

    87.9

    $

    129.1

    $

    153.2

    $

    385.7

    $

    699.9

    Real estate secured (1)

    3,782.6

    2,342.0

    315.4

    496.9

    649.1

    Auto finance (2)

    207.6

    8.0

    -

    -

    -

    MasterCard/Visa (3)

    1,383.6

    7,233.4

    7,582.7

    6,463.3

    6,810.0

    Private label (4)

    4,044.5

    3,199.2

    1,009.7

    -

    -

    Other unsecured (5)

    1,054.8

    645.9

    609.0

    873.9

    1,539.2

    Commercial

    .2

    .1

    8.8

    .5

    2.0

    Total

    $

    10,561.2

    $

    13,557.7

    $

    9,678.8

    $

    8,220.3

    $

    9,700.2

    RECEIVABLES BY PRODUCT - AS A PERCENT OF TOTAL MANAGED PORTFOLIO

    First mortgage

    .8

    %

    .9

    %

    1.6

    %

    4.7

    %

    7.2

    %

    Real estate secured (1)

    35.8

    17.3

    3.3

    6.0

    6.7

    Auto finance (2)

    2.0

    .1

    -

    -

    -

    MasterCard/Visa (3)

    13.1

    53.3

    78.4

    78.7

    70.2

    Private label (4)

    38.3

    23.6

    10.4

    -

    -

    Other unsecured (5)

    10.0

    4.8

    6.3

    10.6

    15.9

    Total

    100

    %

    100

    %

    100

    %

    100

    %

    100

    %

    Credit

    Consumer

    Auto

    Retail

    Card

    At December 31, 2000

    Total

    Lending

    Finance

    Services

    Services

    MANAGED CONSUMER RECEIVABLES BY GEOGRAPHIC AREA

    California

    15

    %

    18

    %

    14

    %

    15

    %

    13

    %

    Midwest

    20

    19

    16

    20

    22

    Mid Atlantic

    10

    7

    12

    11

    13

    Northeast

    8

    4

    7

    10

    14

    Southeast

    22

    23

    17

    24

    16

    West, excluding California

    9

    11

    6

    5

    9

    Southwest

    16

    18

    28

    15

    13

    Total

    100

    %

    100

    %

    100

    %

    100

    %

    100

    %

    (1)1999, the Bank purchased $2.1 billion of real- estate secured loans.

    (2) In August 1999, the Bank began originating auto finance receivables.

    (3) On October 1, 2000, SB sold $6.7 billion in managed GM Card receivables to HFC.

    (4) Beginning in late 1998, the Bank began originating substantially all private label receivables generated from new merchant relationships. Although HFC subsequently purchases a portion of these receivables, the change has resulted in an overall increase in the Bank's private label receivables.

    5) In 1997, the Bank sold its entire portfolio of student loans totaling about $900 million, as it exited this business.

    Page 30

    ********************************************************************************

    HOUSEHOLD BANK, f.s.b.

    All dollar amounts are stated in millions.

    At December 31, unless otherwise indicated.

    2000

    1999

    1998

    1997

    1996

    CONSUMER CREDIT QUALITY DATA

    Managed Consumer Two-Month-and-Over Contractual Delinquency (1)

    First mortgage

    $

    12.4

    $

    20.0

    $

    22.5

    $

    38.1

    $

    63.6

    Real estate secured

    2.5

    4.6

    18.0

    27.5

    30.0

    Auto finance (2)

    1.9

    -

    -

    -

    -

    MasterCard/Visa

    201.4

    159.4

    212.3

    196.4

    181.1

    Other unsecured

    5.3

    12.7

    24.3

    44.3

    60.1

    Total

    $

    223.5

    $

    196.7

    $

    277.1

    $

    306.3

    $

    334.8

    Managed Consumer Two-Month-and-Over Contractual Delinquency Ratios (1)

    First mortgage

    14.14

    %

    15.46

    %

    14.70

    %

    9.88

    %

    9.08

    %

    Real estate secured

    .07

    .20

    5.70

    5.53

    4.63

    Auto finance (2)

    .89

    -

    -

    -

    -

    MasterCard/Visa

    14.56

    2.20

    2.80

    3.04

    2.66

    Other unsecured

    .50

    1.97

    3.99

    5.07

    3.90

    Total

    2.12

    %

    1.45

    %

    2.87

    %

    3.73

    %

    3.45

    %

    Managed Net Chargeoffs for the Year (1)

    First mortgage

    $

    1.0

    $

    3.5

    $

    1.1

    $

    5.9

    $

    6.1

    Real estate secured

    .7

    .1

    4.6

    5.4

    5.5

    Auto finance (2)

    .8

    -

    -

    -

    -

    MasterCard/Visa

    376.1

    432.7

    431.4

    408.6

    336.0

    Private label (2)

    .3

    .3

    -

    -

    -

    Other unsecured

    5.4

    17.3

    41.3

    55.3

    41.5

    Total

    $

    384.3

    $

    453.9

    $

    478.4

    $

    475.2

    $

    389.1

    Ratio of Net Chargeoffs to Average Managed Receivables for the Year (1)

    First mortgage

    .96

    %

    2.38

    %

    .39

    %

    1.07

    %

    .35

    %

    Real estate secured

    .02

    .01

    1.11

    .95

    .39

    Auto finance (2)

    .81

    -

    -

    -

    -

    MasterCard/Visa

    6.28

    6.30

    6.33

    6.58

    5.16

    Private label (2)

    .01

    .02

    -

    -

    -

    Other unsecured

    .71

    2.89

    5.83

    3.66

    2.65

    Total

    2.79

    %

    4.41

    %

    5.68

    %

    5.37

    %

    3.46

    %

    (1) On October 1, 2000, SB sold $6.7 billion in managed GM Card receivables to HFC. In 1999, the Bank began selling delinquent private label and real estate secured receivables to HFC.

    (2) The Bank began originating auto finance receivables in 1999 and private label receivables in 1998.

    Page 31

    ********************************************************************************

    HOUSEHOLD GLOBAL FUNDING, INC.

    Household's United Kingdom and Canadian operations are consolidated in Household Global Funding, Inc. ("Global"). In the United Kingdom, principal products are secured and unsecured consumer loans, co-branded and affinity MasterCard and Visa credit cards and retail finance. In Canada, principal products are consumer loans and private label credit cards.

    Global's operating subsidiaries are independently funded with their borrowings supported by a Household or an HFC guarantee. Household's Canadian operation is principally funded with commercial paper and intermediate and long-term debt.

    United Kingdom operations are funded through wholesale deposits, short and intermediate-term bank lines of credit, long-term debt and securitizations of receivables. Household International Netherlands, B.V., a subsidiary of Global, has the ability to issue long-term debt in the United States and lends funds to its United Kingdom operating subsidiary, HFC Bank plc.

    HFC Bank plc, a fully licensed United Kingdom bank, is regulated by the Financial Services Authority. In Canada, Household Trust Company, an operating company, is regulated by the Office of the Superintendent of Financial Institutions.

    Beneficial's United Kingdom operations were merged with and into Global on December 22, 1998, effective June 30, 1998. In accordance with the guidance established for mergers involving affiliates under common control, the results of the United Kingdom operations of Beneficial are reflected in Global's financial statements for the period subsequent to June 30, 1998.

    All dollar amounts are stated in millions.

    2000

    1999

    1998

    1997

    1996

    FINANCIAL HIGHLIGHTS

    Statement of Income Data - Year Ended December 31

    Net interest margin and other revenues

    $

    876.4

    $

    831.0

    $

    643.8

    $

    516.9

    $

    436.2

    Provision for credit losses on owned receivables

    180.6

    189.5

    132.0

    104.6

    100.8

    Operating expenses

    333.2

    320.7

    263.9

    220.7

    203.9

    Policyholders' benefits

    29.9

    33.4

    30.7

    19.4

    25.1

    Income tax expense

    99.4

    63.7

    61.4

    54.5

    35.6

    Net income

    $

    233.3

    $

    223.7

    $

    155.8

    $

    117.7

    $

    70.8

    Net income:

    United Kingdom

    $

    212.5

    $

    204.2

    $

    136.9

    $

    84.0

    $

    63.3

    Canada

    21.4

    18.5

    15.1

    13.1

    15.1

    Parent company and eliminations

    (.6)

    1.0

    3.8

    20.6

    (7.6)

    Total

    $

    233.3

    $

    223.7

    $

    155.8

    $

    117.7

    $

    70.8

    Balance Sheet Data at December 31

    Assets:

    United Kingdom

    $

    6,462.6

    $

    6,584.5

    $

    6,379.4

    $

    2,934.2

    $

    2,654.5

    Canada

    1,246.6

    1,187.6

    1,037.1

    1,338.5

    1,424.2

    Parent company and eliminations

    116.8

    109.8

    110.8

    7.1

    4.7

    Total

    $

    7,826.0

    $

    7,881.9

    $

    7,527.3

    $

    4,279.8

    $

    4,083.4

    Receivables:

    Owned

    $

    6,522.3

    $

    6,513.9

    $

    6,124.5

    $

    3,591.3

    $

    3,356.3

    Serviced with limited recourse

    1,326.2

    1,104.9

    1,241.2

    1,135.6

    910.8

    Managed receivables

    $

    7,848.5

    $

    7,618.8

    $

    7,365.7

    $

    4,726.9

    $

    4,267.1

    Selected Financial Ratios

    Return on managed assets

    2.67

    %

    2.55

    %

    2.23

    %

    2.29

    %

    1.50

    %

    Managed net interest margin:

    United Kingdom

    7.14

    7.66

    7.24

    7.67

    8.94

    Canada

    10.71

    11.16

    10.90

    10.14

    9.04

    Managed net chargeoff ratio:

    United Kingdom

    2.59

    2.83

    2.28

    2.07

    2.37

    Canada

    3.72

    4.88

    5.92

    4.45

    3.40

    Debt to equity ratio

    6.9:1

    6.4:1

    7.4:1

    5.6:1

    6.4:1

    Exchange Rates (1)

    United Kingdom - Average for the year

    $

    1.5160

    $

    1.6177

    $

    1.6575

    $

    1.6395

    $

    1.5625

    United Kingdom - At December 31

    1.4930

    1.6151

    1.6600

    1.6451

    1.7140

    Canada - Average for the year

    .6735

    .6734

    .6748

    .7223

    .7335

    Canada - At December 31

    .6671

    .6922

    .6501

    .6995

    .7297

    Number of branches:

    United Kingdom

    181

    176

    179

    143

    141

    Canada

    99

    85

    75

    74

    57

    Total

    280

    261

    254

    217

    198

    (1) In U.S. dollars, per unit of foreign currency.

    Page 32

    ********************************************************************************

    Page 33

    ********************************************************************************

     

    HOUSEHOLD GLOBAL FUNDING, INC.

    In millions.

    Year ended December 31

    2000

    1999

    1998

    1997

    1996

    STATEMENTS OF INCOME

    Finance income

    $

    852.0

    $

    854.1

    $

    682.0

    $

    497.2

    $

    435.8

    Other interest income

    19.8

    19.2

    18.6

    9.8

    10.5

    Interest expense

    404.1

    378.3

    315.2

    210.9

    193.5

    Net interest margin

    467.7

    495.0

    385.4

    296.1

    252.8

    Provision for credit losses on owned receivables

    180.6

    189.5

    132.0

    104.6

    100.8

    Net interest margin after provision for credit losses

    287.1

    305.5

    253.4

    191.5

    152.0

    Securitization revenue

    126.4

    83.4

    64.0

    68.7

    62.4

    Insurance revenue

    166.4

    176.9

    139.9

    101.3

    85.5

    Investment income

    15.1

    14.4

    14.2

    14.9

    6.6

    Fee income

    61.0

    54.1

    44.6

    33.4

    25.0

    Other income

    39.8

    7.2

    (4.3)

    2.5

    3.9

    Total other revenues

    408.7

    336.0

    258.4

    220.8

    183.4

    Salaries, sales incentives, and fringe benefits

    160.3

    144.6

    127.3

    99.7

    83.1

    Other operating expenses

    172.9

    176.1

    136.6

    121.0

    120.8

    Policyholders' benefits

    29.9

    33.4

    30.7

    19.4

    25.1

    Total costs and expenses

    363.1

    354.1

    294.6

    240.1

    229.0

    Income before income tax expense

    332.7

    287.4

    217.2

    172.2

    106.4

    Income tax expense

    99.4

    63.7

    61.4

    54.5

    35.6

    Net income

    $

    233.3

    $

    223.7

    $

    155.8

    $

    117.7

    $

    70.8

    In millions.

    United

    Year ended December 31, 2000

    Global

    Other (1)

    Kingdom

    Canada

    CONSOLIDATING STATEMENT OF INCOME

    Finance income

    $

    852.0

    -

    $

    664.9

    $

    187.1

    Other interest income

    19.8

    -

    19.5

    .3

    Interest expense

    404.1

    $

    5.1

    332.9

    66.1

    Net interest margin

    467.7

    (5.1)

    351.5

    121.3

    Provision for credit losses on owned receivables

    180.6

    .5

    137.5

    42.6

    Net interest margin after provision for credit losses

    287.1

    (5.6)

    214.0

    78.7

    Securitization revenue

    126.4

    -

    126.4

    -

    Insurance revenue

    166.4

    -

    166.4

    -

    Investment income

    15.1

    -

    15.1

    -

    Fee income

    61.0

    -

    54.2

    6.8

    Other income

    39.8

    4.6

    35.0

    .2

    Total other revenues

    408.7

    4.6

    397.1

    7.0

    Salaries, sales incentives, and fringe benefits

    160.3

    -

    132.4

    27.9

    Other operating expenses

    172.9

    .1

    152.8

    20.0

    Policyholders' benefits

    29.9

             

    29.9

             

    Total costs and expenses

    363.1

            .1 

    315.1

    47.9

    Income before income tax expense

    332.7

    (1.1)

    296.0

    37.8

    Income tax expense

    99.4

           (.5)  

    83.5

    16.4

    Net income

    $

    233.3

    $

    (.6)

    $

    212.5

    $

    21.4

    (1) Includes Household Global Funding parent and eliminations.

    Page 34

    ********************************************************************************

    HOUSEHOLD GLOBAL FUNDING, INC.

    In millions.

    At December 31

    2000

    1999

    1998

    1997

    1996

    BALANCE SHEETS

    Assets

    Cash

    $

    73.5

    $

    102.0

    $

    27.9

    $

    23.0

    $

    19.7

    Investment securities

    760.6

    833.2

    919.1

    515.7

    483.8

    Receivables, net

    6,403.1

    6,454.6

    6,050.5

    3,493.6

    3,280.2

    Other assets

    588.8

    492.1

    529.8

    247.5

    299.7

    Total assets

    $

    7,826.0

    $

    7,881.9

    $

    7,527.3

    $

    4,279.8

    $

    4,083.4

    Liabilities and Shareholder's Equity

    Debt:

    Deposits

    $

    1,712.0

    $

    1,235.7

    $

    1,169.9

    $

    792.3

    $

    863.9

    Commercial paper, bank and other borrowings

    1,085.2

    1,577.4

    2,307.9

    1,142.7

    955.6

    Senior debt (with original maturities over one year)

    3,171.7

    3,154.0

    2,344.3

    1,341.8

    1,367.5

    Total debt

    5,968.9

    5,967.1

    5,822.1

    3,276.8

    3,187.0

    Insurance policy and claim reserves

    214.8

    231.7

    295.5

    200.1

    183.7

    Other liabilities

    774.0

    754.2

    622.9

    221.7

    216.4

    Total liabilities

    6,957.7

    6,953.0

    6,740.5

    3,698.6

    3,587.1

    Common shareholder's equity

    868.3

    928.9

    786.8

    581.2

    496.3

    Total liabilities and shareholder's equity

    $

    7,826.0

    $

    7,881.9

    $

    7,527.3

    $

    4,279.8

    $

    4,083.4

    In millions.

    United

    At December 31, 2000

    Global

    Other (1)

    Kingdom

    Canada

    CONSOLIDATING BALANCE SHEET

    Assets

    Cash

    $

    73.5

    $

    39.5

    $

    30.4

    $

    3.6

    Investment securities

    760.6

    -

    755.8

    4.8

    Receivables, net

    6,403.1

    3.6

    5,186.9

    1,212.6

    Other assets

    588.8

    73.7

    489.5

    25.6

    Total assets

    $

    7,826.0

    $

    116.8

    $

    6,462.6

    $

    1,246.6

    Liabilities and Shareholder's Equity

    Debt:

    Deposits

    $

    1,712.0

    -

    $

    1,710.6

    $

    1.4

    Commercial paper, bank and other borrowings

    $

    1,085.2

    $

    (395.9)

    $

    1,115.5

    $

    365.6

    Senior debt (with original maturities over one year)

    3,171.7

    (.2)

    2,422.7

    749.2

    Total debt

    5,968.9

    (396.1)

    5,248.8

    1,116.2

    Insurance policy and claim reserves

    214.8

    (12.3)

    227.1

    -

    Other liabilities

    774.0

    435.5

    311.8

    26.7

    Total liabilities

    6,957.7

    27.1

    5,787.7

    1,142.9

    Common shareholder's equity

    868.3

    89.7

    674.9

    103.7

    Total liabilities and shareholder's equity

    $

    7,826.0

    $

    116.8

    $

    6,462.6

    $

    1,246.6

    (1) Includes Household Global Funding parent and eliminations.

    Page 35

    ********************************************************************************

    HOUSEHOLD GLOBAL FUNDING, INC.

    All dollar amounts are stated in millions.

    At December 31

    2000

    1999

    1998

    1997

    1996

    RECEIVABLES ANALYSIS

    Owned Receivables

    Real estate secured

    $

    1,259.7

    $

    1,090.2

    $

    1,218.6

    $

    483.2

    $

    484.8

    MasterCard/Visa

    2,206.7

    2,167.8

    1,852.4

    651.6

    581.2

    Private label

    1,675.8

    1,573.0

    1,515.0

    1,317.6

    1,263.0

    Other unsecured

    1,377.7

    1,681.8

    1,535.3

    1,117.0

    1,001.5

    Commercial and other

    2.4

    1.1

    3.2

    21.9

    25.8

    Total owned receivables

    6,522.3

    6,513.9

    6,124.5

    3,591.3

    3,356.3

    Accrued finance charges

    106.6

    103.7

    121.4

    88.0

    93.2

    Credit loss reserve for owned receivables

    (143.3)

    (143.7)

    (142.7)

    (97.1)

    (88.2)

    Unearned credit insurance premiums and claims reserves

    (102.9)

    (89.9)

    (94.5)

    (108.2)

    (102.0)

    Amounts due and deferred from receivables sales

    101.3

    135.9

    92.4

    61.5

    54.1

    Reserve for receivables serviced with limited recourse

    (80.9)

    (65.3)

    (50.6)

    (41.9)

    (33.2)

    Total owned receivables, net

    6,403.1

    6,454.6

    6,050.5

    3,493.6

    3,280.2

    Receivables serviced with limited recourse

    1,326.2

    1,104.9

    1,241.2

    1,135.6

    910.8

    Total managed receivables, net

    $

    7,729.3

    $

    7,559.5

    $

    7,291.7

    $

    4,629.2

    $

    4,191.0

    Managed Portfolio

    Real estate secured

    $

    1,259.7

    $

    1,090.2

    $

    1,218.6

    $

    483.2

    $

    484.8

    MasterCard/Visa

    2,424.9

    2,413.9

    2,124.1

    913.0

    581.2

    Private label

    1,675.8

    1,573.0

    1,515.0

    1,317.6

    1,263.0

    Other unsecured

    2,485.7

    2,540.6

    2,504.8

    1,991.2

    1,912.3

    Commercial and other

    2.4

    1.1

    3.2

    21.9

    25.8

    Total

    $

    7,848.5

    $

    7,618.8

    $

    7,365.7

    $

    4,726.9

    $

    4,267.1

    RECEIVABLES BY PRODUCT - AS A PERCENT OF TOTAL MANAGED PORTFOLIO

    Real estate secured

    16.1

    %

    14.3

    %

    16.5

    %

    10.2

    %

    11.4

    %

    MasterCard/Visa

    30.9

    31.7

    28.8

    19.3

    13.6

    Private label

    21.3

    20.7

    20.6

    27.9

    29.6

    Other unsecured

    31.7

    33.3

    34.1

    42.1

    44.8

    Commercial and other

             

             

             

          .5  

          .6  

    Total managed portfolio

    100

    %

    100

    %

    100

    %

    100

    %

    100

    %

    All dollar amounts are stated in millions

    United

    Percent

    Percent of

    At December 31, 2000

    Global

    Kingdom

    of U.K.

    Canada

    Canada

    CONSOLIDATING MANAGED RECEIVABLES

    Real estate secured

    $

    1,259.7

    $

    857.1

    12.9

    %

    $

    402.6

    32.9

    %

    MasterCard/Visa

    2,424.9

    2,424.9

    36.7

    -

    -

    Private label

    1,675.8

    1,234.6

    18.6

    441.2

    36.1

    Other unsecured

    2,485.7

    2,108.2

    31.8

    377.5

    30.9

    Commercial and other

          2.4  

          1.0  

             

        1.4

            .1 

    Total

    $

    7,848.5

    $

    6,625.8

    100

    %

    $

    1,222.7

    100

    %

    Page 36

    ********************************************************************************

    HOUSEHOLD GLOBAL FUNDING, INC.

    All dollar amounts are stated in millions.

    At December 31, unless otherwise indicated.

    2000

    1999

    1998

    1997

    1996

    CONSUMER CREDIT QUALITY DATA

    Managed Consumer Two-Month-and-Over Contractual Delinquency

    United Kingdom:

    Real estate secured

    $

    67.1

    7.83

    %

    $

    84.7

    11.28

    %

    $

    58.0

    6.32

    %

    $

    13.4

    8.12

    %

    $

    17.7

    10.81

    %

    MasterCard/Visa

    64.8

    2.67

    53.2

    2.20

    35.7

    1.68

    11.0

    1.21

    8.2

    1.41

    Private label

    36.6

    2.97

    39.8

    3.47

    36.9

    3.16

    20.2

    2.60

    20.1

    2.90

    Other unsecured

    134.5

    6.38

    131.7

    6.07

    103.5

    4.79

    68.2

    4.25

    61.7

    3.99

    Total

    303.0

    4.58

    309.4

    4.78

    234.1

    3.68

    112.8

    3.27

    107.7

    3.61

    Canada:

    Real estate secured

    6.0

    1.50

    6.3

    1.87

    6.7

    2.20

    14.7

    4.56

    21.6

    6.66

    Private label

    27.7

    6.29

    28.8

    6.73

    26.9

    7.70

    38.2

    7.09

    30.2

    5.28

    Other unsecured

    25.7

    6.80

    27.4

    7.40

    31.6

    9.20

    44.9

    11.58

    34.0

    9.32

    Commercial and other

    -

    -

    -

    -

    -

    -

    2.1

    27.35

    4.3

    19.41

    Total

    59.4

    4.87

    62.5

    5.50

    65.2

    6.54

    99.9

    7.95

    90.1

    7.02

    Global Funding Parent

             

             

             

             

             

             

    1.3

    11.43

             

             

    Total Global

    $

    362.4

    4.62

    %

    $

    371.9

    4.89

    %

    $

    299.3

    4.06

    %

    $

    214.0

    4.53

    %

    $

    197.8

    4.64

    %

    Managed Net Chargeoffs for the Year

    United Kingdom:

    Real estate secured

    $

    5.7

    .73

    %

    $

    8.6

    1.05

    %

    $

    3.3

    .56

    %

    $

    1.1

    .64

    %

    $

    2.9

    1.86

    %

    MasterCard/Visa

    68.4

    2.99

    66.9

    3.12

    39.3

    2.65

    15.0

    2.15

    13.9

    3.18

    Private label

    29.0

    2.51

    34.4

    3.05

    13.5

    1.48

    13.3

    1.79

    15.5

    2.92

    Other unsecured

    60.6

    2.90

    67.1

    3.10

    55.2

    2.91

    36.1

    2.31

    24.2

    1.92

    Total

    163.7

    2.59

    177.0

    2.83

    111.3

    2.28

    65.5

    2.07

    56.5

    2.37

    Canada:

    Real estate secured

    4.6

    1.25

    6.3

    1.96

    11.5

    3.58

    9.7

    2.72

    10.2

    3.37

    Private label

    21.5

    5.12

    23.6

    6.67

    30.4

    7.38

    25.9

    4.92

    13.0

    2.78

    Other unsecured

    17.0

    4.60

    20.5

    5.72

    23.0

    6.32

    20.5

    5.41

    14.7

    4.03

    Commercial and other

             

             

             

             

             

           

             

             

    1.9

    5.43

    Total

    43.1

    3.72

    50.4

    4.88

    64.9

    5.92

    56.1

    4.45

    39.8

    3.40

    Global Funding Parent

         -        

         -        

         -        

         -        

         -       

         -       

    .1

    1.96

         -        

         -        

    Total Global

    $

    206.8

    2.77

    %

    $

    227.4

    3.12

    %

    $

    176.2

    2.95

    %

    $

    121.7

    2.74

    %

    $

    96.3

    2.71

    %

    Page 37

    ********************************************************************************

    HOUSEHOLD GLOBAL FUNDING, INC.

    All dollar amounts are stated in millions.

    At December 31, unless otherwise indicated.

    2000

    1999

    1998

    1997

    1996

    DEBT STRUCTURE

    Deposits

    $

    1,712.0

    $

    1,235.7

    $

    1,169.9

    $

    792.3

    $

    863.9

    Commercial paper

    360.9

    359.4

    322.9

    435.0

    389.2

    Bank and other borrowings

    724.3

    1,218.0

    1,985.0

    707.7

    566.4

    Senior debt (with original maturities over one year)

    3,171.7

    3,154.0

    2,344.3

    1,341.8

    1,367.5

    Total

    $

    5,968.9

    $

    5,967.1

    $

    5,822.1

    $

    3,276.8

    $

    3,187.0

    Debt Structure as a Percent of Total

    Deposits

    28.7

    %

    20.7

    %

    20.1

    %

    24.2

    %

    27.1

    %

    Commercial paper

    6.1

    6.0

    5.5

    13.3

    12.2

    Bank and other borrowings

    12.1

    20.4

    34.1

    21.6

    17.8

    Senior debt (with original maturities over one year)

    53.1

    52.9

    40.3

    40.9

    42.9

    Total

    100

    %

    100

    %

    100

    %

    100

    %

    100

    %

    Weighted-Average Interest Rates (1)

    Deposits

    4.5

    %

    4.7

    %

    6.3

    %

    6.1

    %

    5.7

    %

    Commercial paper, bank and other borrowings

    6.0

    5.1

    6.4

    5.8

    7.7

    Senior debt (with original maturities over one year)

    6.4

    5.9

    7.1

    6.6

    7.0

    Composite

    5.8

    5.4

    6.7

    6.3

    6.6

    In millions.

    United

    At December 31, 2000

    Global

    Other (2)

    Kingdom

    Canada

    CONSOLIDATING DEBT STRUCTURE

    Deposits

    $

    1,712.0

    -

    $

    1,710.6

    $

    1.4

    Commercial paper

    360.9

    -

    -

    360.9

    Bank and other borrowings

    724.3

    $

    (395.9)

    1,115.5

    4.7

    Senior debt (with original maturities over one year)

    3,171.7

    (.2)

    2,422.7

    749.2

    Total

    $

    5,968.9

    $

    (396.1)

    $

    5,248.8

    $

    1,116.2

    (1) For the year. Includes the impact of interest-rate swap agreements.

    (2) Includes Household Global Funding parent and eliminations.

    Page 38

    ********************************************************************************

    Glossary of Terms

    Acquired Intangibles and Goodwill - Intangible assets reflected on the consolidated balance sheet resulting from the market value premium attributable to credit card accounts in excess of the aggregate outstanding managed credit card loans acquired. Goodwill represents the purchase price over the fair value of identifiable assets acquired less liabilities assumed from business combinations.

    Affinity Credit Card - A MasterCard or Visa account jointly sponsored by the issuer of the card and an organization whose members share a common interest (e.g., the AFL-CIO Union Privilege Credit Card Program).

    Asset Securitization - The process where interests in a pool of financial assets, such as credit card or other unsecured receivables, are sold to investors. Typically, the receivables are sold to a trust that issues interests that are sold to investors.

    Auto Finance Loans - Closed-end loans secured by a first lien on a vehicle.

    Co-Branded Credit Card - A MasterCard or Visa account that is jointly sponsored by the issuer of the card and another corporation (e.g., the GM Card®). The account holder typically receives some form of added benefit for using the card.

    Common Dividend Payout Ratio - Dividends declared per share divided by net income per share.

    Consumer Net Chargeoff Ratio - Net chargeoffs of consumer receivables divided by average receivables outstanding.

    Fee Income - Income associated with interchange on credit cards and late and other fees from the origination or acquisition of loans.

    Interchange Fees - Fees received for processing a credit card transaction through the MasterCard or Visa network.

    Liquidity - A measure of how quickly a company can convert assets to cash or raise additional cash by issuing debt.

    Managed Basis - Method of reporting whereby net interest margin, other revenues and credit losses on securitized receivables are reported as if those receivables were still held on the balance sheet.

    Managed Basis Efficiency Ratio - Ratio of operating expenses to managed net interest margin and other revenues less policyholders' benefits. The normalized efficiency ratio excludes nonrecurring gains, losses and charges.

    Managed Net Interest Margin - Interest income from managed receivables and noninsurance investment securities reduced by interest expense.

    Managed Receivables - The sum of receivables on the balance sheet and those that are serviced for investors as part of our asset securitization program.

    MasterCard and Visa Receivables - Receivables generated through customer usage of MasterCard and Visa credit cards.

    Nonaccrual Loans - Loans on which interest is no longer accrued because ultimate collection is unlikely.

    Non-prime Accounts - Accounts held by individuals with credit history reflecting occasional delinquencies, prior chargeoffs, or other credit blemishes. These accounts generally are charged higher interest rates and fees to compensate for the additional risk.

    Other Unsecured Receivables - Unsecured lines of credit or closed-end loans made to individuals.

    Owned Receivables - Receivables held on the balance sheet.

    Private Label Credit Card - A line of credit made available to customers of retail merchants evidenced by a credit card bearing the merchant's name.

    Real Estate Secured Loan - Closed-end loans and revolving lines of credit secured by first or second liens on residential real estate.

    Refund Anticipation Loan ("RAL") Program - A cooperative program with H&R Block Tax Services, Inc. and certain of its franchises, along with other independent tax preparers, to provide loans to customers entitled to tax refunds and who electronically file their returns with the Internal Revenue Service.

    Receivables Serviced with Limited Recourse - Receivables that have been securitized and for which the company has some level of potential loss if defaults occur.

    Return on Average Owned Assets - Net income divided by average owned assets.

    Return on Average Common Shareholders' Equity - Net income less dividends on preferred stock divided by average common shareholders' equity.

    Return on Average Managed Assets - Net income divided by average managed assets.

    Risk Adjusted Revenue - Managed net interest margin plus other revenues less securitization related revenue and managed net chargeoffs divided by average managed interest earning assets.

    Total Shareholders' Equity - Includes company obligated mandatorily redeemable preferred securities of subsidiary trusts, preferred stock and common shareholders' equity.

    Page 39

    ********************************************************************************

    CORPORATE INFORMATION

    Annual Meeting Our annual shareholders' meeting will be held on Tuesday, May 8, 2001 at 9:00 a.m. (EDT) at Household Financial Services in Brandon, Florida.

    Shareholder Services Shareholder address changes and inquiries regarding shareholder accounts, dividend payments and stock transfers should be directed to our stock transfer and dividend disbursing agent as follows:

    By Hand:

    By Mail:

    In New York, deliver stock certificates for transfer to:

    Computershare Investor Services LLC
    Shareholder Services
    2 North LaSalle Street
    Mezzanine Level
    Chicago, Illinois 60602
    800 926.2335
    Fax 312 601.4332
    www-us.computershare.com
    (Website address)

    Computershare Investor Services LLC
    Shareholder Services
    P.O. Box A3504
    Chicago, Illinois
    60690-3504

    Computershare Trust Company of New York
    Stock Transfer Division
    Wall Street Plaza
    88 Pine Street, 19th Floor
    New York, New York 10005


    Those forwarding stock certificates are advised to use registered, insured mail.

    Dividend Reinvestment and Common Stock Purchase Plan Shareholders may have common and/or preferred dividends automatically reinvested in Household common stock and/or make optional cash payments to increase their common stock investment through our dividend reinvestment and common stock purchase plan. Inquiries regarding this no-cost service should be directed to:


    Computershare Investor Services LLC
    Dividend Reinvestment
    P.O. Box A3309
    Chicago, Illinois 60690 3309
    800 926.2335

    Investor Inquiries Security analysts and investment professionals should direct their inquiries to the Vice President - Investor Relations at our corporate headquarters, or call 847 564.7369.

    Inquiries regarding commercial paper, medium-term notes, senior and senior subordinated debt, preferred securities and thrift notes of Household International and certain of its subsidiaries, including Household Finance Corporation and Household Bank, f.s.b., should be directed to the Vice President-Money and Capital Markets at 847 564.6278.

    Press releases, annual reports, Form 10-K and other financial information, as well as information about our businesses and products, can be obtained from our Corporate Communications department or by accessing our web site at www.household.com.

    Investors can also e-mail us at investor relations @ household.com.


    2001 Key Dividend Dates

    Ex Dividend Date:

    Record Date:

    Payment Date:

    February 26, 2001

    February 28, 2001

    March 31, 2001 - $4.30 Preferred

    March 28, 2001

    March 30, 2001

    April 15, 2001 - Common & 8 1/4 % Preferred

    May 29, 2001

    May 31, 2001

    June 30, 2001 - 5% & $4.50 Preferred

    June 27, 2001

    June 29, 2001

    July 15, 2001 - Common & 8 1/4 % Preferred

    August 29, 2001

    August 31, 2001

    September 30, 2001 - $4.30 Preferred

    September 26, 2001

    September 28, 2001

    October 15, 2001 - Common & 8 1/4 % Preferred

    November 28, 2001

    November 30, 2001

    December 31, 2001 - 5% & $4.50 Preferred

    December 27, 2001

    December 31, 2001

    January 15, 2002-Common & 8 1/4 % Preferred

    Page 40

    ********************************************************************************