-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CjuqAyRGNqXXKAVXtQTTeXu8BCP0flmg3Lm+PBS7mhDnjenFUBhYNc/850hIzmD3 RcgBGDJfaUx9A4d5zHORUg== 0000893220-01-500076.txt : 20010426 0000893220-01-500076.hdr.sgml : 20010426 ACCESSION NUMBER: 0000893220-01-500076 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010424 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010425 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANTA CORP CENTRAL INDEX KEY: 0000096638 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 231462070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-14120 FILM NUMBER: 1610100 BUSINESS ADDRESS: STREET 1: P.O. BOX 844 STREET 2: WELSH & MCKEAN ROADS CITY: SPRING HOUSE STATE: PA ZIP: 19477 BUSINESS PHONE: 2154445051 MAIL ADDRESS: STREET 1: C/O WELSH & MCKEAN ROADS STREET 2: P.O. BOX 844 CITY: SPRING HOUSE STATE: PA ZIP: 19477-0844 FORMER COMPANY: FORMER CONFORMED NAME: TSO FINANCIAL CORP DATE OF NAME CHANGE: 19880306 FORMER COMPANY: FORMER CONFORMED NAME: TEACHERS SERVICE ORGANIZATION INC DATE OF NAME CHANGE: 19850812 8-K 1 w48262e8-k.txt ADVANTA CORP. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 24, 2001 Advanta Corp. (Exact name of registrant as specified in its charter) Delaware 0-14120 23-1462070 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) Welsh and McKean Roads, P.O. Box 844, Spring House, PA 19477 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 657-4000 2 Item 5. Other Events On April 24, 2001 Advanta Corp. (the "Company" or "Advanta") announced first quarter net income for Advanta Business Cards of $8.3 million, representing an after tax return on average managed receivables of 2.0% on an annualized basis. Operating results from continuing business segments were $0.28 per share for Class A and Class B shares combined. Book value per share at March 31, 2001 remains in line with the Company's expectations at $16.05, after recording restructuring and other non-operating items. Advanta also announced that its Board of Directors has authorized the repurchase of up to 1.5 million shares of the Company's common stock or the equivalent dollar amount of trust preferred securities or some combination thereof. "This quarter we completed Advanta's strategic repositioning. We will now focus all our operating activities on our very profitable business credit card operation and small business market. We believe this market remains relatively unsaturated, unlike the consumer card business," said Chairman and Chief Executive Officer Dennis Alter. "We accomplished this repositioning while progressing on track toward our operating goals for 2001." During the quarter, the Company successfully negotiated an early termination of its strategic alliance to direct market auto insurance and completed the sale of its mortgage business. The Company also ceased lease originations, implemented a program to restructure its corporate functions to a size commensurate with its ongoing business, and recorded asset valuation charges on its venture capital portfolio. As a result of the non-operating items and restructuring charges, the Company reported a net loss for the quarter of $29 million, or $1.17 per share on a diluted basis for its Class A and Class B shares combined. Advanta Business Cards ended the quarter with managed receivables of $1.78 billion, as compared to $1.66 billion at December 31, 2000. Consistent with the Company's expectations, over 30 day delinquencies were 5.2% at March 31, 2001 and charge-offs for the first quarter were 6.5% on an annualized basis. The Company's on-balance sheet loan loss reserve as a percent of owned receivables was 9.9% at March 31, 2001. The Company has taken significant steps in reducing its leverage. On April 6, the Company completed the tender offer for medium-term notes solicited in the first quarter. When additional untendered medium-term notes mature on May 1, 2001, Advanta will have reduced its outstanding institutional debt by approximately $319 million since December 31, 2000. Of the remaining $25 million of institutional debt outstanding after May 1, 2001, $24.8 million matures between June 2001 and September 2001. The Company is also in the process of significantly reducing its retail notes. Advanta management held a conference call with analysts and institutional investors on April 24, 2001, at 9:00 am Eastern time. The call was broadcast simultaneously for the public over the 3 Internet through www.advanta.com or www.vcall.com. During the conference call, Advanta management provided details on the financial results for the first quarter and other information, including the following: - - Management expects that second quarter financial results will be impacted by net interest expense on excess liquidity in the range of approximately $7 million to $9 million. - - The trial date for Advanta's long-standing litigation with Fleet Boston and certain of its subsidiaries has been rescheduled by the court and will now commence October 29, 2001. For those who were unable to listen to the live broadcast, replays are available on the Vcall site. Advanta is a highly focused financial services company which has been providing innovative financial solutions since 1951. Advanta leverages its first-class direct marketing and information based expertise to develop state-of-the-art data warehousing and statistical modeling tools that identify potential customers and new target markets. Over the past five years, it has used these distinctive capabilities to become one of the nation's largest issuers of MasterCard business credit cards to small businesses. Learn more about Advanta at www.advanta.com. This Current Report on Form 8-K contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The most significant among these risks and uncertainties are: (1) the Company's managed net interest margin; (2) competitive pressures; (3) factors that affect the level of delinquencies and charge-offs, including a deterioration of general economic conditions; (4) factors affecting fluctuations in the number of accounts or loan balances; (5) interest rate fluctuations; (6) the level of expenses; (7) the timing of the securitizations of the Company's receivables; (8) factors affecting the value of investments held by the Company; (9) the effects of government regulation, including restrictions and limitations imposed by banking laws, regulators, examinations, and the agreements between the Company's bank subsidiaries and their regulators; (10) relationships with significant vendors, business partners and customers; (11) the amount and cost of financing available to the Company; (12) the ratings on the debt of the Company and its subsidiaries; (13) the ultimate amount of restructuring and other related charges associated with the conclusion of strategic alternatives process for our mortgage and leasing businesses; and (14) the ability to attract and retain key personnel. Additional risks that may affect the Company's future performance are detailed in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. 4 Form 8-K Advanta Corp. April 24, 2001 Item 7. Financial Statements and Exhibits. (c) Exhibits: The following exhibits are filed as part of this Report on Form 8-K. 99 Selected Summary Financial Data. 5 Form 8-K Advanta Corp. April 24, 2001 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Advanta Corp. By: /s/ Elizabeth H. Mai Elizabeth H. Mai, Senior Vice President, Secretary and General Counsel April 24, 2001 6 Form 8-K Advanta Corp. April 24, 2001 Index to Exhibits
Exhibit Number Per Item 60l of Regulation S-K Description of Document - -------------- ----------------------- 99 Selected Summary Financial Data
EX-99 2 w48262ex99.txt SELECTED SUMMARY FINANCIAL DATA 1 Exhibit 99 ADVANTA CORP. SUPPLEMENTAL CONSOLIDATING INCOME STATEMENT (IN THOUSANDS) Three Months Ended March 31, 2001
Advanta Venture Business Cards Capital Other (A) Total -------- -------- -------- -------- Interest income $ 18,493 $ 31 $ 15,480 $ 34,004 Interest expense 7,220 418 16,638 24,276 -------- -------- -------- -------- Net interest income 11,273 (387) (1,158) 9,728 Provision for credit losses 7,940 0 0 7,940 -------- -------- -------- -------- Net interest income after provision for credit losses 3,333 (387) (1,158) 1,788 Noninterest revenues: Securitization income 22,173 0 0 22,173 Servicing revenues 6,652 0 0 6,652 Interchange income 17,622 0 0 17,622 Other revenues, net 729 (11,355) (5,822) (16,448) -------- -------- -------- -------- Total noninterest revenues 47,176 (11,355) (5,822) 29,999 Expenses: Operating expenses 37,061 973 5,019 43,053 Minority interest in income of Consolidated subsidiary 0 0 2,220 2,220 Unusual charges (B) 0 0 40,750 40,750 -------- -------- -------- -------- Total expenses 37,061 973 47,989 86,023 -------- -------- -------- -------- Income (loss) before income taxes 13,448 (12,715) (54,969) (54,236) Income tax expense (benefit) 5,177 (4,895) (17,162) (16,880) -------- -------- -------- -------- Income (loss) from continuing operations 8,271 (7,820) (37,807) (37,356) Loss from discontinued operations, net of tax 0 0 (8,438) (8,438) Gain, net, on discontinuance of mortgage and leasing businesses, net of tax 0 0 16,361 16,361 -------- -------- -------- -------- Net income (loss) $ 8,271 $ (7,820) $(29,884) $(29,433) ======== ======== ======== ========
(A) Other includes insurance operations, investment and other activities not attributable to other segments. (B) Includes severance, outplacement and other compensation costs associated with restructuring our corporate functions commensurate with the ongoing businesses as well as expenses associated with exited businesses and asset impairments. 2 ADVANTA CORP. SUPPLEMENTAL NON-GAAP DISCLOSURE MANAGED INCOME STATEMENT (A) (IN THOUSANDS) Three Months Ended March 31, 2001
Advanta Venture Business Cards Capital Other (D) Total --------- --------- --------- --------- Interest income $ 85,249 $ 31 $ 15,480 $ 100,760 Interest expense 27,105 418 16,638 44,161 --------- --------- --------- --------- Net interest income 58,144 (387) (1,158) 56,599 Provision for credit losses (B) 29,489 0 0 29,489 --------- --------- --------- --------- Net interest income after provision for credit losses 28,655 (387) (1,158) 27,110 Noninterest revenues: Interchange income 17,622 0 0 17,622 Other revenues, net 4,232 (11,355) (5,822) (12,945) --------- --------- --------- --------- Total noninterest revenues 21,854 (11,355) (5,822) 4,677 Expenses: Operating expenses 37,061 973 5,019 43,053 Minority interest in income of consolidated subsidiary 0 0 2,220 2,220 Unusual charges (C) 0 0 40,750 40,750 --------- --------- --------- --------- Total expenses 37,061 973 47,989 86,023 --------- --------- --------- --------- Income (loss) before income taxes 13,448 (12,715) (54,969) (54,236) --------- --------- --------- --------- Income tax expense (benefit) 5,177 (4,895) (17,162) (16,880) --------- --------- --------- --------- Income (loss) from continuing operations 8,271 (7,820) (37,807) (37,356) Loss from discontinued operations, net of tax 0 0 (8,438) (8,438) Gain, net, on discontinuance of mortgage and leasing businesses, net of tax 0 0 16,361 16,361 --------- --------- --------- --------- Net income (loss) $ 8,271 $ (7,820) $ (29,884) $ (29,433) ========= ========= ========= =========
(A) We analyze the financial performance of Advanta Business Cards on a managed receivable portfolio basis. To do so, we adjust the Advanta Business Cards income statement to reverse the effects of securitization. Our managed business credit card receivable portfolio is comprised of owned and securitized business credit card receivables. (B) The provision for credit losses includes the amount by which losses would have been higher had the securitized receivables remained as owned and the provision for credit losses been equal to actual reported charge-offs. (C) Includes severance, outplacement and other compensation costs associated with restructuring our corporate functions commensurate with the ongoing businesses as well as expenses associated with exited businesses and asset impairments. (D) Other includes insurance operations, investment and other activities not attributable to other segments. 3 ADVANTA CORP. HIGHLIGHTS (IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Percent Change from ------------------------------------------- --------------------- March 31, Dec. 31, March 31, Prior Prior EARNINGS 2001 2000 2000 Quarter Year - ------------------------------------------------------------------------------------------------------------------------------------ Gross revenues $ 64,003 $ 68,303 $ 71,544 -6.3% -10.5% Basic income (loss) from continuing operations per common share (1.48) (0.50) 0.21 N/M N/M Diluted income (loss) from continuing operations per Common share (1.48) (0.50) 0.20 N/M N/M Basic net income (loss) per common share (1.17) 0.13 0.68 N/M N/M Diluted net income (loss) per common share (1.17) 0.13 0.67 N/M N/M Return on average common equity (27.10)% 2.94% 11.37% N/M N/M Net income per common share from continuing business segments (A) $ 0.28 N/M N/M N/M N/M COMMON STOCK DATA - ------------------------------------------------------------------------------------------------------------------------------------ Weighted average common shares used to compute: Basic earnings per common share 25,303 25,293 24,785 0.0% 2.1% Diluted earnings per common share 25,303 25,293 25,384 0.0 -0.3 Ending shares outstanding 27,274 27,126 27,280 0.5 0.0 Stock price: Class A High $ 16.000 $ 11.875 $ 21.875 34.7 -26.9 Low 8.750 5.750 16.875 52.2 -48.1 Closing 15.813 8.813 20.313 79.4 -22.2 Class B High 14.000 8.375 15.500 67.2 -9.7 Low 7.156 4.125 11.500 73.5 -37.8 Closing 13.688 7.188 14.484 90.4 -5.5 Cash dividends declared Class A 0.063 0.063 0.063 0.0 0.0 Class B 0.076 0.076 0.076 0.0 0.0 Book value per common share (B) 16.05 17.06 23.68 -5.9 -32.2 BUSINESS CREDIT CARDS - ------------------------------------------------------------------------------------------------------------------------------------ Origination volume $ 1,003,735 $ 945,088 $ 747,587 6.2% 34.3% Securitization proceeds 100,000 250,000 157,067 -60.0 -36.3 Average managed receivables 1,691,479 1,574,750 1,120,635 7.4 50.9 Ending managed receivables 1,781,005 1,659,224 1,226,210 7.3 45.2 Managed net interest margin 13.87% 12.68% 12.48% 9.4 11.1 As a percentage of gross managed receivables: Total loans 30 days or more delinquent 5.20 5.00 3.44 4.1 51.2 Net charge-offs 6.50 5.54(C) 4.42 17.4 47.1
(A) Includes results of the Advanta Business Cards segment and expenses of the venture capital segment. (B) Based on shares outstanding. (C) Beginning in the fourth quarter of 2000, business credit card charge-off statistics reflect the adoption of a new charge-off Policy for bankruptcies. Bankrupt business credit cards are charged off within a 60-day investigative period after receipt of notification. The previous policy provided a 90-day investigative period. The fourth quarter of 2000 includes a 0.59% acceleration of charge-offs in connection with the adoption of this policy. -Statistical Supplement Available Upon Request- ###### -----END PRIVACY-ENHANCED MESSAGE-----