-----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, PeQg9Iz6E2xAdcLndSJsvfEUy+A1fhKG0qMfYV6biUXAhYKINrGCHI5Dfk6dHEDp f6WDazcP9s70YE5HedxuuQ== 0000893220-03-000067.txt : 20030123 0000893220-03-000067.hdr.sgml : 20030123 20030123170749 ACCESSION NUMBER: 0000893220-03-000067 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030123 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030123 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: 1934 Act SEC FILE NUMBER: 000-14120 FILM NUMBER: 03522784 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: TEACHERS SERVICE ORGANIZATION INC DATE OF NAME CHANGE: 19850812 FORMER COMPANY: FORMER CONFORMED NAME: TSO FINANCIAL CORP DATE OF NAME CHANGE: 19880306 8-K 1 w82706ae8vk.txt ADVANTA CORP. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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) January 23, 2003 Advanta Corp. (Exact Name of Registrant as Specified in Charter) Delaware 0-14120 23-1462070 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) Welsh & McKean Roads, 19477 P.O. Box 844, Spring House, Pennsylvania (Zip Code) (Address of Principal Executive Offices)
Registrant's telephone number, including area code (215) 657-4000 ------------------------------------------------------------------ (Former Name or Former Address, if Changed Since Last Report) ITEM 5. OTHER EVENTS. On January 23, 2003, Advanta Corp. (the "Company" or "Advanta") reported operating results from continuing business segments of $0.43 per diluted share for fourth quarter and $1.42 per diluted share for full year 2002 for Class A and Class B shares combined, in line with the Company's previously announced expectations. Advanta reported consolidated net income for the quarter of $9.8 million or $0.39 per diluted share and $18.8 million or $0.72 per diluted share for full year 2002 for Class A and Class B shares combined. This compares to net income of $0.30 per diluted share for the fourth quarter of 2001 and a net loss of $2.75 per diluted share for full year 2001. Consolidated net income for the quarter includes an asset valuation charge associated with the Company's venture capital portfolio and net interest expense not associated with continuing business segments. "We are pleased with the solid developments in credit quality and the quality of the customer base we built in 2002," said Dennis Alter, Chairman and CEO. "In 2003, we plan to continue our emphasis on prudent growth, good credit quality and long-term profitability." Business Card results for the fourth quarter included an approximate 80 basis point decline in charge-offs to 7.9% on an annualized basis as compared to 8.7% at December 31, 2001. Over 30 day delinquencies declined 51 basis points to 6.15% and over 90 day delinquencies decreased 14 basis points to 3.13% as compared to year end 2001. The on-balance sheet loan loss reserve as a percent of owned receivables was 10% at year end, representing approximately 14 months of estimated losses based on fourth quarter net charge-offs. Business Card ended the year with managed receivables of $2.6 billion as compared to $2 billion at year end 2001. The Company continued its stock repurchase plan bringing the total purchases to approximately 2,287,000 shares through January 22, 2003. The Company intends further stock repurchases under the remaining unused authorization of approximately 713,000 shares. Advanta management held a conference call, publicly announced in its press release dated January 14, 2003, at 9:00 a.m. Eastern time. The call was broadcast for the public simultaneously over the Internet through www.advanta.com or www.vcall.com. Replays of the call are available on the Vcall site for 30 days from the date of the call. During the fourth quarter earnings conference call, management also reported that the Company was notified this morning that the Delaware Chancery Court has rendered an opinion in the lawsuit brought by Fleet in January 1999 relating to issues arising out of the 1998 Consumer Credit Card Transaction. Management indicated that they had not received the opinion and therefore had not yet had the opportunity to review and evaluate it. Based on the length and complexity of the opinion, the Company expects it will take some time to evaluate the Court's decision, and the Company will provide further information upon the completion of its evaluation. Advanta is a highly focused financial services company serving the small business market. Advanta leverages direct marketing and information based expertise to identify potential customers and new target markets and to provide a high level of service tailored to the unique needs of small business. Using these distinctive capabilities, Advanta has become one of the nation's largest issuers of MasterCard business credit cards to small businesses. Since 1951, Advanta has pioneered many of the marketing techniques common in the financial services industry today, including remote lending, direct mail, and affinity and relationship marketing. 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) political, social and/or general economic conditions that affect the level of new account acquisitions, customer spending, delinquencies and charge-offs; (4) factors affecting fluctuations in the number of accounts or loan balances, including the retention of cardholders after promotional pricing periods have expired; (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 customers, significant vendors and business partners; (11) the amount and cost of financing available to the Company; (12) the ratings on the debt of the Company and its subsidiaries; (13) revisions to estimated charges associated with the discontinued operations of our mortgage and leasing businesses; and (14) the impact of litigation. 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. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits. 99.1 Press Release dated January 23, 2003. 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 hereunto duly authorized. Advanta Corp. --------------- (Registrant) Date: January 23, 2003 By: /s/ Elizabeth H. Mai ----------------------------- Elizabeth H. Mai Senior Vice President, Secretary and General Counsel EXHIBIT INDEX
Exhibit Description Method of Filing - ------- ----------- ---------------- 99.1 Press Release, dated January 23, 2003 Filed Electronically Herewith
EX-99.1 3 w82706aexv99w1.txt PRESS RELEASE, DATED JANUARY 23, 2003. Exhibit 99.1 David Weinstock Vice President, Investor Relations (215) 444-5335 dweinstock@advanta.com Catherine Reid Vice President, Communications (215) 444-5073 creid@advanta.com FOR IMMEDIATE RELEASE ADVANTA REPORTS FOURTH QUARTER AND FULL YEAR 2002 EARNINGS Spring House, PA, January 23, 2003 - Advanta Corporation (NASDAQ: ADVNB; ADVNA) today reported operating results from continuing business segments of $0.43 per diluted share for fourth quarter and $1.42 per diluted share for full year 2002 for Class A and Class B shares combined, in line with the Company's previously announced expectations. Advanta reported consolidated net income for the quarter of $9.8 million or $0.39 per diluted share and $18.8 million or $0.72 per diluted share for full year 2002 for Class A and Class B shares combined. This compares to net income of $0.30 per diluted share for the fourth quarter of 2001 and a net loss of $2.75 per diluted share for full year 2001. Consolidated net income for the quarter includes an asset valuation charge associated with the Company's venture capital portfolio and net interest expense not associated with continuing business segments. "We are pleased with the solid developments in credit quality and the quality of the customer base we built in 2002," said Dennis Alter, Chairman and CEO. "In 2003, we plan to continue our emphasis on prudent growth, good credit quality and long-term profitability." Business Card results for the fourth quarter included an approximate 80 basis point decline in charge-offs to 7.9% on an annualized basis as compared to 8.7% at December 31, 2001. Over 30 day delinquencies declined 51 basis points to 6.15% and over 90 day delinquencies decreased 14 basis points to 3.13% as compared to year end 2001. The on-balance sheet loan loss reserve as a percent of owned receivables was 10% at year end, representing approximately 14 months of estimated losses based on fourth quarter net charge-offs. Business Card ended the year with managed receivables of $2.6 billion as compared to $2 billion at year end 2001. The Company continued its stock repurchase plan bringing the total purchases to approximately 2,287,000 shares through January 22, 2003. The Company intends further stock repurchases under the remaining unused authorization of approximately 713,000 shares. Advanta management will hold a conference call with analysts and institutional investors today, January 23, 2003, at 9:00 a.m. Eastern time. The call will be broadcast simultaneously for the public over the Internet through www.advanta.com or www.vcall.com. To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. Replays of the call will be available beginning at noon today on the Internet at www.advanta.com or www.vcall.com or by dialing (719) 457-0820 and referring to confirmation code 544710. Advanta is a highly focused financial services company serving the small business market. Advanta leverages direct marketing and information based expertise to identify potential customers and new target markets and to provide a high level of service tailored to the unique needs of small business. Using these distinctive capabilities, Advanta has become one of the nation's largest issuers of MasterCard business credit cards to small businesses. Since 1951, Advanta has pioneered many of the marketing techniques common in the financial services industry today, including remote lending, direct mail, and affinity and relationship marketing. Learn more about Advanta at www.advanta.com. This Press Release 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) political, social and/or general economic conditions that affect the level of new account acquisitions, customer spending, delinquencies and charge-offs; (4) factors affecting fluctuations in the number of accounts or loan balances, including the retention of cardholders after promotional pricing periods have expired; (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 customers, significant vendors and business partners; (11) the amount and cost of financing available to the Company; (12) the ratings on the debt of the Company and its subsidiaries; (13) revisions to estimated charges associated with the discontinued operations of our mortgage and leasing businesses; and (14) the impact of litigation. 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. ADVANTA CORP. SUPPLEMENTAL CONSOLIDATING INCOME STATEMENT (IN THOUSANDS)
Three Months Ended December 31, 2002 - --------------------------------------------------------------------------------------------------------- Advanta Venture Business Cards Capital Other (A) Total -------------- ------- --------- ----- Interest income $24,831 $ 1 $ 2,212 $27,044 Interest expense 10,321 152 576 11,049 ------- ------- ------- ------- Net interest income 14,510 (151) 1,636 15,995 Provision for credit losses 9,227 0 217 9,444 ------- ------- ------- ------- Net interest income after provision for credit losses 5,283 (151) 1,419 6,551 Noninterest revenues: Securitization income 30,138 0 0 30,138 Servicing revenues 9,554 0 0 9,554 Other revenues, net 26,387 (777) 146 25,756 ------- ------- ------- ------- Total noninterest revenues 66,079 (777) 146 65,448 Expenses: Operating expenses 53,018 590 311 53,919 Minority interest in income of consolidated subsidiary 0 0 2,220 2,220 ------- ------- ------- ------- Total expenses 53,018 590 2,531 56,139 ------- ------- ------- ------- Income (loss) before income taxes 18,344 (1,518) (966) 15,860 Income tax expense (benefit) 7,063 (584) (373) 6,106 ------- ------- ------- ------- Net income (loss) $11,281 $ (934) $ (593) $ 9,754 ======= ======= ======= =======
(A) Other includes insurance operations, investment and other activities not attributable to other segments. ADVANTA CORP. SUPPLEMENTAL NON-GAAP DISCLOSURE ADVANTA BUSINESS CARDS MANAGED INCOME STATEMENT (IN THOUSANDS) In addition to analyzing the financial performance of Advanta Business Cards under generally accepted accounting principles (GAAP), we analyze Advanta Business Cards' performance on a managed receivable portfolio basis. To do so, we adjust the Advanta Business Cards GAAP 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. Performance on a managed receivable portfolio basis is relevant because we retain interests in the securitized receivables, and we have a financial interest in and exposure to the performance of the securitized receivables.
Three Months Ended December 31, 2002 - -------------------------------------------------------------------------------------------------------------------- Advanta Adjustments to Advanta Business Cards Reverse Effects of Business Cards GAAP Securitizations Managed -------------- ------------------ -------------- Interest income $ 24,831 $ 80,364 $105,195 Interest expense 10,321 10,152 20,473 -------- -------- -------- Net interest income 14,510 70,212 84,722 Provision for credit losses 9,227 38,938(A) 48,165 -------- -------- -------- Net interest income after provision for credit losses 5,283 31,274 36,557 Noninterest revenues: Securitization income 30,138 (30,138) 0 Servicing revenues 9,554 (9,554) 0 Other revenues, net 26,387 8,418 34,805 -------- -------- -------- Total noninterest revenues 66,079 (31,274) 34,805 Operating expenses 53,018 0 53,018 -------- -------- -------- Income before income taxes 18,344 0 18,344 Income tax expense 7,063 0 7,063 -------- -------- -------- Net income $ 11,281 $ 0 $ 11,281 ======== ======== ========
(A) The provision for credit losses includes the amount by which the provision for credit losses would have been higher had the securitized receivables remained as owned and the provision for credit losses on securitized receivables been equal to actual reported charge-offs. ADVANTA CORP. Highlights (IN THOUSANDS EXCEPT PER SHARE DATA)
Three Months Ended Percent Change From -------------------------------------------- Dec. 31, Sept. 30, Dec. 31, Prior Prior EARNINGS 2002 2002 2001 Quarter Year - ----------- -------- --------- -------- ----- ----- Basic income from continuing operations per common share $ 0.40 $ 0.25 $ 0.30 60.0% 33.3% Diluted income from continuing operations per common share 0.39 0.25 0.30 56.0 30.0 Basic net income per common share 0.40 0.25 0.30 60.0 33.3 Diluted net income per common share 0.39 0.25 0.30 56.0 30.0 Return on average common equity 10.75% 6.99% 8.52% 53.8 26.2 Diluted net income per common share from continuing business segments (A) $ 0.43 $ 0.38 $ 0.42 13.2 2.4 Reconciliation of diluted net income per common share from continuing business segments to diluted income from continuing operations per common share: Diluted net income per common share from continuing business segments (A) $ 0.43 $ 0.38 $ 0.42 13.2 2.4 Less reconciling items per diluted common share: Other segment net income (loss) (B) (0.02) (0.05) (0.07) (60.0) (71.4) Valuation adjustments from venture capital investments, net of tax at 38.5% (0.02) (0.08) (0.05) (75.0) (60.0) ------------- ------- -------- Diluted income from continuing operations per common share $ 0.39 $ 0.25 $ 0.30 56.0 30.0 Weighted average common shares used to compute: Basic earnings per common share 24,463 25,038 25,677 (2.3) (4.7) Diluted earnings per common share 25,278 25,664 25,844 (1.5) (2.2) Ending shares outstanding 27,471 28,240 26,633 (2.7) 3.1 BUSINESS CREDIT CARDS Origination volume $ 1,707,416 $ 1,348,154 $1,157,491 26.6% 47.5% Securitization volume 331,975 65,000 0 N/M N/M Average managed receivables 2,441,218 2,230,089 1,998,428 9.5 22.2 Ending managed receivables 2,594,230 2,253,513 2,042,974 15.1 27.0 Managed net interest margin 13.88% 14.96% 16.57% (7.2) (16.2) As a percentage of gross managed receivables: Total receivables 30 days or more delinquent 6.15 6.66 6.66 (7.7) (7.7) Net charge-offs 7.89 8.93 8.67 (11.6) (9.0)
(A) Includes net income (loss) of the Advanta Business Cards segment and the Venture Capital segment with the exception of venture capital valuation adjustments, net of tax. Excludes net income (loss) of the Other segment and results of discontinued operations. (B) Other includes insurance operations, investment and other activities not attributable to other segments. N/M - Not Meaningful ADVANTA CORP. Highlights (IN THOUSANDS EXCEPT PER SHARE DATA)
Three Months Ended Percent Change From --------------------------------- Dec. 31, Sept. 30, Dec. 31, Prior Prior COMMON STOCK DATA 2002 2002 2001 Quarter Year - ----------------- ------- --------- -------- ------- ---- Stock price: Class A High $11.00 $11.45 $11.72 (3.9)% (6.1)% Low 8.25 7.60 8.00 8.6 3.1 Closing 8.98 10.05 9.94 (10.6) (9.7) Class B High 11.10 11.44 10.79 (3.0) 2.9 Low 8.00 7.35 6.85 8.8 16.8 Closing 9.39 10.33 9.10 (9.1) 3.2 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 14.87 14.44 14.20 3.0 4.7
- Statistical Supplement available at www.advanta.com - - ##### - -----END PRIVACY-ENHANCED MESSAGE-----