31st Mar 2005 12:31
HSBC Holdings PLC31 March 2005 PART 3 The usual form of distribution is a lump sum. However, at the time of deferral,a participant is eligible to select an optional form of distribution consistingof annual installments of up to 10 years if he or she has or will have 10 yearsof Company service as of the date such installments begin. Notwithstanding theforegoing, if at initial valuation the amount to be distributed (i.e., a commondistribution date and a common installment method) is less than $25,000, thendistribution will be in a lump sum. The method of distribution (from one form ofinstallments to another form of installments or to a lump sum and vice versa)can be changed by filing a form with the Committee at least 12 months prior tothe distribution date. However, subject to Section 18, the election to receive aPlan Year's deferrals at termination of employment or at some future date whileemployed is irrevocable. SECTION 9. Hypothetical Investment. Each deferred compensation account for aparticular Plan Year will be credited with earnings from the date on whichdeferred compensation is credited to the account until the date of payment. Theparticipant can elect to have the amount credited to his or her account for aparticular Plan Year invested hypothetically in various benchmark funds. Thebenchmark funds that initially will be available under the Plan are as follows:1) Van Kampen Real Estate Securities - A Shares 2) Oppenheimer Global - A Shares3) AIM Small Cap Growth - Class A 4) HSBC Investor Small Cap Equity - Class Y 5)Fidelity Advisor Mid Cap Stock - Class A 6) Dreyfus S&P 500 Index 7) HSBCInvestor Growth & Income - Class Y 8) HSBC Investor Fixed Income - Class Y 9)HSBC Investor Money Market - Class Y. The benchmark funds may be subsequentlychanged by the Committee or its delegate as it sees fit. In the absence of aninvestment election for a Plan Year, the participant's deferred compensationaccount balance for that Plan Year will be deemed invested in the HSBC InvestorMoney Market - Class Y. The participant can change his or her investment election as to the amount for aparticular Plan Year already credited or to be credited to his or her account inwhole percentages on a monthly basis by filing an appropriate election form withthe Committee by the 25th day of the month prior to the first day of the monthin which the election is to be effective. Each Plan Year of deferrals may have aseparate investment allocation. There is no guarantee a participant's deferredcompensation account deemed invested in a particular benchmark fund willincrease; amounts may decrease based on the performance of the benchmark fund. 2 SECTION 10. Prior Plan Deferrals. Amounts that were previously deferred by aparticipant for a Plan Year under the Prior Plan and which have not beendistributed as of the Effective Date will be credited to the participant'sdeferred compensation account under this Plan known as the Prior Plan Balance.Amounts credited to the Prior Plan Balance for any prior plan year will bedistributed according to the participant's previous deferral election for thatplan year under the Prior Plan subject to the participant's right to change themanner of distribution in accordance with Section 8, if eligible. The amountscredited to the participant's account under the Prior Plan which werehypothetically invested in Fund A (the Stock Fund) shall continue to behypothetically invested in such Stock Fund until such time as the participantelects to have such amounts transferred to one or more of the benchmark fundsoffered under the Plan but no deemed dividends on such amounts nor new deferralsnor transfers from other benchmark funds can be hypothetically invested in theStock Fund. However, any amounts that are credited or would be credited to theparticipant's account under the Prior Plan invested in Fund B (the TreasuryFund) will be invested in the HSBC Investor Money Market - Class Y. Theparticipant may make an election to have amounts representing the Prior PlanBalance for each prior plan year invested hypothetically in the benchmarkinvestment funds offered under this Plan and the investment election for anyplan year can be changed from time to time in accordance with Section 9. SECTION 11. Value of Deferred Compensation Accounts. The value of eachparticipant's deferred compensation account shall include compensation deferred,adjusted for any increase or decrease thereon, pursuant to Section 9 of thePlan. SECTION 12. Payment of Deferral. Subject to Section 18, a distribution may bemade from the participant's deferred compensation account as soon as practicablein the calendar year following the date of the termination of the participant'semployment, including retirement due to disability, unless an earlier date fordistribution while employed is specified by the participant in his or herelection to defer compensation or in the event of the participant's death. If aparticipant elected to defer any Plan Year's compensation to a specific datewhile employed, such Plan Year's deferred compensation and earnings or lossesthereon will be payable in cash in a lump sum or installments, if applicable, onthe date specified unless it is paid earlier due to termination of employment ordeath. If a participant terminates employment, including retirement due todisability, for a reason other than death, before the date chosen fordistribution, then distribution will occur in the calendar year followingtermination. The account balance will be distributed in the same form ofdistribution elected for termination of employment subject to the minimumrequirements for installments. If a participant terminates employment whilereceiving in-service installments, then the remaining installments will bedistributed as they fall due. SECTION 13. Withholding. There shall be deducted from all deferrals andpayments under the Plan the amount of any taxes required to be withheld by anyfederal, state or local government. The participants and their beneficiaries,distributees, and personal representatives will bear any and all federal,foreign, state, local or other income or other taxes imposed on amounts deferredor paid under the Plan. SECTION 14. Designation of Beneficiary. A participant may designate abeneficiary or beneficiaries which shall be effective upon filing written noticewith the Committee on the form provided by the Committee for that purpose. If aParticipant is married and has not designated his or her spouse as the soleprimary beneficiary of his or her account, then such spouse must provide writtenconsent to the participant's beneficiary designation form or else the accountwill be paid to such spouse, if living, upon the death of the participant. If nobeneficiary is designated, the beneficiary will be the participant's estate. Ifmore than one beneficiary statement has been filed, the beneficiary orbeneficiaries designated in the statement bearing the most recent date will bedeemed the valid beneficiary or beneficiaries. SECTION 15. Death of Participant or Beneficiary. In the event of aparticipant's death before he or she has received the full value of his or herdeferred compensation account, the then current value of the participant'sdeferred compensation account shall be determined and such amount shall be paidto the beneficiary or beneficiaries of the deceased participant as soon aspracticable thereafter in cash in a lump sum. If no designated beneficiary hasbeen named or survives the participant, the beneficiary will be theparticipant's estate. 3 SECTION 16. Participant's Rights Unsecured. The right of any participant orbeneficiary to receive payment under the provisions of the Plan shall be anunsecured claim against the general assets of the Company, and any successorcompany in the event of a merger, consolidation, reorganization or any otherevent which causes the Company's assets or business to be acquired by anothercompany. No provisions contained in the Plan shall be construed to give anyparticipant or beneficiary at any time a security interest in the deferredcompensation account or any other assets of the Company. SECTION 17. Statement of Account. Statements will be sent to participantsfollowing the end of each calendar quarter reflecting the value of theirdeferred compensation accounts as of the end of that quarter. The accounts willbe valued daily but recorded monthly. SECTION 18. Hardship Withdrawals. Notwithstanding anything in this Plan to thecontrary, a participant may request a hardship withdrawal of all or a portion ofthe balance of his or her deferred compensation account by filing a writtenrequest with the Committee in a form acceptable to the Committee for thatpurpose. A hardship withdrawal will be granted on a limited basis and only dueto the participant's or dependant's illness or accident, casualty loss of theparticipant's property or similar circumstances arising out of events beyond thecontrol of the participant. A participant requesting a hardship withdrawal willbe requested to submit documentation of the hardship and proof that the loss isnot covered by other means. This request may be granted, solely in the absolutediscretion of the Committee. No member of the Committee may vote on, orotherwise influence, a decision of the Committee concerning his or her requestfor a hardship withdrawal. A hardship withdrawal by a participant shall have noeffect on any amounts remaining in the participant's account and shall not haveany effect on any current or future deferral election after the hardshipwithdrawal. SECTION 19. Assignability. No right to receive payments hereunder shall betransferable or assignable by a participant or a beneficiary. SECTION 20. Governing Law. This Agreement shall be governed by and construedin accordance with the laws of the State of Illinois. SECTION 21. Amendment or Termination of Plan. This Plan may at any time orfrom time to time be amended, modified or terminated by the Committee. Noamendment, modification or termination shall, without the consent of aparticipant, adversely affect such participant's accruals on his or her priorelections. Rights accrued prior to termination of the Plan will not be canceledby termination of the Plan. SECTION 22. Payment of Certain Costs of the Participant. If a dispute arisesregarding the interpretation or enforcement of this Plan and the participant(or, in the event of his or her death, his or her beneficiary) obtains a finaljudgment in his or her favor from a court of competent jurisdiction from whichno appeal may be taken, whether because the time to do so has expired orotherwise, or his or her claim is settled by the Company prior to the renderingof such a judgment, all reasonable legal and other professional fees andexpenses incurred by the participant in contesting or disputing any such claimor in seeking to obtain or enforce any right or benefit provided for in the Planor in otherwise pursuing his claim will be promptly paid by the Company withinterest thereon at the highest Illinois statutory rate for interest onjudgments against private parties from the date of payment thereof by theparticipant to the date of reimbursement to him or her by the Company. 4 EXHIBIT 12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS SIX MONTHS MARCH 29 JANUARY 1 ENDED THROUGH THROUGH JUNE 30, JUNE 30, MARCH 28, 2004 2003 2003---------------------------------------------------------------------------------------------------- (SUCCESSOR) (SUCCESSOR) (PREDECESSOR) (RESTATED) (RESTATED) (IN MILLIONS)Net income............................................... $ 903 $ 743 $ 246Income tax expense....................................... 466 402 182 -------- -------- --------Income before income tax expense......................... 1,369 1,145 428 -------- -------- --------Fixed charges: Interest expense(1).................................... 1,415 708 898 Interest portion of rentals(2)......................... 27 11 18 -------- -------- --------Total fixed charges...................................... 1,442 719 916 -------- -------- --------Total earnings as defined................................ $ 2,811 $ 1,864 $ 1,344 ======== ======== ========Ratio of earnings to fixed charges....................... 1.95 2.59 1.47(4)Preferred stock dividends(3)............................. 54 33 32Ratio of earnings to combined fixed charges and preferred stock dividends........................................ 1.88 2.48 1.42(4) --------------- (1) For financial statement purposes for the periods January 1 through March 28, 2003 and March 29 through June 30, 2003, these amounts are reduced for income earned on temporary investment of excess funds, generally resulting from over-subscriptions of commercial paper issuances. (2) Represents one-third of rentals, which approximates the portion representing interest. (3) Preferred stock dividends are grossed up to their pretax equivalents. (4) The ratios for the period January 1 through March 28, 2003 have been negatively impacted by $167 million (after-tax) of HSBC acquisition related costs and other merger related items incurred by Household. Excluding these charges, our ratio of earnings to fixed charges would have been 1.69 and our ratio of earnings to combined fixed charges and preferred stock dividends would have been 1.63. These non-GAAP financial ratios are provided for comparison of our operating trends only. EXHIBIT 31 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, William F. Aldinger, Chairman and Chief Executive Officer of HSBC FinanceCorporation (formerly known as Household International, Inc.), certify that: 1. I have reviewed this amended report on Form 10-Q/A of HSBC FinanceCorporation; 2. Based on my knowledge, this report does not contain any untrue statementof a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financialinformation included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based onour most recent evaluation, to the registrant's auditors and the audit committeeof the registrant's board of directors (or persons performing the equivalentfunction): a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ William F. Aldinger -------------------------------------- William F. Aldinger Chairman and Chief Executive Officer Date: March 31, 2005 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Simon C. Penney, Senior Executive Vice President and Chief Financial Officerof HSBC Finance Corporation (formerly known as Household International, Inc.),certify that: 1. I have reviewed this amended report on Form 10-Q/A of HSBC FinanceCorporation; 2. Based on my knowledge, this report does not contain any untrue statementof a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financialinformation included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based onour most recent evaluation, to the registrant's auditors and the audit committeeof the registrant's board of directors (or persons performing the equivalentfunction): a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Simon C. Penney -------------------------------------- Simon C. Penney Senior Executive Vice President and Chief Financial Officer Date: March 31, 2005 EXHIBIT 32 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the amended Quarterly Report of HSBC Finance Corporation,formerly known as Household International, Inc. (the "Company"), on Form 10-Q/Afor the period ending June 30, 2004 as filed with the Securities and ExchangeCommission on the date hereof (the "Report"), I, William F. Aldinger, Chairmanand Chief Executive Officer of HSBC Finance Corporation, certify, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in allmaterial respects, the financial condition and results of operations of theCompany. /s/ WILLIAM F. ALDINGER -------------------------------------- William F. Aldinger Chairman and Chief Executive Officer March 31, 2005 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the amended Quarterly Report of HSBC Finance Corporation,formerly known as Household International, Inc. (the "Company"), on Form 10-Q/Afor the period ending June 30, 2004 as filed with the Securities and ExchangeCommission on the date hereof (the "Report"), I, Simon C. Penney, SeniorExecutive Vice President and Chief Financial Officer of HSBC FinanceCorporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in allmaterial respects, the financial condition and results of operations of theCompany. /s/ SIMON C. PENNEY -------------------------------------- Simon C. Penney Senior Executive Vice President and Chief Financial Officer March 31, 2005 This certification accompanies each Report pursuant to Section 906 of theSarbanes-Oxley Act of 2002 and shall not, except to the extent required by theSarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes ofSection 18 of the Securities Exchange Act of 1934, as amended. Signed originals of these written statements required by Section 906 of theSarbanes-Oxley Act of 2002 have been provided to HSBC Finance Corporation andwill be retained by HSBC Finance Corporation and furnished to the Securities andExchange Commission or its staff upon request. EXHIBIT 99.1 DEBT AND PREFERRED STOCK SECURITIES RATINGS STANDARD & MOODY'S POOR'S INVESTORS CORPORATION SERVICE FITCH, INC. ----------- --------- -----------AT JUNE 30, 2004Household International, Inc. Senior debt............................................... A A2 A Preferred stock........................................... BBB+ Baa1 A-Household Finance Corporation Senior debt............................................... A A1 A Senior subordinated debt.................................. A- A2 A- Commercial paper.......................................... A-1 P-1 F-1HFC Bank Limited Senior debt............................................... A A1 A Commercial paper.......................................... A-1 P-1 F-1Household Bank (SB), N.A Senior debt............................................... A A1 A EXHIBIT 99.2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and ShareholderHSBC Finance Corporation We have reviewed the consolidated balance sheet of HSBC Finance Corporation(formerly Household International, Inc.) (the Company), an indirect wholly-ownedsubsidiary of HSBC Holdings plc, and subsidiaries as of June 30, 2004 (successorbasis), the related consolidated statements of income for the three and sixmonths ended June 30, 2004 (successor basis), the three months ended June 30,2003 (successor basis), and the periods January 1, 2003 through March 28, 2003(predecessor basis) and March 29, 2003 through June 30, 2003 (successor basis),and the consolidated statements of changes in shareholder's(s') equity and cashflows for the six months ended June 30, 2004 (successor basis), and the periodsJanuary 1, 2003 through March 28, 2003 (predecessor basis) and March 29, 2003through June 30, 2003 (successor basis). These consolidated financial statementsare the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the PublicCompany Accounting Oversight Board (United States). A review of interimfinancial information consists principally of applying analytical procedures andmaking inquiries of persons responsible for financial and accounting matters. Itis substantially less in scope than an audit conducted in accordance with thestandards of the Public Company Accounting Oversight Board (United States), theobjective of which is the expression of an opinion regarding the financialstatements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that shouldbe made to the consolidated financial statements referred to above for them tobe in conformity with U.S. generally accepted accounting principles. As discussed in Note 1 to the consolidated financial statements, HSBC FinanceCorporation was acquired by HSBC Holdings plc on March 28, 2003 in a purchasebusiness combination recorded under the "push-down" method of accounting. As aresult of the acquisition, the consolidated financial information for the periodafter the acquisition is presented on a different cost basis than that for theperiod before the acquisition and, therefore, is not comparable. As discussed in Note 2 to the consolidated financial statements, HSBC FinanceCorporation has restated its consolidated financial statements as of June 30,2004 (successor basis) and for the three and six months ended June 30, 2004(successor basis), the three months ended June 30, 2003 (successor basis), andthe period March 29, 2003 through June 30, 2003 (successor basis). /s/ KPMG LLP Chicago, IllinoisAugust 2, 2004 (except as to Note 2, which is as of March 31, 2005) EXHIBIT 99.3 HSBC Finance CorporationProspect Heights, Illinois Re: Quarterly Report Pursuant to Section 13 of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2004 as filed on Form 10-Q/A on March 31, 2005 With respect to the subject quarterly report pursuant to Section 13 of theSecurities Exchange Act of 1934 for the quarterly period ended June 30, 2004 asfiled on Form 10-Q/A on March 31, 2005, we acknowledge our awareness of the usetherein of our report dated August 2, 2004 (except as to Note 2, which is as ofMarch 31, 2005) related to our reviews of interim financial information. Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report isnot considered part of a registration statement prepared or certified by anaccountant, or a report prepared or certified by an accountant within themeaning of Sections 7 and 11 of the Act. /s/ KPMG LLP Chicago, IllinoisMarch 31, 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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