-----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, WtBVedAVKqcO4Pr7WNKjUF8mgac/jg0PZOTcMcG/0kahgrRPEepbP7/hpnZ/ZFw3 HxQGacrael0FqJFgG/rW+Q== 0000950152-98-006897.txt : 19980818 0000950152-98-006897.hdr.sgml : 19980818 ACCESSION NUMBER: 0000950152-98-006897 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980410 ITEM INFORMATION: FILED AS OF DATE: 19980817 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANC ONE CORP /OH/ CENTRAL INDEX KEY: 0000036090 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 310738296 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-08552 FILM NUMBER: 98693045 BUSINESS ADDRESS: STREET 1: 100 E BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43271 BUSINESS PHONE: 6142485944 MAIL ADDRESS: STREET 1: 100 EAST BROAD STREET STREET 2: 18TH FLOOR CITY: COLUMBUS STATE: OH ZIP: 43271-0251 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BANC GROUP OF OHIO INC /OH/ DATE OF NAME CHANGE: 19800301 8-K/A 1 BANC ONE CORPORATION FORM 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- FORM 8-K/A (Amendment No. 3) 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 10, 1998 BANC ONE CORPORATION (Exact Name of Registrant as Specified in Charter) Ohio (State or Other Jurisdiction of Incorporation) 1-8552 31-0738296 (Commission File Number) (IRS Employer Identification No.) 100 East Broad Street, Columbus, Ohio 43271 (Address of Principal Executive Offices)(Zip Code) Registrant's telephone number, including area code: (614) 248-5944 N/A (Former Name or Former Address, If Changed Since Last Report) 2 The Current Report on Form 8-K dated April 10, 1998 and filed with the Securities and Exchange Commission on April 14, 1998 is amended to add Exhibits 99.10 and 99.11 and to amend and restate Item 7 in its entirety as follows: ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Businesses Acquired. The following consolidated financial statements of First Chicago NBD Corporation are incorporated herein by reference to Exhibit 99.5 filed herewith: 1. Consolidated Balance Sheets as of December 31, 1997 and 1996. 2. Consolidated Statement of Income for the years ended December 31, 1997, 1996 and 1995. 3. Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 1997, 1996 and 1995. 4. Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995. 5. Notes to the Consolidated Financial Statements. The report of Arthur Andersen LLP, independent accountants, on the consolidated financial statements of First Chicago NBD Corporation as of December 31, 1997 and 1996 and for the years ended December 31, 1997, 1996 and 1995 is filed herewith as part of Exhibit 99.5 and the related consent is filed herewith as Exhibit 99.6. Both the opinion and the consent are incorporated herein by reference. The following unaudited consolidated financial statements of First Chicago NBD Corporation are incorporated herein by reference to Exhibit 99.8 filed herewith: 1. Consolidated Balance Sheet as of March 31, 1998. 2. Consolidated Statement of Income for the quarters ended March 31, 1998 and 1997. 3. Consolidated Statements of Changes in Stockholders' Equity for the quarters ended March 31, 1998 and 1997. 4. Consolidated Statements of Cash Flows for the quarters ended March 31, 1998 and 1997. 5. Notes to the Unaudited Consolidated Financial Statements. 2 3 The following unaudited consolidated financial statements of First Chicago NBD Corporation are incorporated herein by reference to Exhibit 99.10 filed herewith: 1. Consolidated Balance Sheet as of June 30, 1998. 2. Consolidated Statement of Income for the three and six months ended June 30, 1998 and 1997. 3. Consolidated Statements of Changes in Stockholders' Equity for the six months ended June 30, 1998 and 1997. 4. Consolidated Statements of Cash Flows for the six months ended June 30, 1998 and 1997. 5. Notes to the Consolidated Financial Statements. (b) Pro Forma Financial Information. The following pro forma financial statements are incorporated herein by reference to Exhibit 99.7 filed herewith: 1. Pro Forma Condensed Combined Balance Sheet at December 31, 1997 (unaudited). 2. Pro Forma Condensed Combined Statement of Income for the fiscal years ended December 31, 1997, 1996 and 1995 (unaudited). 3. Pro Forma Condensed Combined Statement of Income for the year ended December 31, 1997 (unaudited). 4. Pro Forma Condensed Combined Statement of Income for the year ended December 31, 1996 (unaudited). 5. Pro Forma Condensed Combined Statement of Income for the year ended December 31, 1995 (unaudited). 6. Notes to the Unaudited Pro Forma Condensed Combined Financial Information. The following pro forma financial statements are incorporated herein by reference to Exhibit 99.9 filed herewith: 1. Pro Forma Condensed Combined Balance Sheet at March 31, 1998 (unaudited). 2. Pro Forma Condensed Combined Statement of Income for the three months ended March 31, 1998 and 1997 (unaudited). 3. Notes to the Unaudited Pro Forma Condensed Combined Financial Information. The following pro forma financial statements are incorporated herein by reference to Exhibit 99.11 filed herewith: 1. Pro Forma Condensed Combined Balance Sheet at June 30, 1998 (unaudited). 3 4 2. Pro Forma Condensed Combined Statement of Income for the six months ended June 30, 1998 and 1997 (unaudited). 3. Notes to the Unaudited Pro Forma Condensed Combined Financial Information. (c) Exhibits. Exhibit 2.1 Agreement and Plan of Reorganization dated as of April 10, 1998 by and among BANC ONE CORPORATION, First Chicago NBD Corporation and Hornet Reorganization Corporation. * Exhibit 99.1 Stock Option Agreement dated as of April 10, 1998, by and between First Chicago NBD Corporation, as issuer, and BANC ONE CORPORATION, as grantee. * Exhibit 99.2 Stock Option Agreement dated as of April 10, 1998, by and between BANC ONE CORPORATION, as issuer, and First Chicago NBD Corporation, as grantee. * Exhibit 99.3 Joint Press Release, dated April 13, 1998. * Exhibit 99.4 Investor Presentation, dated April 13, 1998. * Exhibit 99.5 Consolidated Financial Statements of First Chicago NBD Corporation as of December 31, 1997 and for the years ended December 31, 1997, 1996 and 1995, and Report of Arthur Andersen LLP. * Exhibit 99.6 Consent of Arthur Andersen LLP. * Exhibit 99.7 Unaudited Pro Forma Condensed Combined Financial Information as of December 31, 1997 and for the years ended December 31, 1997, 1996 and 1995. * Exhibit 99.8 Unaudited Consolidated Financial Statements of First Chicago NBD Corporation as of March 31, 1998 and for the three months ended March 31, 1998 and 1997. * Exhibit 99.9 Unaudited Pro Forma Condensed Combined Financial Information as of March 31, 1998 and for the three months ended March 31, 1998 and 1997. * 4 5 (c) Exhibits (continued) Exhibit 99.10 Unaudited Consolidated Financial Statements of First Chicago NBD Corporation as of June 30, 1998 and for the three and six months ended June 30, 1998 and 1997. Exhibit 99.11 Unaudited Pro Forma Condensed Combined Financial Information as of June 30, 1998 and for the six months ended June 30, 1998 and 1997. - ------------- * Previously filed. 5 6 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. BANC ONE CORPORATION (Registrant) Date: August 17, 1998 By: /s/ William C. Leiter ---------------------- William C. Leiter Senior Vice President 6 EX-99.10 2 EXHIBIT 99.10 1 Exhibit 99.10 First Chicago NBD Corporation and Subsidiaries Consolidated Balance Sheet
- --------------------------------------------------------------------------------------------------------------------------- June 30 December 31 June 30 (Dollars in millions) 1998 1997 1997 - --------------------------------------------------------------------------------------------------------------------------- Assets Cash and due from banks..................................................... $ 8,049 $ 7,223 $ 7,969 Interest-bearing due from banks............................................. 5,588 6,904 7,705 Federal funds sold and securities under resale agreements................... 7,982 8,501 8,185 Trading assets.............................................................. 4,128 4,198 4,752 Derivative product assets................................................... 4,250 4,547 3,761 Securities available for sale............................................... 12,604 9,330 8,265 Loans (net of unearned income--$937, $961 and $954, respectively)........... 72,563 68,724 67,510 Less allowance for credit losses......................................... (1,408) (1,408) (1,408) ------------ ------------ ------------ Loans, net............................................................... 71,155 67,316 66,102 Premises and equipment...................................................... 1,448 1,439 1,407 Customers' acceptance liability............................................. 366 708 661 Other assets................................................................ 4,211 3,930 3,788 ------------ ------------ ------------ Total assets.......................................................... $ 119,781 $ 114,096 $ 112,595 ============ ============ ============ - --------------------------------------------------------------------------------------------------------------------------- Liabilities Deposits Demand................................................................... $ 17,038 $ 16,069 $ 17,142 Savings.................................................................. 21,432 21,437 21,154 Time..................................................................... 15,256 15,178 14,980 Foreign offices.......................................................... 15,802 15,805 14,742 ------------ ------------ ------------ Total deposits........................................................ 69,528 68,489 68,018 Federal funds purchased and securities under repurchase agreements.......... 9,869 9,271 10,053 Other short-term borrowings................................................. 12,672 9,710 9,848 Long-term debt.............................................................. 9,595 9,092 8,020 Guaranteed preferred beneficial interest in the Corporation's junior 996 996 996 subordinated debt.......................................................... Acceptances outstanding..................................................... 366 708 661 Derivative product liabilities.............................................. 4,307 4,616 3,844 Other liabilities........................................................... 4,134 3,254 2,684 ------------ ------------ ------------ Total liabilities..................................................... 111,467 106,136 104,124 - --------------------------------------------------------------------------------------------------------------------------- Stockholders' Equity Preferred stock............................................................. 190 190 290 Common stock--$1 par value.................................................. 320 320 320
June 30, 1998 Dec. 31, 1997 June 30, 1997 ------------- ------------- ------------- Number of shares authorized....... 750,000,000 750,000,000 750,000,000 Number of shares issued........... 319,508,976 319,509,114 319,509,163 Number of shares outstanding...... 287,743,039 289,137,449 302,064,635
Surplus..................................................................... 1,948 1,966 1,985 Retained earnings........................................................... 7,977 7,446 6,933 Accumulated other adjustments to stockholders' equity....................... 66 55 24 Deferred compensation....................................................... (112) (79) (87) Treasury stock at cost--31,765,937; 30,371,665; and 17,444,528 shares, (2,075) (1,938) (994) respectively............................................................... ------------ ------------ ------------ Stockholders' equity.................................................. 8,314 7,960 8,471 ------------ ------------ ------------ Total liabilities and stockholders' equity............................ $ 119,781 $ 114,096 $ 112,595 ============ ============ ============ - ---------------------------------------------------------------------------------------------------------------------------
25 2 First Chicago NBD Corporation and Subsidiaries Consolidated Income Statement
- ------------------------------------------------------------------------------------------------------------------------------ Three Months Ended Six Months Ended June 30 June 30 (In millions, except per-share data) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------------------ Interest Income Loans, including fees..................................................... $1,501 $1,484 $2,961 $2,885 Bank balances............................................................. 85 114 186 210 Federal funds sold and securities under resale agreements................. 99 77 188 142 Trading assets............................................................ 68 67 139 136 Securities available for sale--taxable.................................... 133 89 253 167 Securities available for sale--tax-exempt................................. 25 29 48 54 ------ ------ ------ ------ Total................................................................ 1,911 1,860 3,775 3,594 - ------------------------------------------------------------------------------------------------------------------------------ Interest Expense Deposits.................................................................. 562 544 1,120 1,043 Federal funds purchased and securities under repurchase agreements........ 141 124 283 238 Other short-term borrowings............................................... 154 121 285 223 Long-term debt............................................................ 170 146 342 289 ------ ------ ------ ------ Total................................................................ 1,027 935 2,030 1,793 - ------------------------------------------------------------------------------------------------------------------------------ Net Interest Income....................................................... 884 925 1,745 1,801 Provision for credit losses............................................... 206 180 385 367 ------ ------ ------ ------ Net Interest Income After Provision for Credit Losses..................... 678 745 1,360 1,434 - ------------------------------------------------------------------------------------------------------------------------------ Noninterest Income Combined trading profits.................................................. 52 36 98 64 Equity securities gains................................................... 87 46 145 100 Investment securities gains............................................... 6 4 16 29 ------ ------ ------ ------ Market-driven revenue................................................ 145 86 259 193 ------ ------ ------ ------ Credit card fee revenue................................................... 234 207 468 441 Fiduciary and investment management fees.................................. 108 99 214 204 Service charges and commissions........................................... 283 227 534 440 ------ ------ ------ ------ Fee-based revenue.................................................... 625 533 1,216 1,085 ------ ------ ------ ------ Other income.............................................................. 72 25 106 45 ------ ------ ------ ------ Total................................................................ 842 644 1,581 1,323 - ------------------------------------------------------------------------------------------------------------------------------ Noninterest Expense Salaries and employee benefits............................................ 477 426 917 851 Net premises and equipment expense........................................ 117 115 232 235 Other..................................................................... 317 284 610 539 ------ ------ ------ ------ Total................................................................ 911 825 1,759 1,625 - ------------------------------------------------------------------------------------------------------------------------------ Income Before Income Taxes................................................ 609 564 1,182 1,132 Applicable income taxes................................................... 201 186 391 374 ------ ------ ------ ------ Net Income................................................................ $ 408 $ 378 $ 791 $ 758 ====== ====== ====== ====== Net Income Attributable to Common Stockholders' Equity.................... $ 404 $ 373 $ 785 $ 746 ====== ====== ====== ====== - ------------------------------------------------------------------------------------------------------------------------------ Earnings Per Share Basic................................................................ $1.41 $1.22 $2.73 $2.41 Diluted.............................................................. $1.38 $1.20 $2.68 $2.37 - ------------------------------------------------------------------------------------------------------------------------------
26 3 First Chicago NBD Corporation and Subsidiaries Consolidated Statement of Stockholders' Equity
- ------------------------------------------------------------------------------------------------------------------------------ Six Months Ended June 30 (In millions) 1998 1997 - ------------------------------------------------------------------------------------------------------------------------------ Preferred Stock Balance, beginning of period......................................................... $ 190 $ 444 Conversion of preferred stock........................................................ - (154) ------- ------- Balance, end of period............................................................... 190 290 ------- ------- Common Stock Balance, beginning of period......................................................... 320 320 Issuance of stock.................................................................... - - ------- ------- Balance, end of period............................................................... 320 320 ------- ------- Capital Surplus Balance, beginning of period......................................................... 1,966 2,149 Issuance of treasury stock........................................................... (48) (55) Conversion of preferred stock........................................................ - (138) Other................................................................................ 30 29 ------- ------- Balance, end of period............................................................... 1,948 1,985 ------- ------- Retained Earnings Balance, beginning of period......................................................... 7,446 6,433 Net income........................................................................... 791 758 Cash dividends declared on common stock.............................................. (254) (246) Cash dividends declared on preferred stock........................................... (6) (12) ------- ------- Balance, end of period............................................................... 7,977 6,933 ------- ------- Accumulated Other Adjustments To Stockholders' Equity Fair Value Adjustment on Securities Available for Sale Balance, beginning of period......................................................... 49 38 Change in fair value (net of taxes) and other........................................ 11 (20) ------- ------- Balance, end of period............................................................... 60 18 ------- ------- Accumulated Translation Adjustment Balance, beginning of period......................................................... 6 7 Translation gain (loss), net of taxes................................................ - (1) ------- ------- Balance, end of period............................................................... 6 6 ------- ------- Total Accumulated Other Adjustments To Stockholders' Equity............................. 66 24 ------- ------- Deferred Compensation Balance, beginning of period......................................................... (79) (58) Awards granted, net.................................................................. (56) (42) Amortization of deferred compensation................................................ 29 19 Other................................................................................ (6) (6) ------- ------- Balance, end of period............................................................... (112) (87) ------- ------- Treasury Stock Balance, beginning of period......................................................... (1,938) (326) Purchase of common stock............................................................. (229) (1,056) Conversion of preferred stock........................................................ - 292 Issuance of stock.................................................................... 92 96 ------- ------- Balance, end of period............................................................... (2,075) (994) ------- ------- Total Stockholders' Equity, end of period............................................... $ 8,314 $ 8,471 ======= ======= Total Net Income and Accumulated Other Adjustments To Stockholders' Equity.............. $ 802 $ 737 ======= ======= - ------------------------------------------------------------------------------------------------------------------------
27 4 First Chicago NBD Corporation and Subsidiaries Consolidated Statement of Cash Flows
- -------------------------------------------------------------------------------------------------------------------------- Six Months Ended June 30 (In millions) 1998 1997 - -------------------------------------------------------------------------------------------------------------------------- Cash Flows from Operating Activities Net income................................................................................. $ 791 $ 758 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization........................................................... 95 123 Provision for credit losses............................................................. 385 367 Equity securities gains................................................................. (145) (100) Net (increase) decrease in net derivative product balances.............................. (12) 304 Net (increase) decrease in trading assets............................................... 4 (16) Net (increase) decrease in loans held for sale.......................................... (146) 60 Net (increase) decrease in accrued income receivable.................................... 17 (36) Net increase (decrease) in accrued expenses payable..................................... 823 (50) Net (increase) decrease in other assets................................................. 50 (471) Other noncash adjustments............................................................... (34) (36) -------- ------- Total adjustments....................................................................... 1,037 145 Net cash provided by operating activities.................................................. 1,828 903 - -------------------------------------------------------------------------------------------------------------------------- Cash Flows from Investing Activities Net (increase) decrease in federal funds sold and securities under resale agreements....... 519 (3,988) Purchase of investment securities--available-for-sale...................................... (10,026) (5,220) Purchase of equity securities--fair value.................................................. (1,165) (51) Proceeds from maturities of debt securities--available-for-sale............................ 995 639 Proceeds from sales of investment securities--available-for-sale........................... 5,945 3,478 Proceeds from sales of equity securities--fair value....................................... 1,174 126 Net (increase) in loans.................................................................... (4,362) (1,600) Loan recoveries............................................................................ 101 92 Net proceeds from sales of assets held for accelerated disposition......................... - 1 Purchases of premises and equipment........................................................ (121) (88) Proceeds from sales of premises and equipment.............................................. 72 9 Net cash and cash equivalents due to acquisitions and dispositions......................... (27) - -------- ------- Net cash (used in) investing activities.................................................... (6,895) (6,602) - -------------------------------------------------------------------------------------------------------------------------- Cash Flows from Financing Activities Net increase in deposits................................................................... 799 4,367 Net increase in federal funds purchased and securities under repurchase agreements.............................................................................. 597 2,193 Net increase in other short-term borrowings................................................ 2,962 2,276 Proceeds from issuance of long-term debt................................................... 9,908 5,578 Repayment of long-term debt................................................................ (9,411) (4,922) Net (decrease) in other liabilities........................................................ (194) (47) Dividends paid............................................................................. (271) (265) Repurchase of common stock................................................................. (229) (1,056) -------- ------- Net cash provided by financing activities.................................................. 4,161 8,124 - -------------------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents............................... 416 (48) - -------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents....................................... (490) 2,377 Cash and cash equivalents at beginning of period........................................... 14,127 13,297 -------- ------- Cash and cash equivalents at end of period................................................. $ 13,637 $15,674 ======== ======= - --------------------------------------------------------------------------------------------------------------------------
For purposes of this statement, cash and cash equivalents consist of cash and due from banks, whether interest-bearing or not. In the first quarter of 1997, $154 million of the Corporation's 53/4% Cumulative Convertible Preferred Stock, Series B, was converted into common stock; such issuance was redeemed in April 1997. 28 5 Notes to Consolidated Financial Statements Note 1 - ------ The consolidated financial statements for the Corporation, including its subsidiaries, have been prepared in conformity with generally accepted accounting principles. Such preparation requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Although the interim amounts are unaudited, they do reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods. All such adjustments are of a normal, recurring nature. Because the results from commercial banking operations are so closely related and responsive to changes in economic conditions, fiscal policy and monetary policy, and because the results for the investment security and trading portfolios are largely market-driven, the results for any interim period are not necessarily indicative of the results that can be expected for the entire year. Note 2 - ------ In December 1997, the Corporation adopted SFAS No. 128 "Earnings Per Share," as required, and all prior periods presented were restated. Basic EPS is computed by dividing income available to common stockholders by the average number of common shares outstanding for the period. The Statement also requires presentation of EPS assuming full dilution. The diluted EPS calculation includes net shares that may be issued under the Employee Stock Purchase and Savings Plan, outstanding stock options, and common shares that would result from the conversion of convertible preferred stock. In the diluted calculation, income available to common stockholders is not reduced by preferred stock dividend requirements related to convertible preferred stock, since such dividends would not be paid if the preferred stock were converted to common stock.
- --------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended June 30 June 30 (Dollars in millions, except per-share data) 1998 1997 1998 1997 - --------------------------------------------------------------------------------------------------------- Basic Net income................................................... $ 408 $ 378 $ 791 $ 758 Preferred stock dividends.................................... (4) (5) (6) (12) -------- -------- -------- -------- Net income attributable to common stockholders' equity....... $ 404 $ 373 $ 785 $ 746 ======== ======== ======== ======== Diluted Net income................................................... $ 408 $ 378 $ 791 $ 758 Preferred stock dividends, excluding convertible Series B, where applicable............................................ (4) (5) (6) (10) -------- -------- -------- -------- Diluted income available to common stockholders.............. $ 404 $ 373 $ 785 $ 748 ======== ======== ======== ======== (In thousands) Average shares outstanding.................................... 287,444 306,754 287,783 309,425 Dilutive Shares Employee Stock Purchase and Savings Plan..................... 1,401 788 1,335 784 Stock options................................................ 3,736 3,387 3,703 3,532 Convertible preferred stock.................................. - - - 2,118 Average shares outstanding assuming full dilution............. 292,581 310,929 292,821 315,859 ======== ======== ======== ======== Basic........................................................ $ 1.41 $ 1.22 $ 2.73 $ 2.41 ======== ======== ======== ======== Diluted...................................................... $ 1.38 $ 1.20 $ 2.68 $ 2.37 ======== ======== ======== ======== - ---------------------------------------------------------------------------------------------------------
29 6 Note 3 - ------ At June 30, 1998, credit card receivables aggregated $9.2 billion. These receivables are available for sale through credit card securitization programs. Note 4 - ------ The Corporation adopted SFAS No. 130, "Reporting Comprehensive Income," on January 1, 1998. The Statement defines comprehensive income as including net income and certain other items that affect stockholders' equity. The other items include "fair value adjustment on investment securities available for sale" and "accumulated translation adjustment," which are reported in "Accumulated other adjustments to stockholders' equity" on the Corporation's Consolidated Balance Sheet. The Corporation has elected to disclose these items in its Consolidated Statement of Stockholders' Equity. Since the Statement solely relates to display and disclosure requirements, it has no effect on the Corporation's financial results. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This Statement establishes new accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those derivatives at fair value. The accounting for the gains or losses resulting from changes in the value of those derivatives will depend on the intended use of the derivative and whether it qualifies for hedge accounting. This Statement will significantly change the accounting treatment for derivatives the Corporation uses in its asset and liability management activities. The Corporation is required to adopt this Statement on January 1, 2000. The Corporation is in the process of evaluating the impact of this new Statement. Note 5 - ------ The carrying values and estimated fair values of financial instruments as of June 30, 1998, have not materially changed on a relative basis from the carrying values and estimated fair values of financial instruments disclosed as of December 31, 1997, in the Corporation's Annual Report. Note 6 - ------ Nonperforming loans are generally identified as "impaired loans". The recorded investment in loans considered impaired was $293 million and $329 million at June 30, 1998, and June 30, 1997, respectively. The required allowance for credit losses related to these loans was $57 million and $46 million at June 30, 1998, and June 30, 1997, respectively. Substantially all of the impaired loans on both dates required the establishment of an allocated reserve. The following table summarizes additional information related to impaired loans.
- ------------------------------------------------------------------------------------------------------------------ Three Months Ended Six Months Ended (In millions) June 30 June 30 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------ Impaired loans average balance........................ $334 $267 $341 $262 Interest income recognized on impaired loans.......... 4 4 9 9 - ------------------------------------------------------------------------------------------------------------------
30 7 Note 7 - ------ Derivative financial instruments used in trading activities are valued at estimated fair value. Such instruments include swaps, forwards, spot, futures, options, caps, floors and forward rate agreements in the interest rate, foreign exchange, equity and commodity markets. The estimated fair values are based on quoted market prices or pricing and valuation models on a present value basis using current market information. Realized and unrealized gains and losses are included in noninterest income as combined trading profits. Where appropriate, compensation for credit risk and ongoing servicing is deferred and recorded as income over the terms of the derivative financial instruments. Derivative financial instruments used in ALM activities, principally interest rate swaps, are required to meet specific criteria. Such interest rate swaps are designated as ALM derivatives; are linked to and adjust the interest rate sensitivity of a specific asset, liability, firm commitment, or anticipated transaction or a specific pool of transactions with similar risk characteristics; and are effective in reducing the Corporation's structural interest rate risk at inception. Interest rate swaps that do not meet these criteria are designated as derivatives used in trading activities and are accounted for at estimated fair value. Income or expense on most ALM derivatives used to manage interest rate exposure is recorded on an accrual basis, as an adjustment to the yield of the linked exposures over the periods covered by the contracts. This matches the income recognition treatment of that exposure, generally assets or liabilities carried at historical cost, which are recorded on an accrual basis. If an interest rate swap is terminated early, any resulting gain or loss is deferred and amortized as an adjustment of the yield on the linked interest rate exposure position over the remaining periods originally covered by the terminated swap. If all or part of a linked position is terminated, e.g., a linked asset is sold or prepaid, or if the amount of an anticipated transaction is likely to be less than originally expected, the related pro rata portion of any unrecognized gain or loss on the swap is recognized in earnings at that time, and the related pro rata portion of the swap is subsequently accounted for at estimated fair value. Purchased option, cap and floor contracts are reported in derivative product assets, and written option, cap and floor contracts are reported in derivative product liabilities. For other derivative financial instruments, an unrealized gain is reported in derivative product assets, and an unrealized loss is reported in derivative product liabilities. However, fair value amounts recognized for derivative financial instruments executed with the same counterparty under a legally enforceable master netting arrangement are reported on a net basis. Cash flows from derivative financial instruments are reported net as operating activities. Note 8 - ------ The ratio of income to fixed charges for the six months ended June 30, 1998, excluding interest on deposits, was 2.3x, and including interest on deposits, was 1.6x. The ratio has been computed on the basis of the total enterprise (as defined by the Securities and Exchange Commission) by dividing income before fixed charges and income taxes by fixed charges. Fixed charges consist of interest expense on all long- and short-term borrowings, excluding or including interest on deposits. 31 8 Note 9 - ------ On April 10, 1998, the Corporation and BANC ONE CORPORATION ("ONE") entered into an Agreement and Plan of Reorganization (as amended, the "Agreement"), pursuant to which, subject to the conditions and upon the terms stated therein, the Corporation and ONE will each merge into a new company, BANK ONE CORPORATION ("BANK ONE") organized to effect the merger (such mergers, collectively, the "Merger"). It is anticipated that the Merger will be accounted for as a pooling-of- interests and that it will be consummated during the second half of 1998, pending necessary approvals of the Corporation's and ONE's respective stockholders, regulatory bodies, and other customary conditions of closing. As a result of the pending Merger, the Corporation's stock repurchase program was rescinded. In accordance with the Agreement, each share of ONE's common stock, without par value, ("ONE Common Stock") outstanding immediately prior to the effective time of the Merger (the "Effective Time") will at the Effective Time be converted into one share of the common stock, with par value $0.01 per share, of BANK ONE ("BANK ONE Common Stock"), and each share of the Corporation's common stock, par value $1.00 per share, ("FCN Common Stock") outstanding immediately prior to the Effective Time will at the Effective Time be converted into the right to receive 1.62 shares of BANK ONE Common Stock. In addition, each share of the Corporation's Preferred Stock with Cumulative and Adjustable Dividends, Series B, and Preferred Stock with Cumulative and Adjustable Dividends, Series C, in each case outstanding immediately prior to the Effective Time, will be converted into the right to receive one share of a series of corresponding preferred stock of BANK ONE with substantially the same terms. The Corporation and ONE have scheduled a special meeting of stockholders for September 15, 1998, at which their respective stockholders are expected to consider and vote on the Merger. Note 10 - ------- The Corporation and certain of its subsidiaries are defendants in various lawsuits, including certain class actions, arising out of the normal course of business, and the Corporation has received certain tax deficiency assessments. Since the Corporation and certain of its subsidiaries, which are regulated by one or more federal and state regulatory authorities, also are the subject of numerous examinations and reviews by such authorities, the Corporation is and will, from time to time, normally be engaged in various disagreements with regulators, related primarily to banking matters. In the opinion of management and the Corporation's general counsel, the ultimate resolution of the matters referred to in this note will not have a material effect on the consolidated financial statements. 32 EX-99.11 3 EXHIBIT 99.11 1 Exhibit 99.11 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION On April 10, 1998, BANC ONE CORPORATION ("BANC ONE"), First Chicago NBD ("FCN") and Hornet Reorganization Corporation, since renamed BANK ONE CORPORATION ("BANK ONE") entered into an Agreement and Plan of Reorganization (the "Agreement"), as subsequently amended, pursuant to which BANC ONE and FCN will be merged seriatim with and into BANK ONE as the surviving corporation in each case (such mergers together, the "Merger"). Common shareholders of FCN will receive 1.62 shares of BANK ONE common stock for each share of FCN and common shareholders of BANC ONE will receive one share of BANK ONE common stock for each share of BANC ONE. The Merger will be accounted for as a pooling of interests and pending regulatory and shareholder approval is expected to be completed during the fourth quarter of 1998. The following unaudited pro forma condensed combined financial information and explanatory notes are presented to show the impact on the historical financial position and results of operations of BANC ONE of the Merger under the "pooling of interests" method of accounting. The unaudited pro forma condensed combined financial information combines the historical financial information of BANC ONE and FCN as of June 30, 1998 and for the six months ended June 30, 1998 and 1997, respectively. The pro forma condensed combined financial information as of June 30, 1998 and for the six months ended June 30, 1998 and 1997, is based on and derived from, and should be read in conjunction with, (a) the historical consolidated financial statements and the related notes thereto of BANC ONE, which are incorporated by reference herein, and (b) the historical consolidated financial statements and the related notes thereto of FCN, which are incorporated by reference herein. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the future financial position or results of operations of the combined company or of the combined financial position or the results of operations that would have been realized had the merger been consummated during the periods or as of the dates for which the pro forma financial information is presented. The pro forma financial information noted above gives effect to BANC ONE's acquisition of First Commerce Corporation ("FCC") which was consummated on June 12, 1998. Previously presented unaudited pro forma financial information for the years ended December 31, 1997, 1996 and 1995 have not been restated to give effect to BANC ONE's acquisition of FCC as the acquisition is not material to BANC ONE. 2 BANK ONE CORPORATION & SUBSIDIARIES (CONSOLIDATED) PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JUNE 30, 1998 (UNAUDITED) (IN MILLIONS) The following unaudited pro forma condensed combined balance sheet as of June 30, 1998 is presented to show the impact on BANC ONE's historical financial condition of the proposed Merger with FCN. The Merger has been reflected under the "pooling of interests" method of accounting.
PROFORMA BANC ONE FCN ADJUSTMENTS COMBINED --------- --------- ----------- --------- ASSETS Total cash and due from banks $ 8,174 $ 8,049 $ 16,223 Short-term investments 765 13,570 14,335 Trading assets 1,214 4,128 5,342 Investment securities: Securities held to maturity 691 691 Securities available for sale 18,357 12,604 30,961 --------- --------- --------- --------- Total securities 19,048 12,604 31,652 Loans and leases (net of unearned income and allowance for credit losses) 82,683 70,191 152,874 Other assets 12,135 11,239 23,374 --------- --------- --------- --------- TOTAL ASSETS $ 124,019 $ 119,781 $ 243,800 ========= ========= ========= ========= LIABILITIES Deposits: Non-interest bearing $ 21,482 $ 19,800 $ 41,282 Interest bearing 63,472 49,728 113,200 --------- --------- --------- --------- Total deposits 84,954 69,528 154,482 Short-term borrowings 11,807 22,541 34,348 Long-term borrowings 11,656 10,591 22,247 Other liabilities 4,028 8,807 $ 837 13,672 --------- --------- --------- --------- TOTAL LIABILITIES 112,445 111,467 837 224,749 --------- --------- --------- --------- STOCKHOLDERS' EQUITY Preferred stock 190 190 Common stock 3,521 320 2,011 5,852 Capital in excess of aggregrate stated value 6,772 1,948 (4,086) 4,634 Retained earnings 1,170 7,977 (837) 8,310 Other shareholders' equity 111 (46) 65 Less: Treasury stock (2,075) 2,075 --------- --------- --------- --------- Total stockholders' equity 11,574 8,314 (837) 19,051 --------- --------- --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 124,019 $ 119,781 $ 0 $ 243,800 ========= ========= ========= =========
See accompanying notes to the pro forma financial information. 3 BANK ONE CORPORATION & SUBSIDIARIES (CONSOLIDATED) PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE DATA) The following unaudited pro forma condensed combined statements of income are presented to show the impact on BANC ONE's historical results of operations of the proposed merger with FCN. Such statements assume that the companies had been combined for each period presented.
PROFORMA BANC ONE FCN COMBINED -------- ------ -------- INTEREST INCOME Loans and leases $4,273 $2,961 $7,234 Securities, including trading 664 440 1,104 Other interest income 29 374 403 ------ ------ ------ Total 4,966 3,775 8,741 INTEREST EXPENSE Deposits 1,393 1,120 2,513 Borrowings 726 910 1,636 ------ ------ ------ Total 2,119 2,030 4,149 NET INTEREST INCOME 2,847 1,745 4,592 Provision for credit losses 406 385 791 ------ ------ ------ Net interest income after provision for credit losses 2,441 1,360 3,801 NONINTEREST INCOME Credit card revenue 948 468 1,416 Deposit fees 394 231 625 Other noninterest income 1,121 882 2,003 ------ ------ ------ Total 2,463 1,581 4,044 NONINTEREST EXPENSE Salaries and employee benefits 1,346 917 2,263 Other operating expense 2,043 842 2,885 ------ ------ ------ Total 3,389 1,759 5,148 INCOME BEFORE INCOME TAXES 1,515 1,182 2,697 Income taxes 479 391 870 ------ ------ ------ NET INCOME $1,036 $ 791 $1,827 ====== ====== ====== NET INCOME PER COMMON SHARE Basic $ 1.47 $ 2.73 $ 1.56 Diluted 1.45 2.68 1.53 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 701.1 287.8 1,167.3 Diluted 716.0 292.8 1,190.4
See accompanying notes to the pro forma financial information. 4 BANK ONE CORPORATION & SUBSIDIARIES (CONSOLIDATED) PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE DATA)
PROFORMA BANC ONE FCN COMBINED -------- --- -------- INTEREST INCOME Loans and leases $4,363 $2,885 $7,248 Securities, including trading 654 357 1,011 Other interest income 23 352 375 ------ ------ ------ Total 5,040 3,594 8,634 INTEREST EXPENSE Deposits 1,387 1,043 2,430 Borrowings 741 750 1,491 ------ ------ ------ Total 2,128 1,793 3,921 NET INTEREST INCOME 2,912 1,801 4,713 Provision for credit losses 696 367 1,063 ------ ------ ------ Net interest income after provision for credit losses 2,216 1,434 3,650 NONINTEREST INCOME Credit card revenue 655 441 1,096 Deposit fees 369 221 590 Other noninterest income 697 661 1,358 ------ ------ ------ Total 1,721 1,323 3,044 NONINTEREST EXPENSE Salaries and employee benefits 1,219 851 2,070 Other operating expense 1,978 774 2,752 ------ ------ ------ Total 3,197 1,625 4,822 INCOME BEFORE INCOME TAXES 740 1,132 1,872 Income taxes 280 374 654 ------ ------ ------ NET INCOME $ 460 $ 758 $1,218 ====== ====== ====== NET INCOME PER COMMON SHARE Basic $ 0.66 $ 2.41 $ 1.01 Diluted 0.65 2.37 0.99 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 676.2 309.4 1,177.5 Diluted 712.4 315.9 1,224.1
See accompanying notes to the pro forma financial information. 5 BANK ONE CORPORATION NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION NOTE 1. BASIS OF PRESENTATION The pro forma condensed combined financial information reflects the Merger using the pooling of interests method of accounting. The pro forma information presented is not necessarily indicative of the results of operations or the combined financial position that would have resulted had the Merger been consummated at the beginning of the periods indicated, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities. It is anticipated that the Merger will be consummated in the fourth quarter of 1998, subject to shareholder and regulatory approval. Certain reclassifications have been included in the unaudited pro forma condensed combined balance sheet and statements of income to conform statement presentations. NOTE 2. ACCOUNTING POLICIES The accounting policies of both companies are in the process of being reviewed. As a result of this review, certain conforming accounting adjustments may be necessary. The nature and extent of such adjustments have not been determined and are not expected to be significant. NOTE 3. MERGER-RELATED EFFECTS In connection with the Merger, the managements of BANC ONE and FCN estimate that a one-time restructuring charge of approximately $1.25 billion ($837 million after-tax) will be incurred at the time of the consummation of the Merger. The estimated details of this overall charge have been summarized into the following components: $800 million in personnel-related items, $350 million related to facilities and equipment costs and $100 million on other merger-related transaction costs. Actions incorporated in the business combination and restructuring plan are principally targeted for implementation over a 12-18 month period following the effective date of the Merger, currently contemplated for the fourth quarter of 1998. There can be no assurance that the actual restructuring charge and the details thereof will not differ materially from the foregoing estimates. Personnel-related items consist primarily of severance and benefits cost for separated employees and costs associated with change in control provisions of FCN's stock plans (currently estimated at $200 million). The benefit package to be made available to certain affected employees has been approved by management and communicated on a corporate-wide basis. Facilities and equipment costs include the net cost associated with the closing and divestiture of identified banking facilities, and from the consolidation of headquarters and operational facilities. Other merger-related transaction costs include investment banking fees, registration and listing fees, and various accounting, legal and other related costs. 6 These amounts, including the related tax effects, have been reflected in the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 1998 and are not reflected in the Unaudited Pro Forma Condensed Combined Statements of Income due to their nonrecurring nature. NOTE 4. PRO FORMA ADJUSTMENTS The following pro forma adjustments have been reflected in the pro forma condensed combined financial information: a) Common stock and capital in excess of aggregate stated value were adjusted by $2.011 billion to reflect the Merger accounted for as a pooling of interests through the exchange of 466.1 million shares of BANC ONE common stock for 287.7 million shares of FCN common stock using an exchange ratio of 1.62. b) Treasury stock and capital in excess of aggregate stated value were adjusted by $2.075 billion to reflect the retirement of FCN treasury stock. c) Other liabilities and retained earnings were adjusted by $1.25 billion to reflect the recording of the merger-related charge. d) Other liabilities and retained earnings were adjusted by $413 million to reflect the tax benefit associated with the merger related charge. -----END PRIVACY-ENHANCED MESSAGE-----