-----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, LoggV/MubgOejHezzLxFF05RTI48BvNmusvynJKQm6ewI4pmkOKT2PZ6yOUjHK0c XVvN90F1rm+2F/yOj7Rz7g== 0000927016-99-002029.txt : 19990517 0000927016-99-002029.hdr.sgml : 19990517 ACCESSION NUMBER: 0000927016-99-002029 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990514 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKBOSTON CORP CENTRAL INDEX KEY: 0000036672 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 042471221 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06522 FILM NUMBER: 99624501 BUSINESS ADDRESS: STREET 1: 100 FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174342200 FORMER COMPANY: FORMER CONFORMED NAME: BANK OF BOSTON CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FIRST NATIONAL BOSTON CORP DATE OF NAME CHANGE: 19830414 8-K 1 FORM 8-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 14, 1999 BANKBOSTON CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 1-6522 04-2471221 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 100 Federal Street, Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 434-2200 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -2- Item 5. Other Events. - ---------------------- As previously reported in its Current Report on Form 8-K dated March 14, 1999, BankBoston Corporation (the Corporation) has entered into an agreement and plan of merger with Fleet Financial Group, Inc. (Fleet). The Corporation's Current Report on Form 8-K dated April 2, 1999 (the Current Report) included as exhibits thereto and incorporated by reference therein, certain pro forma condensed combined financial information for the Corporation and Fleet, and certain historical consolidated financial information for Fleet. In order to update the information in the Current Report, attached hereto as exhibits and incorporated by reference herein are (i) pro forma condensed combined financial information for the Corporation and Fleet for the quarters ended March 31, 1999 and 1998; and (ii) Fleet historical consolidated financial information for the quarter ended March 31, 1999. Item 7. Financial Statements and Exhibits. - ------------------------------------------- (c) Exhibits. 99(a) Pro Forma Condensed Combined Balance Sheet for the Corporation and Fleet at March 31, 1999; and Pro Forma Condensed Combined Statements of Income for the Corporation and Fleet for the three months ended March 31, 1999 and 1998 (and Notes to Pro Forma Condensed Combined Financial Statements). 99(b) Fleet Consolidated Balance Sheets at March 31, 1999 and December 31, 1998, and Fleet Consolidated Statements of Income, Changes in Stockholders' Equity and Cash Flows for the three months ended March 31, 1999 and 1998 (and Notes to Consolidated Financial Statements), incorporated herein by reference to Part 1, Item 1 of the Fleet Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (File No. 1-6366). -3- 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. BANKBOSTON CORPORATION Dated: May 14, 1999 /s/ Robert T. Jefferson ----------------------------- Robert T. Jefferson Comptroller EX-99.A 2 PRO FORMA CONDENSED COMBINED BALANCE SHEET EXHIBIT 99(a) ------------- UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following unaudited pro forma condensed combined balance sheet as of March 31, 1999 and the unaudited pro forma condensed combined statements of income for the three months ended March 31, 1999 and 1998 give effect to the pending merger (the "merger") of BankBoston Corporation ("BankBoston") and Fleet Financial Group, Inc. ("Fleet"), accounted for as a pooling of interests. The merger, anticipated to be consummated in the fourth quarter of 1999 if not earlier, is subject to shareholder and regulatory approval. The unaudited pro forma condensed combined financial information is based on the historical consolidated financial statements of BankBoston and Fleet under the assumptions and adjustments set forth in the accompanying notes to the unaudited pro forma condensed combined financial statements, and gives effect to the merger as if the merger had been consummated at the beginning of the earliest period presented. The unaudited pro forma condensed combined financial statements do not give effect to the anticipated cost savings in connection with the merger or the effects of any divestitures required by regulators. The unaudited pro forma condensed combined financial statements should be read in conjunction with the consolidated historical financial statements of BankBoston and Fleet, including the respective notes to those statements. The pro forma information is not necessarily indicative of the combined financial position or the results of operations in the future or of the combined financial position or the results of operations which would have been realized had the merger been consummated during the periods or as of the dates for which the pro forma information is presented. Pro forma per share amounts for the combined BankBoston and Fleet entity are based on the exchange ratio of 1.1844 shares of Fleet common stock, par value $.01 per share, for each share of BankBoston common stock, par value $1.00 per share. 1 BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET As of March 31, 1999
Pro Forma Pro Forma (Dollars in millions) BankBoston Fleet Adjustments Combined ---------- ----- ----------- -------- ASSETS: Cash, due from banks and interest-bearing deposits $ 4,108 $ 4,857 $ - $ 8,965 Federal funds sold and securities purchased under agreements to resell 3,655 5 - 3,660 Securities 13,882 11,059 - 24,941 Trading assets 4,213 670 - 4,883 Loans and leases 42,775 73,683 - 116,458 Reserve for credit losses (758) (1,724) - (2,482) Due from brokers/dealers 101 2,726 - 2,827 Mortgages held for resale - 2,155 - 2,155 Premises and equipment 1,291 1,233 - 2,524 Mortgage servicing rights - 2,098 - 2,098 Intangible assets 793 3,423 - 4,216 Other assets 5,648 5,981 - 11,629 -------- --------- ---------- --------- Total assets $ 75,708 $ 106,166 $ - $ 181,874 ======== ========= ========= ========= LIABILITIES and STOCKHOLDERS' EQUITY: Deposits: Domestic: Noninterest-bearing $ 6,298 $ 16,636 $ - $ 22,934 Interest-bearing 27,724 47,712 - 75,436 Overseas: Noninterest-bearing 1,534 - - 1,534 Interest-bearing 12,912 3,285 - 16,197 -------- --------- ---------- --------- Total deposits 48,468 67,633 - 116,101 -------- --------- ---------- --------- Federal funds purchased and securities sold under agreements to repurchase 6,181 3,027 - 9,208 Funds borrowed 7,697 3,001 - 10,698 Due to brokers/dealers 218 3,823 - 4,041 Notes payable 5,611 15,586 - 21,197 Accrued expenses and other liabilities 2,570 3,484 650 (4b) 6,704 -------- --------- ---------- --------- Total liabilities 70,745 96,554 650 167,949 -------- --------- ---------- --------- Stockholders' equity: Preferred stock - 691 - 691 Common stock 307 6 (304)(4a) 9 Common surplus 1,106 3,291 (127)(4a) 4,270 Retained earnings 3,982 5,602 (650)(4b) 8,934 Accumulated other comprehensive income (37) 58 - 21 Treasury stock, at cost (395) (36) 431 (4a) - -------- --------- ---------- --------- Total stockholders' equity 4,963 9,612 (650) 13,925 -------- --------- ---------- --------- Total liabilities and stockholders' equity $ 75,708 $ 106,166 $ - $ 181,874 ======== ========= ========== =========
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements 2 BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME For the Three Months Ended March 31, 1999
Pro Forma Pro Forma (Dollars in millions, except per share amounts) BankBoston Fleet Adjustments Combined ---------- ----- ----------- -------- Interest income: Interest and fees on loans $ 1,034 $ 1,559 $ - $ 2,593 Interest on securities and trading assets 229 173 - 402 Other 109 46 - 155 -------- -------- --------- -------- Total interest income 1,372 1,778 - 3,150 -------- -------- --------- -------- Interest expense: Deposits 473 424 - 897 Funds borrowed 180 80 - 260 Notes payable 84 201 - 285 Other - 39 - 39 -------- -------- --------- -------- Total interest expense 737 744 - 1,481 -------- -------- --------- -------- Net interest income 635 1,034 - 1,669 -------- -------- --------- -------- Provision for credit losses 70 149 - 219 -------- -------- --------- -------- Net interest income after provision for credit losses 565 885 - 1,450 -------- -------- --------- -------- Noninterest income: Investment services revenue 134 248 - 382 Banking fees and commissions 154 193 - 347 Credit card revenue 21 141 - 162 Venture capital revenue 34 41 - 75 Other 252 336 - 588 -------- -------- --------- -------- Total noninterest income 595 959 - 1,554 -------- -------- --------- -------- Noninterest expense: Employee compensation and benefits 473 542 - 1,015 Occupancy and equipment 109 162 - 271 Intangible asset amortization 15 71 - 86 Other 209 350 - 559 -------- -------- --------- -------- Total noninterest expense 806 1,125 - 1,931 -------- -------- --------- -------- Income before income taxes 354 719 - 1,073 Applicable income taxes 131 281 - 412 -------- -------- --------- -------- Net income $ 223 $ 438 $ - $ 661 ======== ======== ========= ======== Net income applicable to common shares $ 223 $ 422 $ - $ 645 ======== ======== ========= ======== Weighted average common shares outstanding (in thousands): Basic 295,935 568,546 - 919,051 (4c) Diluted 298,477 588,572 - 942,088 (4c) Per Common Share: Basic $ 0.75 $ 0.74 $ - $ 0.70 (4c) Diluted 0.75 0.72 - 0.68 (4c)
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements 3 BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME For the Three Months Ended March 31, 1998
Pro Forma Pro Forma (Dollars in millions, except per share amounts) BankBoston Fleet Adjustments Combined ---------- ----- ----------- -------- Interest income: Interest and fees on loans $ 1,012 $ 1,378 $ - $ 2,390 Interest on securities and trading assets 208 162 - 370 Other 117 54 - 171 -------- -------- --------- -------- Total interest income 1,337 1,594 - 2,931 -------- -------- --------- -------- Interest expense: Deposits 462 438 - 900 Funds borrowed 207 84 - 291 Notes payable 65 89 - 154 Other - 54 - 54 -------- -------- --------- -------- Total interest expense 734 665 - 1,399 -------- -------- --------- -------- Net interest income 603 929 - 1,532 -------- -------- --------- -------- Provision for credit losses 140 92 - 232 -------- -------- --------- -------- Net interest income after provision for credit losses 463 837 - 1,300 -------- -------- --------- -------- Noninterest income: Investment services revenue 82 201 - 283 Banking fees and commissions 131 176 - 307 Credit card revenue 10 56 - 66 Venture capital revenue 52 30 - 82 Securities gains 25 51 - 76 Gain on sale of business 165 - - 165 Other 124 181 - 305 -------- -------- --------- -------- Total noninterest income 589 695 - 1,284 -------- -------- --------- -------- Noninterest expense: Employee compensation and benefits 354 445 - 799 Occupancy and equipment 94 154 - 248 Intangible asset amortization 10 51 - 61 Merger-related charges - 73 - 73 Other 203 274 - 477 -------- -------- --------- -------- Total noninterest expense 661 997 - 1,658 -------- -------- --------- -------- Income before income taxes 391 535 - 926 Applicable income taxes 153 212 - 365 -------- -------- --------- -------- Net income $ 238 $ 323 $ - $ 561 ======== ======== ========= ======== Net income applicable to common shares $ 234 $ 311 $ - $ 545 ======== ======== ========= ======== Weighted average common shares outstanding (in thousands): Basic 292,542 567,778 - 914,265 (4c) Diluted 296,840 587,184 - 938,761 (4c) Per Common Share: Basic $ 0.80 $ 0.55 $ - $ 0.60 (4c) Diluted 0.79 0.53 - 0.58 (4c)
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements 4 NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS Note 1. Basis of Presentation 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 company. It is anticipated that the merger will be consummated in the fourth quarter of 1999, if not earlier. Under generally accepted accounting principles, the transaction will be accounted for as a pooling of interests and, as such, the assets and liabilities of Fleet will be combined with those of BankBoston at book value. In addition, the statements of income of Fleet will be combined with the statements of income of BankBoston as of the earliest period presented. The unaudited pro forma condensed combined statements of income give effect to the merger as if the merger occurred at the beginning of the earliest period presented. The unaudited pro forma condensed combined balance sheet assumes the merger was consummated on March 31, 1999. Certain reclassifications have been included in the unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined statements of income to conform presentations. BankBoston and Fleet anticipate that, in order to obtain regulatory approval for the merger, the companies will be required to divest approximately $13 billion of deposits, primarily in the Massachusetts, Connecticut and Rhode Island markets. No adjustment has been included, however, in the unaudited pro forma condensed combined financial statements for the anticipated divestitures. The reduction in net income related to such divestitures is estimated to be $160 million post-tax. Note 2. Accounting Policies and Financial Statement Classifications The accounting policies of both companies are in the process of being reviewed for consistency. As a result of this review, certain conforming accounting adjustments may be necessary. The nature and extent of such adjustments have not been determined but are not expected to be significant. Transactions between BankBoston and Fleet that are not material in relation to the pro forma financial information have not been eliminated from the pro forma combined amounts. Note 3. Merger- and Restructuring-Related Charges A liability of $1 billion (pre-tax) has been recorded in the unaudited pro forma condensed combined balance sheet to reflect BankBoston's and Fleet's best estimate of merger- and restructuring-related charges in connection with the merger. This liability resulted in a $650 million post-tax charge to retained earnings in the unaudited pro forma condensed combined balance sheet. The following table provides detail of the estimated charges by type, post-tax:
Estimated Costs (Post-Tax) Type of Cost (Dollars in millions) - -------------------------------------------------------------------------------- Personnel $300 Technology and operations 150 Facilities 75 Branches 25 Transaction costs and other 100 - -------------------------------------------------------------------------------- Total $650 ================================================================================
5 NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (continued) Personnel-related costs consist primarily of charges related to employee severance, termination of certain employee benefits plans and employee assistance costs for separated employees. Technology and operations costs include accelerated depreciation in excess of normal scheduled depreciation and certain liabilities that will be incurred as a result of the elimination of duplicate systems. Facilities charges consist of lease termination costs and other facilities-related exit costs, as well as accelerated depreciation in excess of normal depreciation, resulting from consolidation of duplicate headquarters and operation facilities. Branch-related costs are primarily related to the cost of exiting branches anticipated to be closed, including lease terminations and equipment write-offs. The effect of the proposed charge has been reflected in the unaudited pro forma condensed combined balance sheet as of March 31, 1999. However, since the proposed charge is nonrecurring, it has not been reflected in the unaudited pro forma condensed combined statements of income. In addition, it is estimated that $60 million (post-tax) in other expenses related to the merger will be recognized in future periods as they are incurred. These charges have not been reflected in the unaudited pro forma condensed combined balance sheet as of March 31, 1999. Note 4. Pro Forma Adjustments (a) Pro forma adjustments to common stock, treasury stock and common surplus at March 31, 1999, reflect the merger accounted for as a pooling of interests, through: (1) the exchange of 351.3 million shares of Fleet common stock (using the exchange ratio of 1.1844) for the 296.6 million outstanding shares of BankBoston common stock at March 31, 1999, (2) the reclassification adjustment to common stock to reflect the $.01 par value of Fleet common stock, and (3) an adjustment for $431 million to reflect the retirement of BankBoston treasury stock and the reissuance of Fleet treasury stock. (b) Pro forma adjustments to accrued expenses and other liabilities and retained earnings reflect the $1 billion merger- and restructuring-related charge and a $350 million reduction in the deferred tax liability for the anticipated tax benefit of such charge. For additional information on the merger- and restructuring-related charges see Note 3. (c) The pro forma combined weighted average common shares outstanding for the three months ended March 31, 1999 and 1998 reflect the converted BankBoston weighted average common shares outstanding plus Fleet weighted average common shares outstanding. Each share of BankBoston common stock was converted into 1.1844 shares of Fleet common stock. Note 5. Other Securities and Exchange Commission Filings In connection with its proposed merger with BankBoston, Fleet will file a Registration Statement on Form S-4 with the Securities and Exchange Commission (the "Commission") registering Fleet common stock to be issued in connection therewith. This Registration Statement, which may be subject to review and comment by the Staff of the Commission, includes pro forma financial information for BankBoston and Fleet. Such pro forma financial information may differ from the pro forma financial information included herein. 6 -----END PRIVACY-ENHANCED MESSAGE-----