-----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, EPhvvxp4Xhbkb56CRR8V1+J4xZP3jKJwo12LBApNWuLqauMZ21vS2DjEfX6svyyW GQW7lfA1nkX1cFnQmVJtXQ== 0000927016-99-001318.txt : 19990405 0000927016-99-001318.hdr.sgml : 19990405 ACCESSION NUMBER: 0000927016-99-001318 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990402 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990402 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: 99586794 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): April 2, 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 financial information included herein and listed under Item 7 below as Exhibit 99(a) presents unaudited pro forma condensed combined financial information for the Corporation and Fleet. Item 7. Financial Statements and Exhibits. - ------------------------------------------- (c) Exhibits. 23 Consent of KPMG Peat Marwick LLP with respect to their report on the consolidated financial statements of Fleet Financial Group, Inc. and subsidiaries. 99(a) Unaudited Pro Forma Condensed Combined Balance Sheet for the Corporation and Fleet as of December 31, 1998; and unaudited Pro Forma Condensed Combined Statements of Income for the Corporation and Fleet for the years ended December 31, 1998, 1997 and 1996 (and Notes to unaudited Pro Forma Condensed Combined Financial Statements). 99(b) Fleet Consolidated Balance Sheets at December 31, 1998 and 1997; Fleet Consolidated Statements of Income, Changes in Stockholders' Equity and Cash Flows for the years ended December 31, 1998, 1997 and 1996 (and Notes to Consolidated Financial Statements), incorporated herein by reference to Item 8 of the Fleet Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-6366). 99(c) Report of KPMG Peat Marwick LLP dated January 20, 1999 with respect to the consolidated financial statements of Fleet Financial Group, Inc. and subsidiaries at December 31, 1998 and 1997 and for each of the years in the three-year period ended December 31, 1998, incorporated herein by reference to Item 8 of the Fleet Annual Report on Form 10-K for the year ended December 31, 1998 (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: April 2, 1999 /s/ Robert T. Jefferson --------------------------------- Robert T. Jefferson Comptroller EX-23 2 CONSENT OF KPMG PEAT MARWICK LLP Exhibit 23 ---------- INDEPENDENT AUDITORS' CONSENT The Board of Directors Fleet Financial Group, Inc. We consent to the incorporation by reference in the registration statements (Nos. 33-1899, 33-11186, 33-64462, 333-00297, 333-07329, 333-09041, 333-12851, 333-18999, 333-24199, 333-41589 and 333-71867) on Form S-8, and the registration statements (Nos. 333-13697, 333-47125, 333-47125-01, 333-47125-02 and 333-67383) on Form S-3 of BankBoston Corporation of our report dated January 20, 1999, with respect to the consolidated balance sheets of Fleet Financial Group, Inc. and subsidiaries as of December 31, 1998 and 1997, and the related consolidated statements of income, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1998, which report is incorporated by reference in the Form 8-K of BankBoston Corporation dated April 2, 1999. /s/ KPMG PEAT MARWICK LLP Boston, Massachusetts April 2, 1999 EX-99 3 PRO FORMA BALANCE SHEET EXHIBIT 99A =========== UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following unaudited pro forma condensed combined balance sheet as of December 31, 1998, and the unaudited pro forma condensed combined statements of income for each of the years in the three year period ended December 31, 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, 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 regulatory required divestitures. 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 thereto. 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 Common 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. BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET as of December 31, 1998
Pro Forma Pro Forma (Dollars in millions) BankBoston Fleet Adjustments Combined ---------- ----- ----------- -------- ASSETS: Cash, due from banks and interest-bearing deposits $ 5,306 $ 5,635 $ - $ 10,941 Federal funds sold and securities purchased under agreements to resell 2,463 103 - 2,566 Securities 12,534 10,902 - 23,436 Trading assets 3,802 562 - 4,364 Loans and leases 42,806 69,396 - 112,202 Reserve for credit losses (754) (1,552) - (2,306) Due from brokers/dealers 265 3,600 - 3,865 Mortgages held for resale - 3,960 - 3,960 Premises and equipment 1,319 1,229 - 2,548 Mortgage servicing rights - 1,405 - 1,405 Intangible assets 787 3,117 - 3,904 Other assets 4,985 6,025 - 11,010 -------- -------- ------ -------- Total assets $ 73,513 $104,382 $ - $177,895 ======== ======== ====== ======== LIABILITIES and STOCKHOLDERS' EQUITY: Deposits: Domestic: Noninterest-bearing $ 6,554 $ 18,646 $ - $ 25,200 Interest-bearing 28,371 47,214 - 75,585 Overseas: Noninterest-bearing 1,144 - - 1,144 Interest-bearing 12,431 3,818 - 16,249 -------- -------- ------ -------- Total deposits 48,500 69,678 - 118,178 -------- -------- ------ -------- Federal funds purchased and securities sold under agreements to repurchase 5,241 4,456 - 9,697 Funds borrowed 6,775 5,033 - 11,808 Due to brokers/dealers 241 3,975 - 4,216 Notes payable 5,588 8,820 - 14,408 Accrued expenses and other liabilities 2,351 3,011 650 4(b) 6,012 -------- -------- ------ -------- Total liabilities 68,696 94,973 650 164,319 -------- -------- ------ -------- Stockholders' equity: Preferred stock - 691 - 691 Common stock 307 6 (304)4(a) 9 Common surplus 1,118 3,284 (203)4(a) 4,199 Retained earnings 3,895 5,337 (650)4(b) 8,582 Accumulated other comprehensive income (33) 128 - 95 Treasury stock, at cost (470) (37) 507 4(a) - -------- -------- ------ -------- Total stockholders' equity 4,817 9,409 (650) 13,576 -------- -------- ------ -------- Total liabilities and stockholders' equity $ 73,513 $104,382 $ - $177,895 ======== ======== ====== ========
See Notes To Unaudited Pro Forma Condensed Combined Financial Statements BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME For the Year Ended December 31, 1998
Pro Forma Pro Forma (Dollars in millions, except per share data) BankBoston Fleet Adjustments Combined ---------- ----- ----------- -------- Interest income: Interest and fees on loans $ 4,259 $ 5,878 $ - $ 10,137 Interest on securities and trading assets 892 673 - 1,565 Other 426 214 - 640 -------- -------- ------ -------- Total interest income 5,577 6,765 - 12,342 -------- -------- ------ -------- Interest expense: Deposits 1,871 1,835 - 3,706 Funds borrowed 859 400 - 1,259 Notes payable 320 448 - 768 Other - 213 - 213 -------- -------- ------ -------- Total interest expense 3,050 2,896 - 5,946 -------- -------- ------ -------- Net interest income 2,527 3,869 - 6,396 -------- -------- ------ -------- Provision for credit losses 380 470 - 850 -------- -------- ------ -------- Net interest income after provision for credit losses 2,147 3,399 - 5,546 -------- -------- ------ -------- Noninterest income: Banking fees and commissions 580 748 - 1,328 Investment services revenue 388 851 - 1,239 Credit card revenue 64 391 - 455 Venture capital revenue 233 149 - 382 Securities gains 41 74 - 115 Gains on sales of businesses 254 - - 254 Other 472 1,024 - 1,496 -------- -------- ------ -------- Total noninterest income 2,032 3,237 - 5,269 -------- -------- ------ -------- Noninterest expense: Employee compensation and benefits 1,630 1,927 - 3,557 Occupancy and equipment 398 605 - 1,003 Intangible asset amortization 47 227 - 274 Merger-related charges - 73 - 73 Other 835 1,297 - 2,132 -------- -------- ------ -------- Total noninterest expense 2,910 4,129 - 7,039 -------- -------- ------ -------- Income before income taxes 1,269 2,507 - 3,776 Applicable income taxes 477 975 - 1,452 -------- -------- ------ -------- Net income $ 792 $ 1,532 $ - $ 2,324 ======== ======== ====== ======== Net income applicable to common shares $ 783 $ 1,481 $ - $ 2,264 ======== ======== ====== ======== Weighted average common shares outstanding: (in thousands) Basic 293,873 568,059 - 916,122 4(d) Diluted 296,663 587,769 - 939,137 4(d) Per Common Share: Basic $ 2.66 $ 2.61 $ - $ 2.47 4(d) Diluted 2.64 2.52 - 2.41 4(d)
See Notes To Unaudited Pro Forma Condensed Combined Financial Statements BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME For the Year Ended December 31, 1997
Pro Forma Pro Forma (Dollars in millions, except per share data) BankBoston Fleet Adjustments Combined ---------- ----- ----------- -------- Interest income: Interest and fees on loans $ 3,954 $ 5,357 $ - $ 9,311 Interest on securities and trading assets 809 570 - 1,379 Other 401 164 - 565 -------- -------- ------ -------- Total interest income 5,164 6,091 - 11,255 -------- -------- ------ -------- Interest expense: Deposits 1,685 1,654 - 3,339 Funds borrowed 805 247 - 1,052 Notes payable 245 338 - 583 Other - 152 - 152 -------- -------- ------ -------- Total interest expense 2,735 2,391 - 5,126 -------- -------- ------ -------- Net interest income 2,429 3,700 - 6,129 -------- -------- ------ -------- Provision for credit losses 200 322 - 522 -------- -------- ------ -------- Net interest income after provision for credit losses 2,229 3,378 - 5,607 -------- -------- ------ -------- Noninterest income: Banking fees and commissions 487 708 - 1,195 Investment services revenue 294 696 - 990 Venture capital revenue 221 71 - 292 Securities gains 80 33 - 113 Credit card revenue 36 62 - 98 Gains on sales of businesses 68 175 - 243 Other 377 886 - 1,263 -------- -------- ------ -------- Total noninterest income 1,563 2,631 - 4,194 -------- -------- ------ -------- Noninterest expense: Employee compensation and benefits 1,279 1,752 - 3,031 Occupancy and equipment 350 611 - 961 Intangible asset amortization 37 169 - 206 Merger-related charges - 25 - 25 Other 658 1,158 - 1,816 -------- -------- ------ -------- Total noninterest expense 2,324 3,715 - 6,039 -------- -------- ------ -------- Income before income taxes 1,468 2,294 - 3,762 Applicable income taxes 589 927 - 1,516 -------- -------- ------ -------- Net income $ 879 $ 1,367 $ - $ 2,246 ======== ======== ====== ======== Net income applicable to common shares $ 848 $ 1,305 $ - $ 2,153 ======== ======== ====== ======== Weighted average common shares outstanding: (in thousands) Basic 295,918 551,956 - 902,441 4(d) Diluted 300,080 568,605 - 924,020 4(d) Per Common Share: Basic $ 2.86 $ 2.37 $ - $ 2.39 4(d) Diluted 2.82 2.30 - 2.33 4(d)
See Notes To Unaudited Pro Forma Condensed Combined Financial Statements BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME For the Year Ended December 31, 1996
Pro Forma Pro Forma (Dollars in millions, except per share data) BankBoston Fleet Adjustments Combined ---------- ----- ----------- -------- Interest income: Interest and fees on loans $ 3,863 $ 5,169 $ - $ 9,032 Interest on securities and trading assets 724 723 - 1,447 Other 306 136 - 442 -------- -------- ------ -------- Total interest income 4,893 6,028 - 10,921 -------- -------- ------ -------- Interest expense: Deposits 1,680 1,754 - 3,434 Funds borrowed 679 311 - 990 Notes payable 194 390 - 584 Other - 111 - 111 -------- -------- ------ -------- Total interest expense 2,553 2,566 - 5,119 -------- -------- ------ -------- Net interest income 2,340 3,462 - 5,802 -------- -------- ------ -------- Provision for credit losses 231 213 - 444 -------- -------- ------ -------- Net interest income after provision for credit losses 2,109 3,249 - 5,358 -------- -------- ------ -------- Noninterest income: Banking fees and commissions 455 601 - 1,056 Investment services revenue 251 634 - 885 Venture capital revenue 209 106 - 315 Credit card revenue 36 59 - 95 Securities gains 23 43 - 66 Gains on sales of businesses 153 - - 153 Other 217 890 (18) 4(c) 1,089 -------- -------- ------ -------- Total noninterest income 1,344 2,333 (18) 3,659 -------- -------- ------ -------- Noninterest expense: Employee compensation and benefits 1,178 1,735 - 2,913 Occupancy and equipment 341 593 - 934 Intangible asset amortization 34 140 - 174 Merger-related charges 180 - - 180 Other 587 1,044 - 1,631 -------- -------- ------ -------- Total noninterest expense 2,320 3,512 - 5,832 -------- -------- ------ -------- Income before income taxes 1,133 2,070 (18) 3,185 Applicable income taxes 483 849 (7) 1,325 -------- -------- ------ -------- Net income $ 650 $ 1,221 $ (11) $ 1,860 ======== ======== ====== ======== Net income applicable to common shares $ 613 $ 1,149 $ (11) $ 1,751 ======== ======== ====== ======== Weighted average common shares outstanding: (in thousands) Basic 307,058 568,896 - 932,575 4(d) Diluted 312,224 580,026 - 949,824 4(d) Per Common Share: Basic $ 2.00 $ 2.02 $ - $ 1.88 4(d) Diluted 1.96 1.98 - 1.84 4(d)
See Notes To Unaudited Pro Forma Condensed Combined Financial Statements NOTES TO 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 entity. It is anticipated that the Merger will be consummated in the fourth quarter of 1999. 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 December 31, 1998. 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 presentation. 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 and approximately $5 billion of loans, primarily in the Massachusetts, Connecticut and Rhode Island markets. No adjustment has been included in the unaudited pro forma condensed combined financial statements for the anticipated divestitures, however, the reduction in net income related to such divestitures is estimated to be $160 million. 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 management's best estimate of merger and restructuring related charges in connection with the Merger. This liability resulted in a $650 million post-tax charge to retained earnings in the unaudited pro forma condensed combined balance sheet. The following table provides detail of the estimated charges by type, post-tax:
Estimated Costs (Post-Tax) Type of Cost ($ in millions) ------------ --------------- Personnel $300 Technology and operations 150 Facilities 75 Branches 25 Transaction costs and other 100 ---- Total $650 ====
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 relate to the elimination of duplicate systems. Facilities charges consist of lease termination costs and other facilities related exit costs resulting from consolidation of duplicate headquarters and operational 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 December 31, 1998; 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 December 31, 1998. Note 4. Pro Forma Adjustments (a) Pro forma adjustments to common stock, treasury stock and common surplus at December 31, 1998, reflect the Merger accounted for as a pooling of interests, through: (i) the exchange of 349.4 million shares of Fleet common stock (using the Common Exchange Ratio of 1.1844) for the 295.0 million outstanding shares of BankBoston common stock at December 31, 1998, (ii) the reclassification adjustment from common surplus to common stock to reflect the $.01 par value of Fleet common stock and (iii) an adjustment for $507 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) Pro forma adjustment reflects the elimination of gains on the sale of BankBoston common stock realized by Fleet in 1996. (d) The pro forma combined weighted average common shares outstanding for each of the years in the three year period ended December 31, 1998 reflect the converted BankBoston weighted average common shares 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 will be subject to review and comment by the Staff of the Commission, will include pro forma financial information for BankBoston and Fleet. Such pro forma financial information may differ from the pro forma financial information included herein. -----END PRIVACY-ENHANCED MESSAGE-----