-----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, U7tqXa0zs57zn96rP8bmXtFO+RrJMM6v5/FXWJTEg7Tr43uE6SRMHW57nEnR4++i euENhQUNvJjSnpH8Q4dh4g== 0000927016-99-002934.txt : 19990813 0000927016-99-002934.hdr.sgml : 19990813 ACCESSION NUMBER: 0000927016-99-002934 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990812 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990812 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: 99686429 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): August 12, 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 Reports on Form 8-K dated April 2, 1999 and May 14, 1999 (the Current Reports) 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 those Current Reports, 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 and six months ended June 30, 1999 and 1998; and (ii) Fleet historical consolidated financial information for the quarter and six months ended June 30, 1999. Item 7. Financial Statements and Exhibits. - ------------------------------------------- (c) Exhibits. 99(a) Pro Forma Condensed Combined Balance Sheet for the Corporation and Fleet at June 30, 1999; and Pro Forma Condensed Combined Statements of Income for the Corporation and Fleet for the three and six months ended June 30, 1999 and 1998 (and Notes to Pro Forma Condensed Combined Financial Statements). 99(b) Fleet Consolidated Balance Sheets at June 30, 1999 and December 31, 1998, Fleet Consolidated Statements of Income for the three and six months ended June 30, 1999 and 1998, and Fleet Consolidated Statements of Changes in Stockholders' Equity and Cash Flows for the six months ended June 30, 1999 (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 June 30, 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: August 12, 1999 /s/ Robert T. Jefferson ------------------------------------------------ Robert T. Jefferson Comptroller EX-99.(A) 2 PRO FORMA CONDENSED COMBINED BALANCE SHEET EXHIBIT 99A ----------- UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following unaudited pro forma condensed combined balance sheet as of June 30, 1999 and the unaudited pro forma condensed combined statements of income for the three and six months ended June 30, 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 late in the third or early in the fourth quarter of 1999, has been approved by the stockholders of both companies and is subject to 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. BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET as of June 30, 1999
Pro Forma Pro Forma (Dollars in millions) BankBoston Fleet Adjustments Combined ---------- ----- ----------- --------- ASSETS: Cash, due from banks and interest-bearing deposits $ 4,482 $ 4,994 $ - $ 9,476 Federal funds sold and securities purchased under agreements to resell 6,271 7 - 6,278 Securities 13,824 10,461 - 24,285 Trading assets 4,422 769 - 5,191 Loans and leases 41,789 75,287 - 117,076 Reserve for credit losses (792) (1,723) - (2,515) Due from brokers/dealers 79 2,444 - 2,523 Mortgages held for resale - 1,339 - 1,339 Premises and equipment 1,295 1,234 - 2,529 Mortgage servicing rights - 2,630 - 2,630 Intangible assets 779 3,389 - 4,168 Other assets 5,415 6,117 - 11,532 ------- -------- ------ -------- Total assets $77,564 $106,948 $ - $184,512 ======= ======== ====== ======== LIABILITIES and STOCKHOLDERS' EQUITY: Deposits: Domestic: Noninterest-bearing $ 6,387 $ 17,069 $ - $ 23,456 Interest-bearing 28,147 46,006 - 74,153 Overseas: Noninterest-bearing 1,322 - - 1,322 Interest-bearing 13,180 3,269 - 16,449 ------- -------- ------ -------- Total deposits 49,036 66,344 - 115,380 ------- -------- ------ -------- Federal funds purchased and securities sold under agreements to repurchase 7,257 3,507 - 10,764 Other short-term borrowings 5,454 3,379 - 8,833 Due to brokers/dealers 200 3,775 - 3,975 Long-term debt 5,594 16,436 - 22,030 Accrued expenses and other liabilities 4,949 3,767 650 (4b) 9,366 ------- -------- ------ -------- Total liabilities 72,490 97,208 650 170,348 ------- -------- ------ -------- Stockholders' equity: Preferred stock - 691 - 691 Common stock 307 6 (304)(4a) 9 Common surplus 1,101 3,346 (145)(4a) 4,302 Retained earnings 4,143 5,887 (650)(4b) 9,380 Accumulated other comprehensive loss (102) (116) - (218) Treasury stock, at cost (375) (74) 449 (4a) - ------- -------- ------ -------- Total stockholders' equity 5,074 9,740 (650) 14,164 ------- -------- ------ -------- Total liabilities and stockholders' equity $77,564 $106,948 $ - $184,512 ======= ======== ====== ======== See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME For the Three Months Ended June 30, 1999
Pro Forma Pro Forma (Dollars in millions, except per share amounts) BankBoston Fleet Adjustments Combined ---------- ----- ----------- --------- Interest income: Interest and fees on loans $ 1,027 $ 1,557 $ - $ 2,584 Interest on securities and trading assets 264 177 - 441 Other 157 49 - 206 --------- -------- ------- -------- Total interest income 1,448 1,783 - 3,231 --------- -------- ------- -------- Interest expense: Deposits 459 404 - 863 Short-term borrowings 221 72 - 293 Long-term debt 90 236 - 326 Other - 48 - 48 --------- -------- ------- -------- Total interest expense 770 760 - 1,530 --------- -------- ------- -------- Net interest income 678 1,023 - 1,701 --------- -------- ------- -------- Provision for credit losses 95 146 - 241 --------- -------- ------- -------- Net interest income after provision for credit losses 583 877 - 1,460 --------- -------- ------- -------- Noninterest income: Investment services revenue 156 264 - 420 Banking fees and commissions 176 194 - 370 Credit card revenue 23 164 - 187 Venture capital revenue 26 45 - 71 Gain on sale of business 50 - - 50 Other 281 369 - 650 --------- -------- ------- -------- Total noninterest income 712 1,036 - 1,748 --------- -------- ------- -------- Noninterest expense: Employee compensation and benefits 547 579 - 1,126 Occupancy and equipment 113 156 - 269 Intangible asset amortization 14 71 - 85 Other 225 372 - 597 --------- -------- ------- -------- Total noninterest expense 899 1,178 - 2,077 --------- -------- ------- -------- Income before income taxes 396 735 - 1,131 Applicable income taxes 146 285 - 431 --------- -------- ------- -------- Net income $ 250 $ 450 $ - $ 700 ========= ======== ======= ======== Net income applicable to common shares $ 250 $ 435 $ - $ 685 ========= ======== ======= ======== Weighted average common shares outstanding (in thousands): Basic 296,832 569,532 - 921,100 (4c) Diluted 301,662 589,634 - 946,922 (4c) Per Common Share: Basic $ .84 $ .76 $ - $ .74 (4c) Diluted .83 .74 - .72 (4c) See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME For the Six Months Ended June 30, 1999
Pro Forma Pro Forma (Dollars in millions, except per share amounts) BankBoston Fleet Adjustments Combined ---------- ----- ----------- -------- Interest income: Interest and fees on loans $ 2,061 $ 3,116 $ - $ 5,177 Interest on securities and trading assets 493 350 - 843 Other 265 95 - 360 -------- -------- -------- -------- Total interest income 2,819 3,561 - 6,380 -------- -------- -------- -------- Interest expense: Deposits 932 827 - 1,759 Short-term borrowings 401 152 - 553 Long-term debt 173 437 - 610 Other - 88 - 88 -------- -------- -------- -------- Total interest expense 1,506 1,504 - 3,010 -------- -------- -------- -------- Net interest income 1,313 2,057 - 3,370 -------- -------- -------- -------- Provision for credit losses 165 295 - 460 -------- -------- -------- -------- Net interest income after provision for credit losses 1,148 1,762 - 2,910 -------- -------- -------- -------- Noninterest income: Investment services revenue 290 511 - 801 Banking fees and commissions 329 387 - 716 Credit card revenue 44 305 - 349 Venture capital revenue 59 86 - 145 Gain on sale of business 50 - - 50 Other 535 706 - 1,241 -------- -------- -------- -------- Total noninterest income 1,307 1,995 - 3,302 -------- -------- -------- -------- Noninterest expense: Employee compensation and benefits 1,021 1,121 - 2,142 Occupancy and equipment 221 316 - 537 Intangible asset amortization 29 142 - 171 Other 434 724 - 1,158 -------- -------- -------- -------- Total noninterest expense 1,705 2,303 - 4,008 -------- -------- -------- -------- Income before income taxes 750 1,454 - 2,204 Applicable income taxes 277 566 - 843 -------- -------- -------- -------- Net income $ 473 $ 888 $ - $ 1,361 ======== ======== ======== ======== Net income applicable to common shares $ 473 $ 857 $ - $ 1,330 ======== ======== ======== ======== Weighted average common shares outstanding (in thousands): Basic 296,386 569,042 - 920,082 (4c) Diluted 300,095 589,291 - 944,724 (4c) Per Common Share: Basic $ 1.60 $ 1.51 $ - $ 1.45 (4c) Diluted 1.58 1.45 - 1.41 (4c) See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME For the Three Months Ended June 30, 1998
(Dollars in millions, except Pro Forma Pro Forma per share amounts) BankBoston Fleet Adjustments Combined ---------- ----- ----------- -------- Interest income: Interest and fees on loans $ 1,032 $ 1,481 $ - $ 2,513 Interest on securities and trading assets 238 179 - 417 Other 120 56 - 176 --------- --------- -------- --------- Total interest income 1,390 1,716 - 3,106 --------- --------- -------- --------- Interest expense: Deposits 464 474 - 938 Short-term borrowings 210 107 - 317 Long-term debt 76 104 - 180 Other - 59 - 59 --------- --------- -------- --------- Total interest expense 750 744 - 1,494 --------- --------- -------- --------- Net interest income 640 972 - 1,612 --------- --------- -------- --------- Provision for credit losses 60 118 - 178 --------- --------- -------- --------- Net interest income after provision for credit losses 580 854 - 1,434 --------- --------- -------- --------- Noninterest income: Banking fees and commissions 143 182 - 325 Investment services revenue 85 220 - 305 Venture capital revenue 84 39 - 123 Credit card revenue 12 98 - 110 Securities gains 11 - - 11 Other 122 270 - 392 --------- --------- -------- --------- Total noninterest income 457 809 - 1,266 --------- --------- -------- --------- Noninterest expense: Employee compensation and benefits 368 482 - 850 Occupancy and equipment 96 149 - 245 Intangible asset amortization 11 59 - 70 Other 172 327 - 499 --------- --------- -------- --------- Total noninterest expense 647 1,017 - 1,664 --------- --------- -------- --------- Income before income taxes 390 646 - 1,036 Applicable income taxes 148 253 - 401 --------- --------- -------- --------- Net income $ 242 $ 393 $ - $ 635 ========= ========= ======== ========= Net income applicable to common shares $ 238 $ 380 $ - $ 618 ========= ========= ======== ========= Weighted average common shares outstanding (in thousands): Basic 293,769 568,194 - 916,134 (4c) Diluted 298,275 588,760 - 942,037 (4c) Per Common Share: Basic $ .81 $ .67 $ - $ .67 (4c) Diluted .80 .65 - .66 (4c) See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME For the Six Months Ended June 30, 1998
Pro Forma Pro Forma (Dollars in millions, except per share amounts) BankBoston Fleet Adjustments Combined ---------- ----- ----------- --------- Interest income: Interest and fees on loans $ 2,043 $ 2,858 $ - $ 4,901 Interest on securities and trading assets 446 342 - 788 Other 239 110 - 349 -------- -------- ------ -------- Total interest income 2,728 3,310 - 6,038 -------- -------- ------ -------- Interest expense: Deposits 926 911 - 1,837 Short-term borrowings 417 191 - 608 Long-term debt 142 193 - 335 Other - 114 - 114 -------- -------- ------ -------- Total interest expense 1,485 1,409 - 2,894 -------- -------- ------ -------- Net interest income 1,243 1,901 - 3,144 -------- -------- ------ -------- Provision for credit losses 200 210 - 410 -------- -------- ------ -------- Net interest income after provision for credit losses 1,043 1,691 - 2,734 -------- -------- ------ -------- Noninterest income: Banking fees and commissions 272 358 - 630 Investment services revenue 167 421 - 588 Venture capital revenue 136 69 - 205 Credit card revenue 22 154 - 176 Securities gains 36 51 - 87 Gain on sale of business 165 - - 165 Other 248 451 - 699 -------- -------- ------ -------- Total noninterest income 1,046 1,504 - 2,550 -------- -------- ------ -------- Noninterest expense: Employee compensation and benefits 722 926 - 1,648 Occupancy and equipment 190 303 - 493 Intangible asset amortization 21 110 - 131 Other 375 675 - 1,050 -------- -------- ------ -------- Total noninterest income 1,308 2,014 - 3,322 -------- -------- ------ -------- Income before income taxes 781 1,181 - 1,962 Applicable income taxes 301 465 - 766 -------- -------- ------ -------- Net income $ 480 $ 716 $ - $ 1,196 ======== ======== ====== ======== Net income applicable to common shares $ 471 $ 691 $ - $ 1,162 ======== ======== ====== ======== Weighted average common shares outstanding (in thousands): Basic 293,159 567,987 - 915,205 (4c) Diluted 297,579 587,999 - 940,452 (4c) Per Common Share: Basic $ 1.61 $ 1.22 $ - $ 1.27 (4c) Diluted 1.58 1.18 - 1.24 (4c) See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
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 late in the third or early 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 June 30, 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 and New Hampshire, 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 - -------------------------------------------------------------------------------- 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 June 30, 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 June 30, 1999. Note 4. Pro Forma Adjustments (a) Pro forma adjustments to common stock, treasury stock and common surplus at June 30, 1999, reflect the merger accounted for as a pooling of interests, through: (1) the exchange of 351.8 million shares of Fleet common stock (using the exchange ratio of 1.1844) for the 297.0 million outstanding shares of BankBoston common stock at June 30, 1999, (2) the reclassification adjustment to common stock to reflect the $.01 par value of Fleet common stock, and (3) an adjustment for $449 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 and six months ended June 30, 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. -----END PRIVACY-ENHANCED MESSAGE-----