-----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, C6j5jzjeDnZ8bCUF4r505n4Cji5xUkHdmsNj1i40oZoEyiKaDsmvPzRd2v0P73XX ZbKfpMrQ9+IJHu8OiizxHg== 0001068800-99-000284.txt : 19990630 0001068800-99-000284.hdr.sgml : 19990630 ACCESSION NUMBER: 0001068800-99-000284 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERCANTILE BANCORPORATION INC CENTRAL INDEX KEY: 0000064907 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 430951744 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 001-11792 FILM NUMBER: 99655398 BUSINESS ADDRESS: STREET 1: 7TH & WASHINGTON TRAM 19 1 STREET 2: ONE MERCANTILE CENTER STREET CITY: ST LOUIS STATE: MO ZIP: 63101-1643 BUSINESS PHONE: 3144252525 MAIL ADDRESS: STREET 1: P O BOX 524 CITY: ST LOUIS STATE: MO ZIP: 63166 FORMER COMPANY: FORMER CONFORMED NAME: MERCANTILE TRUST CO DATE OF NAME CHANGE: 19720229 10-K405/A 1 MERCANTILE BANCORPORATION INC. FORM 10-K405/A ============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 COMMISSION FILE NO. 1-11792 MERCANTILE BANCORPORATION INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MISSOURI 43-0951744 (STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.) P.O. BOX 524 63166-0524 ST. LOUIS, MISSOURI (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 314-418-2525 SECURITIES REGISTERED PURSUANT TO NAME OF EXCHANGE ON WHICH REGISTERED: SECTION 12(b) OF THE ACT: (1) COMMON STOCK ($0.01 PAR VALUE) (1) NEW YORK STOCK EXCHANGE (2) PREFERRED STOCK PURCHASE RIGHTS (2) NEW YORK STOCK EXCHANGE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO --- --- INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K. [X] STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT AS OF JUNE 17, 1999: COMMON STOCK, $0.01 PAR VALUE, $7,524,087,509. INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF COMMON STOCK, AS OF JUNE 17, 1999: COMMON STOCK $0.01 PAR VALUE, 158,156,398 SHARES OUTSTANDING. DOCUMENTS INCORPORATED BY REFERENCE THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE: NOT APPLICABLE. ============================================================================== The "Exhibit Index" as previously filed with the Form 10-K is hereby amended by inserting the following entries: No. 2-1 Agreement and Plan of Merger by and between Mercantile Bancorporation Inc. and Firstar Corporation dated as of April 30, 1999. No. 23-2 Consent of KPMG LLP (relating to report dated June 23, 1999, Mercantile Bancorporation Inc. Horizon Investment and Savings Plan and Trust Financial Statements). No. 99-1 Report of the Independent Auditors KPMG LLP dated June 23, 1999; Statements of Net Assets Available for Plan Benefits of Mercantile Bancorporation Inc. Horizon Investment and Savings Plan and Trust as of December 31, 1998 and 1997; Statements of Changes in Net Assets Available For Plan Benefits for the years then ended; and the Notes and Schedules thereto. No. 99-2 Stock Option Agreement, dated April 30, 1999, between Firstar Corporation, a Wisconsin corporation ("Issuer"), and Mercantile Bancorporation Inc., a Missouri corporation ("Grantee"). No. 99-3 Stock Option Agreement, dated April 30, 1999, between Mercantile Bancorporation Inc., a Missouri corporation ("Issuer"), and Firstar Corporation, a Wisconsin Corporation ("Grantee"). [FN] Filed herewith. Filed with the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 dated May 14, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. MERCANTILE BANCORPORATION INC. (Registrant) Date: June 29, 1999 By: /s/ John W. McClure --------------------------- John W. McClure Vice Chairman and Chief Financial Officer EXHIBIT INDEX EXHIBIT NO. DESCRIPTION No. 2-1 Agreement and Plan of Merger by and between Mercantile Bancorporation Inc. and Firstar Corporation dated as of April 30, 1999, as filed as Exhibit 2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, is incorporated herein by reference. No. 3-1(a) Restated Articles of Incorporation of the Registrant, as amended and currently in effect, filed as Exhibit 3 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, are incorporated herein by reference. No. 3-1(b) Certificate of Designation, Preferences and Rights of Series B Junior Participating Preferred Stock of the Registrant filed as Exhibit 3-1(b) to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (Commission File No. 1-11792), is incorporated herein by reference. No. 3-2 By-Laws of the Registrant, as amended and currently in effect, filed as Exhibit 3.2 to Amendment No. 2 to Registrant's Registration Statement on Form 4 (No. 333-17757), are incorporated herein by reference. No. 4-1 Form of Indenture Regarding Subordinated Securities between the Registrant and The First National Bank of Chicago as Trustee, filed on March 31, 1992 as Exhibit 4.1 to Registrant's Report on Form 8-K dated September 24, 1992 (Commission File No. 1-11792), is incorporated herein by reference. No. 4-2 Rights Agreement dated as of May 20, 1998, between Registrant and Harris Trust and Savings Bank, as Rights Agent (including as an exhibit thereto the form of Rights Certificate) filed as Exhibit 4-2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (Commission File No. 1-11792), is incorporated herein by reference. No. 4-3 Form of Indenture Regarding Senior Debt Securities, filed as Exhibit 4.1 to Registrant's Registration Statement on Form S-3 (No. 333-25775), is incorporated herein by reference. No. 4-4 Form of Indenture Regarding Subordinated Debt Securities, filed as Exhibit 4.2 to Registrant's Registration Statement on Form S-3 (No. 333-25775), is incorporated herein by reference. No. 4-5 Indenture, dated February 4, 1997; First Supplemental Indenture, dated February 4, 1997, and Supplemental Indenture of First Supplemental Indenture, dated May 22, 1997, between the Company, as issuer, and The Chase Manhattan Bank, as Indenture Trustee, filed as Exhibits 4.5, 4.6 and 4.12, respectively, to the Company's Registration Statement on Form S-4 (No. 333-25131), are incorporated herein by reference. No. 10-1 The Mercantile Bancorporation Inc. 1987 Stock Option Plan, as amended, filed as Exhibit 10-3 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989 (Commission File No. 1-11792), is incorporated herein by reference. No. 10-2 The Mercantile Bancorporation Inc. Amended and Restated Executive Incentive Compensation Plan, filed as Annex H to Registrant's definitive Proxy Statement for the 1997 Annual Meeting of Shareholders, is incorporated herein by reference. No. 10-3 The Mercantile Bancorporation Inc. Employee Stock Purchase Plan, filed as Exhibit 10-7 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989 (Commission File No. 1-11792), is incorporated herein by reference. No. 10-4 The Mercantile Bancorporation Inc. 1991 Employee Incentive Plan, filed as Exhibit 10-7 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990 (Commission File No. 1-11792), is incorporated herein by reference. No. 10-5 Amendment Number One to the Mercantile Bancorporation Inc. 1991 Employee Incentive Plan, filed as Exhibit 10-6 to Registrant's Report on Form 10-K for the year ended December 31, 1994 (Commission File No. 1-11792), is incorporated herein by reference. No. 10-6 The Mercantile Bancorporation Inc. Amended and Restated Stock Incentive Plan, filed as Annex G to Registrant's definitive Proxy Statement for the 1997 Annual Meeting of Shareholders (Commission File No. 1-11792), is incorporated herein by reference. No. 10-7 The Mercantile Bancorporation Inc. 1994 Stock Incentive Plan for Non-Employee Directors, filed as Appendix E to Registrant's definitive Proxy Statement for the 1994 Annual Meeting of Shareholders (Commission File No. 1-11792), is incorporated herein by reference. No. 10-8 The Mercantile Bancorporation Inc. Amended and Restated Voluntary Deferred Compensation Plan, filed as Exhibit 10.1 to Registrant's Registration Statement on Form S-8 (File No. 333-47713), is incorporated herein by reference. No. 10-9 Mercantile Bancorporation Inc. Supplemental Retirement Plan, filed as Exhibit 10-12 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992 (Commission File No. 1-11792), is incorporated herein by reference. No. 10-10 Mercantile Bancorporation Inc. Voluntary Deferred Compensation Plan for Non-Employee Affiliate Directors and Advisory Directors, filed as Exhibit 10.3 to Registrant's Registration Statement on Form S-8 (File No. 333-47713), is incorporated herein by reference. No. 10-11 Mercantile Bancorporation Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors, filed as Exhibit 10.2 to Registrant's Registration Statement on Form S-8 (File No. 333-47713), is incorporated herein by reference. No. 10-12 Employment Agreement for Thomas H. Jacobsen, as amended and restated, filed as Exhibit 10.9 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 (Commission File No. 1-11792), is incorporated herein by reference. No. 10-13 Form of Change of Control Employment Agreement for John W. McClure, W. Randolph Adams, John Q. Arnold and Certain Other Executive Officers, filed as Exhibit 10- 10 to Registrant's Report on Form 10-K for the year ended December 31, 1989 (Commission File No. 1-11792), is incorporated herein by reference. No. 10-14 Employment Agreement for Alvin J. Siteman, dated November 18, 1996, filed as Exhibit 10.3 to Registrant's Report on Form 10-Q for the quarter ended March 31, 1997 (Commission File No. 1-11792), is incorporated herein by reference. No. 10-15 Employment Agreement for John P. Dubinsky, dated October 27, 1996, filed as Exhibit 10.4 to Registrant's Report on Form 10-Q for the quarter ended March 31, 1997 (Commission File No. 1-11792), is incorporated herein by reference. No. 13 Excerpts from Annual Report of the Registrant to its Shareholders for the year ended December 31, 1998. No. 21 Subsidiaries of the Registrant as of February 26, 1998. No. 23-1 Consent of KPMG LLP. No. 23-2 Consent of KPMG LLP (relating to report dated June 23, 1999, Mercantile Bancorporation Inc. Horizon Investment and Savings Plan and Trust Financial Statements.) No. 24 Power of Attorney (on signature page). No. 27 Financial Data Schedule. No. 99-1 Report of the Independent Auditors KPMG LLP dated June 23, 1999; Statements of Net Assets Available for Plan Benefits of Mercantile Bancorporation Inc. Horizon Investment and Savings Plan and Trust as of December 31, 1998 and 1997; Statements of Changes in Net Assets Available For Plan Benefits for the years then ended; and the Notes and Schedules thereto. No. 99-2 Stock Option Agreement, dated April 30, 1999, between Firstar Corporation, a Wisconsin corporation ("Issuer") and Mercantile Bancorporation Inc., a Missouri corporation ("Grantee"), as filed as Exhibit 99.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, is incorporated herein by reference. No. 99-3 Stock Option Agreement, dated April 30, 1999, between Mercantile Bancorporation Inc., a Missouri corporation ("Issuer"), and Firstar Corporation, a Wisconsin Corporation ("Grantee"), as filed as Exhibit 99.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, is incorporated herein by reference. [FN] Filed with the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998. Management contract or compensatory plan or arrangement. EX-23.2 2 CONSENT OF EXPERT EXHIBIT 23-2 ------------ INDEPENDENT AUDITORS' CONSENT The Board of Directors Mercantile Bancorporation Inc.: Plan Administrator Mercantile Bancorporation Inc. Horizon Investment and Savings Plan and Trust: We consent to incorporation by reference in the Registration Statement (No. 33-35139) on Form S-8 of Mercantile Bancorporation Inc. related to the Mercantile Bancorporation Inc. Horizon Investment and Savings Plan and Trust of our report dated June 23, 1999, relating to the statements of net assets available for plan benefits of the Mercantile Bancorporation Inc. Horizon Investment and Savings Plan and Trust as of December 31, 1998 and 1997, and the related statements of changes in net assets available for plan benefits for the years then ended and the related schedules, which report appears in the 1998 Annual Report on Form 10-K/A, of Mercantile Bancorporation Inc. /s/ KPMG LLP St. Louis, Missouri June 28, 1999 EX-99.1 3 REPORT OF INDEPENDENT AUDITORS EXHIBIT 99-1 ------------ MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Financial Statements and Schedules December 31, 1998 and 1997 (With Independent Auditors' Report Thereon) MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST TABLE OF CONTENTS AND DEFINITIONS
PAGE TABLE OF CONTENTS: Independent Auditors' Report 1 Statement of Net Assets Available for Plan Benefits, December 31, 1998 2 Statement of Net Assets Available for Plan Benefits, December 31, 1997 3 Statement of Changes in Net Assets Available for Plan Benefits, Year ended December 31, 1998 4 Statement of Changes in Net Assets Available for Plan Benefits, Year ended December 31, 1997 5 Notes to Financial Statements, December 31, 1998 and 1997 6 SCHEDULE Item 27a: Schedule of Assets Held for Investment Purposes, December 31, 1998 1 13 Schedule of Assets Held for Investment Purposes Which Were Both Acquired and Disposed of Within the Plan Year Item 27b - Schedule of Loans or Fixed Income Obligations Item 27c - Schedule of Leases in Default or Classified as Uncollectible Item 27d - Schedule of Reportable Transactions, Year ended December 31, 1998 2 14 Item 27e - Schedule of Nonexempt Transactions There were no assets held for investment purposes which were both acquired and disposed of within the plan year ended December 31, 1998, and no nonexempt transactions during the year ended December 31, 1998 which require separate disclosure. There were no known loans, fixed income obligations, or leases in default or classified as uncollectible which have not been reported during the year ended December 31, 1998.
DEFINITIONS: Plan - Mercantile Bancorporation Inc. Horizon Investment and Savings Plan and Trust Trustee - Mercantile Bank N.A. ERISA - Employee Retirement Income Security Act of 1974 Mercantile (or the Company) - Mercantile Bancorporation Inc. and subsidiaries Plan Administrator - Mercantile Employee Benefits Committee INDEPENDENT AUDITORS' REPORT Mercantile Employee Benefits Committee Mercantile Bancorporation Inc. Horizon Investment and Savings Plan and Trust: We have audited the accompanying statements of net assets available for plan benefits of the Mercantile Bancorporation Inc. Horizon Investment and Savings Plan and Trust as of December 31, 1998 and 1997, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits as of December 31, 1998 and 1997, and the changes in net assets available for plan benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information included in Schedules 1 and 2 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statements of net assets available for plan benefits and the statements of changes in net assets available for plan benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and the changes in net assets available for plan benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ KPMG LLP June 23, 1999 St. Louis, Missouri MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Statement of Net Assets Available for Plan Benefits December 31, 1998
PARTICIPANT-DIRECTED FUNDS ---------------------------------------------------------------------- GROWTH GOVERNMENT GROWTH AND AND MONEY EQUITY BALANCED INCOME CORPORATE MARKET FUND FUND FUND BOND FUND FUND ---------- ---------- ---------- ---------- ---------- Assets: Total noninterest-bearing cash $ -- -- -- -- -- Receivables: Employer contributions -- -- -- -- -- Participant contributions 28,845 63,845 172,024 24,313 22,415 Accrued income 3,440 56,570 48,772 46,089 54,714 ---------- ---------- ---------- ---------- ---------- Total receivables 32,285 120,415 220,796 70,402 77,129 ---------- ---------- ---------- ---------- ---------- Investments at fair value: Interest-bearing cash (including money market funds) 2,286 1,726 1,707 1,688 14,607,267 Value of interest in registered investment companies 8,477,318 31,730,033 60,073,362 10,307,920 -- Common stock -- -- -- -- -- Loans to participants -- -- -- -- -- Other -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total investments 8,479,604 31,731,759 60,075,069 10,309,608 14,607,267 ---------- ---------- ---------- ---------- ---------- Total assets 8,511,889 31,852,174 60,295,865 10,380,010 14,684,396 Liabilities - accrued expenses 1,173 3,388 6,673 1,166 2,008 ---------- ---------- ---------- ---------- ---------- Net assets available for plan benefits $8,510,716 31,848,786 60,289,192 10,378,844 14,682,388 ========== ========== ========== ========== ========== PARTICIPANT-DIRECTED FUNDS ----------------------------------------- NONPAR- SMALL CAP MERCANTILE INTER- TICIPANT- EQUITY STOCK NATIONAL DIRECTED FUND FUND FUND FUNDS TOTAL ----------- ----------- --------- ---------- ----------- Assets: Total noninterest-bearing cash -- -- -- 12,573 12,573 Receivables: Employer contributions -- 384,596 -- -- 384,596 Participant contributions 66,329 186,458 30,798 -- 595,027 Accrued income 9 1,516,529 51 46,315 1,772,489 ---------- ----------- --------- ---------- ----------- Total receivables 66,338 2,087,583 30,849 46,315 2,752,112 ---------- ----------- --------- ---------- ----------- Investments at fair value: Interest-bearing cash (including money market funds) 2,057 308,467 1,808 138,446 15,065,452 Value of interest in registered investment companies 13,333,528 -- 6,866,521 -- 130,788,682 Common stock -- 226,222,830 -- 3,653,192 229,876,022 Loans to participants -- -- -- 8,066,838 8,066,838 Other -- -- -- 13,488 13,488 ---------- ----------- --------- ---------- ----------- Total investments 13,335,585 226,531,297 6,868,329 11,871,964 383,810,482 ---------- ----------- --------- ---------- ----------- Total assets 13,401,923 228,618,880 6,899,178 11,930,852 386,575,167 Liabilities - accrued expenses 14,213 32,703 994 -- 62,318 ---------- ----------- --------- ---------- ----------- Net assets available for plan benefits 13,387,710 228,586,177 6,898,184 11,930,852 386,512,849 ========== =========== ========= ========== =========== See accompanying notes to financial statements.
2 MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Statement of Net Assets Available for Plan Benefits December 31, 1997
PARTICIPANT-DIRECTED FUNDS ---------------------------------------------------------------------- GROWTH GOVERNMENT GROWTH AND AND MONEY EQUITY BALANCED INCOME CORPORATE MARKET FUND FUND FUND BOND FUND FUND ---------- ---------- ---------- --------- ---------- Assets: Total noninterest-bearing cash $ -- 940 470 -- -- Receivables: Employer contributions -- -- -- -- -- Accrued income 2,485 66,967 81,340 41,481 59,077 Interfund transfers 1,522 124,660 320,245 43,669 42,905 ---------- ---------- ---------- --------- ---------- Total receivables 4,007 191,627 401,585 85,150 101,982 ---------- ---------- ---------- --------- ---------- Investments at fair value: Interest-bearing cash (including money market funds) 9,446 579 5,645 57 13,947,792 Value of interest in registered investment companies 4,372,071 27,691,361 50,224,411 9,147,640 -- Common stock -- -- -- -- -- Loans to participants -- -- -- -- -- Other -- -- -- -- -- ---------- ---------- ---------- --------- ---------- Total investments 4,381,517 27,691,940 50,230,056 9,147,697 13,947,792 ---------- ---------- ---------- --------- ---------- Liabilities: Accrued expenses 341 3,032 2,161 1,573 1,924 Interfund transfers 68,811 -- -- -- -- ---------- ---------- ---------- --------- ---------- Total liabilities 69,152 3,032 2,161 1,573 1,924 ---------- ---------- ---------- --------- ---------- Net assets available for plan benefits $4,316,372 27,881,475 50,629,950 9,231,274 14,047,850 ========== ========== ========== ========= ========== CAPTION> PARTICIPANT-DIRECTED FUNDS ----------------------------------------- NONPAR- SMALL CAP MERCANTILE INTER- TICIPANT- EQUITY STOCK NATIONAL DIRECTED FUND FUND FUND FUNDS TOTAL ----------- ----------- --------- ---------- ----------- Assets: Total noninterest-bearing cash -- 470 -- -- 1,880 Receivables: Employer contributions -- 5,702,174 -- -- 5,702,174 Accrued income 112 1,332,584 85 3,752 1,587,883 Interfund transfers 136,419 422,161 64,063 -- 1,155,644 ---------- ----------- --------- ---------- ----------- Total receivables 136,531 7,456,919 64,148 3,752 8,445,701 ---------- ----------- --------- ---------- ----------- Investments at fair value: Interest-bearing cash (including money market funds) 877 592,932 1,142 1,413,427 15,971,897 Value of interest in registered investment companies 12,841,759 -- 5,301,944 -- 109,579,186 Common stock -- 285,308,617 -- -- 285,308,617 Loans to participants -- -- -- 8,837,826 8,837,826 Other -- -- -- 13,489 13,489 ---------- ----------- --------- ---------- ----------- Total investments 12,842,636 285,901,549 5,303,086 10,264,742 419,711,015 ---------- ----------- --------- ---------- ----------- Liabilities: Accrued expenses 2,088 32,215 821 -- 44,155 Interfund transfers 11,154 -- -- 1,075,679 1,155,644 ---------- ----------- --------- ---------- ----------- Total liabilities 13,242 32,215 821 1,075,679 1,199,799 ---------- ----------- --------- ---------- ----------- Net assets available for plan benefits 12,965,925 293,326,723 5,366,413 9,192,815 426,958,797 ========== =========== ========= ========== =========== See accompanying notes to financial statements.
3 MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Statement of Changes in Net Assets Available for Plan Benefits Year ended December 31, 1998
PARTICIPANT-DIRECTED FUNDS ---------------------------------------------------------------------- GROWTH GOVERNMENT GROWTH AND AND MONEY EQUITY BALANCED INCOME CORPORATE MARKET FUND FUND FUND BOND FUND FUND ---------- ---------- ---------- ---------- ---------- Additions: Contributions from: Employer $ -- -- -- -- -- Participants 552,839 1,781,041 4,902,030 706,532 632,157 ---------- ---------- ---------- ---------- ---------- Total contributions 552,839 1,781,041 4,902,030 706,532 632,157 ---------- ---------- ---------- ---------- ---------- Earnings (loss) on investments: Interest: Interest-bearing cash (including money market funds) 1,550 2,926 6,162 1,091 680,060 Loans to participants -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total interest 1,550 2,926 6,162 1,091 680,060 Common stock dividends -- -- -- -- -- Net appreciation (depreciation) in fair value of investments in common stock -- -- -- -- -- Net investment appreciation (depreciation) in fair value of investments in registered investment companies 1,746,727 3,201,171 6,689,048 812,241 -- Other income 3 18 32 6 9 ---------- ---------- ---------- ---------- ---------- Total earnings (loss) on investments 1,748,280 3,204,115 6,695,242 813,338 680,069 ---------- ---------- ---------- ---------- ---------- Total additions 2,301,119 4,985,156 11,597,272 1,519,870 1,312,226 ---------- ---------- ---------- ---------- ---------- Deductions: Administrative expenses 4,483 17,260 38,864 5,071 7,781 Benefit payments to participants or beneficiaries 879,858 2,557,634 5,079,363 1,091,397 4,231,691 ---------- ---------- ---------- ---------- ---------- Total deductions 884,341 2,574,894 5,118,227 1,096,468 4,239,472 ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets available for plan benefits prior to transfers 1,416,778 2,410,262 6,479,045 423,402 (2,927,246) Transfers to the Plan 1,267,469 1,117,321 3,321,247 374,649 4,108,574 Interfund transfers, net 1,510,097 439,728 (141,050) 349,519 (546,790) ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets available for plan benefits 4,194,344 3,967,311 9,659,242 1,147,570 634,538 Net assets available for plan benefits: Beginning of year 4,316,372 27,881,475 50,629,950 9,231,274 14,047,850 ---------- ---------- ---------- ---------- ---------- End of year $8,510,716 31,848,786 60,289,192 10,378,844 14,682,388 ========== ========== ========== ========== ========== PARTICIPANT-DIRECTED FUNDS ----------------------------------------- NONPAR- SMALL CAP MERCANTILE INTER- TICIPANT- EQUITY STOCK NATIONAL DIRECTED FUND FUND FUND FUNDS TOTAL ----------- ----------- --------- ---------- ----------- Additions: Contributions from: Employer -- 9,894,517 -- -- 9,894,517 Participants 2,019,403 6,370,038 900,829 6,117 17,870,986 ---------- ----------- --------- ---------- ----------- Total contributions 2,019,403 16,264,555 900,829 6,117 27,765,503 ---------- ----------- --------- ---------- ----------- Earnings (loss) on investments: Interest: Interest-bearing cash (including money market funds) 2,043 62,187 1,171 107,831 865,021 Loans to participants -- -- -- 825,785 825,785 ---------- ----------- --------- ---------- ----------- Total interest 2,043 62,187 1,171 933,616 1,690,806 Common stock dividends -- 5,988,124 -- 47,114 6,035,238 Net appreciation (depreciation) in fair value of investments in common stock -- (72,727,821) -- 574,558 (72,153,263) Net investment appreciation (depreciation) in fair value of investments in registered investment companies (1,244,531) -- 950,677 -- 12,155,333 Other income 9 -- 4 102,353 102,434 ---------- ----------- --------- ---------- ----------- Total earnings (loss) on investments (1,242,479) (66,677,510) 951,852 1,657,641 (52,169,452) ---------- ----------- --------- ---------- ----------- Total additions 776,924 (50,412,955) 1,852,681 1,663,758 (24,403,949) ---------- ----------- --------- ---------- ----------- Deductions: Administrative expenses 22,689 193,088 5,345 3,177 297,758 Benefit payments to participants or beneficiaries 1,303,886 31,896,939 571,646 11,577,200 59,189,614 ---------- ----------- --------- ---------- ----------- Total deductions 1,326,575 32,090,027 576,991 11,580,377 59,487,372 ---------- ----------- --------- ---------- ----------- Net increase (decrease) in net assets available for plan benefits prior to transfers (549,651) (82,502,982) 1,275,690 (9,916,619) (83,891,321) Transfers to the Plan 818,300 17,129,897 234,375 15,073,541 43,445,373 Interfund transfers, net 153,136 632,539 21,706 (2,418,885) -- ---------- ----------- --------- ---------- ----------- Net increase (decrease) in net assets available for plan benefits 421,785 (64,740,546) 1,531,771 2,738,037 (40,445,948) Net assets available for plan benefits: Beginning of year 12,965,925 293,326,723 5,366,413 9,192,815 426,958,797 ---------- ----------- --------- ---------- ----------- End of year 13,387,710 228,586,177 6,898,184 11,930,852 386,512,849 ========== =========== ========= ========== =========== See accompanying notes to financial statements.
4 MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Statement of Changes in Net Assets Available for Plan Benefits Year ended December 31, 1997
PARTICIPANT-DIRECTED FUNDS --------------------------------------------------------------------- GROWTH GOVERNMENT GROWTH AND AND MONEY EQUITY BALANCED INCOME CORPORATE MARKET FUND FUND FUND BOND FUND FUND --------- ---------- ---------- ---------- --------- Additions: Contributions from: Employer $ -- -- -- -- -- Participants 2,387 1,755,877 4,354,171 571,115 888,576 ---------- ---------- ---------- --------- ---------- Total contributions 2,387 1,755,877 4,354,171 571,115 888,576 ---------- ---------- ---------- --------- ---------- Earnings on investments: Interest: Interest-bearing cash (including money market funds) 411 2,600 4,664 1,436 586,842 Certificates of deposit -- -- -- -- 737 Loans to participants -- -- -- -- -- ---------- ---------- ---------- --------- ---------- Total interest 411 2,600 4,664 1,436 587,579 Common stock dividends -- -- -- -- -- Net appreciation in fair value of investments in common stock -- -- -- -- -- Net investment appreciation (depreciation) in fair value of investments in registered investment companies (25,404) 4,169,602 10,259,961 672,878 -- Other income -- 5,648 17,772 59 -- ---------- ---------- ---------- --------- ---------- Total earnings on investments (24,993) 4,177,850 10,282,397 674,373 587,579 ---------- ---------- ---------- --------- ---------- Total additions (22,606) 5,933,727 14,636,568 1,245,488 1,476,155 ---------- ---------- ---------- --------- ---------- Deductions: Administrative expenses 341 22,307 36,355 8,455 11,021 Benefit payments to participants or beneficiaries 325,072 2,486,574 3,080,210 812,541 1,867,589 ---------- ---------- ---------- --------- ---------- Total deductions 325,413 2,508,881 3,116,565 820,996 1,878,610 ---------- ---------- ---------- --------- ---------- Net increase (decrease) in net assets available for plan benefits prior to transfers (348,019) 3,424,846 11,520,003 424,492 (402,455) Transfers to the Plan 4,331,323 1,215,320 2,516,976 546,464 3,943,976 Interfund transfers, net 333,068 (571,526) (389,861) 218,695 554,764 ---------- ---------- ---------- --------- ---------- Net increase in net assets available for plan benefits 4,316,372 4,068,640 13,647,118 1,189,651 4,096,285 Net assets available for plan benefits: Beginning of year -- 23,812,835 36,982,832 8,041,623 9,951,565 ---------- ---------- ---------- --------- ---------- End of year $4,316,372 27,881,475 50,629,950 9,231,274 14,047,850 ========== ========== ========== ========= ========== PARTICIPANT-DIRECTED FUNDS ----------------------------------------- NONPAR- SMALL CAP MERCANTILE INTER- TICIPANT- EQUITY STOCK NATIONAL DIRECTED FUND FUND FUND FUNDS TOTAL ----------- ----------- --------- --------- ----------- Additions: Contributions from: Employer -- 10,821,114 -- 3,799 10,824,913 Participants 1,959,909 4,146,377 961,615 848 14,640,875 ---------- ----------- --------- --------- ----------- Total contributions 1,959,909 14,967,491 961,615 4,647 25,465,788 ---------- ----------- --------- --------- ----------- Earnings on investments: Interest: Interest-bearing cash (including money market funds) 2,040 39,606 1,250 152,038 790,887 Certificates of deposit -- -- -- -- 737 Loans to participants -- -- -- 783,730 783,730 ---------- ----------- --------- --------- ----------- Total interest 2,040 39,606 1,250 935,768 1,575,354 Common stock dividends -- 4,704,859 -- 32,515 4,737,374 Net appreciation in fair value of investments in common stock -- 113,817,305 -- 1,561,769 115,379,074 Net investment appreciation (depreciation) in fair value of investments in registered investment companies 2,121,670 -- 156,711 493,317 17,848,735 Other income 2,905 1 883 208,342 235,610 ---------- ----------- --------- --------- ----------- Total earnings on investments 2,126,615 118,561,771 158,844 3,231,711 139,776,147 ---------- ----------- --------- --------- ----------- Total additions 4,086,524 133,529,262 1,120,459 3,236,358 165,241,935 ---------- ----------- --------- --------- ----------- Deductions: Administrative expenses 10,733 145,745 3,914 5,285 244,156 Benefit payments to participants or beneficiaries 789,301 15,883,396 349,836 3,767,103 29,361,622 ---------- ----------- --------- --------- ----------- Total deductions 800,034 16,029,141 353,750 3,772,388 29,605,778 ---------- ----------- --------- --------- ----------- Net increase (decrease) in net assets available for plan benefits prior to transfers 3,286,490 117,500,121 766,709 (536,030) 135,636,157 Transfers to the Plan 640,946 41,887,472 518,459 74,300 55,675,236 Interfund transfers, net (1,006,118) (927,908) 74,924 1,713,962 -- ---------- ----------- --------- --------- ----------- Net increase in net assets available for plan benefits 2,921,318 158,459,685 1,360,092 1,252,232 191,311,393 Net assets available for plan benefits: Beginning of year 10,044,607 134,867,038 4,006,321 7,940,583 235,647,404 ---------- ----------- --------- --------- ----------- End of year 12,965,925 293,326,723 5,366,413 9,192,815 426,958,797 ========== =========== ========= ========= =========== See accompanying notes to financial statements.
5 MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Notes to Financial Statements December 31, 1998 and 1997 (1) DESCRIPTION OF THE PLAN The following description of the Plan provides only general information. Interested parties should refer to the plan document for a more complete description of the Plan's provisions. GENERAL The Plan, which was adopted in 1969, is a defined contribution plan which covers all employees of Mercantile who have completed one year of eligible service or employees with an account balance resulting from a qualified rollover. The Plan is subject to the provisions of ERISA and structured to incorporate the provisions available under Section 401(k) of the Internal Revenue Code, which allows member and sponsor contributions to be excluded from federal and state income taxation within certain prescribed limits. The Plan Administrator, appointed by the Mercantile Board of Directors, manages and directs the operation of the Plan. CONTRIBUTIONS Each participant may contribute 1% to 15% of their annual compensation (subject to federal limits) and may elect to have their contributions invested and allocated earnings reinvested to their account in the following separate investment funds within the Plan: * Growth Equity Fund, which invests in the Arch Growth Equity Portfolio. The Arch Growth Equity Portfolio is a mutual fund that invests in common stocks of proven mid-to-large-sized companies. * Balanced Fund, which invests in the Arch Balanced Portfolio. The Arch Balanced Portfolio is a mutual fund that invests in fixed-income securities and equity securities. * Growth and Income Fund, which invests in the Arch Growth and Income Equity Portfolio. The Arch Growth and Income Equity Portfolio is a mutual fund that primarily invests in broadly diversified equity securities. * Government and Corporate Bond Fund, which invests in the Arch Government and Corporate Bond Portfolio. The Arch Government and Corporate Bond Portfolio is a mutual fund that primarily invests in debt obligations with maturity dates of one year or more. * Money Market Fund, which invests in the Arch Money Market Portfolio Trust Shares. The Arch Money Market Portfolio Trust Shares is a mutual fund that primarily invests in fixed income obligations with maturity dates of less than one year. * Small Cap Equity Fund which invests in the Arch Small Cap Equity Portfolio. The Arch Small Cap Equity Portfolio is a mutual fund that invests in common stocks of emerging or established small-to-medium- sized companies. * Mercantile Stock Fund, which invests in the common stock of Mercantile. 6 (Continued) MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Notes to Financial Statements December 31, 1998 and 1997 * International Fund, which invests in the Arch International Equity Portfolio. The Arch International Equity Portfolio is a mutual fund that invests in a diversified portfolio of international stocks. Subject to the provisions of the Plan prior to January 1, 1998, each participant is eligible to receive employer contributions. Mercantile's contribution has both a matching and incentive component. As a matching component, Mercantile contributes 50% of a participant's contribution up to a maximum employer contribution equal to 3% of a participant's salary. Mercantile's incentive contribution is based on a formula using a return-on-assets ratio. Incentive contributions cannot exceed 6% of the total compensation paid to participants during a plan year. Both the matching and the incentive contributions are invested in the Mercantile Stock Fund. The plan document was amended and restated effective January 1, 1998. Beginning January 1, 1998, Mercantile contributes 100% of a participant's contribution up to an employer contribution equal to 3% of a participant's salary plus 50% of a participant's contribution up to an employer contribution equal to the next 3% of a participant's salary. Mercantile's incentive component is no longer applicable effective January 1, 1998. PARTICIPANT ACCOUNTS Each participant account is credited with the participant's contribution, an allocation of employer contributions, and an allocation of plan earnings net of administrative expenses. Allocations are based on participant compensation or account balances, as defined in the plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. NONPARTICIPANT-DIRECTED FUNDS Included in nonparticipant-directed funds are a Loan Fund, Insurance Fund, several temporary funds, and Suspense Fund. The Loan Fund allows participating employees to borrow money, within specified limits, in the form of interest- bearing promissory notes from the Plan to be repaid over a period not to exceed five years for general loans or 10 years for mortgage loans. The Insurance Fund relates only to certain employees who were merged into the Plan via acquisition activity. The Insurance Fund provides for the payment of a participant's life insurance premiums via pre- tax contributions. The temporary funds capture and distribute assets received from plans merged into the Plan. The Suspense Fund captures and distributes contributions, administrative expenses, and benefit payments to participants or beneficiaries. VESTING Participants are fully vested in their account balances, including employer matching and incentive contributions. BENEFIT PAYMENTS Upon termination of employment, participants with an account balance less than $5,000 are paid in a lump sum. Participants with an account balance of $5,000 or more, upon 7 (Continued) MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Notes to Financial Statements December 31, 1998 and 1997 termination of employment, may elect to be paid the balance of their account, either immediately or upon retirement, in a lump sum or installments over a period not to exceed 10 years in accordance with plan provisions. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The accompanying financial statements have been prepared on an accrual basis, with the exception of benefits which are recorded when paid, and present the net assets available for plan benefits and changes in those assets. The preparation of the accompanying financial statements in conformity with generally accepted accounting principles requires the Plan's management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates. VALUATION OF INVESTMENTS The Plan's investments are stated at current (or fair) value. Securities traded on a national securities exchange, including Mercantile Bancorporation Inc. common stock, are valued at the last reported sales price on the last business day of the plan year. Interest in registered investment companies represents units of participation in Arch Mutual Funds (subsequently renamed the Mercantile Mutual Funds effective March 31, 1999). Interest-bearing cash represents units of participation in the Arch Money Market Portfolio Trust Shares. Units of Arch Mutual Funds and Arch Money Market Portfolio Trust Shares are valued at quoted market prices which represent the net asset value of shares held by the Plan as provided by BYSIS Fund Services, the administrator of Arch Funds, Inc. Loans to participants represent the unpaid principal of employee loans and are valued at cost which approximates fair value. INVESTMENT TRANSACTIONS Investment purchases and sales are recorded on a trade-date basis (date the order to buy or sell is executed). The realized gains or losses on investments are determined principally using the average cost of the individual security issue as a basis. Average cost is based on the market value of the security at the beginning of the year and the acquisition cost of any purchases made during the year. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Uninvested moneys within each fund are temporarily invested in the Arch Money Market Portfolio Trust Shares. COSTS OF PLAN ADMINISTRATION Fees and expenses incurred by the Trustee and the Plan's management in the administration of the Plan are paid by Mercantile and from plan assets. Expenses solely attributable to the investment of plan funds are paid from plan assets. 8 (Continued) MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Notes to Financial Statements December 31, 1998 and 1997 (3) INVESTMENTS The Plan's investments are maintained in a trust fund managed by the Trustee on behalf of the Plan. The investments and changes therein of this trust fund have been reported to the Plan by the Trustee. The following table presents the fair value of investments at December 31, 1998 and 1997. Investments that represent 5% or more of the Plan's assets are separately identified:
1998 1997 ------------ ----------- Investments at fair value as determined by quoted market price: Cash equivalents $ 15,065,452 15,971,897 Interest in registered investment companies: Arch Balanced Portfolio 31,730,033 27,691,361 Arch Growth and Income Equity Portfolio 60,073,362 50,224,411 Other 38,985,287 31,663,414 Common stocks - Mercantile Bancorporation Inc., 4,983,762 and 4,639,165 shares, respectively 229,876,022 285,308,617 ------------ ----------- 375,730,156 410,859,700 Investments at estimated fair value 8,080,326 8,851,315 ------------ ----------- Total investments $383,810,482 419,711,015 ============ ===========
During 1998 and 1997, the Plan's investments, exclusive of investments in registered investment companies, appreciated (depreciated) in fair value as follows:
1998 1997 -------------------------- ----------------------- REALIZED UNREALIZED REALIZED UNREALIZED ----------- ----------- --------- ----------- Net appreciation (depreciation) in fair value of investments - investments at fair value as determined by quoted market price - common stocks $(3,455,111) (68,698,152) 3,134,261 112,244,813 =========== =========== ========= ===========
9 (Continued) MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Notes to Financial Statements December 31, 1998 and 1997 (4) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 The following is a reconciliation of net assets available for plan benefits per the financial statements to Form 5500:
1998 1997 ------------ ----------- Net assets available for plan benefits per the financial statements $386,512,849 426,958,797 Amounts allocated to withdrawing participants (9,558,213) (11,122,033) ------------ ----------- Net assets available for plan benefits per the Form 5500 $376,954,636 415,836,764 ============ ===========
The following is a reconciliation of benefits paid to participants per the financial statements to Form 5500:
1998 1997 ----------- ---------- Benefits paid to participants per the financial statements $59,189,614 29,361,622 Add amounts allocated to withdrawing participants at December 31, current year 9,558,213 11,122,033 Less amounts allocated to withdrawing participants at December 31, prior year (11,122,033) (2,688,173) ----------- ---------- Benefits paid to participants per the Form 5500 $57,625,794 37,795,482 =========== ==========
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31 but not yet paid as of that date. 10 (Continued) MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Notes to Financial Statements December 31, 1998 and 1997 (5) TRANSFERS TO THE PLAN During 1998 and 1997, the following plans merged into the Plan. The mergers were related to Mercantile's corporate acquisitions:
EFFECTIVE TOTAL DATE PLAN ASSETS ----------------- ----------- 1998 plan mergers: Horizon Bancorp, Inc. Employee Stock Ownership & Savings Plan November 18, 1998 $16,371,803 Roosevelt Bank Employees' Savings & Profit Sharing Plan January 1, 1998 22,335,458 Kirksville Federal Savings Bank 401(k) Plan January 1, 1998 2,788,651 Homecorp, Inc. Employee Stock Ownership & 401(k) Plan July 1, 1998 1,949,461 ----------- Total transfers to the Plan $43,445,373 =========== 1997 plan mergers: First Financial Corporation of America Profit Sharing Trust January 1, 1997 $1,718,501 Peoples State Bank Employee Savings and Profit Sharing Plan January 1, 1997 1,074,608 Today's Bancorp, Inc. Employees Stock Ownership Plan March 3, 1997 3,845,310 Regional Bancshares, Inc. 401(k) Plan July 1, 1997 969,953 First City National Bank 401(k) Plan July 3, 1997 112,434 Mark Twain Bancshares, Inc. Savings Challenge Plan November 5, 1997 47,954,430 ----------- Total transfers to the Plan $55,675,236 ===========
(6) RELATED PARTY TRANSACTIONS On various dates during 1997, the Plan purchased and sold shares of Mercantile common stock at fair value for investment in the Plan's Mercantile Stock Fund. Certain plan investments are shares of mutual funds managed by Mercantile Bank N.A., a wholly owned subsidiary of Mercantile. Mercantile Bank N.A. is the trustee of the Plan and, therefore, these transactions qualify as party-in-interest transactions. 11 (Continued) MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Notes to Financial Statements December 31, 1998 and 1997 (7) INCOME TAX STATUS The Internal Revenue Service has determined and informed Mercantile by a letter dated August 7, 1996, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC) and, therefore, are exempt from federal income taxes. The Plan has been amended and restated since receiving the tax determination letter. However, the Plan Administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. (8) PLAN TERMINATION While Mercantile has not expressed any intent to terminate the Plan or discontinue contributions, it may do so at any time, subject to the provisions set forth in ERISA. (9) SUBSEQUENT EVENTS (UNAUDITED) In September 1998, Mercantile acquired First Financial Bancorporation. In conjunction with the acquisition, the First National Bank Iowa Salary Reduction Profit Sharing Plan merged into the Plan effective January 1999. The fair value of the assets merged into the Plan was approximately $6,620,000. In August 1998, Mercantile acquired Financial Services Corporation of the Midwest. In conjunction with the acquisition, the Rock Island Bank Saving Trust Plan merged into the Plan effective January 1999. The fair value of the assets merged into the Plan was approximately $5,614,000. In July 1998, Mercantile acquired CBT Corporation. In conjunction with the acquisition, the CBT Savings and Profit Sharing Plan and CBT Money Purchase Pension Plan merged into the Plan effective January 1999. The fair value of the assets merged into the Plan was approximately $11,306,000 and $1,863,000, respectively. Also in July 1998, Mercantile acquired Firstbank of Illinois Co. In conjunction with the acquisition, the First Bank of Illinois Profit Sharing Plan, Central Bank Profit Sharing Plan, and Central Bank Frozen 401(k) Plan merged into the Plan effective January 1999. The fair value of the assets merged into the Plan was approximately $54,916,000, $4,617,000, and $361,000, respectively. On April 30, 1999, a definitive Agreement and Plan of Merger by and between Mercantile and Firstar Corporation (Firstar) was signed. Mercantile will merge with and into Firstar in a transaction intended to be a tax-free reorganization. Firstar, headquartered in Milwaukee, is a $38 billion-asset bank holding company with approximately 720 full-service banking offices in Ohio, Wisconsin, Kentucky, Illinois, Indiana, Iowa, Minnesota, Tennessee, and Arizona. The transaction is expected to close in the fourth quarter of 1999. 12 SCHEDULE 1 MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Item 27a -- Schedule of Assets Held for Investment Purposes December 31, 1998
SHARES OR CURRENT UNITS COST VALUE -------------- ------------ ----------- Cash equivalents - Arch Money Market Portfolio 15,065,452 Trust Shares $ 15,065,452 15,065,452 ------------ ----------- Registered investment companies: 531,876 Arch International Equity Portfolio 6,217,130 6,866,521 1,049,058 Arch Small Cap Equity Portfolio 13,361,561 13,333,528 978,910 Arch Government and Corporate Bond Portfolio 10,087,987 10,307,921 2,639,770 Arch Balanced Portfolio 29,558,414 31,730,033 3,252,483 Arch Growth and Income Equity Portfolio 53,024,965 60,073,362 437,426 Arch Growth Equity Portfolio 7,586,924 8,477,317 ------------ ----------- 119,836,981 130,788,682 ------------ ----------- 4,983,762 Mercantile Bancorporation Inc. common stock 106,083,292 229,876,022 Loans to participants -- general purpose and residential 8,066,838 loans (interest rates range from 6.25% to 10.50%) 8,066,838 8,066,838 150,023 Equitable Life Insurance 7,390 13,488 ------------ ----------- Total assets held for investment purposes $249,059,953 383,810,482 ============ =========== Represents party-in-interest transaction allowable under ERISA regulations. See accompanying independent auditors' report.
13 SCHEDULE 2 MERCANTILE BANCORPORATION INC. HORIZON INVESTMENT AND SAVINGS PLAN AND TRUST Item 27d -- Schedule of Reportable Transactions Year ended December 31, 1998
EXPENSES INCURRED IDENTITY OF PURCHASE SELLING LEASE WITH PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE RENTAL TRANSACTION - ------------------------------- -------------------------------------- ------------ ------------ ------ ----------- Arch Money Market Portfolio Trust Shares Purchases of Arch Money Market Portfolio Trust Shares $108,707,611 -- -- -- Arch Money Market Portfolio Trust Shares Sales of Arch Money Market Portfolio Trust Shares -- 109,644,667 -- -- MTC Master Money Market Account Purchases of MTC Master Money Market Account 1,071,095 -- -- -- MTC Master Money Market Account Sales of MTC Master Money Market Account -- 1,071,095 -- -- Mercantile Bancorporation Inc. Purchases of Mercantile Bancorporation Inc. common stock 19,454,589 -- -- 22,696 Mercantile Bancorporation Inc. Sales of Mercantile Bancorporation Inc. common stock -- 2,208,128 -- 3,022 Arch Balanced Portfolio Purchases of Arch Balanced Portfolio shares 6,426,903 -- -- -- Arch Balanced Portfolio Sales of Arch Balanced Portfolio shares -- 2,715,462 -- -- Arch Small Capital Equity Portfolio Purchases of Arch Small Cap Equity Portfolio shares 2,974,451 -- -- -- Arch Small Capital Equity Portfolio Sales of Arch Small Cap Equity Portfolio shares -- 1,184,700 -- -- Arch Government and Corporate Bond Portfolio Purchases of Arch Government and Corporate Bond Portfolio shares 2,631,410 -- -- -- Arch Government and Corporate Bond Portfolio Sales of Arch Government and Corporate Bond Portfolio shares -- 1,560,300 -- -- Arch International Equity Portfolio shares Purchases of Arch International Equity Portfolio shares 1,927,996 -- -- -- Arch International Equity Portfolio shares Sales of Arch International Equity Portfolio shares -- 912,800 -- -- Arch Growth and Income Equity Portfolio Purchases of Arch Growth and Income Equity Portfolio shares 13,470,853 -- -- -- Arch Growth and Income Equity Portfolio Sales of Arch Growth and Income Equity Portfolio shares -- 5,560,418 -- -- Arch Growth Equity Portfolio Purchases of Arch Growth Equity Portfolio shares 3,742,849 -- -- -- Arch Growth Equity Portfolio Sales of Arch Growth Equity Portfolio shares -- 600,500 -- -- ============ =========== ==== ======= CURRENT VALUE COST OF ASSET ON IDENTITY OF OF TRANSACTION NET GAIN PARTY INVOLVED DESCRIPTION OF ASSET ASSETS DATE OR (LOSS) - ------------------------------- -------------------------------------- ----------- ----------- --------- Arch Money Market Portfolio Trust Shares Purchases of Arch Money Market Portfolio Trust Shares 108,707,611 108,707,611 -- Arch Money Market Portfolio Trust Shares Sales of Arch Money Market Portfolio Trust Shares 109,644,667 109,644,667 -- MTC Master Money Market Account Purchases of MTC Master Money Market Account 1,071,095 1,071,095 -- MTC Master Money Market Account Sales of MTC Master Money Market Account 1,071,095 1,071,095 -- Mercantile Bancorporation Inc. Purchases of Mercantile Bancorporation Inc. common stock 19,454,589 19,454,589 -- Mercantile Bancorporation Inc. Sales of Mercantile Bancorporation Inc. common stock 242,365 2,208,128 1,965,763 Arch Balanced Portfolio Purchases of Arch Balanced Portfolio shares 6,426,903 6,426,903 -- Arch Balanced Portfolio Sales of Arch Balanced Portfolio shares 2,461,992 2,715,462 253,470 Arch Small Capital Equity Portfolio Purchases of Arch Small Cap Equity Portfolio shares 2,974,451 2,974,451 -- Arch Small Capital Equity Portfolio Sales of Arch Small Cap Equity Portfolio shares 1,249,440 1,184,700 (64,740) Arch Government and Corporate Bond Portfolio Purchases of Arch Government and Corporate Bond Portfolio shares 2,631,410 2,631,410 -- Arch Government and Corporate Bond Portfolio Sales of Arch Government and Corporate Bond Portfolio shares 1,520,335 1,560,300 39,965 Arch International Equity Portfolio shares Purchases of Arch International Equity Portfolio shares 1,927,996 1,927,996 -- Arch International Equity Portfolio shares Sales of Arch International Equity Portfolio shares 810,465 912,800 102,335 Arch Growth and Income Equity Portfolio Purchases of Arch Growth and Income Equity Portfolio shares 13,470,853 13,470,853 -- Arch Growth and Income Equity Portfolio Sales of Arch Growth and Income Equity Portfolio shares 4,850,731 5,560,418 709,687 Arch Growth Equity Portfolio Purchases of Arch Growth Equity Portfolio shares 3,742,849 3,742,849 -- Arch Growth Equity Portfolio Sales of Arch Growth Equity Portfolio shares 555,926 600,500 44,574 =========== =========== ========= Represents party-in-interest transaction allowable under ERISA regulations. See accompanying independent auditors' report.
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