-----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, MuN12i6v5aCFNMKqw6CvPPe8mDWFcxUlHipFl2pu1EXFk4c2mYJ7L1wPlc7Tj6kO ykwGPAiSE94Fkmbyhax9ww== 0000891836-98-000663.txt : 19981029 0000891836-98-000663.hdr.sgml : 19981029 ACCESSION NUMBER: 0000891836-98-000663 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981027 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981028 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WACHOVIA CORP/ NC CENTRAL INDEX KEY: 0000774203 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 561473727 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09021 FILM NUMBER: 98731684 BUSINESS ADDRESS: STREET 1: 100 N MAIN ST STREET 2: P O BOX 3099 CITY: WINSTON SALEM STATE: NC ZIP: 27150 BUSINESS PHONE: 9107705000 MAIL ADDRESS: STREET 1: 100 NORTH MAIN ST STREET 2: P O BOX 3099 CITY: WINSTON SALEM STATE: NC ZIP: 27150 FORMER COMPANY: FORMER CONFORMED NAME: FIRST WACHOVIA CORP DATE OF NAME CHANGE: 19910603 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): October 27, 1998 WACHOVIA CORPORATION ----------------------------------------------------------------------- (Exact Name of Registrant as specified in its charter) North Carolina No. 1-9021 No. 56-1473727 - --------------------------------- -------------- -------------------- (State or other jurisdiction of (Commission (IRS employer incorporation) File Number) Identification No.) 100 North Main Street Winston-Salem, NC 27101 191 Peachtree Street NE, Atlanta, GA 30303 - ------------------------------------------------------ -------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: Winston-Salem 336-770-5000 Atlanta 404-332-5000 ---------------------------- Not applicable -------------- (Registrant's former address of principal executive offices) Item 5. Other Events. On October 27, 1997, Wachovia Corporation, a North Carolina corporation (the "Registrant"), entered into an Agreement and Plan of Merger by and between the Registrant and Interstate/Johnson Lane, Inc., a Delaware corporation ("IJL"), for a tax-free merger of the two companies pursuant to which each outstanding share of common stock, par value $0.20 per share, of IJL would be converted into the number of shares of Wachovia's common stock par value $5.00 per share equal to $32.00 divided by Wachovia's average stock price for the five trading days preceding the effective date of the Merger. This current report on Form 8-K, including the investor materials, contains certain forward looking statements with respect to the financial condition, results of operations and business of Wachovia and the combined company, including statements relating to: (a) the cost savings and reported earnings that will be realized from the Proposed Merger; (b) the impact on revenues of the Proposed Merger; and (c) the restructuring charges expected to be incurred in connection with the Proposed Merger. These forward looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) expected costs savings from the Proposed Merger cannot be fully realized or realized within the expected time frame; (2) costs or difficulties related to the integration of the businesses of Wachovia and IJL are greater than expected; (3) revenues following the Proposed Merger are lower than expected; (4) competitive pressure among depository institutions increases significantly; (5) changes in the interest rate environment reduce interest margins; (6) general economic conditions, either nationally or in the states in which the combined company will be doing business, are less favorable than expected; or (7) legislation or regulatory changes adversely affect the businesses in which the combined company would be engaged. Item 7. Financial Statements and Exhibits (c) Exhibits. 99.1 Press release dated October 27, 1998 announcing the Proposed Merger. 99.2 Investor presentation materials distributed by the Registrant on October 27, 1998 relating to the Proposed Merger. -2- 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. Date: October 28, 1998 WACHOVIA CORPORATION By: /s/ Kenneth W. McAllister --------------------------------- Name: Kenneth W. McAllister Title: Senior Executive Vice President -3- Exhibit Index 99.1 Press release dated October 27, 1998 announcing the Proposed Merger. 99.2 Investor presentation materials distributed by the Registrant on October 27, 1998 relating to the Proposed Merger. -4- EX-99.1 2 PRESS RELEASE DATED 10/27/98 [WACHOVIA LOGO] NEWS ANNOUNCEMENT Wachovia Corporation Atlanta, GA 30383 Winston-Salem, NC 27150 For Additional Information: Wachovia -- Ed L. Hutchins, 336-732-4200 IJL -- Jane P. Shoemaker, 704-379-9015 October 27, 1998 FOR RELEASE: Immediately INTERSTATE/JOHNSON LANE TO MERGE WITH WACHOVIA Wachovia Corporation and Interstate/Johnson Lane Inc. today announced an agreement in which Interstate/Johnson Lane will merge with Wachovia. Interstate/Johnson Lane is a full-service investment banking and securities brokerage company based in Charlotte, N.C. The agreement was approved today by the boards of directors of both Interstate/Johnson Lane Inc. and Wachovia Corporation. The transaction, which is subject to approval by IJL shareholders, the Federal Reserve and other regulatory authorities, is expected to close in the first half of 1999. The merger will be accounted for as a purchase. The merger agreement provides for a tax-free exchange of Wachovia common shares for all shares of IJL common stock. The per share exchange ratio will be determined at the time of closing and will be based on the ratio of $32 per IJL share to the average closing price per share of Wachovia's common stock over the five trading days prior to closing. The transaction is valued at $230 million. In addition, Wachovia has established an employee retention pool of $23 million in restricted stock for key employees of IJL. Before pre-tax merger and integration charges of $16 million in 1999, the transaction is expected to be nondilutive to Wachovia's earnings in 1999 and accretive to earnings in 2000 and beyond. Wachovia intends to repurchase in the open market or otherwise a number of shares of Wachovia common stock approximately equal to the number of shares issued in the merger. These repurchases will be in addition to Wachovia's previously announced repurchase plan. In addition, Wachovia may purchase shares of common stock of IJL as well pending consummation of the merger. IJL will give Wachovia full-service brokerage capabilities through its 63 Private Client Group offices in the Carolinas, Georgia and Virginia. CapTrust Financial Advisors LLC, an IJL subsidiary, provides investment consulting and brokerage services in these and other geographic markets. IJL's equity research, investment banking and established institutional equity and fixed income distribution businesses will complement Wachovia's growing capital markets activities. -more- "IJL will strengthen Wachovia's relationship approach to serving our customers by adding full service brokerage services. IJL financial consultants will become part of Wachovia's network of financial, investment management, insurance and estate planning specialists," said L. M. Baker Jr., Wachovia's chief executive officer. "In addition, IJL will add valuable equity research, underwriting and sales capabilities for Wachovia's rapidly growing capital markets business line." "IJL has a long tradition of building close relationships and giving every client personal attention," said James H. Morgan, chairman and chief executive officer of IJL. "Wachovia, too, possesses a relationship-oriented culture. By combining our talents, strengths and resources in this strategic combination, we can provide superior value for our shareholders and a wider range of financial services to the individuals, corporations and institutions we serve." Upon closing, IJL will be integrated into Wachovia through a new broker-dealer subsidiary with Morgan as chief executive officer. The subsidiary, which will be known as Wachovia Securities Inc., is expected to include the activities of Interstate/Johnson Lane, CapTrust and all Section 20 activities of Wachovia's Capital Markets Division. The companies expect that the growth potential of the combined company together with natural attrition will result in minimal job loss. In connection with the merger, IJL issued to Wachovia an option to purchase up to 19.9 percent of IJL's stock under certain circumstances. In addition, directors and executive officers of IJL controlling over 27 percent of IJL's outstanding shares have agreed to vote in favor of the merger. Headquartered in Charlotte, IJL is a regional financial services firm whose subsidiaries provide securities brokerage, investment banking and underwriting, and investment consulting services to individuals, institutions, municipalities and corporations. Its principal operating unit, Interstate/Johnson Lane Corporation, is one of the largest full-service broker-dealers headquartered in the Southeast. It is a member of SIPC and The New York Stock Exchange. Wachovia Corporation is an interstate bank holding company with dual headquarters in Atlanta and Winton-Salem, N.C. As of September 30, 1998, Wachovia Corporation had assets of $65.6 billion. Wachovia Bank, N.A. provides consumer banking services through more than 750 offices and 1,300 ATMs in Florida, Georgia, North Carolina, South Carolina and Virginia. Wachovia offers a broad range of credit, specialized finance, capital markets, investment and processing services tailored to meet the needs of companies of all sizes. EX-99.2 3 INVESTOR PRESENTATION MATERIALS WACHOVIA -------------- ACQUISITION OF INTERSTATE/JOHNSON LANE OCTOBER 27, 1998 - -------------------------------------------------------------------------------- This presentation contains certain forward looking statements with respect to the financial condition, results of operations and business of Wachovia after its merger with IJL including statements relating to: (a) the cost savings and reported earnings that will be realized from the proposed merger; (b) the impact on revenues of the proposed merger; and (c) the restructuring charges expected to be incurred in connection with the proposed merger. These forward looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) expected costs savings from the proposed merger cannot be fully realized or realized within the expected time frame; (2) costs or difficulties related to the integration of the businesses of Wachovia and IJL are greater than expected; (3) revenues following the proposed merger are lower than expected; (4) competitive pressure among financial institutions increases significantly; (5) changes in the interest rate environment reduce interest margins; (6) general economic conditions, either nationally or in the states in which the combined company will be doing business, and conditions in securities markets are less favorable than expected; or (7) legislation or regulatory changes adversely affect the businesses in which Wachovia will be engaged. - -----------------------------------------------------------------------WACHOVIA 1 STRATEGIC RATIONALE - -------------------------------------------------------------------------------- o Expands product capabilities in target growth markets -- Enhances retail brokerage distribution network -- Strengthens capital market position and adds equity capabilities o Creates cross-sell opportunities o Combines complementary products, cultures and geographic regions o Pricing compares favorably to recent transactions o Provides attractive returns - -----------------------------------------------------------------------WACHOVIA 2 TRANSACTION SUMMARY - -------------------------------------------------------------------------------- Price Per Share: $32.00 of Wachovia common stock for each IJL share Purchase Price: Approximately $230 million Form of Consideration: Tax free exchange of WB stock. Approximately 2.65 million total shares of WB to be issued based on current market price Exchange Ratio: The number of shares issued per IJL share will equal $32.00 divided by the average of the final trading price for Wachovia common stock during the five trading days prior to closing. Retention Program: Approximately $23 million in restricted stock Accounting Method: Purchase Expected Closing: First Half 1999 Stock Repurchase: 100% of shares issued in transaction Deal Protection: Voting agreement and 19.9% stock option - -----------------------------------------------------------------------WACHOVIA 3 OVERVIEW OF IJL - -------------------------------------------------------------------------------- Brokerage Services - ------------------ o Experienced retail sales force of 466 financial consultants in 63 branches across the Southeast o Over 124,000 active retail accounts with client assets aggregating more than $16.8 billion Corporate and Institutional Business - ------------------------------------ o Rapidly growing institutional sales and trading business o Small, focused investment banking effort targeting middle-market companies in the Southeast Research Capabilities - --------------------- o Proprietary equity research capabilities with analysts covering over 140 companies o Leading provider of third-party institutional research o Market maker in over 200 NASDAQ stocks Customer Focus - -------------- o Strong client driven culture - ----------------------------------------------------------------------WACHOVIA 4 COMPLEMENTARY PRODUCTS - -------------------------------------------------------------------------------- Wachovia IJL -------- --- Full Service Brokerage X Mutual Funds X Insurance Sales X Financial Planning X X Private Banking X Trust Services and Estate Planning X Equity Underwriting, Sales & Trading X Fixed Income Underwriting, Sales & X X Trading Equity Research X M&A Advisory X X Loan Syndications X Derivatives X Private Equity X X Private Placements X X - -----------------------------------------------------------------------WACHOVIA 5 ADDS UNDERWRITING CAPABILITIES - -------------------------------------------------------------------------------- IJL Lead and Co-Managed Financings 1993-1998 YTD(a) [GRAPH] TITLE: EQUITY AND EQUITY LINKED(b) Amount Raised Number of Deals ($ in Millions) --------------- --------------- 1993 $560.1 15 1994 $472.3 9 1995 $534.4 8 1996 $361.7 8 1997 $657.4 12 1998 YTD(a) $338.5 6 [SECOND GRAPH] TITLE: MUNICIPAL FINANCE Amount Raised Number of Deals ($ in Millions) --------------- --------------- 1993 $112.7 13 1994 $165.8 26 1995 $173.1 12 1996 $426.9 26 1997 $233.9 16 1998 YTD(a) $431.4 27 Source: Securities Data Corporation. Data includes all offerings in the domestic public and private market by U.S. issuers. (a) Through September 30, 1998. (b) Excludes closed-end funds. - ------------------------------------------------------------------------WACHOVIA 6 EXCELLENT GEOGRAPHIC FIT - -------------------------------------------------------------------------------- [GRAPHIC DEPICTING THE SOUTHEASTERN UNITED STATES AND LOCATIONS OF IJL BRANCHES WITHIN THE REGION] o IJL provides enhanced distribution in Wachovia's core markets. o IJL has 63 branches in 58 cities and municipalities in North Carolina, South Carolina, Georgia and Virginia o Greater access and broader product offering to affluent individuals, as well as, small and mid-sized companies in Southeast - ------------------------------------------------------------------------WACHOVIA 7 STRUCTURE/MANAGEMENT - -------------------------------------------------------------------------------- o IJL's principal broker dealer subsidiary, Interstate/Johnson Lane Corporation, will be merged into Wachovia Securities, Inc., a newly created subsidiary of Wachovia Corporation o As CEO of Wachovia Securities, Inc., Jim Morgan will be responsible for Wachovia's Capital Markets activities and report to John McLean, EVP o IJL's Private Client Group and CapTrust will report to Bob Kniejski, EVP and head of Personal Financial Services - ------------------------------------------------------------------------WACHOVIA 8 IJL -- SUMMARY FINANCIAL INFORMATION - -------------------------------------------------------------------------------- (Dollars in Millions)
FISCAL YEAR ENDED SEPTEMBER 30, 1994 1995 1996 1997 1998 -------- ------- ------- ------- ------- NET REVENUES $147.9 $151.5 $187.6 $213.7 $257.6 Total Operating Expenses 134.6 141.6 170.8 193.9 229.0 -------- ------- ------- ------- ------- Pre-Tax Core Operating Income $13.3 $9.9 $16.8 $19.8 $28.6 LTIP Expense(a) 0 0 1.2 2.7 5.4 NET INCOME $10.9 $5.9 $9.4 $10.9 $14.7 -------- ------- ------- ------- ------- PROFITABILITY RATIOS Pre-Tax Margin 9.0% 6.5% 8.3% 8.0% 9.0% Pre-Tax ROAE 20.6 14.4 21.4 20.6 24.1 Adjusted for LTIP(a) Pre-Tax Margin 9.0% 6.5% 9.0% 9.2% 11.1% Pre-Tax ROAE 20.6 14.4 23.0 23.9 29.7 Total Assets $767.8 $616.5 $568.3 $626.7 $652.3 Total Shareholder's Equity 68.0 69.4 76.6 88.8 103.6 - -------------------- (a) Long-Term Incentive Plan expense of $5.4 million in 1998. The LTIP expired in September 1998 and this strategic transaction causes automatic vesting and termination.
- ------------------------------------------------------------------------WACHOVIA 9 IJL -- REVENUE SOURCES - -------------------------------------------------------------------------------- Total Revenues by Business Unit for Fiscal Year Ended September 30, 1998 [PIE CHART] Private Client Group 61.2% Fixed Income Capital Markets 17.8% Equity Capital Markets 8.5% The Interstate Group (Third-Party Research Services) 5.6% Cap Trust Financial Advisors 4.1% Other 2.8% - ------------------------------------------------------------------------WACHOVIA 10 FAVORABLE PRICING RELATIVE TO RECENT BROKERAGE TRANSACTIONS - -------------------------------------------------------------------------------- Acquisitions of Retail Brokerage Firms 1997 - 1998YTD
PURCHASE PRICE(a) AS A MULTIPLE OF: ---------------------------------------- TRANSACTION DATE OF AMOUNT LTM NET TANGIBLE NET ANNC. ACQUIROR TARGET ($MIL) INCOME BOOK VALUE REVENUES - -------- ------------------ ----------------------- -------------- ----------- ---------- --------- 8/20/98 PNC Corp. Hilliard-Lyons $315.0 15.80x 2.67x 1.96x 8/10/98 BB&T Corp. Scott & Stringfellow 145.8 23.00 3.76 1.40 6/15/98 KeyCorp. McDonald & Co. 721.0 18.98 3.64 2.19 12/15/97 US Bancorp Piper Jaffray Cos. 730.0 20.40(b) 4.20 1.20 11/19/97 First Chicago NBD Roney & Co. 95.0 17.00 3.83 NA 8/20/97 First Union Corp. Wheat First Butcher Singer 546.0 15.00 3.35 1.00 ------------------------------------------------------------------ High 23.00x 4.20x 2.19x Mean 18.36 3.57 1.55 Median 17.99 3.70 1.40 Low 15.00 2.67 1.00 ------------------------------------------------------------------ --------------------------------------------------------------------------------- IJL $240.8(c) 16.3x(d) 2.64x 0.93x --------------------------------------------------------------------------------- - -------------------- (a) Transaction value includes purchase price paid to shareholders and the net after-tax value of any retention pool at an assumed discount rate. (b) Based on Annualized 4Q EPS before non-recurring charges. (c) Assumes a $230 million transaction value and the net after-tax present value of a $23 million retention pool vesting over 3 years. (d) Price/LTM net income multiple excluding LTIP expense would equal 13.3x.
- ------------------------------------------------------------------------WACHOVIA 11 FINANCIALLY ATTRACTIVE - -------------------------------------------------------------------------------- o Nondilutive to EPS in 1999 (before restructuring charge), moderately accretive thereafter o Returns will exceed cost of capital and enhance shareholder value o Estimated pre-tax merger and integration expense of $16 million recognized during 1999. o Fully phased-in synergies of $11 million (after-tax) from combination of cost savings and revenue growth - ------------------------------------------------------------------------WACHOVIA 12 -----END PRIVACY-ENHANCED MESSAGE-----