UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934
February 25, 1998
(Date of report)
HomeSide, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-12655 59-3387041
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification No.)
7301 Baymeadows Way, Jacksonville, FL 32256
(Address of principal executive offices) (Zip Code)
(904) 281-3000
(Registrant's telephone number, including area code)
1
<PAGE>
Item 1. Change in Control of Registrant
On February 10, 1998, National Australia Bank Limited ("NAB") acquired
43,472,568 shares of common stock (the "Shares") of HomeSide, Inc. As
consideration for the Shares, NAB paid $27.825 per share or a total of
approximately $1.2 billion. NAB paid for the purchase with available funds.
Following the transaction described above ("the Merger"), NAB now owns 100% of
the Registrant's common stock and HomeSide, Inc. became an indirect wholly-owned
subsidiary of NAB.
Item 7. Unaudited Pro Forma Consolidated Financial Information
The unaudited pro forma consolidated financial information set forth below,
which is based upon management's assumptions and includes adjustments as
described in the notes which follow, should be read in conjunction with the
historical financial statements and notes of the registrant. The pro forma
adjustments are based on preliminary estimates and are subject to change as
these estimates are finalized. The Unaudited Pro Forma Balance Sheet set forth
below gives effect to the Merger as though such transaction occurred as of
November 30, 1997, while the Unaudited Pro Forma Consolidated Income Statements
set forth below gives effect to the Merger as though the transaction occurred at
the beginning of the periods presented. The unaudited pro forma consolidated
financial information does not include the effects, if any, of changes in debt
and stockholder's equity which may occur as a result of the Merger. The
unaudited pro forma consolidated financial information does not purport to
represent the results that actually would have occurred if the Merger had in
fact occurred on such date or to project the results that may be achieved in the
future.
2
<PAGE>
<TABLE>
HomeSide, Inc.
Unaudited Pro Forma
Consolidated Balance Sheet
November 30, 1997
(dollars in millions, except share data)
<CAPTION>
Pro Forma
Historical (a) Adjustments (b) Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash and cash equivalents $ 16.6 $ 1.8 (c) $ 18.4
Mortgage loans held for sale, net 984.7 - 984.7
Mortgage servicing rights, net 1,748.8 - 1,748.8
Accounts receivable, net 252.8 - 252.8
Early pool buyout advances 311.6 - 311.6
Premises and equipment, net 35.4 (7.4)(d) 28.0
Goodwill 9.0 767.9 (e) 776.9
Other assets 155.6 (17.1)(f) 138.5
--------------- --------------- ---------------
Total Assets $ 3,514.5 $ 745.2 $ 4,259.7
=============== =============== ===============
Notes payable $ 1,732.6 $ 0.6 (f) $ 1,733.2
Accounts payable and accrued liabilities 140.6 112.1 (g) 252.7
Deferred income taxes 169.6 (67.2)(h) 102.4
Long-term debt 900.7 39.7 (f) 940.4
--------------- --------------- ---------------
Total Liabilities 2,943.5 85.2 3,028.7
Common Stock:
Common stock, $.01 par value, 119,610,000 shares authorized and 43,375,430
shares issued and outstanding before the
merger, 1 share issued and outstanding after the merger. 0.4 (0.4)(i) -
Class C non-voting common stock, $1.00 par value, 195,000 shares authorized,
and 97,138 shares issued and outstanding before the merger, 0 shares
issued and outstanding after the merger 0.1 (0.1)(i) -
Additional paid-in capital 476.6 754.4 (i) 1,231.0
Retained earnings 95.7 (95.7)(i) -
--------------- --------------- ---------------
572.8 658.2 1,231.0
Less: Notes received in payment for capital stock (1.8) 1.8 (c) -
--------------- --------------- ---------------
Total Stockholders' Equity 571.0 660.0 1,231.0
--------------- --------------- ---------------
Total Liabilities and Stockholders' Equity $ 3,514.5 $ 745.2 $ 4,259.7
=============== =============== ===============
</TABLE>
(consolidated footnotes on following page)
3
<PAGE>
- --------------------
(a) Reflects HomeSide, Inc.'s historical unaudited consolidated balance sheet
at November 30, 1997.
(b) Reflects pro forma adjustments related to the Merger, as if such Merger
occurred on November 30, 1997. The adjustments apply the purchase
accounting adjustments required to reflect the effects of the Merger. The
values of assets and liabilities have been adjusted to reflect the
allocation of the purchase price. The purchase price in excess of the
fair value of net assets acquired has been recorded as goodwill.
(c) Reflects the repayment of notes received in payment of capital stock of
$1.8 million.
(d) Reflects the mark to market of premises and equipment as part of the
allocation of the purchase price to assets and liabilities.
(e) Goodwill of $9.0 million from previous transactions has been eliminated.
Goodwill of $776.9 million has been recorded in respect of the Merger.
(f) Reflects the elimination of unamortized debt issue costs of $17.1
million, mark to market of notes payable of $0.6 million and long-term
debt of $39.7 million as part of the allocation of the purchase price
to assets and liabilities.
(g) Reflects accrued transaction costs related to the Merger and the mark to
market of certain liabilities as part of the allocation of the purchase
price to assets and liabilities.
(h) Reflects the net tax effect of the changes in bases of assets and
liabilities as a result of the application of purchase accounting for
the Merger.
(i) Reflects the impact on consolidated stockholders' equity of the Merger
and is comprised of the following (in millions):
100% outstanding stock prior to merger
converted to right to receive cash $ (0.5)
Elimination of historical retained earnings (95.7)
Elimination of historical paid-in capital ( 476.6)
Purchase of 100% of HomeSide's outstanding common stock 1,231.0
-----------
Net increase in stockholders' equity $ 658.2
===========
4
<PAGE>
<TABLE>
HomeSide, Inc.
Unaudited Pro Forma
Consolidated Income Statement
For the Period from March 16, 1996 to February 28, 1997
(dollars in millions)
<CAPTION>
Period from Pro Forma
March 16, 1996 to Pro Forma March 16, 1996 to
February 28, 1997(a) Adjustments(b) February 28, 1997
-------------------- --------------- ------------------
<S> <C> <C> <C>
Revenues:
Mortgage servicing fees $ 312.3 $ - $ 312.3
Amortization of mortgage servicing rights (155.8) - (155.8)
-------------------- --------------- ------------------
Net servicing revenue 156.5 - 156.5
Interest income 81.5 - 81.5
Interest expense (87.7) 7.6(c) (80.1)
-------------------- --------------- -------------------
Net interest revenue (6.2) 7.6 1.4
Net mortgage origination revenue 66.1 - 66.1
Other income 0.7 - 0.7
-------------------- --------------- ------------------
Total Revenues 217.1 7.6 224.7
Expenses:
Salaries and employee benefits 73.0 - 73.0
Occupancy and equipment 11.8 (0.4)(d) 11.4
Servicing losses on investor-owned loans
and foreclosure-related expenses 17.9 - 17.9
Other expenses 41.7 34.3 (e) 76.0
-------------------- --------------- ------------------
Total Expenses 144.4 33.9 178.3
Income before income taxes 72.7 (26.3) 46.4
Income tax expense 29.3 2.8 (f) 32.1
-------------------- --------------- ------------------
Income before extraordinary loss on early
extinguishment of debt 43.4 (29.1) 14.3
Extraordinary loss on early extinguishment
of debt, net of tax 6.4 - 6.4
-------------------- --------------- ------------------
Net Income (g) $ 37.0 $ (29.1) $ 7.9
==================== =============== ==================
</TABLE>
(consolidated footnotes on following page)
5
<PAGE>
- --------------------
(a) Reflects HomeSide's historical unaudited consolidated income statement for
the period March 16, 1996 to February 28,1997.
(b) Reflects pro forma adjustments related to the Merger as if such acquisition
occurred at the beginning of the period presented. The adjustments apply
the purchase accounting adjustment required to reflect the effects of the
Merger. The values of assets and liabilities have been adjusted to reflect
the allocation of the purchase price. The purchase price in excess of the
fair value of net assets acquired has been recorded as goodwill.
(c) Notes payable, debt issuance costs and long-term debt have been marked to
market as part of the allocation of the purchase price to the value of
assets and liabilities. As a result, interest expense has been adjusted by
$7.6 million. This adjustment does not reflect applicable margin
improvements of 2.5 basis points for the warehouse credit facility and 7.5
basis points for the servicing credit facility as a result of expected
improved credit ratings due to the Merger.
(d) Changes in the depreciation expense included in occupancy and equipment
expenses have been adjusted to reflect the adjusted fair value of premises
and equipment as of the closing date of the Merger.
(e) Other expenses have been adjusted to reflect amortization of goodwill
arising from the Merger.
(f) Adjusts the income tax expense to HomeSide's expected effective tax rate
after the Merger.
(g) No income per share data is provided because HomeSide, Inc. is a wholly
owned subsidiary of National Australia Bank Limited.
6
<PAGE>
<TABLE>
HomeSide, Inc.
Unaudited Pro Forma
Consolidated Income Statement
For the Period from March 1, 1997 to November 30, 1997
(dollars in millions)
<CAPTION>
Period from Pro Forma
March 1, 1997 to Pro Forma March 1, 1997 to
November 30, 1997 (a) Adjustments (b) November 30, 1997
--------------------- --------------- ------------------
<S> <C> <C> <C>
Revenues:
Mortgage servicing fees $ 312.3 $ - $ 312.3
Amortization of mortgage servicing rights (161.5) - (161.5)
-------------------- --------------- ------------------
Net sericing revenue 150.8 - 150.8
Interest income 74.4 - 74.4
Interest expense (73.3) 7.8 (c) (65.5)
-------------------- --------------- ------------------
Net interest revenue 1.1 7.8 8.9
Net mortgage origination revenue 59.2 - 59.2
Other income 1.3 - 1.3
-------------------- --------------- ------------------
Total Revenues 212.4 7.8 220.2
Expenses:
Salaries and employee benefits 58.5 - 58.5
Occupancy and equipment 11.9 (0.4) (d) 11.5
Servicing losses on investor-owned loans
and foreclosure-related expenses 15.7 - 15.7
Other expenses 30.0 28.3 (e) 58.3
-------------------- --------------- ------------------
Total Expenses 116.1 27.9 144.0
Income before income taxes 96.3 (20.1) 76.2
Income tax expense 37.6 2.9 (f) 40.5
-------------------- --------------- ------------------
Net Income (g) $ 58.7 $ (23.0) $ 35.7
==================== =============== ==================
</TABLE>
(consolidated footnotes on following page)
7
<PAGE>
- --------------------
(a) Reflects HomeSide's historical unaudited consolidated income statement for
the period March 1, 1997 to November 30, 1997.
(b) Reflects pro forma adjustments related to the Merger as if such acquisition
occurred at the beginning of the period presented. The adjustments apply
the purchase accounting adjustments required to reflect the effects of the
Merger. The assets and liabilities have been adjusted to reflect the
allocation of the purchase price. The purchase price in excess of the fair
value of net assets acquired has been recorded as goodwill.
(c) Notes payable, debt issuance costs and long-term debt have been marked to
market as part of the allocation of the purchase price to the value of
assets and liabilities. As a result, interest expense has been adjusted by
$7.8 million. This adjustment does not reflect applicable margin
improvements of 2.5 basis points for the warehouse credit facility and 7.5
basis points for the servicing credit facility as a result of expected
improved credit ratings due to the Merger.
(d) Changes in the depreciation expense included in occupancy and equipment
expenses have been adjusted to reflect the adjusted fair value of premises
and equipment as of the closing date of the Merger.
(e) Other expenses have been adjusted to reflect amortization of goodwill
arising from the Merger.
(f) Adjusts the income tax expense to HomeSide's expected effective tax rate
after the Merger.
(g) No income per share data is provided because HomeSide, Inc. is a wholly
owned subsidiary of National Australia Bank Limited.
8
<PAGE>
Item 8. Change in fiscal year
On February 10, 1998, HomeSide determined it will change to a fiscal year
ending September 30 following the conclusion of the current fiscal year on
February 10, 1998. HomeSide intends to file a form 10-K for the fiscal year
ended February 10, 1998 and will begin its second fiscal quarter on the new
basis on February 11, 1998.
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, thereunto duly authorized.
HomeSide, Inc.
Registrant)
Date: February 25, 1998 By: /s/Kevin D. Race
-------------------- ----------------
Kevin D. Race
Vice President, Chief Financial Officer
and Treasurer (Principal Financial
and Accounting Officer)
