<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 10, 1998
BANC ONE CORPORATION
(Exact Name of Registrant as Specified in Charter)
Ohio
(State or Other Jurisdiction of Incorporation)
1-8552 31-0738296
(Commission File Number) (IRS Employer Identification No.)
100 East Broad Street, Columbus, Ohio 43271
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code: (614) 248-5944
N/A
(Former Name or Former Address, If Changed Since Last Report)
<PAGE> 2
The Current Report on Form 8-K dated April 10, 1998 and filed with the
Securities and Exchange Commission ("SEC") on April 14, 1998, as amended by Form
8-K/A dated April 10, 1998 and filed with the SEC on April 21, 1998, is amended
to add Exhibits 99.8 and 99.9 and to amend and restate Item 7 in its entirety as
follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
The following consolidated financial statements of First Chicago
NBD Corporation are incorporated herein by reference to Exhibit
99.5 filed herewith:
1. Consolidated Balance Sheets as of December 31, 1997 and
1996.
2. Consolidated Statement of Income for the years ended
December 31, 1997, 1996 and 1995.
3. Consolidated Statements of Changes in Stockholders'
Equity for the years ended December 31, 1997, 1996
and 1995.
4. Consolidated Statements of Cash Flows for the years
ended December 31, 1997, 1996 and 1995.
5. Notes to the Consolidated Financial Statements.
The report of Arthur Andersen LLP, independent accountants, on
the consolidated financial statements of First Chicago NBD
Corporation as of December 31, 1997 and 1996 and for the years
ended December 31, 1997, 1996 and 1995 is filed herewith as part
of Exhibit 99.5 and the related consent is filed herewith as
Exhibit 99.6. Both the opinion and the consent are incorporated
herein by reference.
The following unaudited consolidated financial statements of
First Chicago NBD Corporation are incorporated herein by
reference to Exhibit 99.8 filed herewith:
1. Consolidated Balance Sheet as of March 31, 1998.
2. Consolidated Statement of Income for the quarters ended
March 31, 1998 and 1997.
3. Consolidated Statements of Changes in Stockholders'
Equity for the quarters ended March 31, 1998 and 1997.
4. Consolidated Statements of Cash Flows for the quarters
ended March 31, 1998 and 1997.
5. Notes to the Unaudited Consolidated Financial
Statements.
<PAGE> 3
(b) Pro Forma Financial Information.
The following pro forma financial statements are incorporated
herein by reference to Exhibit 99.7 filed herewith:
1. Pro Forma Condensed Combined Balance Sheet at December
31, 1997 (unaudited).
2. Pro Forma Condensed Combined Statement of Income for
the fiscal years ended December 31, 1997, 1996 and 1995
(unaudited).
3. Pro Forma Condensed Combined Statement of Income for
the year ended December 31, 1997 (unaudited).
4. Pro Forma Condensed Combined Statement of Income for
the year ended December 31, 1996 (unaudited).
5. Pro Forma Condensed Combined Statement of Income for
the year ended December 31, 1995 (unaudited).
6. Notes to the Unaudited Pro Forma Condensed Combined
Financial Information.
The following pro forma financial statements are incorporated
herein by reference to Exhibit 99.9 filed herewith:
1. Pro Forma Condensed Combined Balance Sheet at March 31,
1998 (unaudited).
2. Pro Forma Condensed Combined Statement of Income for
the three months ended March 31, 1998 and 1997
(unaudited).
3. Notes to the Unaudited Pro Forma Condensed Combined
Financial Information.
(c) Exhibits.
Exhibit 2.1 Agreement and Plan of Reorganization dated as
of April 10, 1998 by and among BANC ONE
CORPORATION, First Chicago NBD Corporation and
Hornet Reorganization Corporation. *
Exhibit 99.1 Stock Option Agreement dated as of April 10,
1998, by and between First Chicago NBD
Corporation, as issuer, and BANC ONE CORPORATION,
as grantee. *
Exhibit 99.2 Stock Option Agreement dated as of April 10,
1998, by and between BANC ONE CORPORATION, as
issuer, and First Chicago NBD Corporation, as
grantee. *
Exhibit 99.3 Joint Press Release, dated April 13, 1998. *
Exhibit 99.4 Investor Presentation, dated April 13, 1998. *
<PAGE> 4
Exhibit 99.5 Consolidated Financial Statements of First
Chicago NBD Corporation as of December 31, 1997
and for the years ended December 31, 1997, 1996
and 1995, and Report of Arthur Andersen LLP. *
Exhibit 99.6 Consent of Arthur Andersen LLP. *
Exhibit 99.7 Unaudited Pro Forma Condensed Combined
Financial Information as of December 31, 1997 and
for the years ended December 31, 1997, 1996 and
1995. *
Exhibit 99.8 Unaudited Consolidated Financial Statements
of First Chicago NBD Corporation as of March 31,
1998 and for the three months ended March 31,
1998 and 1997.
Exhibit 99.9 Unaudited Pro Forma Condensed Combined
Financial Information as of March 31, 1998 and
for the three months ended March 31, 1998 and
1997.
- -------------
* Previously filed.
<PAGE> 5
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.
BANC ONE CORPORATION
(Registrant)
Date: May 19, 1998 By:/s/ William C. Leiter
-----------------------------------
William C. Leiter
Senior Vice President
<PAGE> 1
Exhibit 99.8
FIRST CHICAGO NBD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
March 31 December 31 March 31
(Dollars in millions) 1998 1997 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks............................................................. $ 7,907 $ 7,223 $ 6,800
Interest-bearing due from banks..................................................... 5,163 6,904 7,169
Federal funds sold and securities under resale agreements........................... 7,735 8,501 6,635
Trading assets...................................................................... 3,841 4,198 5,192
Derivative product assets........................................................... 4,233 4,547 5,363
Investment securities............................................................... 11,594 9,330 7,500
Loans (net of unearned income--$929, $961 and $814, respectively)................... 69,590 68,724 66,536
Less allowance for credit losses............................................... (1,408) (1,408) (1,408)
------------ ------------ ------------
Loans, net..................................................................... 68,182 67,316 65,128
Premises and equipment.............................................................. 1,468 1,439 1,416
Customers' acceptance liability..................................................... 560 708 576
Other assets........................................................................ 4,121 3,930 3,354
------------ ------------ ------------
Total assets................................................................... $ 114,804 $ 114,096 $ 109,133
============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits
Demand......................................................................... $ 16,440 $ 16,069 $ 15,016
Savings........................................................................ 21,681 21,437 21,381
Time........................................................................... 15,350 15,178 15,078
Foreign offices................................................................ 14,699 15,805 13,452
------------ ------------ ------------
Total deposits............................................................... 68,170 68,489 64,927
Federal funds purchased and securities under repurchase agreements.................. 10,176 9,271 9,656
Other short-term borrowings......................................................... 10,458 9,710 8,517
Long-term debt...................................................................... 9,298 9,092 7,518
Guaranteed preferred beneficial interest in the Corporation's junior subordinated
debt............................................................................ 996 996 996
Acceptances outstanding............................................................. 560 708 576
Derivative product liabilities...................................................... 4,129 4,616 5,134
Other liabilities................................................................... 3,011 3,254 3,024
------------ ------------ ------------
Total liabilities ........................................................... 106,798 106,136 100,348
- ------------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock..................................................................... 190 190 290
Common stock--$1 par value.......................................................... 320 320 320
March 31,1998 Dec. 31, 1997 March 31, 1997
------------- ------------- --------------
Number of shares authorized....... 750,000,000 750,000,000 750,000,000
Number of shares issued........... 319,508,976 319,509,114 319,509,175
Number of shares outstanding...... 287,187,823 289,137,449 312,362,710
Surplus............................................................................. 1,960 1,966 1,988
Retained earnings................................................................... 7,699 7,446 6,682
Accumulated other adjustments to stockholders' equity............................... 48 55 (4)
Deferred compensation............................................................... (109) (79) (88)
Treasury stock at cost--32,321,153; 30,371,665; and 7,146,465 shares, respectively.. (2,102) (1,938) (403)
------------ ------------ ------------
Stockholders' equity........................................................... 8,006 7,960 8,785
------------ ------------ ------------
Total liabilities and stockholders' equity..................................... $ 114,804 $ 114,096 $ 109,133
============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 2
FIRST CHICAGO NBD CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31 March 31 December 31
(In millions, except per-share data) 1998 1997 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees..................................................... $1,460 $1,401 $1,473
Bank balances............................................................. 101 96 121
Federal funds sold and securities under resale agreements................. 89 65 83
Trading assets............................................................ 71 69 74
Investment securities--taxable............................................ 120 78 105
Investment securities--tax-exempt......................................... 23 25 16
------ ------ ------
Total.................................................................. 1,864 1,734 1,872
- --------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits.................................................................. 558 499 575
Federal funds purchased and securities under repurchase agreements........ 142 114 126
Other short-term borrowings............................................... 131 102 132
Long-term debt............................................................ 172 143 167
------ ------ ------
Total.................................................................. 1,003 858 1,000
- --------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME....................................................... 861 876 872
Provision for credit losses............................................... 179 187 167
------ ------ ------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES..................... 682 689 705
- --------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Combined trading profits (losses)......................................... 46 28 (15)
Equity securities gains................................................... 58 54 54
Investment securities gains............................................... 10 25 6
------ ------ ------
Market-driven revenue................................................. 114 107 45
------ ------ ------
Credit card fee revenue................................................... 234 234 230
Fiduciary and investment management fees.................................. 106 105 101
Service charges and commissions........................................... 251 213 261
------ ------ ------
Fee-based revenue...................................................... 591 552 592
------ ------ ------
Other income.............................................................. 34 20 90
------ ------ ------
Total.................................................................. 739 679 727
- --------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits............................................ 440 425 457
Net premises, and equipment expense....................................... 115 120 111
Other..................................................................... 293 255 304
------ ------ ------
Total.................................................................. 848 800 872
- --------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES................................................ 573 568 560
Applicable income taxes................................................... 190 188 178
------ ------ ------
NET INCOME................................................................ $ 383 $ 380 $ 382
====== ====== ======
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS' EQUITY.................... $ 381 $ 373 $ 378
====== ====== ======
- --------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
Basic.................................................................. $1.32 $1.19 $1.30
Diluted................................................................ $1.30 $1.17 $1.28
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 3
FIRST CHICAGO NBD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31
(In millions) 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCK
Balance, beginning of period......................................................... $ 190 $ 444
Conversion of preferred stock........................................................ - (154)
------- ------
Balance, end of period............................................................... 190 290
------- ------
COMMON STOCK
Balance, beginning of period......................................................... 320 320
Issuance of stock.................................................................... - -
------- ------
Balance, end of period............................................................... 320 320
------- ------
CAPITAL SURPLUS
Balance, beginning of period......................................................... 1,966 2,149
Issuance of treasury stock........................................................... (23) (38)
Conversion of preferred stock........................................................ - (138)
Other................................................................................ 17 15
------- ------
Balance, end of period............................................................... 1,960 1,988
------- ------
RETAINED EARNINGS
Balance, beginning of period......................................................... 7,446 6,433
Net income........................................................................... 383 380
Cash dividends declared on common stock.............................................. (128) (124)
Cash dividends declared on preferred stock........................................... (2) (7)
------- ------
Balance, end of period............................................................... 7,699 6,682
------- ------
ACCUMULATED OTHER ADJUSTMENTS TO STOCKHOLDERS' EQUITY
Fair Value Adjustment on Investment Securities Available-for-Sale
Balance, beginning of period......................................................... 49 38
Change in fair value (net of taxes) and other........................................ (9) (48)
------- ------
Balance, end of period............................................................... 40 (10)
------- ------
Accumulated Translation Adjustment
Balance, beginning of period......................................................... 6 7
Translation gain (loss), net of taxes................................................ 2 (1)
------- ------
Balance, end of period............................................................... 8 6
------- ------
TOTAL ACCUMULATED OTHER ADJUSTMENTS TO STOCKHOLDERS' EQUITY............................. 48 (4)
------- ------
DEFERRED COMPENSATION
Balance, beginning of period......................................................... (79) (58)
Awards granted, net.................................................................. (42) (40)
Amortization of deferred compensation................................................ 18 9
Other................................................................................ (6) 1
------- ------
Balance, end of period............................................................... (109) (88)
------- ------
TREASURY STOCK
Balance, beginning of period......................................................... (1,938) (326)
Purchase of common stock............................................................. (229) (450)
Conversion of preferred stock........................................................ - 292
Issuance of stock.................................................................... 65 81
------- ------
Balance, end of period............................................................... (2,102) (403)
------- ------
Total Stockholders' Equity, end of period............................................... $ 8,006 $8,785
======= ======
TOTAL NET INCOME AND ACCUMULATED OTHER ADJUSTMENTS TO STOCKHOLDERS' EQUITY.............. $ 376 $ 331
======= ======
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 4
FIRST CHICAGO NBD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31
(In millions) 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income.................................................................................. $ 383 $ 380
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization............................................................ 47 61
Provision for credit losses.............................................................. 179 187
Equity securities gains.................................................................. (58) (54)
Net (increase) in net derivative product balances........................................ (174) (9)
Net (increase) decrease in trading assets................................................ 358 (455)
Net (increase) decrease in loans held for sale........................................... 735 (32)
Net (increase) decrease in accrued income receivable..................................... (20) 14
Net increase (decrease) in accrued expenses payable...................................... (19) 27
Net (increase) decrease in other assets.................................................. (32) 9
Other noncash adjustments................................................................ 81 (20)
------- -------
Total adjustments........................................................................ 1,097 (272)
Net cash provided by operating activities................................................... 1,480 108
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold and securities under resale agreements........ 766 (2,438)
Purchase of investment securities--available-for-sale....................................... (4,821) (2,448)
Purchase of equity securities--fair value................................................... (42) (19)
Proceeds from maturities of debt securities--available-for-sale............................. 516 223
Proceeds from sales of investment securities--available-for-sale............................ 1,979 1,794
Proceeds from sales of equity securities--fair value........................................ 111 86
Net (increase) in loans..................................................................... (1,854) (299)
Loan recoveries............................................................................. 55 38
Net proceeds from sales of assets held for accelerated disposition.......................... 2 1
Purchases of premises and equipment......................................................... (86) (49)
Proceeds from sales of premises and equipment............................................... 22 4
------- -------
Net cash (used in) investing activities..................................................... (3,352) (3,107)
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits......................................................... (345) 1,294
Net increase in federal funds purchased and securities under repurchase agreements.......... 904 1,797
Net increase in other short-term borrowings................................................. 748 945
Proceeds from issuance of long-term debt.................................................... 5,731 828
Repayment of long-term debt................................................................. (5,529) (669)
Net increase (decrease) in other liabilities................................................ (335) 109
Dividends paid.............................................................................. (129) (121)
Proceeds from issuance of common and treasury stock......................................... - 2
Repurchase of common stock.................................................................. (229) (450)
------- -------
Net cash provided by financing activities................................................... 816 3,735
- --------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS................................ (1) (64)
- --------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................................ (1,057) 672
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............................................ 14,127 13,297
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................................................. $13,070 $13,969
======= =======
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
For purposes of this statement, cash and cash equivalents consist of cash and
due from banks, whether interest-bearing or not. In the first three months of
1997, $154 million of the Corporation's 5 3/4% Cumulative Convertible Preferred
Stock, Series B, was converted into common stock; such issuance was redeemed in
April, 1997.
27
<PAGE> 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
- ------
The consolidated financial statements for the Corporation, including its
subsidiaries, have been prepared in conformity with generally accepted
accounting principles. Such preparation requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Although the interim amounts are unaudited, they do reflect all adjustments
that, in the opinion of management, are necessary for a fair presentation of the
results of operations for the interim periods. All such adjustments are of a
normal, recurring nature. Because the results from commercial banking
operations are so closely related and responsive to changes in economic
conditions, fiscal policy and monetary policy, and because the results for the
investment security and trading portfolios are largely market-driven, the
results for any interim period are not necessarily indicative of the results
that can be expected for the entire year.
Note 2
- ------
In December 1997, the Corporation adopted SFAS No. 128 "Earnings Per Share", as
required, and all prior periods presented were restated. Basic EPS is computed
by dividing income available to common stockholders by the average number of
common shares outstanding for the period. The Statement also requires
presentation of EPS assuming full dilution. The diluted EPS calculation
includes net shares that may be issued under the Employee Stock Purchase and
Savings Plan, outstanding stock options, and common shares that would result
from the conversion of convertible preferred stock. In the diluted calculation,
income available to common stockholders is not reduced by preferred stock
dividend requirements related to convertible preferred stock, since such
dividends would not be paid if the preferred stock were converted to common
stock.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31
(In millions) 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Basic
Net income................................................................... $ 383 $ 380
Preferred stock dividends.................................................... (2) (7)
-------- --------
Net income attributable to common stockholders' equity....................... $ 381 $ 373
======== ========
Diluted
Net income................................................................... $ 383 $ 380
Preferred stock dividends, excluding convertible Series B, where
applicable.................................................................. (2) (5)
-------- --------
Diluted income available to common stockholders.............................. $ 381 $ 375
======== ========
(In thousands, except per-share amounts)
Average shares outstanding..................................................... 288,126 312,124
Dilutive Shares
Employee Stock Purchase and Savings Plan..................................... 1,266 735
Stock options................................................................ 3,647 3,675
Convertible preferred stock.................................................. - 4,259
-------- --------
Average shares outstanding assuming full dilution.............................. 293,039 320,793
======== ========
Basic........................................................................ $ 1.32 $1.19
======== ========
Diluted...................................................................... $ 1.30 $1.17
======== ========
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 6
Note 3
- ------
At March 31, 1998, credit card receivables aggregated $9.0 billion. These
receivables are available for sale through credit card securitization programs.
Note 4
- ------
The Corporation adopted SFAS No. 130, "Reporting Comprehensive Income," on
January 1, 1998. The Statement defines comprehensive income as including net
income and certain other items that affect stockholders' equity. The other items
include "fair value adjustment on investment securities available for sale" and
"accumulated translation adjustment," which are reported in "Accumulated other
adjustments to stockholders' equity" on the Corporation's Consolidated Balance
Sheet. The Corporation has elected to disclose these items in its Consolidated
Statement of Stockholders' Equity. Since the Statement solely relates to display
and disclosure requirements, it has no effect on the Corporation's financial
results.
Note 5
- ------
Nonperforming loans are generally identified as "impaired loans." At March 31,
1998, the recorded investment in loans considered impaired was $352 million,
which required a related allowance for credit losses of $47 million.
Substantially all of the $352 million in impaired loans required the
establishment of an allocated reserve. The average recorded investment in
impaired loans was approximately $347 million for the quarter ended March 31,
1998. The Corporation recognized interest income of $5 million associated with
impaired loans during the quarter.
Note 6
- ------
Derivative financial instruments used in trading activities are valued at
estimated fair value. Such instruments include swaps, forwards, spot, futures,
options, caps, floors and forward rate agreements in the interest rate, foreign
exchange, equity and commodity markets. The estimated fair values are based on
quoted market prices or pricing and valuation models on a present value basis
using current market information. Realized and unrealized gains and losses are
included in noninterest income as combined trading profits. Where appropriate,
compensation for credit risk and ongoing servicing is deferred and recorded as
income over the terms of the derivative financial instruments.
Derivative financial instruments used in ALM activities, principally interest
rate swaps, are required to meet specific criteria. Such interest rate swaps:
are designated as ALM derivatives; are linked to and adjust the interest rate
sensitivity of a specific asset, liability, firm commitment, or anticipated
transaction or a specific pool of transactions with similar risk
characteristics; and are effective in reducing the Corporation's structural
interest rate risk at inception. Interest rate swaps that do not meet these
criteria are designated as derivatives used in trading activities and are
accounted for at estimated fair value.
Income or expense on most ALM derivatives used to manage interest rate exposure
is recorded on an accrual basis, as an adjustment to the yield of the linked
exposures over the periods covered by the contracts. This matches the income
recognition treatment of that exposure, generally assets or liabilities carried
at historical cost, which are recorded on an accrual basis. If an interest rate
swap is terminated early, any resulting gain or loss is deferred and amortized
as an adjustment of the yield on the linked interest rate exposure position over
the remaining periods originally covered by the terminated swap. If all or part
of a linked position is terminated, e.g., a linked asset is sold or prepaid, or
if the amount of an anticipated transaction is likely to be less than originally
expected, the related pro rata portion of any unrecognized gain or loss on the
swap is recognized in earnings at that time, and the related pro rata portion of
the swap is subsequently accounted for at estimated fair value.
Purchased option, cap and floor contracts are reported in derivative product
assets, and written option, cap and floor contracts are reported in derivative
product liabilities. For other derivative financial instruments, an unrealized
gain is reported in derivative product assets, and an unrealized loss is
reported in derivative product liabilities. However, fair value amounts
recognized for derivative financial instruments executed with the same
counterparty under a legally enforceable master netting arrangement are reported
on a net basis. Cash flows from derivative financial instruments are reported
net as operating activities.
29
<PAGE> 7
Note 7
- ------
The ratio of income to fixed charges for the three months ended March 31, 1998,
excluding interest on deposits, was 2.2x, and including interest on deposits,
was 1.6x. The ratio has been computed on the basis of the total enterprise (as
defined by the Securities and Exchange Commission) by dividing income before
fixed charges and income taxes by fixed charges. Fixed charges consist of
interest expense on all long- and short-term borrowings, excluding or including
interest on deposits.
Note 8
- ------
On April 10, 1998, First Chicago NBD Corporation (the "Corporation" or "FCNBD")
and BANC ONE CORPORATION ("ONE") entered into an Agreement and Plan of
Reorganization (the "Agreement"), pursuant to which, subject to the conditions
and upon the terms stated therein, the Corporation and ONE will each merge into
a new company ("Newco") organized to effect the merger (such mergers,
collectively, the "Merger"). Newco will be renamed BANC ONE CORPORATION ("BANC
ONE").
It is anticipated that the merger will be accounted for as a pooling-of-
interests and that it will be consummated during the fourth quarter of 1998,
pending necessary approvals of stockholders of the Corporation and ONE,
regulatory approvals, and other customary conditions of closing. First Chicago
NBD's stock repurchase program has been rescinded.
In accordance with the Agreement, each share of the common stock, without par
value, of ONE ("ONE Common Stock") outstanding immediately prior to the
effective time of the Merger (the "Effective Time") will at the Effective Time
be converted into one share of the common stock, without par value, of Newco
("Newco Common Stock"), and each share of the common stock, par value $1.00 per
share, of the Corporation ("FCN Common Stock") outstanding immediately prior to
the Effective Time will at the Effective Time be converted into the right to
receive 1.62 shares of Newco Common Stock. In addition, each share of the
Corporation's Preferred Stock with Cumulative and Adjustable Dividends, Series
B, and Preferred Stock with Cumulative and Adjustable Dividends, Series C, in
each case outstanding immediately prior to the Effective Time, will be converted
into the right to receive one share of a series of corresponding preferred stock
of Newco with substantially the same terms.
Note 9
- ------
The Corporation and certain of its subsidiaries are defendants in various
lawsuits, including certain class actions, arising out of the normal course of
business, and the Corporation has received certain tax deficiency assessments.
Since the Corporation and certain of its subsidiaries, which are regulated by
one or more federal and state regulatory authorities, also are the subject of
numerous examinations and reviews by such authorities, the Corporation is and
will, from time to time, normally be engaged in various disagreements with
regulators, related primarily to banking matters. In the opinion of management
and the Corporation's general counsel, the ultimate resolution of the matters
referred to in this note will not have a material effect on the consolidated
financial statements.
30
<PAGE> 1
Exhibit 99.9
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On April 10, 1998, BANC ONE CORPORATION ("BANC ONE"), First Chicago NBD
("FCN") and Hornet Reorganization Corporation ("Newco") entered into an
Agreement and Plan of Reorganization (the "Agreement") pursuant to which BANC
ONE and FCN will be merged seriatim with and into Newco as the surviving
corporation in each case (such mergers together, the "Merger"). Common
shareholders of FCN will receive 1.62 shares of Newco common stock for each
share of FCN and common shareholders of BANC ONE will receive one share of Newco
common stock for each share of BANC ONE. The Merger will be accounted for as a
pooling of interests and pending regulatory and shareholder approval is expected
to be completed during the fourth quarter of 1998.
The following unaudited pro forma condensed combined financial
information and explanatory notes are presented to show the impact on the
historical financial position and results of operations of BANC ONE of the
Merger under the "pooling of interests" method of accounting. The unaudited pro
forma condensed combined financial information combines the historical financial
information of BANC ONE and FCN for the three month periods ended March 31, 1998
and 1997, respectively.
The pro forma condensed combined financial information for each of the
three months ended March 31, 1998 is based on and derived from, and should be
read in conjunction with, (a) the historical consolidated financial statements
and the related notes thereto of BANC ONE, which are incorporated by reference
herein, and (b) the historical consolidated financial statements and the related
notes thereto of FCN, which are incorporated by reference herein.
The pro forma financial information does not give effect to BANC ONE's
pending acquisition of First Commerce Corporation as the acquisition is not
material to BANC ONE.
<PAGE> 2
BANC ONE CORPORATION & SUBSIDIARIES
(CONSOLIDATED) PRO FORMA CONDENSED COMBINED BALANCE SHEET AS
OF MARCH 31, 1998 (UNAUDITED)
(IN MILLIONS)
The following unaudited pro forma condensed combined balance sheet as of March
31, 1998 is presented to show the impact on BANC ONE's historical financial
condition of the proposed Merger with FCN. The Merger has been reflected under
the "pooling of interests" method of accounting.
<TABLE>
<CAPTION>
PROFORMA
BANC ONE FCN ADJUSTMENTS COMBINED
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Total cash and due from banks $ 6,880 $ 7,907 $ 14,787
Short-term investments 1,275 12,898 14,173
Trading assets 1,397 3,841 5,238
Investment securities 17,500 11,594 29,094
Loans and leases (net of unearned income and
allowance for credit losses) 81,035 68,182 149,217
Other assets 8,234 10,382 18,616
--------- --------- --------- ---------
Total assets $ 116,321 $ 114,804 $ 231,125
========= ========= ========= =========
LIABILITIES
Deposits:
Non-interest bearing $ 18,880 $ 20,007 $ 38,887
Interest bearing 59,036 48,163 107,199
--------- --------- --------- ---------
Total deposits 77,916 68,170 146,086
Short-term borrowings 12,885 20,634 33,519
Long-term borrowings 11,591 10,294 21,885
Other liabilities 3,463 7,700 $ 837 12,000
--------- --------- --------- ---------
TOTAL LIABILITIES 105,855 106,798 837 213,490
--------- --------- --------- ---------
STOCKHOLDERS' EQUITY
Preferred stock 100 190 290
Common stock 3,237 320 2,006 5,563
Capital in excess of aggregrate stated value 6,690 1,960 (4,108) 4,542
Retained earnings 510 7,699 (837) 7,372
Other shareholders' equity 124 (61) 63
Less: Treasury stock (195) (2,102) 2,102 (195)
--------- --------- --------- ---------
Total stockholders' equity 10,466 8,006 (837) 17,635
--------- --------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 116,321 $ 114,804 $ 0 $ 231,125
========= ========= ========= =========
</TABLE>
See accompanying notes to the pro forma financial information.
<PAGE> 3
BANC ONE CORPORATION & SUBSIDIARIES (CONSOLIDATED)
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED) (IN
MILLIONS, EXCEPT PER SHARE DATA)
The following unaudited pro forma condensed combined statements of income are
presented to show the impact on BANC ONE's historical results of operations of
the proposed Merger with FCN. Such statements assume that the companies had been
combined for each period presented.
<TABLE>
<CAPTION>
PROFORMA
BANC ONE FCN COMBINED
------------ ------------ ------------
<S> <C> <C> <C>
INTEREST INCOME
Loans and leases $2,028 $1,460 $3,488
Securities, including trading 263 214 477
Other interest income 10 190 200
------------ ------------ ------------
Total 2,301 1,864 4,165
INTEREST EXPENSE
Deposits 630 558 1,188
Borrowings 350 445 795
------------ ------------ ------------
Total 980 1,003 1,983
NET INTEREST INCOME 1,321 861 2,182
Provision for credit losses 203 179 382
------------ ------------ ------------
Net interest income after provision for credit loss 1,118 682 1,800
NONINTEREST INCOME
Credit card revenue 492 234 726
Deposit fees 184 108 292
Other noninterest income 461 397 858
------------ ------------ ------------
Total 1,137 739 1,876
NONINTEREST EXPENSE
Salaries and employee benefits 634 440 1,074
Other operating expense 859 408 1,267
------------ ------------ ------------
Total 1,493 848 2,341
INCOME BEFORE INCOME TAXES 762 573 1,335
Income taxes 244 190 434
------------ ------------ ------------
NET INCOME $518 $383 $901
============ ============ ============
NET INCOME PER COMMON SHARE
Basic $0.80 $1.32 $0.81
Diluted 0.79 1.30 0.79
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 643.1 288.1 1,109.9
Diluted 655.5 293.0 1,130.2
</TABLE>
See accompanying notes to the pro forma financial information.
<PAGE> 4
BANC ONE CORPORATION & SUBSIDIARIES (CONSOLIDATED)
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PROFORMA
BANC ONE FCN COMBINED
------------ ------------ ------------
<S> <C> <C> <C>
INTEREST INCOME
Loans and leases $2,014 $1,401 $3,415
Securities, including trading 299 172 471
Other interest income 11 161 172
------------ ------------ ------------
Total 2,324 1,734 4,058
INTEREST EXPENSE
Deposits 623 499 1,122
Borrowings 343 359 702
------------ ------------ ------------
Total 966 858 1,824
NET INTEREST INCOME 1,358 876 2,234
Provision for credit losses 272 187 459
------------ ------------ ------------
Net interest income after provision for credit losses 1,086 689 1,775
NONINTEREST INCOME
Credit card revenue 288 234 522
Deposit fees 166 109 275
Other noninterest income 353 336 689
------------ ------------ ------------
Total 807 679 1,486
NONINTEREST EXPENSE
Salaries and employee benefits 568 425 993
Other operating expense 741 375 1,116
------------ ------------ ------------
Total 1,309 800 2,109
INCOME BEFORE INCOME TAXES 584 568 1,152
Income taxes 202 188 390
------------ ------------ ------------
NET INCOME $382 $380 $762
============ ============ ============
NET INCOME PER COMMON SHARE
Basic $0.60 $1.19 $0.66
Diluted 0.58 1.17 0.64
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 622.6 312.1 1,128.2
Diluted 655.6 320.8 1,175.3
</TABLE>
See accompanying notes to the pro forma financial information.
<PAGE> 5
BANC ONE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION
NOTE 1. BASIS OF PRESENTATION
The pro forma condensed combined financial information reflects the
Merger using the pooling of interests method of accounting. The pro forma
information presented is not necessarily indicative of the results of operations
or the combined financial position that would have resulted had the Merger been
consummated at the beginning of the periods indicated, nor is it necessarily
indicative of the results of operations in future periods or the future
financial position of the combined entities. It is anticipated that the Merger
will be consummated in the fourth quarter of 1998, subject to shareholder and
regulatory approval.
Certain reclassifications have been included in the unaudited pro forma
condensed combined balance sheet and statements of income to conform statement
presentations.
NOTE 2. ACCOUNTING POLICIES
The accounting policies of both companies are in the process of being
reviewed. As a result of this review, certain conforming accounting adjustments
may be necessary. The nature and extent of such adjustments have not been
determined and are not expected to be significant.
NOTE 3. MERGER-RELATED EFFECTS
Management estimates that the restructuring charge for costs related to
or resulting from the Merger will be approximately $1.25 billion. The pro forma
condensed combined income statement does not reflect the impact of this charge
due to its nonrecurring nature.
The pro forma condensed combined financial information does not reflect
any benefit from potential cost savings and revenue enhancements in connection
with the Merger.
NOTE 4. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been reflected in the pro
forma condensed combined financial information:
a) Common stock and capital in excess of aggregate stated value
were adjusted by $2,006 million to reflect the Merger
accounted for as a pooling of interests through the exchange
of 465.2 million shares of BANC ONE common stock for 287.2
million shares of FCN common stock using an exchange rate of
1.62.
b) Treasury stock and capital in excess of aggregate stated value
were adjusted by $2,102 million to reflect the retirement of
FCN treasury stock.
<PAGE> 6
c) Other liabilities and retained earnings were adjusted by $1.25
billion to reflect the recording of the merger-related charge.
d) Other liabilities and retained earnings were adjusted by $413
million to reflect the tax benefit associated with the merger
related charge.
NOTE 5. ADDITIONAL TRANSACTION
The pro forma condensed combined financial information does not give
effect to BANC ONE's pending acquisition of First Commerce Corporation as the
acquisition is not material to BANC ONE.
