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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
NEW CENTURY FINANCIAL CORPORATION
(Name of Issuer)
Common Stock, $.01 Par Value
(Title of Class of Securities)
64352 D 10 1
(CUSIP Number)
Lee R. Mitau, Esq.
Executive Vice President, General Counsel and Secretary
U.S. Bancorp
U.S. Bank Place
601 Second Avenue South, Minneapolis, Minnesota, 55402-4302
(612) 973-0363
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
May 4, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rules 13d-1(e), 13d-1(f) or 13d-1(g) check the following
box. / /
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 2 Page 2
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1 NAMES OF REPORTING PERSONS: U.S. Bancorp
IRS IDENTIFICATION NOS. OF ABOVE PERSONS: 41-0255900
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS: WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e): [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
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NUMBER OF 7 SOLE VOTING POWER: 3,289,800
SHARES
BENEFICIALLY -----------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER: 0
EACH
REPORTING -----------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER: 3,289,800
WITH
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10 SHARED DISPOSITIVE POWER: 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON: 3,289,800
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 18.99%
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14 TYPE OF REPORTING PERSON: HC
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 2 Page 3
ITEM 1. SECURITY AND ISSUER.
The title and class of shares to which this statement relates is the Common
Stock, par value $0.01 per share (the "Common Stock"), of New Century
Financial Corporation, a Delaware corporation (the "Issuer"). The Issuer's
principal executive office is 18400 Von Karman, Suite 1000, Irvine,
California, 92612.
ITEM 2. IDENTITY AND BACKGROUND..
(a) Name of Person Filing:
U.S. Bancorp
(b) Address of Principal Business Office:
U.S. Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
(c) Principal Business:
U.S. Bancorp is a regional bank holding company with its headquarters
in Minneapolis, Minnesota, and its operations concentrated in 17
Midwestern, Rocky Mountain and Western States.
The name, business address, present principal occupation or employment and
citizenship of each director and executive officer of U.S. Bancorp are set
forth in Annex A hereto and are incorporated herein by reference.
(d) Criminal Proceedings:
During the last five years, neither U.S. Bancorp nor any executive
officer or director of U.S. Bancorp has been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors).
(e) Civil Proceedings:
During the last five years, neither U.S. Bancorp nor any executive
officer or director of U.S. Bancorp has been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction resulting in a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws, or finding any violation with
respect to such laws.
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 2 Page 4
(f) Place of Organization:
Delaware
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The source of funds for each of (a) U.S. Bancorp's purchase of 65,000
shares of the Issuer's Common Stock from Steven G. Holder, (b)
U.S. Bancorp's purchase of 500,000 shares of the Issuer's Common Stock
from The Foundation Companies, Inc. and (c) U.S. Bancorp's purchase
of Series 1998A Convertible Preferred Stock of the Issuer as described
herein was working capital funds of U.S. Bancorp.
ITEM 4. PURPOSE OF TRANSACTION.
On May 4, 1999, pursuant to an Agreement dated April 29, 1999,
U.S. Bancorp purchased in a privately negotiated transaction for
investment purposes 65,000 shares of the Issuer's Common Stock at a
price of $11.3625 per share from one of the Issuer's shareholders,
Steven G. Holder.
U.S. Bancorp entered into a Preferred Stock Purchase Agreement with the
Issuer dated as of October 18, 1998 (the "Purchase Agreement") to purchase
20,000 shares of Series 1998A Convertible Preferred Stock (the "Convertible
Preferred Stock") at a purchase price of $1,000 per share. A copy of the
Purchase Agreement has been filed as Exhibit 99.1 to this Schedule 13D. The
closing of the acquisition of the Convertible Preferred Stock occurred on
November 24, 1998 (the "Closing Date"). The designation of the rights and
preferences of the Convertible Preferred Stock are set forth in the
Certificate of Designations for Series 1998A Convertible Preferred Stock
(the "Designation Certificate") which has been filed as Exhibit 99.2 to
this Schedule 13D. The following is a summary of the rights and
preferences of the Convertible Preferred Stock:
Rank: The Convertible Preferred Stock ranks prior to all of the
Issuer's Common Stock, both as to payment of dividends and
as to distribution of assets upon the liquidation and
winding up of the Issuer.
Dividends: Holders of Convertible Preferred Stock are entitled to
receive from the Issuer cumulative dividends of $75.00 per
share per annum, when such dividends may be legally declared
by the Issuer's Board of Directors.
Redemption: On or after November 24, 2002, the Issuer may, at its
option, redeem any or all of the Convertible Preferred Stock
at a price of $1,000 per share, plus accumulated and unpaid
dividends. The Issuer may also redeem the Convertible
Preferred Stock in certain limited circumstances involving
the consummation of an acquisition transaction involving the
Issuer.
Conversion: Each share of the Convertible Preferred Stock is immediately
convertible, at the option of the holder, into 136.24 shares
of the Issuer's Common
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 2 Page 5
Stock. The conversion rate is subject to adjustment as
provided in Section 8 of the Designation Certificate.
Voting Rights: The holders of the Convertible Preferred Stock will be
entitled to the same voting rights as, and will vote
together as one class with, holders of the Issuer's Common
Stock. Each holder of Convertible Preferred Stock will have
such voting rights as are attributable to the number of
whole shares of Common Stock into which such shares of
Convertible Preferred Stock are convertible. In addition,
absent the consent or affirmative vote of the holders of at
least a majority of the outstanding shares of the
Convertible Preferred Stock, voting separately or as a
class, the Issuer may not (a) authorize, issue or create any
shares of any other class or series of capital stock ranking
senior to the Convertible Preferred Stock as to dividends or
liquidation or (b) amend, alter or repeal the Issuer's
Certificate of Incorporation, whether by merger or
consolidation or otherwise, so as to adversely affect the
rights or preferences of the Convertible Preferred Stock.
As of the Closing Date, the Issuer expanded its Board of Directors (the
"Board") from nine to ten members and, pursuant to Section 8.3 of the
Purchase Agreement, U.S. Bancorp designated, and the Issuer appointed,
Francis J. Partel, Jr. to the Board. The Issuer further agreed to take
all reasonable action necessary to further expand its Board and to appoint,
nominate and support one or more additional individuals designated by U.S.
Bancorp for election to the Board such that U.S. Bancorp's representation
on the Issuer's Board may approximately reflect U.S. Bancorp's ownership
stake in the Issuer from time to time, until such date as the earliest to
occur of (a) December 31, 2002, (b) the date on which U.S. Bancorp owns
less than 5% of the Issuer's outstanding shares of Common Stock (assuming
conversion of the Convertible Preferred Stock) or (c) certain defaults by
U.S. Bancorp (such date the "Termination Date"). In accordance with the
preceding provision, U.S. Bancorp designated, and the Issuer appointed,
Terry Sandvik to the Board.
Pursuant to Section 8.4 of the Purchase Agreement, until the earlier to
occur of the Termination Date, November 24, 2000 or the receipt by the
Issuer of gross proceeds totaling $30 million from certain offerings by the
Issuer, U.S. Bancorp has, subject to certain exceptions, a right of first
refusal to purchase certain issuances of new securities by the Issuer. In
addition, pursuant to this Section, until the Termination Date, U.S.
Bancorp has, subject to certain exceptions, a right to purchase a
proportionate share of any new securities to be issued and sold by the
Issuer. In addition, these rights terminate upon the closing of certain
acquisitions of U.S. Bancorp or if U.S. Bancorp sells more than 20% of its
shares of Common Stock during any 90-day period, provided that such sales
are not made for regulatory reasons (an "Additional Termination Date").
Pursuant to Section 8.5 of the Purchase Agreement, until the Termination
Date or an Additional Termination Date, the Issuer has agreed not to
solicit, authorize, initiate or encourage submission of, any proposal,
offer, tender offer or exchange offer from any
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 2 Page 6
person or entity relating to any liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or purchase of
all or a material portion of the assets of, or any material equity
interest in, the Issuer or its subsidiary, New Century Mortgage
Corporation, or other similar transaction or business combination
involving the Issuer or such subsidiary, or, unless the Issuer shall
have determined, based on the advice of counsel to the Issuer, that the
Board has a fiduciary duty to do so, (a) participate in any
negotiations in connection with or in furtherance of any of the
foregoing or (b) permit any person other than U.S. Bancorp and its
representatives to have any access to the facilities of, or (c) furnish
to any person other than U.S. Bancorp and its representatives any
information with respect to, the Issuer or such subsidiary in
connection with or in furtherance of any of the foregoing.
U.S. Bancorp has acquired the Convertible Preferred Stock and the
Common Stock for investment purposes. In addition, U.S. Bancorp's
investment in the Issuer's securities has been made in connection with
certain strategic agreements between U.S. Bank National Association
("U.S. Bank"), the principal banking subsidiary of U.S. Bancorp, and
New Century Mortgage Corporation ("New Century Mortgage"), the
principal operating subsidiary of the Issuer. Under these agreements,
New Century Mortgage and U.S. Bank have agreed to cross sell and
solicit real estate loans and other financial services through each
other's branch system. In addition, U.S. Bank may bid on certain whole
loan sales transactions of New Century Mortgage, with the price and
volume subject to agreement by the parties. The investment, together
with these agreements, allows U.S. Bancorp to expand its business
activities in the area of sub-prime mortgages and to draw upon the
Issuer's capacities in providing sales, underwriting and processing
services for such loans.
Although U.S. Bancorp has no present intent to do so, U.S. Bancorp may,
subject to certain standstill agreements described in Item 6 of this
Schedule 13D, make additional purchases of the Issuer's securities
either in the open market or in privately negotiated transactions,
including transactions with the Issuer, depending on an evaluation of
the Issuer's business prospects and financial condition, the market for
the securities, other available investment opportunities, stock market
conditions and other future developments. Depending on these factors,
U.S. Bancorp may decide to sell all or part of its holdings of the
Convertible Preferred Stock or Common Stock in one or more public or
private transactions.
Except as set forth in this Item 4 or Item 6 which is incorporated herein
by reference, U.S. Bancorp has no plans or proposals which relate to or
would result in any of the matters set forth in clauses (a) through (j) of
Item 4 of Schedule 13D.
The preceding summary of certain provisions of the Purchase Agreement, the
Designations Certificate, the Registration Rights Agreement and the
Shareholder Agreements, copies of which are filed as exhibits hereto, is
not intended to be complete and is qualified in its entirety by reference
to the full text of such agreements.
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 2 Page 7
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of May 11, 1999, based on U.S. Bancorp's prior ownership of
2,724,800 shares of Convertible Preferred Stock, its prior
ownership of 500,000 shares of the Issuer's Common Stock and its
acquisition on May 4, 1999, of 65,000 shares of the Issuer's
Common Stock, U.S. Bancorp is the beneficial owner of approximately
18.99% of the Issuer's outstanding Common Stock (as such outstanding
shares were reported by the Issuer as of April 2, 1999). U.S. Bancorp
may also be deemed to beneficially own shares of Common Stock held in
client accounts with respect to which U.S. Bancorp Piper Jaffray Inc.,
an indirect wholly owned subsidiary of U.S. Bancorp ("Piper"), or
employees of Piper have voting or investment discretion, or both
("Managed Accounts"). U.S. Bancorp and Piper disclaim beneficial
ownership of the shares of Common Stock held in Managed Accounts.
U.S. Bancorp and Piper may also be deemed to beneficially own from
time to time shares of Common Stock acquired in ordinary course
trading and market-making activities by Piper.
(b) Other than those shares held by Piper in ordinary course trading and
market-making activities, U.S. Bancorp has sole voting and dispositive
power as to the shares of Convertible Preferred Stock and the shares
of Common Stock that are described above in paragraph (a).
(c) Reference is made to the information disclosed under Item 4
of this Schedule 13D, and such information is incorporated herein by
reference in response to this Item. Except for the transactions to
which this amended Schedule 13D relates and those shares bought or
sold by Piper in ordinary course trading and market-making
activities, neither U.S. Bancorp nor, to the best knowledge of U.S.
Bancorp, any of U.S. Bancorp's executive officers or directors has
effected any transaction in the shares of the Issuer's Common Stock
during the past sixty (60) days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Reference is made to the information disclosed under Item 4 of this
Schedule 13D, and such information is incorporated herein by reference in
response to this Item. In addition to such information, the following
contracts, arrangements, understandings or relationships are reported
hereunder.
Section 8.1 of the Purchase Agreement provides that, until the Termination
Date, the Issuer will make available to U.S. Bancorp such information and
data of the Issuer, and
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 2 Page 8
will provide access to the executive officers and independent accountants
of the Issuer, as U.S. Bancorp may reasonably request for the purpose of
monitoring U.S. Bancorp's investment in the Issuer.
Section 8.6 of the Purchase Agreement provides that, until the Termination
Date, the Issuer will use reasonable efforts to cooperate with and assist
U.S. Bancorp in connection with sales of shares of the Issuers's capital
stock whether through private placements, market transactions pursuant to
Rule 144 or registered offerings pursuant to the Registration Rights
Agreement.
Section 8.7 of the Purchase Agreement provides that, until the Termination
Date or an Additional Termination Date, and subject to standstill
provisions described below and certain other restrictions, the Issuer will,
if requested to do so by the Purchaser, cooperate with and use its best
efforts to assist the Purchaser in identifying existing shareholders of the
Issuer who may be interested in selling shares of Common Stock, and, once
any such potential seller is identified, will cooperate with U.S. Bancorp,
in such manner as U.S. Bancorp may reasonably request, so as to enable such
purchases to be made in accordance with applicable laws rules and
regulations or other applicable requirements.
Section 8.9 of the Purchase Agreement provides that, until the Termination
Date or an Additional Termination Date, and subject to certain exceptions
and without the prior written consent of U.S. Bancorp, the Issuer shall not
(a) increase the number of shares available for issuance under certain
employee stock plans, (b) adopt certain other stock-related plans,
(c) grant additional restricted stock awards other than pursuant to certain
existing plans or (d) take any action to reprice or regrant any securities
issued pursuant to any employee stock plan of the Issuer.
Section 10 of the Purchase Agreement provides that, without the consent of
the Board, U.S. Bancorp will not take certain actions involving a change of
control of the Issuer.
Pursuant to the Shareholder Agreements, a form of which has been filed as
Exhibit 99.3 to this Schedule 13D, each of Robert K. Cole, Brad A. Morrice,
Edward F. Gotschall and Steve Holder (each a "Shareholder") has agreed with
U.S. Bancorp that: (a) such Shareholder will first offer to U.S. Bancorp
any shares of Common Stock to by sold by such Shareholder, subject to
certain terms and conditions; (b) subsequent to certain triggering events
(which triggering events relate to certain third-party actions involving
the Issuer), such Shareholder will vote such Shareholder's shares of Common
Stock in favor of an acquisition transaction involving U.S. Bancorp and
against certain other transactions, subject to certain conditions; and (c)
such Shareholder will not enter into any agreement or understanding with
any person that would be inconsistent with or violate such Shareholder's
agreement with U.S. Bancorp described in clause (b) of this paragraph.
Each such Shareholder has also agreed, subsequent to such triggering
events, to execute and deliver an irrevocable proxy appointing U.S. Bancorp
as such
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 2 Page 9
Shareholder's proxy to vote such Shareholder's shares in the manner
provided in clause (b) of this paragraph.
Pursuant to the Registration Rights Agreement filed as Exhibit 99.4 to this
Schedule 13D, U.S. Bancorp has certain demand and piggyback rights to
require that the Issuer effect a registration under the Securities Act of
1933, as amended, of the shares of Common Stock issuable upon conversion of
the Convertible Preferred Stock.
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 2 Page 10
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
99.1 Preferred Stock Purchase Agreement (previously filed as an
exhibit to the Issuer's initial 13D filing dated November 24,
1998)
99.2 Certificate of Designations for Series 1998A Convertible
Preferred Stock (previously filed as an exhibit to the Issuer's
13D initial filing dated November 24, 1998)
99.3 Shareholder Agreement (previously filed as an exhibit to the
Issuer's initial 13D filing dated November 24, 1998)
99.4 Registration Rights Agreement (previously filed as an exhibit to
the Issuer's initial 13D filing dated November 24, 1998)
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 2 Page 11
SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: May 11, 1999
U.S. BANCORP
By /s/ Susan E. Lester
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Susan E. Lester
Executive Vice President and Chief
Financial Officer
<PAGE>
ANNEX A
IDENTITY AND BACKGROUND
The following table sets forth the names, addresses and principal occupations of
the executive officers and directors of U.S. Bancorp. Except as set forth
below, the principal business address of each such director and executive
officer is the address of U.S. Bancorp, U.S. Bank Place, 601 Second Avenue
South, Minneapolis, Minnesota, 55402-4302. Each of such directors and executive
officers is a citizen of the United States.
<TABLE>
<CAPTION>
Name and Principal Business Address Occupation
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<S> <C>
John F. Grundhofer Director; Chairman of the
Board, President and Chief Executive
Officer
Gary T. Duim Vice Chairman
Philip G. Heasley Vice Chairman
Robert D. Sznewajs Vice Chairman
Richard A. Zona Vice Chairman
J. Robert Hoffmann Executive Vice President and Chief
Credit Officer
Susan E. Lester Executive Vice President and Chief
Financial Officer
Lee R. Mitau Executive Vice President, General
Counsel and Secretary
Daniel C. Rohr Executive Vice President, Commercial
Banking and Business Banking
Robert H. Sayre Executive Vice President, Human
Resources
Terrance R. Dolan Senior Vice President and Controller
David P. Grandstrand Senior Vice President and Treasurer
<PAGE>
Linda L. Ahlers Director; President, Department Store
Dayton Hudson Corporation Division, Dayton Hudson Corporation
700 Nicollet Mall
Minneapolis, Minnesota 55402
Harry L. Bettis Director; Rancher
Arthur D. Collins, Jr. Director; President and Chief Operating
Medtronic, Inc. Officer, Medtronic, Inc.
7000 Central Avenue, N.E.
Minneapolis, Minnesota 55432
Peter H. Coors Director; Vice Chairman and Chief
Coors Brewing Company Executive Officer, Coors Brewing
311 Tenth Street, NH300 Company
Golden, Colorado 80901
Robert L. Dryden Director; Executive Vice President,
Airplane Production (Retired), The
Boeing Company
Joshua Green III Director; Chairman and Chief Executive
Joshua Green Corporation Officer, Joshua Green Corporation
1425 4th Avenue, Suite 420
Seattle, Washington 98101
Delbert W. Johnson Director; Chairman and Chief Executive,
Pioneer Metal Finishing Officer, Pioneer Metal Finishing
1717 W. River Road North
Minneapolis, Minnesota 55411
Joel W. Johnson Director; Chairman, President and
One Hormel Place Chief Executive Officer, Hormel
Austin, Minnesota 55912 Foods Corporation
-2-
<PAGE>
Jerry W. Levin Director; Chairman and Chief Executive
Sunbeam Corporation Officer, Sunbeam Corporation
35 E. 62nd Street
New York, New York 10021
Edward J. Phillips Director; Chairman and Chief Executive
Phillips Beverage Company Officer, Phillips Beverage Company
25 Main Street S.E.
Minneapolis, Minnesota 55414
Paul A. Redmond Director; Chairman and Chief Executive
Officer (Retired), Avista Corp.
Richard G. Reiten Director; President and Chief Executive
Northwest Natural Gas Company Officer, Northwest Natural Gas Company
220 N.W. 2nd Avenue
Portland, Oregon 97209
S. Walter Richey Director; Former Chairman and Chief
Meritex, Inc. Executive Officer, Meritex, Inc.
1710 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55402
Warren R. Staley Director; President and Chief
15615 McGinty Road West Operating Officer, Cargill,
Wayzata, Minnesota 55391 Incorporated
</TABLE>
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