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Previous: BANKBOSTON CORP, 13F-HR, 1999-08-12 |
Next: FIRST NATIONAL OF NEBRASKA INC, 10-Q, 1999-08-12 |
<PAGE>
_____________________________________________________________________
_____________________________________________________________________
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): August 12, 1999
BANKBOSTON CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 1-6522 04-2471221
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 Federal Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 434-2200
_____________________________________________________________________
_____________________________________________________________________
<PAGE>
-2-
Item 5. Other Events.
- ----------------------
As previously reported in its Current Report on Form 8-K dated March 14,
1999, BankBoston Corporation (the Corporation) has entered into an agreement and
plan of merger with Fleet Financial Group, Inc. (Fleet).
The Corporation's Current Reports on Form 8-K dated April 2, 1999 and
May 14, 1999 (the Current Reports) included as exhibits thereto and incorporated
by reference therein, certain pro forma condensed combined financial information
for the Corporation and Fleet, and certain historical consolidated financial
information for Fleet. In order to update the information in those Current
Reports, attached hereto as exhibits and incorporated by reference herein are
(i) pro forma condensed combined financial information for the Corporation and
Fleet for the quarters and six months ended June 30, 1999 and 1998; and (ii)
Fleet historical consolidated financial information for the quarter and six
months ended June 30, 1999.
Item 7. Financial Statements and Exhibits.
- -------------------------------------------
(c) Exhibits.
99(a) Pro Forma Condensed Combined Balance Sheet for the Corporation and Fleet
at June 30, 1999; and Pro Forma Condensed Combined Statements of Income
for the Corporation and Fleet for the three and six months ended June
30, 1999 and 1998 (and Notes to Pro Forma Condensed Combined Financial
Statements).
99(b) Fleet Consolidated Balance Sheets at June 30, 1999 and December 31,
1998, Fleet Consolidated Statements of Income for the three and six
months ended June 30, 1999 and 1998, and Fleet Consolidated Statements
of Changes in Stockholders' Equity and Cash Flows for the six months
ended June 30, 1999 (and Notes to Consolidated Financial Statements),
incorporated herein by reference to Part 1, Item 1 of the Fleet
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (File
No. 1-6366).
<PAGE>
-3-
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.
BANKBOSTON CORPORATION
Dated: August 12, 1999 /s/ Robert T. Jefferson
------------------------------------------------
Robert T. Jefferson
Comptroller
<PAGE>
EXHIBIT 99A
-----------
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined balance sheet as of June
30, 1999 and the unaudited pro forma condensed combined statements of income for
the three and six months ended June 30, 1999 and 1998 give effect to the pending
merger (the "merger") of BankBoston Corporation ("BankBoston") and Fleet
Financial Group, Inc. ("Fleet"), accounted for as a pooling of interests. The
merger, anticipated to be consummated late in the third or early in the fourth
quarter of 1999, has been approved by the stockholders of both companies and is
subject to regulatory approval.
The unaudited pro forma condensed combined financial information is based on
the historical consolidated financial statements of BankBoston and Fleet under
the assumptions and adjustments set forth in the accompanying notes to the
unaudited pro forma condensed combined financial statements, and gives effect to
the merger as if the merger had been consummated at the beginning of the
earliest period presented. The unaudited pro forma condensed combined financial
statements do not give effect to the anticipated cost savings in connection with
the merger or the effects of any divestitures required by regulators.
The unaudited pro forma condensed combined financial statements should be read
in conjunction with the consolidated historical financial statements of
BankBoston and Fleet, including the respective notes to those statements. The
pro forma information is not necessarily indicative of the combined financial
position or the results of operations in the future or of the combined financial
position or the results of operations which would have been realized had the
merger been consummated during the periods or as of the dates for which the pro
forma information is presented.
Pro forma per share amounts for the combined BankBoston and Fleet entity are
based on the exchange ratio of 1.1844 shares of Fleet common stock, par value
$.01 per share, for each share of BankBoston common stock, par value $1.00 per
share.
<PAGE>
<TABLE>
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
as of June 30, 1999
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions) BankBoston Fleet Adjustments Combined
---------- ----- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Cash, due from banks and interest-bearing
deposits $ 4,482 $ 4,994 $ - $ 9,476
Federal funds sold and securities purchased
under agreements to resell 6,271 7 - 6,278
Securities 13,824 10,461 - 24,285
Trading assets 4,422 769 - 5,191
Loans and leases 41,789 75,287 - 117,076
Reserve for credit losses (792) (1,723) - (2,515)
Due from brokers/dealers 79 2,444 - 2,523
Mortgages held for resale - 1,339 - 1,339
Premises and equipment 1,295 1,234 - 2,529
Mortgage servicing rights - 2,630 - 2,630
Intangible assets 779 3,389 - 4,168
Other assets 5,415 6,117 - 11,532
------- -------- ------ --------
Total assets $77,564 $106,948 $ - $184,512
======= ======== ====== ========
LIABILITIES and STOCKHOLDERS' EQUITY:
Deposits:
Domestic:
Noninterest-bearing $ 6,387 $ 17,069 $ - $ 23,456
Interest-bearing 28,147 46,006 - 74,153
Overseas:
Noninterest-bearing 1,322 - - 1,322
Interest-bearing 13,180 3,269 - 16,449
------- -------- ------ --------
Total deposits 49,036 66,344 - 115,380
------- -------- ------ --------
Federal funds purchased and securities sold
under agreements to repurchase 7,257 3,507 - 10,764
Other short-term borrowings 5,454 3,379 - 8,833
Due to brokers/dealers 200 3,775 - 3,975
Long-term debt 5,594 16,436 - 22,030
Accrued expenses and other liabilities 4,949 3,767 650 (4b) 9,366
------- -------- ------ --------
Total liabilities 72,490 97,208 650 170,348
------- -------- ------ --------
Stockholders' equity:
Preferred stock - 691 - 691
Common stock 307 6 (304)(4a) 9
Common surplus 1,101 3,346 (145)(4a) 4,302
Retained earnings 4,143 5,887 (650)(4b) 9,380
Accumulated other comprehensive loss (102) (116) - (218)
Treasury stock, at cost (375) (74) 449 (4a) -
------- -------- ------ --------
Total stockholders' equity 5,074 9,740 (650) 14,164
------- -------- ------ --------
Total liabilities and stockholders' equity $77,564 $106,948 $ - $184,512
======= ======== ====== ========
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
</TABLE>
<PAGE>
<TABLE>
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Three Months Ended June 30, 1999
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions, except per share amounts) BankBoston Fleet Adjustments Combined
---------- ----- ----------- ---------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 1,027 $ 1,557 $ - $ 2,584
Interest on securities and trading assets 264 177 - 441
Other 157 49 - 206
--------- -------- ------- --------
Total interest income 1,448 1,783 - 3,231
--------- -------- ------- --------
Interest expense:
Deposits 459 404 - 863
Short-term borrowings 221 72 - 293
Long-term debt 90 236 - 326
Other - 48 - 48
--------- -------- ------- --------
Total interest expense 770 760 - 1,530
--------- -------- ------- --------
Net interest income 678 1,023 - 1,701
--------- -------- ------- --------
Provision for credit losses 95 146 - 241
--------- -------- ------- --------
Net interest income after provision for
credit losses 583 877 - 1,460
--------- -------- ------- --------
Noninterest income:
Investment services revenue 156 264 - 420
Banking fees and commissions 176 194 - 370
Credit card revenue 23 164 - 187
Venture capital revenue 26 45 - 71
Gain on sale of business 50 - - 50
Other 281 369 - 650
--------- -------- ------- --------
Total noninterest income 712 1,036 - 1,748
--------- -------- ------- --------
Noninterest expense:
Employee compensation and benefits 547 579 - 1,126
Occupancy and equipment 113 156 - 269
Intangible asset amortization 14 71 - 85
Other 225 372 - 597
--------- -------- ------- --------
Total noninterest expense 899 1,178 - 2,077
--------- -------- ------- --------
Income before income taxes 396 735 - 1,131
Applicable income taxes 146 285 - 431
--------- -------- ------- --------
Net income $ 250 $ 450 $ - $ 700
========= ======== ======= ========
Net income applicable to common shares $ 250 $ 435 $ - $ 685
========= ======== ======= ========
Weighted average common shares outstanding
(in thousands):
Basic 296,832 569,532 - 921,100 (4c)
Diluted 301,662 589,634 - 946,922 (4c)
Per Common Share:
Basic $ .84 $ .76 $ - $ .74 (4c)
Diluted .83 .74 - .72 (4c)
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
</TABLE>
<PAGE>
<TABLE>
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1999
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions, except per share amounts) BankBoston Fleet Adjustments Combined
---------- ----- ----------- --------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 2,061 $ 3,116 $ - $ 5,177
Interest on securities and
trading assets 493 350 - 843
Other 265 95 - 360
-------- -------- -------- --------
Total interest income 2,819 3,561 - 6,380
-------- -------- -------- --------
Interest expense:
Deposits 932 827 - 1,759
Short-term borrowings 401 152 - 553
Long-term debt 173 437 - 610
Other - 88 - 88
-------- -------- -------- --------
Total interest expense 1,506 1,504 - 3,010
-------- -------- -------- --------
Net interest income 1,313 2,057 - 3,370
-------- -------- -------- --------
Provision for credit losses 165 295 - 460
-------- -------- -------- --------
Net interest income after provision
for credit losses 1,148 1,762 - 2,910
-------- -------- -------- --------
Noninterest income:
Investment services revenue 290 511 - 801
Banking fees and commissions 329 387 - 716
Credit card revenue 44 305 - 349
Venture capital revenue 59 86 - 145
Gain on sale of business 50 - - 50
Other 535 706 - 1,241
-------- -------- -------- --------
Total noninterest income 1,307 1,995 - 3,302
-------- -------- -------- --------
Noninterest expense:
Employee compensation and benefits 1,021 1,121 - 2,142
Occupancy and equipment 221 316 - 537
Intangible asset amortization 29 142 - 171
Other 434 724 - 1,158
-------- -------- -------- --------
Total noninterest expense 1,705 2,303 - 4,008
-------- -------- -------- --------
Income before income taxes 750 1,454 - 2,204
Applicable income taxes 277 566 - 843
-------- -------- -------- --------
Net income $ 473 $ 888 $ - $ 1,361
======== ======== ======== ========
Net income applicable to common shares $ 473 $ 857 $ - $ 1,330
======== ======== ======== ========
Weighted average common shares outstanding
(in thousands):
Basic 296,386 569,042 - 920,082 (4c)
Diluted 300,095 589,291 - 944,724 (4c)
Per Common Share:
Basic $ 1.60 $ 1.51 $ - $ 1.45 (4c)
Diluted 1.58 1.45 - 1.41 (4c)
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
</TABLE>
<PAGE>
<TABLE>
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Three Months Ended June 30, 1998
<CAPTION>
(Dollars in millions, except Pro Forma Pro Forma
per share amounts) BankBoston Fleet Adjustments Combined
---------- ----- ----------- --------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 1,032 $ 1,481 $ - $ 2,513
Interest on securities and trading assets 238 179 - 417
Other 120 56 - 176
--------- --------- -------- ---------
Total interest income 1,390 1,716 - 3,106
--------- --------- -------- ---------
Interest expense:
Deposits 464 474 - 938
Short-term borrowings 210 107 - 317
Long-term debt 76 104 - 180
Other - 59 - 59
--------- --------- -------- ---------
Total interest expense 750 744 - 1,494
--------- --------- -------- ---------
Net interest income 640 972 - 1,612
--------- --------- -------- ---------
Provision for credit losses 60 118 - 178
--------- --------- -------- ---------
Net interest income after provision
for credit losses 580 854 - 1,434
--------- --------- -------- ---------
Noninterest income:
Banking fees and commissions 143 182 - 325
Investment services revenue 85 220 - 305
Venture capital revenue 84 39 - 123
Credit card revenue 12 98 - 110
Securities gains 11 - - 11
Other 122 270 - 392
--------- --------- -------- ---------
Total noninterest income 457 809 - 1,266
--------- --------- -------- ---------
Noninterest expense:
Employee compensation and benefits 368 482 - 850
Occupancy and equipment 96 149 - 245
Intangible asset amortization 11 59 - 70
Other 172 327 - 499
--------- --------- -------- ---------
Total noninterest expense 647 1,017 - 1,664
--------- --------- -------- ---------
Income before income taxes 390 646 - 1,036
Applicable income taxes 148 253 - 401
--------- --------- -------- ---------
Net income $ 242 $ 393 $ - $ 635
========= ========= ======== =========
Net income applicable to common shares $ 238 $ 380 $ - $ 618
========= ========= ======== =========
Weighted average common shares outstanding
(in thousands):
Basic 293,769 568,194 - 916,134 (4c)
Diluted 298,275 588,760 - 942,037 (4c)
Per Common Share:
Basic $ .81 $ .67 $ - $ .67 (4c)
Diluted .80 .65 - .66 (4c)
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
</TABLE>
<PAGE>
<TABLE>
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1998
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions, except per share amounts) BankBoston Fleet Adjustments Combined
---------- ----- ----------- ---------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 2,043 $ 2,858 $ - $ 4,901
Interest on securities and trading assets 446 342 - 788
Other 239 110 - 349
-------- -------- ------ --------
Total interest income 2,728 3,310 - 6,038
-------- -------- ------ --------
Interest expense:
Deposits 926 911 - 1,837
Short-term borrowings 417 191 - 608
Long-term debt 142 193 - 335
Other - 114 - 114
-------- -------- ------ --------
Total interest expense 1,485 1,409 - 2,894
-------- -------- ------ --------
Net interest income 1,243 1,901 - 3,144
-------- -------- ------ --------
Provision for credit losses 200 210 - 410
-------- -------- ------ --------
Net interest income after provision for
credit losses 1,043 1,691 - 2,734
-------- -------- ------ --------
Noninterest income:
Banking fees and commissions 272 358 - 630
Investment services revenue 167 421 - 588
Venture capital revenue 136 69 - 205
Credit card revenue 22 154 - 176
Securities gains 36 51 - 87
Gain on sale of business 165 - - 165
Other 248 451 - 699
-------- -------- ------ --------
Total noninterest income 1,046 1,504 - 2,550
-------- -------- ------ --------
Noninterest expense:
Employee compensation and benefits 722 926 - 1,648
Occupancy and equipment 190 303 - 493
Intangible asset amortization 21 110 - 131
Other 375 675 - 1,050
-------- -------- ------ --------
Total noninterest income 1,308 2,014 - 3,322
-------- -------- ------ --------
Income before income taxes 781 1,181 - 1,962
Applicable income taxes 301 465 - 766
-------- -------- ------ --------
Net income $ 480 $ 716 $ - $ 1,196
======== ======== ====== ========
Net income applicable to common shares $ 471 $ 691 $ - $ 1,162
======== ======== ====== ========
Weighted average common shares outstanding
(in thousands):
Basic 293,159 567,987 - 915,205 (4c)
Diluted 297,579 587,999 - 940,452 (4c)
Per Common Share:
Basic $ 1.61 $ 1.22 $ - $ 1.27 (4c)
Diluted 1.58 1.18 - 1.24 (4c)
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
</TABLE>
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
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 company. It is
anticipated that the merger will be consummated late in the third or early in
the fourth quarter of 1999.
Under generally accepted accounting principles, the transaction will be
accounted for as a pooling of interests and, as such, the assets and liabilities
of Fleet will be combined with those of BankBoston at book value. In addition,
the statements of income of Fleet will be combined with the statements of income
of BankBoston as of the earliest period presented. The unaudited pro forma
condensed combined statements of income give effect to the merger as if the
merger occurred at the beginning of the earliest period presented. The
unaudited pro forma condensed combined balance sheet assumes the merger was
consummated on June 30, 1999. Certain reclassifications have been included in
the unaudited pro forma condensed combined balance sheet and unaudited pro forma
condensed combined statements of income to conform presentations.
BankBoston and Fleet anticipate that, in order to obtain regulatory approval
for the merger, the companies will be required to divest approximately $13
billion of deposits, primarily in the Massachusetts and New Hampshire,
Connecticut and Rhode Island markets. No adjustment has been included, however,
in the unaudited pro forma condensed combined financial statements for the
anticipated divestitures. The reduction in net income related to such
divestitures is estimated to be $160 million post-tax.
Note 2. Accounting Policies and Financial Statement Classifications
The accounting policies of both companies are in the process of being reviewed
for consistency. As a result of this review, certain conforming accounting
adjustments may be necessary. The nature and extent of such adjustments have
not been determined but are not expected to be significant. Transactions
between BankBoston and Fleet that are not material in relation to the pro forma
financial information have not been eliminated from the pro forma combined
amounts.
Note 3. Merger- and Restructuring-Related Charges
A liability of $1 billion (pre-tax) has been recorded in the unaudited pro
forma condensed combined balance sheet to reflect BankBoston's and Fleet's best
estimate of merger- and restructuring-related charges in connection with the
merger. This liability resulted in a $650 million post-tax charge to retained
earnings in the unaudited pro forma condensed combined balance sheet. The
following table provides detail of the estimated charges by type, post-tax:
Estimated Costs
(Post-Tax)
Type of Cost (Dollars in millions)
-------------------------------------------------------------------------------
Personnel $300
Technology and operations 150
Facilities 75
Branches 25
Transaction costs and other 100
- --------------------------------------------------------------------------------
Total $650
- --------------------------------------------------------------------------------
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(continued)
Personnel-related costs consist primarily of charges related to employee
severance, termination of certain employee benefits plans and employee
assistance costs for separated employees. Technology and operations costs
include accelerated depreciation in excess of normal scheduled depreciation and
certain liabilities that will be incurred as a result of the elimination of
duplicate systems. Facilities charges consist of lease termination costs and
other facilities-related exit costs, as well as accelerated depreciation in
excess of normal depreciation, resulting from consolidation of duplicate
headquarters and operation facilities. Branch-related costs are primarily
related to the cost of exiting branches anticipated to be closed, including
lease terminations and equipment write-offs. The effect of the proposed charge
has been reflected in the unaudited pro forma condensed combined balance sheet
as of June 30, 1999. However, since the proposed charge is nonrecurring, it has
not been reflected in the unaudited pro forma condensed combined statements of
income. In addition, it is estimated that $60 million (post-tax) in other
expenses related to the merger will be recognized in future periods as they
are incurred. These charges have not been reflected in the unaudited pro
forma condensed combined balance sheet as of June 30, 1999.
Note 4. Pro Forma Adjustments
(a) Pro forma adjustments to common stock, treasury stock and common surplus
at June 30, 1999, reflect the merger accounted for as a pooling of interests,
through: (1) the exchange of 351.8 million shares of Fleet common stock (using
the exchange ratio of 1.1844) for the 297.0 million outstanding shares of
BankBoston common stock at June 30, 1999, (2) the reclassification adjustment to
common stock to reflect the $.01 par value of Fleet common stock, and (3) an
adjustment for $449 million to reflect the retirement of BankBoston treasury
stock and the reissuance of Fleet treasury stock.
(b) Pro forma adjustments to accrued expenses and other liabilities and
retained earnings reflect the $1 billion merger- and restructuring-related
charge and a $350 million reduction in the deferred tax liability for the
anticipated tax benefit of such charge. For additional information on the
merger- and restructuring-related charges see Note 3.
(c) The pro forma combined weighted average common shares outstanding for the
three and six months ended June 30, 1999 and 1998 reflect the converted
BankBoston weighted average common shares outstanding plus Fleet weighted
average common shares outstanding. Each share of BankBoston common stock was
converted into 1.1844 shares of Fleet common stock.
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