<PAGE>
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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): April 2, 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
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<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 financial
information included herein and listed under Item 7 below as Exhibit 99(a)
presents unaudited pro forma condensed combined financial information for the
Corporation and Fleet.
Item 7. Financial Statements and Exhibits.
- -------------------------------------------
(c) Exhibits.
23 Consent of KPMG Peat Marwick LLP with respect to their report on the
consolidated financial statements of Fleet Financial Group, Inc. and
subsidiaries.
99(a) Unaudited Pro Forma Condensed Combined Balance Sheet for the Corporation
and Fleet as of December 31, 1998; and unaudited Pro Forma Condensed
Combined Statements of Income for the Corporation and Fleet for the years
ended December 31, 1998, 1997 and 1996 (and Notes to unaudited Pro Forma
Condensed Combined Financial Statements).
99(b) Fleet Consolidated Balance Sheets at December 31, 1998 and 1997; Fleet
Consolidated Statements of Income, Changes in Stockholders' Equity and
Cash Flows for the years ended December 31, 1998, 1997 and 1996 (and
Notes to Consolidated Financial Statements), incorporated herein by
reference to Item 8 of the Fleet Annual Report on Form 10-K for the year
ended December 31, 1998 (File No. 1-6366).
99(c) Report of KPMG Peat Marwick LLP dated January 20, 1999 with respect to
the consolidated financial statements of Fleet Financial Group, Inc. and
subsidiaries at December 31, 1998 and 1997 and for each of the years in
the three-year period ended December 31, 1998, incorporated herein by
reference to Item 8 of the Fleet Annual Report on Form 10-K for the year
ended December 31, 1998 (File No. 1-6366).
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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: April 2, 1999 /s/ Robert T. Jefferson
---------------------------------
Robert T. Jefferson
Comptroller
<PAGE>
Exhibit 23
----------
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Fleet Financial Group, Inc.
We consent to the incorporation by reference in the registration statements
(Nos. 33-1899, 33-11186, 33-64462, 333-00297, 333-07329, 333-09041,
333-12851, 333-18999, 333-24199, 333-41589 and 333-71867) on
Form S-8, and the registration statements (Nos. 333-13697, 333-47125,
333-47125-01, 333-47125-02 and 333-67383) on Form S-3 of BankBoston Corporation
of our report dated January 20, 1999, with respect to the consolidated balance
sheets of Fleet Financial Group, Inc. and subsidiaries as of December 31, 1998
and 1997, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1998, which report is incorporated by reference in the
Form 8-K of BankBoston Corporation dated April 2, 1999.
/s/ KPMG PEAT MARWICK LLP
Boston, Massachusetts
April 2, 1999
<PAGE>
EXHIBIT 99A
===========
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined balance sheet as of
December 31, 1998, and the unaudited pro forma condensed combined statements of
income for each of the years in the three year period ended December 31, 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 in the fourth
quarter of 1999, is subject to shareholder and 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 regulatory required divestitures.
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 thereto. 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 Common 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>
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
as of December 31, 1998
<TABLE>
<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 $ 5,306 $ 5,635 $ - $ 10,941
Federal funds sold and securities purchased
under agreements to resell 2,463 103 - 2,566
Securities 12,534 10,902 - 23,436
Trading assets 3,802 562 - 4,364
Loans and leases 42,806 69,396 - 112,202
Reserve for credit losses (754) (1,552) - (2,306)
Due from brokers/dealers 265 3,600 - 3,865
Mortgages held for resale - 3,960 - 3,960
Premises and equipment 1,319 1,229 - 2,548
Mortgage servicing rights - 1,405 - 1,405
Intangible assets 787 3,117 - 3,904
Other assets 4,985 6,025 - 11,010
-------- -------- ------ --------
Total assets $ 73,513 $104,382 $ - $177,895
======== ======== ====== ========
LIABILITIES and STOCKHOLDERS' EQUITY:
Deposits:
Domestic:
Noninterest-bearing $ 6,554 $ 18,646 $ - $ 25,200
Interest-bearing 28,371 47,214 - 75,585
Overseas:
Noninterest-bearing 1,144 - - 1,144
Interest-bearing 12,431 3,818 - 16,249
-------- -------- ------ --------
Total deposits 48,500 69,678 - 118,178
-------- -------- ------ --------
Federal funds purchased and securities sold
under agreements to repurchase 5,241 4,456 - 9,697
Funds borrowed 6,775 5,033 - 11,808
Due to brokers/dealers 241 3,975 - 4,216
Notes payable 5,588 8,820 - 14,408
Accrued expenses and other liabilities 2,351 3,011 650 4(b) 6,012
-------- -------- ------ --------
Total liabilities 68,696 94,973 650 164,319
-------- -------- ------ --------
Stockholders' equity:
Preferred stock - 691 - 691
Common stock 307 6 (304)4(a) 9
Common surplus 1,118 3,284 (203)4(a) 4,199
Retained earnings 3,895 5,337 (650)4(b) 8,582
Accumulated other comprehensive income (33) 128 - 95
Treasury stock, at cost (470) (37) 507 4(a) -
-------- -------- ------ --------
Total stockholders' equity 4,817 9,409 (650) 13,576
-------- -------- ------ --------
Total liabilities and stockholders' equity $ 73,513 $104,382 $ - $177,895
======== ======== ====== ========
</TABLE>
See Notes To Unaudited Pro Forma Condensed Combined Financial Statements
<PAGE>
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions, except per share data) BankBoston Fleet Adjustments Combined
---------- ----- ----------- --------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 4,259 $ 5,878 $ - $ 10,137
Interest on securities and trading assets 892 673 - 1,565
Other 426 214 - 640
-------- -------- ------ --------
Total interest income 5,577 6,765 - 12,342
-------- -------- ------ --------
Interest expense:
Deposits 1,871 1,835 - 3,706
Funds borrowed 859 400 - 1,259
Notes payable 320 448 - 768
Other - 213 - 213
-------- -------- ------ --------
Total interest expense 3,050 2,896 - 5,946
-------- -------- ------ --------
Net interest income 2,527 3,869 - 6,396
-------- -------- ------ --------
Provision for credit losses 380 470 - 850
-------- -------- ------ --------
Net interest income after provision for
credit losses 2,147 3,399 - 5,546
-------- -------- ------ --------
Noninterest income:
Banking fees and commissions 580 748 - 1,328
Investment services revenue 388 851 - 1,239
Credit card revenue 64 391 - 455
Venture capital revenue 233 149 - 382
Securities gains 41 74 - 115
Gains on sales of businesses 254 - - 254
Other 472 1,024 - 1,496
-------- -------- ------ --------
Total noninterest income 2,032 3,237 - 5,269
-------- -------- ------ --------
Noninterest expense:
Employee compensation and benefits 1,630 1,927 - 3,557
Occupancy and equipment 398 605 - 1,003
Intangible asset amortization 47 227 - 274
Merger-related charges - 73 - 73
Other 835 1,297 - 2,132
-------- -------- ------ --------
Total noninterest expense 2,910 4,129 - 7,039
-------- -------- ------ --------
Income before income taxes 1,269 2,507 - 3,776
Applicable income taxes 477 975 - 1,452
-------- -------- ------ --------
Net income $ 792 $ 1,532 $ - $ 2,324
======== ======== ====== ========
Net income applicable to common shares $ 783 $ 1,481 $ - $ 2,264
======== ======== ====== ========
Weighted average common shares outstanding:
(in thousands)
Basic 293,873 568,059 - 916,122 4(d)
Diluted 296,663 587,769 - 939,137 4(d)
Per Common Share:
Basic $ 2.66 $ 2.61 $ - $ 2.47 4(d)
Diluted 2.64 2.52 - 2.41 4(d)
</TABLE>
See Notes To Unaudited Pro Forma Condensed Combined Financial Statements
<PAGE>
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions, except per share data) BankBoston Fleet Adjustments Combined
---------- ----- ----------- --------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 3,954 $ 5,357 $ - $ 9,311
Interest on securities and trading assets 809 570 - 1,379
Other 401 164 - 565
-------- -------- ------ --------
Total interest income 5,164 6,091 - 11,255
-------- -------- ------ --------
Interest expense:
Deposits 1,685 1,654 - 3,339
Funds borrowed 805 247 - 1,052
Notes payable 245 338 - 583
Other - 152 - 152
-------- -------- ------ --------
Total interest expense 2,735 2,391 - 5,126
-------- -------- ------ --------
Net interest income 2,429 3,700 - 6,129
-------- -------- ------ --------
Provision for credit losses 200 322 - 522
-------- -------- ------ --------
Net interest income after provision for
credit losses 2,229 3,378 - 5,607
-------- -------- ------ --------
Noninterest income:
Banking fees and commissions 487 708 - 1,195
Investment services revenue 294 696 - 990
Venture capital revenue 221 71 - 292
Securities gains 80 33 - 113
Credit card revenue 36 62 - 98
Gains on sales of businesses 68 175 - 243
Other 377 886 - 1,263
-------- -------- ------ --------
Total noninterest income 1,563 2,631 - 4,194
-------- -------- ------ --------
Noninterest expense:
Employee compensation and benefits 1,279 1,752 - 3,031
Occupancy and equipment 350 611 - 961
Intangible asset amortization 37 169 - 206
Merger-related charges - 25 - 25
Other 658 1,158 - 1,816
-------- -------- ------ --------
Total noninterest expense 2,324 3,715 - 6,039
-------- -------- ------ --------
Income before income taxes 1,468 2,294 - 3,762
Applicable income taxes 589 927 - 1,516
-------- -------- ------ --------
Net income $ 879 $ 1,367 $ - $ 2,246
======== ======== ====== ========
Net income applicable to common shares $ 848 $ 1,305 $ - $ 2,153
======== ======== ====== ========
Weighted average common shares outstanding:
(in thousands)
Basic 295,918 551,956 - 902,441 4(d)
Diluted 300,080 568,605 - 924,020 4(d)
Per Common Share:
Basic $ 2.86 $ 2.37 $ - $ 2.39 4(d)
Diluted 2.82 2.30 - 2.33 4(d)
</TABLE>
See Notes To Unaudited Pro Forma Condensed Combined Financial Statements
<PAGE>
BANKBOSTON CORPORATION AND FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions, except per share data) BankBoston Fleet Adjustments Combined
---------- ----- ----------- --------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 3,863 $ 5,169 $ - $ 9,032
Interest on securities and trading assets 724 723 - 1,447
Other 306 136 - 442
-------- -------- ------ --------
Total interest income 4,893 6,028 - 10,921
-------- -------- ------ --------
Interest expense:
Deposits 1,680 1,754 - 3,434
Funds borrowed 679 311 - 990
Notes payable 194 390 - 584
Other - 111 - 111
-------- -------- ------ --------
Total interest expense 2,553 2,566 - 5,119
-------- -------- ------ --------
Net interest income 2,340 3,462 - 5,802
-------- -------- ------ --------
Provision for credit losses 231 213 - 444
-------- -------- ------ --------
Net interest income after provision for
credit losses 2,109 3,249 - 5,358
-------- -------- ------ --------
Noninterest income:
Banking fees and commissions 455 601 - 1,056
Investment services revenue 251 634 - 885
Venture capital revenue 209 106 - 315
Credit card revenue 36 59 - 95
Securities gains 23 43 - 66
Gains on sales of businesses 153 - - 153
Other 217 890 (18) 4(c) 1,089
-------- -------- ------ --------
Total noninterest income 1,344 2,333 (18) 3,659
-------- -------- ------ --------
Noninterest expense:
Employee compensation and benefits 1,178 1,735 - 2,913
Occupancy and equipment 341 593 - 934
Intangible asset amortization 34 140 - 174
Merger-related charges 180 - - 180
Other 587 1,044 - 1,631
-------- -------- ------ --------
Total noninterest expense 2,320 3,512 - 5,832
-------- -------- ------ --------
Income before income taxes 1,133 2,070 (18) 3,185
Applicable income taxes 483 849 (7) 1,325
-------- -------- ------ --------
Net income $ 650 $ 1,221 $ (11) $ 1,860
======== ======== ====== ========
Net income applicable to common shares $ 613 $ 1,149 $ (11) $ 1,751
======== ======== ====== ========
Weighted average common shares outstanding:
(in thousands)
Basic 307,058 568,896 - 932,575 4(d)
Diluted 312,224 580,026 - 949,824 4(d)
Per Common Share:
Basic $ 2.00 $ 2.02 $ - $ 1.88 4(d)
Diluted 1.96 1.98 - 1.84 4(d)
</TABLE>
See Notes To Unaudited Pro Forma Condensed Combined Financial Statements
<PAGE>
NOTES TO 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 entity. It is anticipated that the
Merger will be consummated 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 December 31, 1998. 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 presentation.
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 and approximately $5 billion of loans, primarily in the
Massachusetts, Connecticut and Rhode Island markets. No adjustment has been
included in the unaudited pro forma condensed combined financial statements for
the anticipated divestitures, however, the reduction in net income related to
such divestitures is estimated to be $160 million.
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 management's best estimate of merger
and restructuring related charges in connection with the Merger. This liability
resulted in a $650 million post-tax charge to retained earnings in the unaudited
pro forma condensed combined balance sheet. The following table provides detail
of the estimated charges by type, post-tax:
<TABLE>
<CAPTION>
Estimated Costs
(Post-Tax)
Type of Cost ($ in millions)
------------ ---------------
<S> <C>
Personnel $300
Technology and operations 150
Facilities 75
Branches 25
Transaction costs and other 100
----
Total $650
====
</TABLE>
<PAGE>
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
relate to the elimination of duplicate systems. Facilities charges consist of
lease termination costs and other facilities related exit costs resulting from
consolidation of duplicate headquarters and operational 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 December 31, 1998; 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 December 31,
1998.
Note 4. Pro Forma Adjustments
(a) Pro forma adjustments to common stock, treasury stock and common surplus at
December 31, 1998, reflect the Merger accounted for as a pooling of interests,
through: (i) the exchange of 349.4 million shares of Fleet common stock (using
the Common Exchange Ratio of 1.1844) for the 295.0 million outstanding shares of
BankBoston common stock at December 31, 1998, (ii) the reclassification
adjustment from common surplus to common stock to reflect the $.01 par value of
Fleet common stock and (iii) an adjustment for $507 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) Pro forma adjustment reflects the elimination of gains on the sale of
BankBoston common stock realized by Fleet in 1996.
(d) The pro forma combined weighted average common shares outstanding for each
of the years in the three year period ended December 31, 1998 reflect the
converted BankBoston weighted average common shares plus Fleet weighted average
common shares outstanding. Each share of BankBoston common stock was converted
into 1.1844 shares of Fleet common stock.
Note 5. Other Securities and Exchange Commission Filings
In connection with its proposed merger with BankBoston, Fleet will file a
Registration Statement on Form S-4 with the Securities and Exchange Commission
(the "Commission") registering Fleet common stock to be issued in connection
therewith. This registration statement, which will be subject to review and
comment by the Staff of the Commission, will include pro forma financial
information for BankBoston and Fleet. Such pro forma financial information may
differ from the pro forma financial information included herein.
