SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- ------------------------------------------------------------------------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE):
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
----------- -----------
Commission File Number 1-10000
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
CORESTATES EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
FIRST UNION CORPORATION
ONE FIRST UNION CENTER
CHARLOTTE, NORTH CAROLINA 28288-0013
<PAGE>
(a) The following financial statements and reports, which have
been prepared pursuant to the requirements of the Employee Retirement Income
Security Act of 1974, are filed as part of this Annual Report on Form 11-K:
Report of Independent Auditors.
Financial Statements and Supplemental Schedules:
Statement of Net Assets Available
for Benefits, January 14, 1999.
Statement of Net Assets Available
for Benefits, December 31, 1998.
Statement of Net Assets Available
for Benefits, December 31, 1997.
Statement of Changes in Net Assets
Available for Benefits, for the period
January 1, 1999 through January 14,
1999.
Statement of Changes in Net Assets
Available for Benefits, for the year ended
December 31, 1998.
Statement of Changes in Net Assets
Available for Benefits, for the year ended
December 31, 1997.
Notes to Financial Statements.
Line 27a-Assets Held for
Investment Purposes, December 31, 1998
Line 27d-Reportable Transactions, for the year
ended December 31, 1998
(b) The following Exhibit is filed as part of this Annual
Report on Form 11-K:
Consent of Independent Auditors.
<PAGE>
Draft #3
W03990033-PH
Financial Statements
and Supplemental Schedules
CoreStates Employee Stock Ownership
and Savings Plan
FOR THE PERIOD FROM JANUARY 1, 1999
TO JANUARY 14, 1999 AND THE YEARS ENDED
DECEMBER 31, 1998 AND 1997
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Financial Statements and Supplemental Schedules
For the Period from January 1, 1999 to January 14, 1999
and the Years ended December 31, 1998 and 1997
CONTENTS
Report of Independent Auditors.................................................1
Audited Financial Statements
Statement of Net Assets Available for Benefits, January 14, 1999...............2
Statement of Net Assets Available for Benefits, December 31, 1998..............3
Statement of Net Assets Available for Benefits, December 31, 1997..............4
Statement of Changes in Net Assets Available for Benefits, For the Period from
January 1, 1999 through January 14, 1999...................................5
Statement of Changes in Net Assets Available for Benefits,
For the Year ended December 31, 1998.......................................6
Statement of Changes in Net Assets Available for Benefits,
For the Year ended December 31, 1997.......................................8
Notes to Financial Statements..................................................9
Line 27a-Schedule of Assets Held for Investment Purposes,
December 31, 1998.........................................................16
Line 27d-Schedule of Reportable Transactions, Year ended
December 31, 1998.........................................................17
<PAGE>
Report of Independent Auditors
The Board of Directors
First Union Corporation
We have audited the accompanying financial statements of the CoreStates Employee
Stock Ownership and Savings Plan as of January 14, 1999, December 31, 1998 and
December 31, 1997, and for the period from January 1, 1999 through January 14,
1999 and the years ended December 31, 1998 and 1997. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
January 14, 1999, December 31, 1998 and December 31, 1997 and the changes in its
net assets available for benefits for the period from January 1, 1999 through
January 14, 1999 and for the years ended December 31, 1998 and 1997, in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1998 and reportable
transactions for the year ended December 31, 1998, are presented for purposes of
additional analysis and are not a required part of the financial statements but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules are the responsibility of
management. The Fund Information in the statements of net assets available for
benefits and the statements of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the net
assets available for benefits and changes in net assets available for benefits
of each fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in our audit of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
The information presented in the schedule of assets held for investment purposes
does not disclose the historical cost of investments. Disclosure of this
information is required by the Department of Labor's Rules and Regulations for
reporting and disclosure under the Employee Retirement Income Security Act of
1974.
/s/ Ernst & Young LLP
June 11, 1999
1
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
January 14, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIRST UNION FIRST UNION FIRST UNION
FIRST UNION EVERGREEN EVERGREEN EVERGREEN
TOTAL COMMON STOCK SELECT STRATEGIC SELECT FIXED SELECT EQUITY
FUND GROWTH FUND INCOME FUND INDEX FUND
-------------------------------------------------------------------------------------------
Assets
Investments, at fair value:
First Union Corporation
Common stock $ - $ - $ - $ - $ -
Mutual funds - - - - -
Participants' notes receivable - - - - -
-------------------------------------------------------------------------------------------
Total investments - - - - -
===========================================================================================
Net assets available for benefits $ - $ - $ - $ - $ -
===========================================================================================
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIRST UNION FIRST UNION FIRST UNION FIRST UNION FIRST UNION
EVERGREEN EVERGREEN EVERGREEN EVERGREEN EVERGREEN
MONEY MARKET FOUNDATION INTERNATIONAL STOCK SELECTOR SELECT INCOME
FUND FUND GROWTH FUND FUND PLUS FUND
-------------------------------------------------------------------------------------------
Assets
Investments, at fair value:
First Union Corporation
Common stock $ - $ - $ - $ - $ -
Mutual funds - - - - -
Participants' notes receivable - - - - -
-------------------------------------------------------------------------------------------
Total investments - - - - -
===========================================================================================
Net assets available for benefits $ - $ - $ - $ - $ -
===========================================================================================
<CAPTION>
<S> <C> <C> <C>
FIRST UNION
FIRST UNION ESOP SUSPENSE
FIRST UNION ESOP STOCK ACCOUNT
LOAN FUND FUND ALLOCATED UNALLOCATED
--------------------------------------------------------
Assets
Investments, at fair value:
First Union Corporation
Common stock $ - $ - $ -
Mutual funds - - -
Participants' notes receivable - - -
--------------------------------------------------------
Total investments - - -
========================================================
Net assets available for benefits $ - $ - $ -
========================================================
</TABLE>
SEE ACCOMPANYING NOTES.
2
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIRST UNION FIRST UNION FIRST UNION
FIRST UNION EVERGREEN EVERGREEN EVERGREEN
TOTAL COMMON STOCK SELECT STRATEGIC SELECT FIXED SELECT EQUITY
FUND GROWTH FUND INCOME FUND INDEX FUND
-------------------------------------------------------------------------------------------
ASSETS
Investments, at fair value:
First Union Corporation common
stock $ 682,348,438 $ 444,391,441 $ - $ - $ -
Mutual funds 451,696,597 - 121,314,740 23,989,012 55,965,474
Participants' notes receivable 22,923,122 - - - -
-------------------------------------------------------------------------------------------
Total investments 1,156,968,157 444,391,441 121,314,740 23,989,012 55,965,474
Cash 3,285 - - - -
-------------------------------------------------------------------------------------------
Total assets 1,156,971,442 444,391,441 121,314,740 23,989,012 55,965,474
CURRENT LIABILITIES:
Accrued interest payable 1,208,908 - - - -
Current portion of loans payable 1,634,838 - - - -
NONCURRENT LIABILITIES:
Loan payable 53,005,029 - - - -
-------------------------------------------------------------------------------------------
Total liabilities 55,848,775 - - - -
===========================================================================================
Net assets available for benefits $ 1,101,122,667 $ 444,391,441 $ 121,314,740 $ 23,989,012 $ 55,965,474
===========================================================================================
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIRST UNION FIRST UNION FIRST UNION FIRST UNION FIRST UNION
EVERGREEN EVERGREEN EVERGREEN EVERGREEN EVERGREEN
MONEY MARKET FOUNDATION INTERNATIONAL STOCK SELECTOR SELECT INCOME
FUND FUND GROWTH FUND FUND PLUS FUND
-------------------------------------------------------------------------------------------
ASSETS
Investments, at fair value:
First Union Corporation common
stock $ - $ - $ - $ - $ -
Mutual funds 75,677,593 77,259,074 11,338,748 70,895,939 13,838,245
Participants' notes receivable - - - - -
-------------------------------------------------------------------------------------------
Total investments 75,677,593 77,259,074 11,338,748 70,895,939 13,838,245
Cash - - - - -
-------------------------------------------------------------------------------------------
Total assets 75,677,593 77,259,074 11,338,748 70,895,939 13,838,245
CURRENT LIABILITIES:
Accrued interest payable - - - - -
Current portion of loans payable - - - - -
NONCURRENT LIABILITIES:
Loan payable - - - - -
-------------------------------------------------------------------------------------------
Total liabilities - - - - -
===========================================================================================
Net assets available for benefits $ 75,677,593 $ 77,259,074 $ 11,338,748 $ 70,895,939 $ 13,838,245
===========================================================================================
<CAPTION>
<S> <C> <C> <C>
FIRST UNION
FIRST UNION ESOP SUSPENSE
FIRST UNION ESOP STOCK ACCOUNT
LOAN FUND FUND ALLOCATED UNALLOCATED
--------------------------------------------------------
ASSETS
Investments, at fair value:
First Union Corporation common
stock $ - $ 34,753,220 $ 203,203,777
Mutual funds - - 1,417,772
Participants' notes receivable 22,923,122 - -
---------------------------------------------------------
Total investments 22,923,122 34,753,220 204,621,549
Cash - - 3,285
---------------------------------------------------------
Total assets 22,923,122 34,753,220 204,624,834
CURRENT LIABILITIES:
Accrued interest payable - - 1,208,908
Current portion of loans payable - - 1,634,838
NONCURRENT LIABILITIES:
Loan payable - - 53,005,029
---------------------------------------------------------
Total liabilities - - 55,848,775
=========================================================
Net assets available for benefits $ 22,923,122 $ 34,753,220 $ 148,776,059
=========================================================
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORESTATES CORESTATES
FINANCIAL CORESTATES SHORT-TERM CORESTATES
CORP COMMON GROWTH INTERMEDIATE EQUITY INDEX
TOTAL STOCK FUND EQUITY FUND BOND FUND FUND
----------------------------------------------------------------------------------------
ASSETS
Investments, at fair value (cost
$630,582,985):
CoreStates Financial Corp
common stock $ 624,485,399 $ 423,944,610 $ - $ - $ -
Mutual funds 366,181,163 690,193 90,453,822 19,817,390 35,353,538
Participants' notes receivable 25,390,070 - - - -
----------------------------------------------------------------------------------------
Total investments 1,016,056,632 424,634,803 90,453,822 19,817,390 35,353,538
Receivables
Due from broker 8,058,763 7,357,776 36,032 133,158 -
Accrued investment income 4,634,243 2,682,503 - 96,985 106,365
Interfund receivable 2,868,266 2,152,544 - - 38,239
Cash 6,615,844 - 1,167,079 84,195 1,551,047
----------------------------------------------------------------------------------------
Total assets 1,038,233,748 436,827,626 91,656,933 20,131,728 37,049,189
CURRENT LIABILITIES
Interfund payable 2,868,266 498,814 389,072 108,953 82,111
Due to broker 3,453,754 - - - 1,239,132
Accrued interest payable 1,242,045 - - - -
Current portion of loans payable 1,496,813 - - - -
Overdrafts 6,790,921 5,365,888 - - -
NONCURRENT LIABILITIES
Loan payable 54,640,871 - - - -
----------------------------------------------------------------------------------------
Total liabilities 70,492,670 5,864,702 389,072 108,953 1,321,243
----------------------------------------------------------------------------------------
Net assets available for benefits $ 967,741,078 $ 430,962,924 $ 91,267,861 $ 20,022,775 $ 35,727,946
========================================================================================
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORESTATES CORESTATES
CORESTATES CORESTATES INTERNATIONAL CORESTATES COREFUND BOND
LIQUIDITY FUND BALANCED FUND GROWTH FUND COREEQUITY FUND FUND
----------------------------------------------------------------------------------------
ASSETS
Investments, at fair value (cost
$630,582,985):
CoreStates Financial Corp
common stock $ - $ - $ - $ - $ -
Mutual funds 70,057,461 60,988,214 8,978,192 69,288,822 10,385,200
Participants' notes receivable - - - - -
----------------------------------------------------------------------------------------
Total investments 70,057,461 60,988,214 8,978,192 69,288,822 10,385,200
Receivables
Due from broker - - 338,649 - -
Accrued investment income - 305,118 114,450 38,397 45,366
Interfund receivable - 102,259 10,430 - -
Cash - 1,629,906 - 1,480,116 689,650
----------------------------------------------------------------------------------------
Total assets 70,057,461 63,025,497 9,441,721 70,807,335 11,120,216
CURRENT LIABILITIES
Interfund payable 1,131,398 47,812 15,373 19,750 -
Due to broker - 728,373 - 894,399 591,850
Accrued interest payable - - - - -
Current portion of loans payable - - - - -
Overdrafts 1,173,672 - 251,361 - -
NONCURRENT LIABILITIES
Loan payable - - - - -
----------------------------------------------------------------------------------------
Total liabilities 2,305,070 776,185 266,734 914,149 591,850
----------------------------------------------------------------------------------------
Net assets available for benefits $ 67,752,391 $ 62,249,312 $ 9,174,987 $ 69,893,186 $ 10,528,366
========================================================================================
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORE STATES CORESTATES
EMPLOYEE CONTRIBUTION CORESTATES CORESTATES
LOAN FUND FUND ESOP ALLOCATED ESOP UNALLOCATED
----------------------------------------------------------------------
ASSETS
Investments, at fair value (cost
$630,582,985):
CoreStates Financial Corp
common stock $ - $ - $ 26,806,758 $ 173,734,031
Mutual funds 103,612 61,113 62 3,544
Participants' notes receivable 25,390,070 - - -
----------------------------------------------------------------------
Total investments 25,493,682 61,113 26,806,820 173,737,575
Receivables
Due from broker - - 193,148 -
Accrued investment income - - 164,166 1,080,893
Interfund receivable 564,794 - - -
Cash 770 215 12,852 14
----------------------------------------------------------------------
Total assets 26,059,246 61,328 27,176,986 174,818,482
CURRENT LIABILITIES
Interfund payable 574,813 170 - -
Due to broker - - - -
Accrued interest payable - - - 1,242,045
Current portion of loans payable - - - 1,496,813
Overdrafts - - - -
NONCURRENT LIABILITIES
Loan payable - - - 54,640,871
----------------------------------------------------------------------
Total liabilities 574,813 170 - 57,379,729
----------------------------------------------------------------------
Net assets available for benefits $ 25,484,433 $ 61,158 $ 27,176,986 $ 117,438,753
======================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Statement of Changes in Net Assets Available for
Benefits, with Fund Information
Period from January 1, 1999 through January 14, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIRST UNION FIRST UNION FIRST UNION
FIRST UNION EVERGREEN EVERGREEN EVERGREEN
TOTAL COMMON STOCK SELECT STRATEGIC SELECT FIXED SELECT EQUITY
FUND GROWTH FUND INCOME FUND INDEX FUND
-------------------------------------------------------------------------------------------
Additions:
Contributions:
Employer $ 186,528 $ - $ - $ - $ -
-------------------------------------------------------------------------------------------
Total contributions 186,528 - - - -
Interest on participant loans 1,500 587 199 59 63
Net appreciation (depreciation) in fair
value of investments 27,326,937 12,286,044 (1,786,836) (60,369) 537,912
Other receipts (disbursements) (827) (869) (277) (40) (503)
-------------------------------------------------------------------------------------------
Total additions 27,514,138 12,285,762 (1,786,914) (60,350) 537,472
Deductions:
Participant withdrawals 10,406,606 3,437,350 2,086,577 313,991 623,260
-------------------------------------------------------------------------------------------
Total deductions 10,406,606 3,437,350 2,086,577 313,991 623,260
Net increase (decrease) prior to
transfers 17,107,532 8,848,412 (3,873,491) (374,341) (85,788)
Transfers to First Union accounts (1,118,230,199) (453,282,066) (117,469,093) (23,615,030) (55,899,671)
Participants' interfund transfers - 42,213 27,844 359 19,985
-------------------------------------------------------------------------------------------
Net decrease (1,101,122,667) (444,391,441) (121,314,740) (23,989,012) (55,965,474)
Net assets available for benefits at
beginning of year 1,101,122,667 444,391,441 121,314,740 23,989,012 55,965,474
-------------------------------------------------------------------------------------------
Net assets available for benefits at
end of year $ - $ - $ - $ - $ -
===========================================================================================
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIRST UNION FIRST UNION FIRST UNION FIRST UNION FIRST UNION
EVERGREEN EVERGREEN EVERGREEN EVERGREEN EVERGREEN
MONEY MARKET FOUNDATION INTERNATIONAL STOCK SELECTOR SELECT INCOME
FUND FUND GROWTH FUND FUND PLUS FUND
-------------------------------------------------------------------------------------------
Additions:
Contributions:
Employer $ - $ - $ - $ - $ -
-------------------------------------------------------------------------------------------
Total contributions - - - - -
Interest on participant loans 208 136 20 177 51
Net appreciation (depreciation) in fair
value of investments 120,985 76,045 117,074 922,988 (61,098)
Other receipts (disbursements) 533 (691) 901 (324) (53)
-------------------------------------------------------------------------------------------
Total additions 121,726 75,490 117,995 922,841 (61,100)
Deductions:
Participant withdrawals 1,357,352 772,560 126,295 802,327 280,392
-------------------------------------------------------------------------------------------
Total deductions 1,357,352 772,560 126,295 802,327 280,392
Net increase (decrease) prior to
transfers (1,235,626) (697,070) (8,300) 120,514 (341,492)
Transfers to First Union accounts (74,453,399) (76,572,206) (11,334,449) (71,035,787) (13,498,235)
Participants' interfund transfers 11,432 10,202 4,001 19,334 1,482
-------------------------------------------------------------------------------------------
Net decrease (75,677,593) (77,259,074) (11,338,748) (70,895,939) (13,838,245)
Net assets available for benefits at
beginning of year 75,677,593 77,259,074 11,338,748 70,895,939 13,838,245
-------------------------------------------------------------------------------------------
Net assets available for benefits at
end of year $ - $ - $ - $ - $ -
===========================================================================================
<CAPTION>
<S> <C> <C> <C>
FIRST UNION
FIRST UNION ESOP SUSPENSE
FIRST UNION ESOP STOCK ACCOUNT
LOAN FUND FUND ALLOCATED UNALLOCATED
------------------------------------------------------
Additions:
Contributions:
Employer $ - $ - $ 186,528
--------------------------------------------------------
Total contributions - - 186,528
Interest on participant loans - - -
Net appreciation (depreciation) in fair
value of investments - 974,418 14,199,774
Other receipts (disbursements) - 496 -
--------------------------------------------------------
Total additions - 974,914 14,386,302
Deductions:
Participant withdrawals 180,473 426,029 -
--------------------------------------------------------
Total deductions 180,473 426,029 -
Net increase (decrease) prior to
transfers (180,473) 548,885 14,386,302
Transfers to First Union accounts (22,605,797) (35,302,105) (163,162,361)
Participants' interfund transfers (136,852) - -
--------------------------------------------------------
Net decrease (22,923,122) (34,753,220) (148,776,059)
Net assets available for benefits at
beginning of year 22,923,122 34,753,220 148,776,059
--------------------------------------------------------
Net assets available for benefits at
end of year $ - $ - $ -
========================================================
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIRST UNION FIRST UNION
FIRST UNION EVERGREEN EVERGREEN
TOTAL COMMON STOCK SELECT STRATEGIC SELECT FIXED
FUND GROWTH FUND INCOME FUND
-----------------------------------------------------------------------
Additions
Contributions:
Employer $ 15,279,162 $ 1,189,786 $ 623,572 $ 117,693
Employee contributions 27,071,090 2,740,036 1,446,011 262,914
Rollovers 720,329 367 674 -
-----------------------------------------------------------------------
Total contributions 43,070,581 3,930,189 2,070,257 380,607
Interest on loans 1,767,830 226,038 91,173 21,978
Net appreciation (depreciation) in fair value
of investments 209,371,888 327,335,116 32,118,469 962,903
Other receipts (disbursements) 842,771 - - -
-----------------------------------------------------------------------
Total additions 255,053,070 331,491,343 34,279,899 1,365,488
Deductions:
Interest expense 3,677,336 - - -
Participants' withdrawals 117,994,145 15,444,386 4,258,707 1,187,335
-----------------------------------------------------------------------
Total deductions 121,671,481 15,444,386 4,258,707 1,187,335
Net increase (decrease) prior to interfund
transfers 133,381,589 316,046,957 30,021,192 178,153
Transfers to First Union accounts - 139,518,157 94,100,237 21,738,138
Participants' interfund transfers - (11,173,673) (2,806,689) 2,072,721
-----------------------------------------------------------------------
Net increase (decrease) 133,381,589 444,391,441 121,314,740 23,989,012
Net assets available for benefits at
beginning of year 967,741,078 - - -
=======================================================================
Net assets available for benefits at
end of year $ 1,101,122,667 $ 444,391,441 $ 121,314,740 $ 23,989,012
=======================================================================
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIRST UNION FIRST UNION FIRST UNION FIRST UNION
EVERGREEN EVERGREEN EVERGREEN EVERGREEN
SELECT EQUITY MONEY MARKET FOUNDATION INTERNATIONAL
INDEX FUND FUND FUND GROWTH FUND
----------------------------------------------------------------------
Additions
Contributions:
Employer $ 459,780 $ 256,648 $ 413,899 $ 132,602
Employee contributions 1,090,605 569,744 946,467 321,642
Rollovers 1,046 124 863 -
----------------------------------------------------------------------
Total contributions 1,551,431 826,516 1,361,229 454,244
Interest on loans 53,293 59,711 63,325 15,217
Net appreciation (depreciation) in fair value
of investments 16,446,167 1,136,224 13,494,689 (16,694)
Other receipts (disbursements) - - - -
----------------------------------------------------------------------
Total additions 18,050,891 2,022,451 14,919,243 452,767
Deductions:
Interest expense - - - -
Participants' withdrawals 2,676,093 4,505,272 2,654,320 309,050
----------------------------------------------------------------------
Total deductions 2,676,093 4,505,272 2,654,320 309,050
Net increase (decrease) prior to interfund
transfers 15,374,798 (2,482,821) 12,264,923 143,717
Transfers to First Union accounts 40,296,414 66,191,391 63,031,061 10,688,627
Participants' interfund transfers 294,262 11,969,023 1,963,090 506,404
----------------------------------------------------------------------
Net increase (decrease) 55,965,474 75,677,593 77,259,074 11,338,748
Net assets available for benefits at
beginning of year - - - -
======================================================================
Net assets available for benefits at
end of year $ 55,965,474 $ 75,677,593 $ 77,259,074 $ 11,338,748
======================================================================
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIRST UNION FIRST UNION FIRST UNION
EVERGREEN EVERGREEN FIRST UNION ESOP SUSPENSE
STOCK SELECTOR SELECT INCOME FIRST UNION ESOP STOCK ACCOUNT
FUND PLUS FUND LOAN FUND FUND ALLOCATED UNALLOCATED
-------------------------------------------------------------------------------------
Additions
Contributions:
Employer $ 362,967 $ 58,633 $ - $ 2,217,166 $ -
Employee contributions 857,428 137,533 - - -
Rollovers - - - - -
-------------------------------------------------------------------------------------
Total contributions 1,220,395 196,166 - 2,217,166
Interest on loans 48,754 9,657 - 561 -
Net appreciation (depreciation) in fair value
of investments 16,347,210 582,228 - 24,894,836 155,823,978
Other receipts (disbursements) - - - - -
-------------------------------------------------------------------------------------
Total additions 17,616,359 788,051 - 27,112,563 155,823,978
Deductions:
Interest expense - - - - 1,217,466
Participants' withdrawals 2,323,079 519,273 504,090 1,671,582 -
-------------------------------------------------------------------------------------
Total deductions 2,323,079 519,273 504,090 1,671,582 1,217,466
Net increase (decrease) prior to interfund
transfers 15,293,280 268,778 (504,090) 25,440,981 154,606,512
Transfers to First Union accounts 59,183,834 11,391,235 23,666,986 10,494,660 (5,830,453)
Participants' interfund transfers (3,581,175) 2,178,232 (239,774) (1,182,421) -
-------------------------------------------------------------------------------------
Net increase (decrease) 70,895,939 13,838,245 22,923,122 34,753,220 148,776,059
Net assets available for benefits at
beginning of year - - - - -
=====================================================================================
Net assets available for benefits at
end of year $ 70,895,939 $ 13,838,245 $ 22,923,122 $ 34,753,220 $ 148,776,059
=====================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
6
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORESTATES
CORESTATES SHORT-TERM
FINANCIAL CORESTATES INTERMEDIATE CORESTATES CORESTATES
CORP COMMON GROWTH EQUITY BOND EQUITY INDEX LIQUIDITY
STOCK FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------
Additions
Contributions:
Employer $ - $ - $ - $ - $ -
Employee contributions - - - - -
Rollovers 125,903 89,889 2,511 98,961 22,004
-----------------------------------------------------------------------------------
Total contributions 125,903 89,889 2,511 98,961 22,004
Interest on loans - - - - -
Net appreciation (depreciation) in fair value
of investments (237,070,934) 1,676,992 616,973 (5,315,292) 2,360,301
Other receipts (disbursements) 148,147 - - - -
-----------------------------------------------------------------------------------
Total additions (236,796,884) 1,766,881 619,484 (5,216,331) 2,382,305
Deductions:
Interest expense - - - - -
Participants' withdrawals 8,026,641 - - - -
-----------------------------------------------------------------------------------
Total deductions 8,026,641 - - - -
Net increase (decrease) prior to interfund
transfers (244,823,525) 1,766,881 619,484 (5,216,331) 2,382,305
Transfers to First Union accounts (139,518,157) (94,100,237) (21,738,138) (40,296,414) (66,191,391)
Participants' interfund transfers (46,621,242) 1,065,495 1,095,879 9,784,799 (3,943,305
-----------------------------------------------------------------------------------
Net increase (decrease) (430,962,924) (91,267,861) (20,022,775) (35,727,946) (67,752,391
Net assets available for benefits at
beginning of year 430,962,924 91,267,861 20,022,775 35,727,946 67,752,391
===================================================================================
Net assets available for benefits at
end of year $ - $ - $ - $ - $ -
===================================================================================
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORESTATES
CORESTATES INTERNATIONAL COREFUND CORESTATES
BALANCED GROWTH COREEQUITY COREFUND EMPLOYEE
FUND FUND FUND BOND FUND LOAN FUND
-----------------------------------------------------------------------------------
Additions
Contributions:
Employer $ - $ - $ - $ - $ -
Employee contributions - - - - -
Rollovers 98,250 12,119 163,114 104,504 -
-----------------------------------------------------------------------------------
Total contributions 98,250 12,119 163,114 104,504 -
Interest on loans - - - - 1,178,123
Net appreciation (depreciation) in fair value
of investments 552,013 745,904 (8,301,431) 275,182 2,323
Other receipts (disbursements) - - - - -
-----------------------------------------------------------------------------------
Total additions 650,263 758,023 (8,138,317) 379,686 1,180,446
Deductions:
Interest expense - - - - -
Participants' withdrawals - - - - -
-----------------------------------------------------------------------------------
Total deductions - - - - -
Net increase (decrease) prior to interfund
transfers 650,263 758,023 (8,138,317) 379,686 1,180,446
Transfers to First Union accounts (63,031,061) (10,688,627) (59,183,834) (11,391,235) (23,666,986)
Participants' interfund transfers 131,486 755,617 (2,571,035) 483,183 (2,997,893)
-----------------------------------------------------------------------------------
Net increase (decrease) (62,249,312) (9,174,987) (69,893,186) (10,528,366) (25,484,433)
Net assets available for benefits at
beginning of year 62,249,312 9,174,987 69,893,186 10,528,366 25,484,433
===================================================================================
Net assets available for benefits at
end of year $ - $ - $ - $ - $ -
===================================================================================
<CAPTION>
<S> <C> <C> <C> <C>
CORESTATES CORESTATES CORESTATES CORESTATES
CONTRIBUTION DISTRIBUTION ESOP ESOP
FUND FUND ALLOCATED UNALLOCATED
-----------------------------------------------------------------
Additions
Contributions:
Employer $ 8,037,131 $ - $ - $ 1,409,285
Employee contributions 18,698,710 - - -
Rollovers - - - -
-----------------------------------------------------------------
Total contributions 26,735,841 - - 1,409,285
Interest on loans - - - -
Net appreciation (depreciation) in fair value
of investments 1,318 6,968 (15,543,308) (119,760,247)
Other receipts (disbursements) - 782,173 (1,808) (85,741)
-----------------------------------------------------------------
Total additions 26,737,159 789,141 (15,545,116) (118,436,703)
Deductions: 9,538,354
Interest expense - - - 2,459,870
Participants' withdrawals - 73,664,944 249,373 -
-----------------------------------------------------------------
Total deductions - 73,664,944 249,373 2,459,870
Net increase (decrease) prior to interfund
transfers 26,737,159 (72,875,803) (15,794,489) (120,896,573)
Transfers to First Union accounts - - (9,538,354) 4,874,147
Participants' interfund transfers (26,798,317) 72,875,803 (1,844,143) (1,416,327)
-----------------------------------------------------------------
Net increase (decrease) (61,158) - (27,176,986) (117,438,753)
Net assets available for benefits at
beginning of year 61,158 - 27,176,986 117,438,753
=================================================================
Net assets available for benefits at
end of year $ - $ - $ - $ -
=================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
7
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CORESTATES
SHORT-
CORESTATES CORESTATES TERM CORESTATES
FINANCIAL GROWTH INTERMEDIATE CORESTATES CORESTATES CORESTATES INTERNATIONAL
CORP COMMON EQUITY BOND EQUITY INDEX LIQUIDITY BALANCED GROWTH
TOTAL STOCK FUND FUND FUND FUND FUND FUND FUND
--------------------------------------------------------------------------------------------------------
Additions
Contributions:
Employer $ 14,426,961 $ - $ - $ - $ - $ - $ - $ -
Employee 28,167,679 - - - - - - -
Rollovers 646,991 179,340 97,516 14,236 66,879 61,139 60,374 54,763
--------------------------------------------------------------------------------------------------------
Total contributions 43,241,631 179,340 97,516 14,236 66,879 61,139 60,374 54,763
Interest income:
Interest 6,587,945 86,788 37,126 1,140,509 25,753 2,888,253 28,205 9,630
Dividends on
CoreStates
Financial Corp.
common stock 15,274,780 8,216,890 - - - - - -
Dividend income 2,618,508 - 77,850 - 354,380 - 1,326,300 114,450
Distribution -
capital gains 19,149,410 - 6,334,396 - 1,014,607 - 3,103,529 366,518
--------------------------------------------------------------------------------------------------------
Total investment income 43,630,643 8,303,678 6,449,372 1,140,509 1,394,740 2,888,253 4,458,034 490,598
Net appreciation
(depreciation) in
fair value of
investments 260,738,083 113,893,019 14,775,000 181,744 5,112,167 - 4,962,683 (214,345)
Transfers from Meridian
Bancorp, Inc.
Employer Stock
Ownership Plan 72,428,016 - - - - - - -
Transfers from Meridian
Bancorp, Inc.
Employee Savings Plan 193,877,755 - - - - - - -
Interest expense (4,986,682) - - - - - - -
Participants' withdrawals (74,270,422) (17,399,237) - - - - - -
Participants' interfund
transfers - 111,005,623 1,777,378 (72,305) 12,652,306 20,218,442 3,574,727 3,815,715
Other (disbursement)
receipts (323,116) - - - - - - -
--------------------------------------------------------------------------------------------------------
Net increase 534,335,908 215,982,423 23,099,266 1,264,184 19,226,092 23,167,834 13,055,818 4,146,731
Net assets available for
benefits at beginning
of year 433,405,170 214,980,501 68,168,595 18,758,591 16,501,854 44,584,557 49,193,494 5,028,256
========================================================================================================
Net assets available for
benefits at end of
year $967,741,078 $430,962,924 $ 91,267,861 $ 20,022,775 $ 35,727,946 $ 67,752,391 $ 62,249,312 $ 9,174,987
========================================================================================================
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CORESTATES CORESTATES
COREFUND CORESTATES EMPLOYEE CORESTATES CORESTATES CORESTATES CORESTATES
COREEQUITY COREFUND LOAN CONTRIBUTION DISTRIBUTION ESOP ESOP MERIDIAN
FUND BOND FUND FUND FUND FUND ALLOCATED UNALLOCATED FUND C
--------------------------------------------------------------------------------------------------------
Additions
Contributions:
Employer $ - $ - $ - $ 12,239,620 $ - $ 420,934 $ 1,766,407 $ -
Employee - - - 28,167,679 - - - -
Rollovers 62,758 12,270 - - - - - 31,541
--------------------------------------------------------------------------------------------------------
Total contributions 62,758 12,270 - 40,407,299 - 420,934 1,766,407 31,541
Interest income:
Interest 145,708 40,285 1,210,872 9,823 1,353 3,787 1,696 4,604
Dividends on
CoreStates
Financial Corp.
common stock - - - - - 535,730 4,223,906 2,298,254
Dividend income 177,046 568,482 - - - - - -
Distribution -
capital gains 8,330,360 - - - - - - -
--------------------------------------------------------------------------------------------------------
Total investment income 8,653,114 608,767 1,210,872 9,823 1,353 539,517 4,225,602 2,302,858
Net appreciation
(depreciation) in
fair value of
investments 6,540,039 238,649 - - - 10,039,886 65,049,099 40,160,142
Transfers from Meridian
Bancorp, Inc.
Employer Stock
Ownership Plan - - - - - 12,127,342 60,300,674 -
Transfers from Meridian
Bancorp, Inc.
Employee Savings Plan 49,226,075 8,207,261 - 1,926,296 - - - 96,287,894
Interest expense - - - - - - (4,986,682) -
Participants' withdrawals - - - - (51,443,485) (947,563) - (4,480,137)
Participants' interfund
transfers 5,411,200 1,461,419 8,084,239 (42,282,260) 51,765,248 4,996,870 (8,916,347)(134,302,298)
Other (disbursement)
receipts - - - - (323,116) - - -
--------------------------------------------------------------------------------------------------------
Net increase 69,893,186 10,528,366 9,295,111 61,158 - 27,176,986 117,438,753 -
Net assets available for
benefits at beginning
of year - - 16,189,322 - - - - -
========================================================================================================
Net assets available for
benefits at end of
year $ 69,893,186 $ 10,528,366 $ 25,484,433 $ 61,158 $ - $ 27,176,986 $117,438,753 $ -
========================================================================================================
<CAPTION>
<S> <C> <C> <C> <C>
MERIDIAN MERIDIAN
MERIDIAN MERIDIAN SEGREGATED ROLLOVER
FUND B LOAN FUND PAYMENT FUND FUND
----------------------------------------------------
Additions
Contributions:
Employer $ - $ - $ - $ -
Employee - - - -
Rollovers 6,175 - - -
----------------------------------------------------
Total contributions 6,175 - - -
Interest income:
Interest 940,503 4,446 8,360 244
Dividends on
CoreStates
Financial Corp.
common stock - - - -
Dividend income - - - -
Distribution -
capital gains - - - -
----------------------------------------------------
Total investment income 940,503 4,446 8,360 244
Net appreciation
(depreciation) in
fair value of
investments - - - -
Transfers from Meridian
Bancorp, Inc.
Employer Stock
Ownership Plan - - - -
Transfers from Meridian
Bancorp, Inc.
Employee Savings Plan 27,866,870 9,064,930 1,190,859 107,570
Interest expense - - - -
Participants' withdrawals - - - -
Participants' interfund
transfers (28,813,548) (9,069,376) (1,199,219) (107,814)
Other (disbursement)
receipts - - - -
----------------------------------------------------
Net increase - - - -
Net assets available for
benefits at beginning
of year - - - -
====================================================
Net assets available for
benefits at end of
year $ - $ - $ - $ -
====================================================
</TABLE>
SEE ACCOMPANYING NOTES.
8
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Notes to Financial Statements
For the Period from January 1, 1999 through January 14, 1999
and Years ended December 31, 1998 and 1997
1. DESCRIPTION OF THE PLAN
The following brief description of the CoreStates Employee Stock Ownership and
Savings Plan (the Plan) is provided for general information only. Participants
should refer to the Plan Agreement for more complete information.
GENERAL
The Plan is a defined contribution, profit-sharing plan which covers qualified
employees of CoreStates Financial Corp (the Company) and certain of the
Company's subsidiaries. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Effective January 1, 1997, participants of the Meridian Bancorp, Inc. Employees
Savings Plan and the Meridian Bancorp, Inc. Employee Stock Ownership Plan became
eligible to participate in the Plan as a result of the April 9, 1996 acquisition
by CoreStates Financial Corp of Meridian Bancorp, Inc. The net assets of the
Meridian Bancorp, Inc. Savings Plan (approximately $194 million as of December
31, 1996) and the net assets of the Meridian Bancorp, Inc. Employee Stock
Ownership Plan (approximately $72 million as of December 31, 1996) were
transferred into the Plan on January 1, 1997.
On April 28, 1998, the plan sponsor, CoreStates, was acquired by First Union
Corporation (successor plan sponsor). As a result of the merger, each share of
the Plan's investments in CoreStates common stock was exchanged for 1.62 shares
of First Union Corporation common stock. Additionally, the individual CoreFund
investment options were converted into First Union's family of Evergreen funds
on July 28, 1998. The conversion was executed dollar for dollar with no related
gain or loss recognized. The CoreStates recordkeeping system was converted to a
daily recordkeeping system. As a result of this conversion, a blackout period
began on July 22, 1998 and continued through November 16, 1998. During the
blackout period participants could not request loans, make withdrawals, transfer
existing fund balances or request a full distribution from the Plan.
Effective January 1, 1999, the Plan merged with the First Union Corporation
Savings Plan. A second blackout period, December 28, 1998 through January 14,
1999, resulted in order to transfer account balances for participants into the
First Union Corporation Savings Plan. The net assets of the Plan (approximately
$1.1 billion) were transferred into the First Union Corporation Savings Plan on
January 14, 1999.
9
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Notes to Financial Statements
1. DESCRIPTION OF THE PLAN (CONTINUED)
CONTRIBUTIONS
Employee
The Plan provides for employee contributions on either an after-tax basis or a
before-tax basis (up to $10,000 in 1998 and $9,500 in 1997) equal to any whole
percentage of the participant's compensation up to 12%.
Employer
The Company makes a matching contribution to the Plan on behalf of each
participant. In 1998 and 1997, the Company's match was determined as follows:
BASIC CONTRIBUTION CORESTATES MATCHING CONTRIBUTIONS AS A
AS A PERCENTAGE PERCENTAGE
OF BASE PAY OF BASIC CONTRIBUTION
- --------------------------------------------------------------------------------
1% - 4% Variable: 50% to 150%
5% - 8% Fixed: 50%
The amount of variable match was based on the Company's attainment of its
performance targets. The first 50% of the variable match is invested in Company
common stock. The Plan owns Company common shares acquired with the proceeds
from a bank borrowing and holds the stock in a trust established under the Plan
(see Note 4).
Upon merger into the First Union Savings Plan, First Union will match 100% on
the first 6% of Basic Contribution. The first 1% of this match will be made in
First Union Common Stock.
VESTING
Employee contributions, rollovers, and qualified voluntary employee contribution
accounts, as affected by investment results, are fully vested at all times.
Effective July 28, 1998, all active employees who were participants in the Plan
became 100% vested in employer matching contributions. For the remaining
duration of the Plan all new participants were 100% vested immediately. Prior to
July 28, 1998, employer contributions were 50% vested after 2 years of vesting
service and 100% vested after 3 years of vesting service.
10
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Notes to Financial Statements
1. DESCRIPTION OF THE PLAN (CONTINUED)
EXPENSES
The expenses of the Plan, including but not limited to legal and accounting
fees, shall be paid by the Plan unless voluntarily paid by the Company. The
expenses of the Plan were paid by the Company for the periods presented.
PAYMENT OF BENEFITS
Distributions from the Plan will be made when a participant retires, dies (in
which case, payment shall be made to his or her beneficiary or, if none, his or
her legal representatives), becomes totally and permanently disabled or
otherwise terminates employment with the Company. Subsequent to the blackout
period participants must receive vested benefits as a lump-sum payment if the
participants vested accrued benefit does not exceed $3,500.
Prior to the blackout period, a participant could receive vested benefits as a
lump-sum payment or if the participant's vested accrued benefit exceeds $3,500,
the participant may elect to receive equal annual installments over a period not
exceeding ten years.
Included in assets available for benefits at December 31, 1998 and 1997 is
approximately $10.5 million and $17 million, respectively, which represents the
amount due to participants who have requested withdrawals.
LOANS
Active participants, terminated participants and beneficiaries with accrued
benefits under the Plan may borrow funds from the Plan subject to requirements
of the Plan. Loans advanced against employees' vested benefits in the Plan are
deducted from the amount of any benefits which are payable to the participant
upon termination.
WITHDRAWALS
A participant shall be permitted to withdraw all or a portion of the amount in
the participant's after-tax contribution account subject to the restrictions or
penalties as set forth in the Plan.
Participants who apply for a hardship withdrawal under IRS regulations, or who
cease to be a participant in the Plan, may receive their deferred account
balance in full.
11
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Notes to Financial Statements
1. DESCRIPTION OF THE PLAN (CONTINUED)
INVESTMENT
CoreStates, NA (CBNA) served as Trustee for the Plan through April 28, 1998. As
a result of the acquisition, First Union National Bank (a subsidiary of First
Union Corporation), became Trustee for the Plan through January 14, 1999 (date
of merger into the First Union Corporation Savings Plan). First Union provides
investment advisory and custodial services for the mutual funds held by the
Plan.
The investment funds held by the Plan at December 31, 1998, were merged into
certain investment options in the First Union Savings Plan. Other investment
options are also available to participants.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments are stated at fair value. Fair values are determined as follows: (1)
Common stock - on the basis of the last reported sales price on the last
business day of the year; and (2) Mutual funds - at net asset value at the close
of business on the last business day of the year. The cost of investments sold
is determined on an average historical cost basis. Loans are carried at the
outstanding principal balance. Dividends are recorded on the ex-dividend date.
The First Union Stock Fund was converted to a unit-basis of accounting to enable
the fund to be valued on a daily basis. Instead of owning shares of stock,
participants own a number of units of the fund. The unit value for the First
Union Common Stock Account and the First Union ESOP Stock Account at December
31, 1998 was $12.22.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
12
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Notes to Financial Statements
3. LOANS PAYABLE
Upon the merger of the Plan into the First Union Corporation Savings Plan, First
Union National Bank assumes all obligations of CoreStates Bank under the loan
agreement dated October 27, 1994 pursuant to which Meridian Trust Company issued
to Meridian Bancorp, Inc. its promissory note dated October 27, 1994, in the
amount of $60,000,000. The loan repayment term is 20 years with equal annual
payments of principal and interest. The scheduled amortization of the loan is
$6,417,000 per year. The loan bears interest at 8.85%. The principal payments
due are as follows:
1999 $ 1,634,838
2000 1,774,383
2001 1,947,631
2002 2,125,802
2003 2,319,273
As the Plan makes each payment of principal, an appropriate percentage of stock
will be allocated to eligible employees' accounts in accordance with applicable
regulations under the Internal Revenue Code. Shares vest fully upon allocation.
Dividends on allocated shares may be either distributed or reinvested in Company
stock at the discretion of the Company.
The borrowing is collaterized by the unallocated shares of stock and is
guaranteed by the Company. The lender has no rights against shares once they are
allocated under the Plan. Accordingly, the financial statements of the Plan for
the year 1998 and 1997 present separately the assets and liabilities and changes
therein pertaining to:
(a) the accounts of employees with vested rights in allocated stock (Allocated)
and
(b) stock not yet allocated to employees (Unallocated).
Each participant is entitled to exercise voting rights attributable to the
shares allocated to his or her account and is notified by the Trustee prior to
the time that such rights are to be exercised. The Trustee is required to vote
all shares in the Plan, including unallocated shares, in proportion to the
response received for participants and beneficiaries with respect to stock
allocated to participant accounts.
13
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Notes to Financial Statements
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service,
stating that the Plan is qualified under Section 401(a) of the Internal Revenue
Code (the "Code") and, therefore, the related trust is exempt from taxation.
Once qualified, the Plan is required to operate in conformity with the Code to
maintain its qualification. The Plan Administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code and,
therefore, believes that the Plan is qualified and the related trust is tax
exempt.
14
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
1
CoreStates Employee Stock Ownership and Savings Plan
Line 27a - Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Description Of Investment
Maturity Date, Rate of
Identity of Issue, Borrower, Lessor or Interest, Par or Maturity
Similar Party Rate Cost** Current Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*First Union Corporation Common
Stock Fund 36,353,476 units $ 444,391,441
*First Union ESOP Stock 2,843,523 units 34,753,220
*First Union Corporation 3,341,480 shares
ESOP Suspense Account of First Union Corporation
common stock 203,203,777
Valiant General Fund Temporary investment 1,417,772
*Evergreen mutual funds:
Evergreen Select Strategic
Growth Fund 9,092,184 units 121,314,740
Evergreen Select Fixed
Income Fund 2,341,668 units 23,989,012
Evergreen Select Equity Index
Fund 4,340,811 units 55,965,474
Evergreen Money Market
Fund 74,439,661 units 75,677,593
Evergreen Foundation Fund 3,171,497 units 77,259,074
Evergreen International
Growth Fund 1,424,944 units 11,338,748
Evergreen Stock Selector
Fund 5,311,162 units 70,895,939
Evergreen Select Income Plus
Fund 1,356,465 units 13,838,245
*Participant notes receivable Interest rates ranging from 5.5% to 11% 22,923,122
----------------------
$ 1,156,968,157
======================
</TABLE>
*Indicates a party-in-interest to the Plan.
** Historical cost information was not available.
16
<PAGE>
CoreStates Employee Stock Ownership and Savings Plan
Line 27d - Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
Selling
Identity of Parties Involved Description of Assets Purchase Price Price
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Category III - A series of transactions in a security issue aggregating in excess of 5% of plan assets
CoreStates Financial Corp. Common
CoreStates Stock $ 14,032,212 $ 34,824,064
CoreStates CoreFund Cash Reserve Fund - Class Y 169,165,728 169,383,993
First Union Corporation Common
First Union Stock 435,958,261 64,104,358
First Union Evergreen Select Money Market 28,521,605 24,434,918
Current Value of Assets on
Identity of Parties Involved Cost Transaction Date Net Gain
- -------------------------------------------------------------------------------------------------------------------
Category III - A series of transactions in a security issue aggregating in excess of 5% of plan assets
CoreStates $ 31,329,774 $ 48,856,276 $ 17,526,502
CoreStates 338,549,721 338,549,721 -
First Union 491,938,648 500,062,619 8,123,971
First Union 52,956,523 52,956,523 -
</TABLE>
There are no category I, II, or IV reportable transactions during the year ended
December 31, 1998. "Lease rental" and "Expenses Incurred with Transactions" do
not apply to the above listed transactions.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the plan administrator has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
FIRST UNION CORPORATION SAVINGS PLAN
(successor to the CoreStates Employee Stock Ownership
and Savings Plan)
By: /s/ Benjamin J. Jolley
-------------------------------------------
Name: Benjamin J. Jolley
Title: Vice President
Date: June 29, 1999
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION LOCATION
- ----------- ----------- --------
<S> <C> <C>
(23) Consent of Independent Auditors Filed herewith
</TABLE>
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-4 No. 33-44015) pertaining to the CoreStates Employee Stock Ownership and
Savings Plan of First Union Corporation of our report dated June 11, 1999, with
respect to the financial statements and schedules of the CoreStates Employee
Stock Ownership and Savings Plan included in this Annual Report (Form 11-K) for
the year ended December 31, 1998.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
June 28, 1999
