<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
FLEET FINANCIAL GROUP, INC.
-------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
RHODE ISLAND
-------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
1-6366 05-0341324
----------------------------------------- ----------------------------------
(Commission File Number) (IRS Employer Identification No.)
One Federal Street, Boston, MA 02110
- -------------------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-346-4000
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. OTHER EVENTS.
As previously reported, Fleet Financial Group, Inc. ("Fleet")
and BankBoston Corporation ("BankBoston") have entered into an
Agreement and Plan of Merger (the "Merger Agreement") dated
March 14, 1999 providing for the merger of BankBoston with and
into Fleet (the "Merger").
Fleet hereby files its Unaudited Pro Forma Condensed Combined
Financial Statements and Notes thereto for the three and six
month periods ended June 30, 1999.
Fleet also hereby files the consolidated balance sheets of
BankBoston at June 30, 1999 and December 31, 1998 and the
related consolidated statements of income for the three and
six month periods ended June 30, 1999 and 1998.
For additional information regarding the Merger, see the
Registrant's Current Reports on Form 8-K dated March 14, 1999,
April 2, 1999 and May 14, 1999 and Form S-4 dated July 8,
1999.
Item 7. FINANCIAL STATEMENTS AND OTHER EXHIBITS.
The following exhibits are filed as part of this report:
EXHIBIT NO. DESCRIPTION
99(a) Unaudited Pro Forma Condensed Combined
Financial Statements and Notes thereto
99(b) Consolidated Financial Statements of
BankBoston (incorporated by reference to
pages 35-44 of the BankBoston Quarterly
Report on Form 10-Q for the three and six
month periods ended June 30, 1999
[Commission File Number 1-6522]). (Portions
of BankBoston's Form 10-Q not specifically
incorporated by reference are not required
for this Current Report and are not
incorporated by reference herein).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed in its behalf
by the undersigned hereunto duly authorized.
FLEET FINANCIAL GROUP, INC.
Registrant
By: /s/ WILLIAM C. MUTTERPERL
--------------------------------
William C. Mutterperl
Executive Vice President,
Secretary & General Counsel
Dated: August 12, 1999
<PAGE>
Exhibit 99(a)
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 Fleet Financial Group, Inc. ("Fleet") and
BankBoston Corporation ("BankBoston"), 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 Fleet and BankBoston
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
Fleet and BankBoston, 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 Fleet and BankBoston 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>
FLEET FINANCIAL GROUP, INC. AND BANKBOSTON CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
as of June 30, 1999
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
(DOLLARS IN MILLIONS) FLEET BANKBOSTON ADJUSTMENTS COMBINED
--------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Cash, due from banks and interest-bearing deposits $ 4,994 $ 4,482 $ -- $ 9,476
Federal funds sold and securities purchased
under agreements to resell 7 6,271 -- 6,278
Securities 10,461 13,824 -- 24,285
Trading assets 769 4,422 -- 5,191
Loans and leases 75,287 41,789 -- 117,076
Reserve for credit losses (1,723) (792) -- (2,515)
Due from brokers/dealers 2,444 79 -- 2,523
Mortgages held for resale 1,339 -- -- 1,339
Premises and equipment 1,234 1,295 -- 2,529
Mortgage servicing rights 2,630 -- -- 2,630
Intangible assets 3,389 779 -- 4,168
Other assets 6,117 5,415 -- 11,532
--------- --------- --------- ---------
Total assets $ 106,948 $ 77,564 $ -- $ 184,512
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Domestic:
Noninterest-bearing $ 17,069 $ 6,387 $ -- $ 23,456
Interest-bearing 46,006 28,147 -- 74,153
Overseas:
Noninterest-bearing -- 1,322 -- 1,322
Interest-bearing 3,269 13,180 -- 16,449
--------- --------- --------- ---------
Total deposits 66,344 49,036 -- 115,380
--------- --------- --------- ---------
Federal funds purchased and securities sold
under agreements to repurchase 3,507 7,257 -- 10,764
Other short-term borrowings 3,379 5,454 -- 8,833
Due to brokers/dealers 3,775 200 -- 3,975
Long-term debt 16,436 5,594 -- 22,030
Accrued expenses and other liabilities 3,767 4,949 650 (4b) 9,366
--------- --------- --------- ---------
Total liabilities 97,208 72,490 650 170,348
--------- --------- --------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock 691 -- -- 691
Common stock 6 307 (304)(4a) 9
Common surplus 3,346 1,101 (145)(4a) 4,302
Retained earnings 5,887 4,143 (650)(4b) 9,380
Accumulated other comprehensive loss (116) (102) -- (218)
Treasury stock, at cost (74) (375) 449 (4a) --
--------- --------- --------- ---------
Total stockholders' equity 9,740 5,074 (650) 14,164
--------- --------- --------- ---------
Total liabilities and stockholders' equity $ 106,948 $ 77,564 $ -- $ 184,512
========= ========= ========= =========
</TABLE>
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
<PAGE>
FLEET FINANCIAL GROUP, INC. AND BANKBOSTON CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Three Months Ended June 30, 1999
<TABLE>
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Fleet BankBoston Adjustments Combined
----- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 1,557 $ 1,027 $ -- $ 2,584
Interest on securities and trading assets 177 264 -- 441
Other 49 157 -- 206
-------- -------- -------- --------
Total interest income 1,783 1,448 -- 3,231
-------- -------- -------- --------
Interest expense:
Deposits 404 459 -- 863
Short-term borrowings 72 221 -- 293
Long-term debt 236 90 -- 326
Other 48 -- -- 48
-------- -------- -------- --------
Total interest expense 760 770 -- 1,530
-------- -------- -------- --------
Net interest income 1,023 678 -- 1,701
-------- -------- -------- --------
Provision for credit losses 146 95 -- 241
-------- -------- -------- --------
Net interest income after provision for credit losses 877 583 -- 1,460
-------- -------- -------- --------
Noninterest income:
Investment services revenue 264 156 -- 420
Banking fees and commissions 194 176 -- 370
Credit card revenue 164 23 -- 187
Venture capital revenue 45 26 -- 71
Gain on sale of business -- 50 -- 50
Other 369 281 -- 650
-------- -------- -------- --------
Total noninterest income 1,036 712 -- 1,748
-------- -------- -------- --------
Noninterest expense:
Employee compensation and benefits 579 547 -- 1,126
Occupancy and equipment 156 113 -- 269
Intangible asset amortization 71 14 -- 85
Other 372 225 -- 597
-------- -------- -------- --------
Total noninterest expense 1,178 899 -- 2,077
-------- -------- -------- --------
Income before income taxes 735 396 -- 1,131
Applicable income taxes 285 146 -- 431
-------- -------- -------- --------
Net income $ 450 $ 250 $ -- $ 700
======== ======== ======== ========
Net income applicable to common shares $ 435 $ 250 $ -- $ 685
======== ======== ======== ========
Weighted average common shares outstanding
(in thousands):
Basic 569,532 296,832 -- 921,100 (4c)
Diluted 589,634 301,662 -- 946,922 (4c)
Per Common Share:
Basic $ .76 $ .84 $ -- $ .74 (4c)
Diluted .74 .83 -- .72 (4c)
</TABLE>
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
<PAGE>
FLEET FINANCIAL GROUP, INC. AND BANKBOSTON CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1999
<TABLE>
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Fleet BankBoston Adjustments Combined
----- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 3,116 $ 2,061 $ -- $ 5,177
Interest on securities and trading assets 350 493 -- 843
Other 95 265 -- 360
-------- -------- -------- --------
Total interest income 3,561 2,819 -- 6,380
-------- -------- -------- --------
Interest expense:
Deposits 827 932 -- 1,759
Short-term borrowings 152 401 -- 553
Long-term debt 437 173 -- 610
Other 88 -- -- 88
-------- -------- -------- --------
Total interest expense 1,504 1,506 -- 3,010
-------- -------- -------- --------
Net interest income 2,057 1,313 -- 3,370
-------- -------- -------- --------
Provision for credit losses 295 165 -- 460
-------- -------- -------- --------
Net interest income after provision for credit losses 1,762 1,148 -- 2,910
-------- -------- -------- --------
Noninterest income:
Investment services revenue 511 290 -- 801
Banking fees and commissions 387 329 -- 716
Credit card revenue 305 44 -- 349
Venture capital revenue 86 59 -- 145
Gain on sale of business -- 50 -- 50
Other 706 535 -- 1,241
-------- -------- -------- --------
Total noninterest income 1,995 1,307 -- 3,302
-------- -------- -------- --------
Noninterest expense:
Employee compensation and benefits 1,121 1,021 -- 2,142
Occupancy and equipment 316 221 -- 537
Intangible asset amortization 142 29 -- 171
Other 724 434 -- 1,158
-------- -------- -------- --------
Total noninterest expense 2,303 1,705 -- 4,008
-------- -------- -------- --------
Income before income taxes 1,454 750 -- 2,204
Applicable income taxes 566 277 -- 843
-------- -------- -------- --------
Net income $ 888 $ 473 $ -- $ 1,361
======== ======== ======== ========
Net income applicable to common shares $ 857 $ 473 $ -- $ 1,330
======== ======== ======== ========
Weighted average common shares outstanding
(in thousands):
Basic 569,042 296,386 -- 920,082 (4c)
Diluted 589,291 300,095 -- 944,724 (4c)
Per Common Share:
Basic $ 1.51 $ 1.60 $ -- $ 1.45 (4c)
Diluted 1.45 1.58 -- 1.41 (4c)
</TABLE>
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
<PAGE>
FLEET FINANCIAL GROUP, INC. AND BANKBOSTON CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Three Months Ended June 30, 1998
<TABLE>
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Fleet BankBoston Adjustments Combined
----- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 1,481 $ 1,032 $ -- $ 2,513
Interest on securities and trading assets 179 238 -- 417
Other 56 120 -- 176
-------- -------- -------- --------
Total interest income 1,716 1,390 -- 3,106
-------- -------- -------- --------
Interest expense:
Deposits 474 464 -- 938
Short-term borrowings 107 210 -- 317
Long-term debt 104 76 -- 180
Other 59 -- -- 59
-------- -------- -------- --------
Total interest expense 744 750 -- 1,494
-------- -------- -------- --------
Net interest income 972 640 -- 1,612
-------- -------- -------- --------
Provision for credit losses 118 60 -- 178
-------- -------- -------- --------
Net interest income after provision for credit losses 854 580 -- 1,434
-------- -------- -------- --------
Noninterest income:
Banking fees and commissions 182 143 -- 325
Investment services revenue 220 85 -- 305
Venture capital revenue 39 84 -- 123
Credit card revenue 98 12 -- 110
Securities gains -- 11 -- 11
Other 270 122 -- 392
-------- -------- -------- --------
Total noninterest income 809 457 -- 1,266
-------- -------- -------- --------
Noninterest expense:
Employee compensation and benefits 482 368 -- 850
Occupancy and equipment 149 96 -- 245
Intangible asset amortization 59 11 -- 70
Other 327 172 -- 499
-------- -------- -------- --------
Total noninterest expense 1,017 647 -- 1,664
-------- -------- -------- --------
Income before income taxes 646 390 -- 1,036
Applicable income taxes 253 148 -- 401
-------- -------- -------- --------
Net income $ 393 $ 242 $ -- $ 635
======== ======== ======== ========
Net income applicable to common shares $ 380 $ 238 $ -- $ 618
======== ======== ======== ========
Weighted average common shares outstanding
(in thousands):
Basic 568,194 293,769 -- 916,134 (4c)
Diluted 588,760 298,275 -- 942,037 (4c)
Per Common Share:
Basic $ .67 $ .81 $ -- $ .67 (4c)
Diluted .65 .80 -- .66 (4c)
</TABLE>
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
<PAGE>
FLEET FINANCIAL GROUP, INC. AND BANKBOSTON CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1998
<TABLE>
<CAPTION>
Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Fleet BankBoston Adjustments Combined
----- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 2,858 $ 2,043 $ -- $ 4,901
Interest on securities and trading assets 342 446 -- 788
Other 110 239 -- 349
-------- -------- -------- --------
Total interest income 3,310 2,728 -- 6,038
-------- -------- -------- --------
Interest expense:
Deposits 911 926 -- 1,837
Short-term borrowings 191 417 -- 608
Long-term debt 193 142 -- 335
Other 114 -- -- 114
-------- -------- -------- --------
Total interest expense 1,409 1,485 -- 2,894
-------- -------- -------- --------
Net interest income 1,901 1,243 -- 3,144
-------- -------- -------- --------
Provision for credit losses 210 200 -- 410
-------- -------- -------- --------
Net interest income after provision for credit losses 1,691 1,043 -- 2,734
-------- -------- -------- --------
Noninterest income:
Banking fees and commissions 358 272 -- 630
Investment services revenue 421 167 -- 588
Venture capital revenue 69 136 -- 205
Credit card revenue 154 22 -- 176
Securities gains 51 36 -- 87
Gain on sale of business -- 165 -- 165
Other 451 248 -- 699
-------- -------- -------- --------
Total noninterest income 1,504 1,046 -- 2,550
-------- -------- -------- --------
Noninterest expense:
Employee compensation and benefits 926 722 -- 1,648
Occupancy and equipment 303 190 -- 493
Intangible asset amortization 110 21 -- 131
Other 675 375 -- 1,050
-------- -------- -------- --------
Total noninterest expense 2,014 1,308 -- 3,322
-------- -------- -------- --------
Income before income taxes 1,181 781 -- 1,962
Applicable income taxes 465 301 -- 766
-------- -------- -------- --------
Net income $ 716 $ 480 $ -- $ 1,196
======== ======== ======== ========
Net income applicable to common shares $ 691 $ 471 $ -- $ 1,162
======== ======== ======== ========
Weighted average common shares outstanding
(in thousands):
Basic 567,987 293,159 -- 915,205 (4c)
Diluted 587,999 297,579 -- 940,452 (4c)
Per Common Share:
Basic $ 1.22 $ 1.61 $ -- $ 1.27 (4c)
Diluted 1.18 1.58 -- 1.24 (4c)
</TABLE>
See Notes To The Unaudited Pro Forma Condensed Combined Financial Statements
<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 BankBoston will be combined with those of Fleet at book value. In addition,
the statements of income of BankBoston will be combined with the statements of
income of Fleet 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.
Fleet and BankBoston 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 Fleet and BankBoston 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 Fleet's and BankBoston'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 (Dollars in millions)
- --------------------------------------------------------------------------------
<S> <C>
Personnel $300
Technology and operations 150
Facilities 75
Branches 25
Transaction costs and other 100
- --------------------------------------------------------------------------------
Total $650
================================================================================
</TABLE>
<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 Fleet weighted
average common shares outstanding plus the converted BankBoston weighted average
common shares outstanding. Each share of BankBoston common stock was converted
into 1.1844 shares of Fleet common stock.
