<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) April 2, 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 02211
---------------------------------------- ----------
(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.
On March 14, 1999, Fleet Financial Group, Inc. ("Fleet") and
BankBoston Corporation ("BankBoston") announced that they had entered
into an Agreement and Plan of Merger (the "Merger Agreement")
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 in connection with the Merger.
Fleet also hereby files the consolidated balance sheets of BankBoston
at December 31, 1998 and 1997 and the related consolidated statements
of income, of changes in common stockholders' equity and of cash flows
for each of the three years in the period ended December 31, 1998.
For additional information regarding the Merger, see the Registrant's
Current Report on Form 8-K dated March 14, 1999.
Item 7. FINANCIAL STATEMENTS AND OTHER EXHIBITS.
The following exhibits are filed as part of this report:
Exhibit No. Description
----------- -----------
23 Consent of PricewaterhouseCoopers LLP
99(a) Unaudited Pro Forma Condensed Combined Financial
Statements and Notes thereto
99(b) Consolidated Financial Statements of BankBoston
(incorporated by reference to pages 60-89 of Item 8
of the BankBoston Annual Report on Form 10-K for the
year ended December 31, 1998 [Commission File
Number 1-6522]).
<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: April 2, 1999
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors
Fleet Financial Group, Inc.
We consent to the inclusion in the Fleet Financial Group, Inc. Form 8-K dated
April 2, 1999, and to the incorporation by reference in the registration
statements on Form S-3 (Registration Nos. 333-37231, 333-43625, 33-36707,
333-48043 and 333-62905), Form S-4 (Registration Nos. 33-58573 and 33-58933)
and Form S-8 (Registration Nos. 33-19425, 33-25872, 33-65230, 33-48818,
33-56061, 33-62367, 33-58933, 33-64635, 33-59139, 333-16037, 333-44517 and
333-68153) of our report dated January 21, 1999 on our audits of the
consolidated financial statements of BankBoston Corporation and subsidiaries
as of December 31, 1998 and 1997 and for each of the years in the three-year
period ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 2, 1999
<PAGE>
EXHIBIT 99(a)
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 Fleet Financial Group, Inc.
("Fleet") and BankBoston Corporation ("BankBoston"), 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 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 regulatory required
divestitures.
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 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 Fleet and BankBoston
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>
FLEET FINANCIAL GROUP, INC. AND BANKBOSTON CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
<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 $ 5,635 $ 5,306 $ -- $ 10,941
Federal funds sold and securities purchased
under agreements to resell 103 2,463 -- 2,566
Securities 10,902 12,534 -- 23,436
Trading assets 562 3,802 -- 4,364
Loans and leases 69,396 42,806 -- 112,202
Reserve for credit losses (1,552) (754) -- (2,306)
Due from brokers/dealers 3,600 265 -- 3,865
Mortgages held for resale 3,960 -- -- 3,960
Premises and equipment 1,229 1,319 -- 2,548
Mortgage servicing rights 1,405 -- -- 1,405
Intangible assets 3,117 787 -- 3,904
Other assets 6,025 4,985 -- 11,010
--------- -------- ------- ---------
Total assets $ 104,382 $ 73,513 $ -- $ 177,895
========= ======== ======= =========
LIABILITIES and STOCKHOLDERS' EQUITY:
Deposits:
Domestic:
Noninterest-bearing $ 18,646 $ 6,554 $ -- $ 25,200
Interest-bearing 47,214 28,371 -- 75,585
Overseas:
Noninterest-bearing -- 1,144 -- 1,144
Interest-bearing 3,818 12,431 -- 16,249
--------- -------- ------- ---------
Total deposits 69,678 48,500 -- 118,178
--------- -------- ------- ---------
Federal funds purchased and securities sold
under agreements to repurchase 4,456 5,241 -- 9,697
Funds borrowed 5,033 6,775 -- 11,808
Due to brokers/dealers 3,975 241 -- 4,216
Notes payable 8,820 5,588 -- 14,408
Accrued expenses and other liabilities 3,011 2,351 650 (4b) 6,012
--------- -------- ------- ---------
Total liabilities 94,973 68,696 650 164,319
--------- -------- ------- ---------
Stockholders' equity:
Preferred stock 691 -- -- 691
Common stock 6 307 (304)(4a) 9
Common surplus 3,284 1,118 (203)(4a) 4,199
Retained earnings 5,337 3,895 (650)(4b) 8,582
Accumulated other comprehensive income 128 (33) -- 95
Treasury stock, at cost (37) (470) 507 (4a) --
--------- -------- ------- ---------
Total stockholders' equity 9,409 4,817 (650) 13,576
--------- -------- ------- ---------
Total liabilities and stockholders' equity $ 104,382 $ 73,513 $ -- $ 177,895
========= ======== ======= =========
</TABLE>
See Notes To 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 YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) FLEET BANKBOSTON ADJUSTMENTS COMBINED
--------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 5,878 $ 4,259 $ -- $ 10,137
Interest on securities and trading assets 673 892 -- 1,565
Other 214 426 -- 640
--------- -------- ------- ---------
Total interest income 6,765 5,577 -- 12,342
--------- -------- ------- ---------
Interest expense:
Deposits 1,835 1,871 -- 3,706
Funds borrowed 400 859 -- 1,259
Notes payable 448 320 -- 768
Other 213 -- -- 213
--------- -------- ------- ---------
Total interest expense 2,896 3,050 -- 5,946
--------- -------- ------- ---------
Net interest income 3,869 2,527 -- 6,396
--------- -------- ------- ---------
Provision for credit losses 470 380 -- 850
--------- -------- ------- ---------
Net interest income after provision for credit losses 3,399 2,147 -- 5,546
--------- -------- ------- ---------
Noninterest income:
Banking fees and commissions 748 580 -- 1,328
Investment services revenue 851 388 -- 1,239
Credit card revenue 391 64 -- 455
Venture capital revenue 149 233 -- 382
Securities gains 74 41 -- 115
Gains on sales of businesses -- 254 -- 254
Other 1,024 472 -- 1,496
--------- -------- ------- ---------
Total noninterest income 3,237 2,032 -- 5,269
--------- -------- ------- ---------
Noninterest expense:
Employee compensation and benefits 1,927 1,630 -- 3,557
Occupancy and equipment 605 398 -- 1,003
Intangible asset amortization 227 47 -- 274
Merger-related charges 73 -- -- 73
Other 1,297 835 -- 2,132
--------- -------- ------- ---------
Total noninterest expense 4,129 2,910 -- 7,039
--------- -------- ------- ---------
Income before income taxes 2,507 1,269 -- 3,776
Applicable income taxes 975 477 -- 1,452
--------- -------- ------- ---------
Net income $ 1,532 $ 792 $ -- $ 2,324
========= ======== ======= =========
Net income applicable to common shares $ 1,481 $ 783 $ -- $ 2,264
========= ======== ======= =========
Weighted average common shares outstanding:
(in thousands)
Basic 568,059 293,873 -- 916,122 (4d)
Diluted 587,769 296,663 -- 939,137 (4d)
Per Common Share:
Basic $ 2.61 $ 2.66 $ -- $ 2.47 (4d)
Diluted 2.52 2.64 -- 2.41 (4d)
</TABLE>
See Notes To 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 YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) FLEET BANKBOSTON ADJUSTMENTS COMBINED
--------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 5,357 $ 3,954 $ -- $ 9,311
Interest on securities and trading assets 570 809 -- 1,379
Other 164 401 -- 565
--------- -------- ------- ---------
Total interest income 6,091 5,164 -- 11,255
--------- -------- ------- ---------
Interest expense:
Deposits 1,654 1,685 -- 3,339
Funds borrowed 247 805 -- 1,052
Notes payable 338 245 -- 583
Other 152 -- -- 152
--------- -------- ------- ---------
Total interest expense 2,391 2,735 -- 5,126
--------- -------- ------- ---------
Net interest income 3,700 2,429 -- 6,129
--------- -------- ------- ---------
Provision for credit losses 322 200 -- 522
--------- -------- ------- ---------
Net interest income after provision for credit losses 3,378 2,229 -- 5,607
--------- -------- ------- ---------
Noninterest income:
Banking fees and commissions 708 487 -- 1,195
Investment services revenue 696 294 -- 990
Venture capital revenue 71 221 -- 292
Securities gains 33 80 -- 113
Credit card revenue 62 36 -- 98
Gains on sales of businesses 175 68 -- 243
Other 886 377 -- 1,263
--------- -------- ------- ---------
Total noninterest income 2,631 1,563 -- 4,194
--------- -------- ------- ---------
Noninterest expense:
Employee compensation and benefits 1,752 1,279 -- 3,031
Occupancy and equipment 611 350 -- 961
Intangible asset amortization 169 37 -- 206
Merger-related charges 25 -- -- 25
Other 1,158 658 -- 1,816
--------- -------- ------- ---------
Total noninterest expense 3,715 2,324 -- 6,039
--------- -------- ------- ---------
Income before income taxes 2,294 1,468 -- 3,762
--------- -------- ------- ---------
Applicable income taxes 927 589 -- 1,516
--------- -------- ------- ---------
Net income $ 1,367 $ 879 $ -- $ 2,246
========= ======== ======= =========
Net income applicable to common shares $ 1,305 $ 848 $ -- $ 2,153
========= ======== ======= =========
Weighted average common shares outstanding:
(in thousands)
Basic 551,956 295,918 -- 902,441 (4d)
Diluted 568,605 300,080 -- 924,020 (4d)
Per Common Share:
Basic $ 2.37 $ 2.86 $ -- $ 2.39 (4d)
Diluted 2.30 2.82 -- 2.33 (4d)
</TABLE>
See Notes To 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 YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) FLEET BANKBOSTON ADJUSTMENTS COMBINED
--------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 5,169 $ 3,863 $ -- $ 9,032
Interest on securities and trading assets 723 724 -- 1,447
Other 136 306 -- 442
--------- -------- ------- ---------
Total interest income 6,028 4,893 -- 10,921
--------- -------- ------- ---------
Interest expense:
Deposits 1,754 1,680 -- 3,434
Funds borrowed 311 679 -- 990
Notes payable 390 194 -- 584
Other 111 -- -- 111
--------- -------- ------- ---------
Total interest expense 2,566 2,553 -- 5,119
--------- -------- ------- ---------
Net interest income 3,462 2,340 -- 5,802
--------- -------- ------- ---------
Provision for credit losses 213 231 -- 444
--------- -------- ------- ---------
Net interest income after provision for credit losses 3,249 2,109 -- 5,358
--------- -------- ------- ---------
Noninterest income:
Banking fees and commissions 601 455 -- 1,056
Investment services revenue 634 251 -- 885
Venture capital revenue 106 209 -- 315
Credit card revenue 59 36 -- 95
Securities gains 43 23 -- 66
Gains on sales of businesses -- 153 -- 153
Other 890 217 (18) (4c) 1,089
--------- -------- ------- ---------
Total noninterest income 2,333 1,344 (18) 3,659
--------- -------- ------- ---------
Noninterest expense:
Employee compensation and benefits 1,735 1,178 -- 2,913
Occupancy and equipment 593 341 -- 934
Intangible asset amortization 140 34 -- 174
Merger-related charges -- 180 -- 180
Other 1,044 587 -- 1,631
--------- -------- ------- ---------
Total noninterest expense 3,512 2,320 -- 5,832
--------- -------- ------- ---------
Income before income taxes 2,070 1,133 (18) 3,185
Applicable income taxes 849 483 (7) 1,325
--------- -------- ------- ---------
Net income $ 1,221 $ 650 $ (11) $ 1,860
========= ======== ======= =========
Net income applicable to common shares $ 1,149 $ 613 $ (11) $ 1,751
========= ======== ======= =========
Weighted average common shares outstanding:
(in thousands)
Basic 568,896 307,058 -- 932,575 (4d)
Diluted 580,026 312,224 -- 949,824 (4d)
Per Common Share:
Basic $ 2.02 $ 2.00 $ -- $ 1.88 (4d)
Diluted 1.98 1.96 -- 1.84 (4d)
</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 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
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.
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 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
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 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 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 Fleet
weighted average common shares 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.
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 Fleet and BankBoston. Such pro forma financial information may
differ from the pro forma financial information included herein.
