<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): September 26, 1994
Marshall & Ilsley Corporation
-----------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 0-1220 39-0968604
--------------- ------------ --------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
770 North Water Street
Milwaukee, Wisconsin 53202
-------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 765-7801
<PAGE>
Item 5. Other Events.
-------------
As previously reported in the registrant's Current Report on Form 8-K
dated May 31, 1994, on May 31, 1994 Valley Bancorporation merged with and into
the registrant in a transaction accounted for as a pooling of interests.
Exhibit 99 to this Current Report on Form 8-K contains restated financial
statements of the registrant reflecting the merger.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
(c) Exhibits
--------
Exhibit Number Description
-------------- -----------
23 Consent of Arthur Andersen & Co.
27 Financial Data Schedule
99 The following restated audited financial
statements of the registrant, prepared in
accordance with Regulation S-X to reflect
the merger with Valley Bancorporation:
- Report of Independent Public Accountants
- Consolidated Balance Sheets as of December
31, 1993 and 1992
- Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991
- Consolidated Statements of Cash Flows for
the years ended December 31, 1993, 1992 and
1991
- Consolidated Statements of Shareholders'
Equity for the years ended December 31,
1993, 1992 and 1991
- Notes to Consolidated Financial Statements
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: September 26, 1994 MARSHALL & ILSLEY CORPORATION
By: /s/ M. A. Hatfield
-------------------------
M. A. Hatfield
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
23 Consent of Arthur Andersen & Co.
27 Financial Data Schedule
99 The following restated audited financial statements of
the registrant, prepared in accordance with Regulation
S-X to reflect the merger with Valley Bancorporation:
- Report of Independent Public Accountants
- Consolidated Balance Sheets as of December 31,
1993 and 1992
- Consolidated Statements of Income for the years
ended December 31, 1993, 1992 and 1991
- Consolidated Statements of Cash Flows for the
years ended December 31, 1993, 1992 and 1991
- Consolidated Statements of Shareholders' Equity
for the years ended December 31, 1993, 1992 and
1991
- Notes to Consolidated Financial Statements
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated May 31, 1994 in this Current Report on Form 8-K dated September 26, 1994
of Marshall & Ilsley Corporation.
We also consent to the incorporation by reference of such report in the
following Registration Statements of Marshall & Ilsley Corporation:
Registration Statement No. 33-3415 (Form S-8) pertaining to the Marshall &
Ilsley Corporation Retirement Growth Plan; Registration Statement No. 33-33153
(Form S-8) pertaining to the Marshall & Ilsley Corporation 1989 Executive Stock
Option and Restricted Stock Plan; Registration Statement No. 33-33090
(Form S-8) pertaining to the Marshall & Ilsley Corporation 1988 Restricted
Stock Plan; Registration Statement No. 33-2642 (Form S-8) pertaining to the
Marshall & Ilsley Corporation 1985 Executive Stock Option and Restricted Stock
Plan; Registration Statement No. 2-89605 (Form S-8) pertaining to the Marshall
& Ilsley Corporation 1983 Executive Stock Option and Restricted Stock Plan;
Registration Statement No. 33-53155 (Form S-8) pertaining to the Marshall &
Ilsley Corporation 1993 Executive Stock Option Plan; Registration Statement No.
33-53897 (Form S-8) pertaining to the stock option plans of Valley
Bancorporation assumed by Marshall & Ilsley Corporation; Registration Statement
No. 33-55317 (Form S-8) pertaining to the Marshall & Ilsley Corporation 1994
Long-Term Incentive Plan for Executives; Registration Statement No. 2-80293
(Form S-3) pertaining to shares of Marshall & Ilsley Corporation held by those
persons named in such Registration Statement; Registration Statement No.
33-21377 (Form S-3) pertaining to the issuance by Marshall & Ilsley Corporation
of Debt Securities; and Registration Statement No. 33-64054 (Form S-3)
pertaining to the issuance by Marshall & Ilsley Corporation of Debt Securities.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
September 23, 1994.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 667,114
<INT-BEARING-DEPOSITS> 7,881,576
<FED-FUNDS-SOLD> 49,336
<TRADING-ASSETS> 2,852
<INVESTMENTS-HELD-FOR-SALE> 2,237,158
<INVESTMENTS-CARRYING> 335,400
<INVESTMENTS-MARKET> 341,877
<LOANS> 8,617,372
<ALLOWANCE> 133,600
<TOTAL-ASSETS> 12,485,937
<DEPOSITS> 10,171,809
<SHORT-TERM> 716,716
<LIABILITIES-OTHER> 248,481
<LONG-TERM> 234,418
0
185
<COMMON> 102,073
<OTHER-SE> 1,012,255
<TOTAL-LIABILITIES-AND-EQUITY> 12,485,937
<INTEREST-LOAN> 643,679
<INTEREST-INVEST> 143,899
<INTEREST-OTHER> 5,899
<INTEREST-TOTAL> 793,477
<INTEREST-DEPOSIT> 272,100
<INTEREST-EXPENSE> 313,198
<INTEREST-INCOME-NET> 480,279
<LOAN-LOSSES> 18,034
<SECURITIES-GAINS> 8,334
<EXPENSE-OTHER> 569,587
<INCOME-PRETAX> 264,584
<INCOME-PRE-EXTRAORDINARY> 171,394
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 171,394
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.60
<YIELD-ACTUAL> 4.48
<LOANS-NON> 44,186
<LOANS-PAST> 7,906
<LOANS-TROUBLED> 4,263
<LOANS-PROBLEM> 80,475
<ALLOWANCE-OPEN> 123,805
<CHARGE-OFFS> 17,466
<RECOVERIES> 8,060
<ALLOWANCE-CLOSE> 133,600
<ALLOWANCE-DOMESTIC> 133,600
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE>
EXHIBIT 99
To the Shareholders and the Board of Directors
of Marshall & Ilsley Corporation
We have audited the accompanying consolidated balance sheets of Marshall &
Ilsley Corporation (a Wisconsin corporation) and subsidiaries as of December
31, 1993 and 1992, and the related consolidated statements of income,
shareholders' equity and cash flows for the years ended December 31, 1993, 1992
and 1991. The consolidated statements give retroactive effect to the merger
with Valley Bancorporation on May 31, 1994, which has been accounted for as a
pooling of interests as described in Note 2. These consolidated financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Marshall & Ilsley
Corporation and subsidiaries as of December 31, 1993 and 1992, and the results
of their operations and cash flows for the years ended December 31, 1993, 1992
and 1991, after giving retroactive effect to the merger with Valley
Bancorporation as described in Note 2, in conformity with generally accepted
accounting principles.
As discussed in Note 3 to the consolidated financial statements, effective
January 1, 1992, the Corporation changed its method of accounting for
postretirement benefits other than pensions and income taxes.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
May 31, 1994.
RJE-M&I Form 8-K (4)
M&I Form.8K
9/26/94
<PAGE>
FINAL
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
FOR YEARS ENDED DECEMBER 31, 1993, 1992, and 1991
<PAGE>
Consolidated Balance Sheets
December 31 ($000's except share data)
Assets 1993 1992
- - ------ ---------- ----------
Cash and Cash Equivalents:
Cash and Due from Banks $ 667,114 $ 717,254
Funds Sold and Security
Resale Agreements 49,336 17,552
Money Market Funds 68,184 48,289
---------- ----------
Total Cash and Cash Equivalents 784,634 783,095
Trading Securities, at Market Value 2,852 13,021
Other Short-term Investments, at Cost which
Approximates Market Value 50,121 248,295
Investment Securities Held to Maturity,
Market Value $341,877 ($1,135,999 in 1992) 335,400 1,121,250
Investment Securities Available for Sale,
Market Value $2,261,117 ($1,649,734 in 1992) 2,237,158 1,620,402
Loans, Net of Unearned Income of $41,094
($40,809 in 1992) 8,617,372 7,980,845
Less: Allowance for Loan Losses 133,600 123,805
---------- ----------
Net Loans 8,483,772 7,857,040
Premises and Equipment 299,801 272,374
Accrued Interest and Other Assets 292,199 298,994
---------- ----------
Total Assets $12,485,937 $12,214,471
========== ==========
Liabilities and Shareholders' Equity
- - ------------------------------------
Deposits:
Noninterest Bearing $2,290,233 $2,169,832
Interest Bearing 7,881,576 7,873,923
---------- ----------
Total Deposits 10,171,809 10,043,755
Short-term Borrowings 716,716 624,813
Accrued Expenses and Other Liabilities 248,481 265,373
Long-term Borrowings 234,418 194,861
---------- ----------
Total Liabilities 11,371,424 11,128,802
Shareholders' Equity:
Series A Convertible Preferred Stock,
$1.00 par value, 500,000 Shares Authorized,
185,314 Shares Issued; Liquidation Preference
of $18,531 185 185
Common Stock, $1.00 par value, 160,000,000 Shares
Authorized, 102,073,005 Shares Issued
(29,787,821 in 1992) 102,073 29,788
Additional Paid-in Capital 238,130 297,452
Retained Earnings 897,123 780,177
---------- ----------
1,237,511 1,107,602
Less: Treasury Stock, at Cost, 5,821,786
Shares (644,963 in 1992) 121,106 18,798
Deferred Compensation 1,892 3,135
---------- ----------
Total Shareholders' Equity 1,114,513 1,085,669
---------- ----------
Total Liabilities and Shareholders' Equity $12,485,937 $12,214,471
========== ==========
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
Consolidated Statements of Income
Years ended December 31 ($000's except share data)
1993 1992 1991
--------- -------- --------
Interest Income
- - ---------------
Loans $ 643,679 $665,634 $730,696
Investment Securities:
Taxable 123,207 139,302 140,261
Exempt from Federal Income Taxes 20,692 31,946 42,438
Trading Securities 186 260 371
Other Short-term Investments 5,713 13,897 24,324
--------- -------- --------
Total Interest Income 793,477 851,039 938,090
Interest Expense
- - ----------------
Deposits 272,100 334,443 448,757
Short-term Borrowings 18,010 17,606 32,065
Long-term Borrowings 23,088 26,439 27,770
--------- -------- --------
Total Interest Expense 313,198 378,488 508,592
--------- -------- --------
Net Interest Income 480,279 472,551 429,498
Provision for Loan Losses 18,034 23,546 28,924
--------- -------- --------
Net Interest Income After Provision for
Loan Losses 462,245 449,005 400,574
Other Income
- - ------------
Data Processing Services 135,041 112,056 90,582
Trust Services 61,226 58,050 54,060
Other Customer Services 124,505 114,164 95,230
Net Securities Gains 8,334 9,207 5,106
Other 42,820 34,934 31,770
--------- -------- --------
Total Other Income 371,926 328,411 276,748
Other Expense
- - -------------
Salaries and Employee Benefits 320,717 299,540 260,289
Net Occupancy 36,389 35,415 34,330
Equipment 57,863 53,438 48,593
Payments to Regulatory Agencies 23,142 22,595 19,799
Processing Charges 17,379 15,079 14,983
Supplies and Printing 13,169 12,841 12,208
Professional Services 12,036 11,034 8,547
Other 88,892 95,682 91,835
--------- -------- --------
Total Other Expense 569,587 545,624 490,584
--------- -------- --------
Income Before Income Taxes and Cumulative
Effect of Changes in Accounting Principles 264,584 231,792 186,738
Provision for Income Taxes 93,190 75,391 56,725
--------- -------- --------
Income Before Cumulative Effect of
Changes in Accounting Principles 171,394 156,401 130,013
Cumulative Effect of Changes in Accounting
Principles, Net of Income Taxes -- (9,134) --
---------- -------- --------
Net Income $ 171,394 $147,267 $130,013
========== ======== ========
Net Income Per Common Share
- - ---------------------------
Primary:
Income Before Cumulative Effect of Changes
in Accounting Principles $ 1.67 $ 1.55 $ 1.33
Cumulative Effect of Changes in Accounting
Principles -- (.09) --
--------- -------- --------
Net Income $ 1.67 $ 1.46 $ 1.33
========= ======== ========
Fully Diluted:
Income Before Cumulative Effect of Changes
in Accounting Principles $ 1.60 $ 1.48 $ 1.27
Cumulative Effect of Changes in Accounting
Principles -- (.08) --
------ ------ ------
Net Income $ 1.60 $ 1.40 $ 1.27
====== ====== ======
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
Consolidated Statements of Cash Flows
Years ended December 31 ($000's)
1993 1992 1991
----------- ----------- ----------
Cash Flows From Operating Activities
Net Income $ 171,394 $ 147,267 $ 130,013
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating
Activities:
Depreciation and Amortization 57,058 41,377 39,098
Provision for Loan Losses 18,034 23,546 28,924
Gains on Sales of Assets (21,487) (19,307) (7,624)
Proceeds from Sales of Trading
Securities and Loans Held for
Resale 3,192,622 3,330,463 2,874,530
Purchases of Trading Securities and
Loans Held for Resale (3,220,184) (3,394,249) (2,913,627)
Other (6,743) (20,291) 3,732
----------- ---------- -----------
Total Adjustments 19,300 (38,461) 25,033
----------- ---------- -----------
Net Cash Provided by Operating
Activities 190,694 108,806 155,046
Cash Flows From Investing Activities
Net (Increase) Decrease in Shorter
Term Securities 53,244 59,217 (2,195)
Proceeds from Maturities of Longer
Term Securities 1,742,984 1,400,797 957,749
Proceeds from Sales of Securities
Available for Sale 29,892 58,393 138,893
Purchases of Longer Term
Securities (1,419,314) (1,843,079) (1,185,670)
Net Increase in Loans (543,812) (199,223) (113,842)
Purchases of Assets to be Leased (94,187) (95,964) (89,860)
Principal Payments on
Lease Receivables 105,352 96,062 85,840
Purchases of Premises and Equipment,
net (65,731) (48,039) (35,527)
Other (10,431) 37,482 31,596
----------- ---------- -----------
Net Cash Used in Investing
Activities (202,003) (534,354) (213,016)
Cash Flows From Financing Activities
Net Increase in Deposits 33,124 201,431 226,585
Proceeds from Issuance of Commercial
Paper 1,348,661 597,794 607,787
Principal Payments on Commercial
Paper (1,325,634) (522,616) (644,483)
Net Increase (Decrease) in Other
Short-term Borrowings 53,320 (62,085) (41,517)
Proceeds from Issuance of Long-term
Debt 116,959 53,121 37,730
Payments of Long-term Debt (63,718) (103,300) (33,605)
Dividends Paid (54,435) (48,060) (42,675)
Purchase of Common Stock (114,686) (99) (4,276)
Proceeds from the Issuance of
Common Stock 19,887 37,820 8,063
Other (630) 401 (66)
----------- ---------- -----------
Net Cash Provided by Financing
Activities 12,848 154,407 113,543
----------- ---------- -----------
Net Increase (Decrease) in Cash and Cash
Equivalents 1,539 (271,141) 55,573
Cash and Cash Equivalents, Beginning
of Year 783,095 1,054,236 998,663
----------- ---------- -----------
Cash and Cash Equivalents,
End of Year $ 784,634 $ 783,095 $1,054,236
=========== ========== ===========
Supplemental Cash Flow Information:
Cash Paid During the Year for:
Interest $ 313,073 $ 395,870 $ 518,032
Income Taxes 88,398 84,948 55,150
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
Consolidated Statements of Shareholders' Equity
($000's except share data)
<TABLE>
<CAPTION>
Additional Treasury
Preferred Common Paid-in Retained Common Deferred
Stock Stock Capital Earnings Stock Compensation
--------- -------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990, as Previously
Reported $ 185 $ 21,995 $ 93,066 $517,690 $ 32,753 $ 967
Adjustment to Retroactively Restate for
1994 Business Combination Accounted for
as a Pooling of Interests -- 6,918 169,401 76,083 -- --
----- ------- ------- -------- -------- -------
Balance, December 31, 1990, Restated 185 28,913 262,467 593,773 32,753 967
Net Income -- -- -- 130,013 -- --
Transactions by Affiliates Prior to
Combination -- -- -- (14,677) -- --
Issuance of 69,766 Common Shares on Conversion
of Convertible Notes -- 70 737 -- -- --
Issuance of 340,048 Common Shares Under
Stock Option and Restricted Stock Plans -- 60 185 -- (8,145) --
Acquisition of 113,976 Common Shares -- (58) (2,630) -- 1,587 --
Acquisition of Savings Associations -- 100 2,343 -- -- --
Dividends Declared on Preferred Stock -
$4.55 Per Share -- -- -- (844) -- --
Dividends Declared on Common Stock -
$0.43 Per Share -- -- -- (27,154) -- --
Net Change in Deferred Compensation -- -- -- -- -- 1,641
Other -- -- 237 (66) -- --
----- ------- ------- -------- -------- -------
Balance, December 31, 1991 185 29,085 263,339 681,045 26,195 2,608
</TABLE>
<PAGE>
Consolidated Statements of Shareholders' Equity
($000's except share data)
<TABLE>
<CAPTION>
Additional Treasury
Preferred Common Paid-in Retained Common Deferred
Stock Stock Capital Earnings Stock Compensation
--------- -------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Income -- -- -- $147,267 -- --
Transactions by Affiliates Prior to
Combination -- -- -- (16,426) -- --
Issuance of 32,558 Common Shares on Conversion
of Convertible Notes -- 32 345 -- -- --
Issuance of 355,463 Common Shares Under
Stock Option and Restricted Stock Plans -- 96 1,907 -- (7,589) --
Acquisition of 5,148 Common Shares -- -- -- -- 192 --
Acquisition of Savings Association -- 575 29,290 -- -- --
Dividends Declared on Preferred Stock -
$5.08 Per Share -- -- -- (942) -- --
Dividends Declared on Common Stock -
$0.48 Per Share -- -- -- (30,692) -- --
Net Change in Deferred Compensation -- -- -- -- -- 527
Other -- -- 2,571 (75) -- --
----- -------- -------- -------- -------- -------
Balance, December 31, 1992 185 29,788 297,452 780,177 18,798 3,135
</TABLE>
<PAGE>
Consolidated Statements of Shareholders' Equity
($000's except share data)
<TABLE>
<CAPTION>
Additional Treasury
Preferred Common Paid-in Retained Common Deferred
Stock Stock Capital Earnings Stock Compensation
--------- -------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Income -- -- -- $171,394 -- --
3 for 1 Stock Split Effected in the
Form of a 200% Stock Dividend -- 59,576 (59,576) -- -- --
Transactions by Affiliates Prior to
Combination -- 11,513 (11,513) (19,014) -- --
Issuance of 134,150 Common Shares on Conversion
of Convertible Notes -- 134 383 -- -- --
Issuance of 2,228,186 Common Shares Under
Stock Option and Restricted Stock Plans -- 1,062 3,230 -- (15,582) --
Acquisition of 5,053,317 Common Shares -- -- -- -- 117,890 --
Dividends Declared on Preferred Stock -
$5.76 Per Share -- -- -- (1,067) -- --
Dividends Declared on Common Stock -
$0.54 Per Share -- -- -- (34,354) -- --
Net Change in Deferred Compensation -- -- -- -- -- (1,243)
Other -- -- 8,154 (13) -- --
----- -------- -------- -------- -------- -------
Balance, December 31, 1993 $ 185 $102,073 $238,130 $897,123 $121,106 $ 1,892
====== ======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991 ($000's except share data)
1. Summary of Significant Accounting Policies
Consolidation principles - The Consolidated Financial Statements include the
accounts of Marshall & Ilsley Corporation (the "Corporation") and all
subsidiaries. All significant intercompany balances and transactions are
eliminated in consolidation. Certain amounts in the 1992 and 1991 Consolidated
Financial Statements have been reclassified to conform with the 1993
presentation.
Cash and cash equivalents - For purposes of the Consolidated Financial
Statements, the Corporation defines cash equivalents as short-term investments
which have an original maturity of three months or less and are readily
convertible into cash.
Securities - Securities, when purchased, are designated as Trading, Investment
Securities Held to Maturity, or Investment Securities Available for Sale and
remain in that category until they are sold or mature. The specific
identification method is used in determining the cost of securities sold.
Investment Securities Held to Maturity are carried at cost, adjusted for
amortization of premiums and accretion of discounts. Investment Securities
Available for Sale are carried at the lower of amortized cost or market. See
Note 6 for changes affecting Investment Securities Available for Sale beginning
January 1, 1994. Short-term Investments other than Trading Securities are
stated at cost, which approximates market value. Trading Securities are
carried at January 1, 1994. Short-term Investments other than Trading
Securities are stated at cost, which approximates market value. Trading
Securities are carried at market value. Adjustments to the carrying value of
securities are reflected in the consolidated income statements.
Loans - Interest on loans, other than direct financing leases, is recognized as
income based on the loan principal outstanding during the period. Unearned
income on direct financing leases is recognized over the lease term on a basis
that results in an approximate level rate of return on the lease investment.
Loans are generally placed on nonaccrual status when they are past due 90 days
as to either interest or principal. When a loan is placed on nonaccrual status,
previously accrued and uncollected interest is charged to interest income on
loans. A nonaccrual loan may be restored to an accrual basis when interest and
principal payments are brought current and collectibility of future payments is
not in doubt.
The Corporation defers and amortizes fees and certain incremental direct costs,
primarily salary and employee benefit expenses, over the contractual term of the
loan or lease as an adjustment to the yield. The unamortized net fees and costs
are reported as part of the loan balance outstanding.
Allowance for loan losses - The allowance for loan losses is maintained at a
level believed adequate by management to absorb estimated potential losses in
the loan portfolio. Management's determination of the adequacy of the
allowance is based on a continual review of the loan portfolio, loan loss
experience, economic conditions, growth and composition of the portfolio, and
other relevant factors. As a result of management's continual review, the
allowance is adjusted through provisions for loan losses charged against
income.
Premises and equipment - Premises and equipment are recorded at cost and
depreciated principally on the straight-line method with annual rates varying
from 2% to 10% for buildings and 10% to 35% for equipment. Maintenance and
repairs are charged to expense and betterments are capitalized.
Other real estate owned - Other real estate owned includes assets that have been
acquired in satisfaction of debts, accounted for as insubstance foreclosures, or
bank branch premises held for sale. Other real estate is recorded at the lower
of cost or fair value, less estimated selling costs, at the date of transfer.
Valuation adjustments required at the date of transfer for assets acquired in
satisfaction of debts or accounted for as insubstance foreclosures are charged
to the allowance for loan losses, whereas any valuation adjustments on bank
branch premises are reported in other expense. Subsequent to transfer, other
real estate owned is carried at the lower of cost or fair market value, less
estimated selling costs, based upon periodic evaluations. Rental income from
properties and gains on sales are included in other income, and property
expenses, which include carrying costs, required valuation adjustments and
losses on sales, are recorded in other expense.
<PAGE>
Mortgage servicing - Normal fees related to the servicing of mortgage loans are
recorded as income when payments are received from mortgagors. Gains or losses
recognized on the sale of mortgage loans are adjusted to reflect any excess or
below market servicing fee generated at the time of sale. Mortgage loans held
for sale to investors are carried at the lower of cost or market, determined on
an aggregate basis, based on outstanding firm commitments received for such
loans or on current market prices.
Data processing services - Direct costs associated with the production of
computer software which will be marketed or used in data processing operations
are capitalized and amortized on the straight-line method over the estimated
economic life of the product, generally four years. Direct costs associated
with customer system conversions to the data services operations are
capitalized and amortized on the straight-line method over the terms,
generally five to seven years, of the related servicing contract. Routine
maintenance of software products, design costs and development costs incurred
prior to establishment of a product's technological feasibility are expensed as
incurred. Net unamortized capitalized costs were $16,979 at December 31, 1993,
and $11,189 at December 31, 1992. Amortization expense was $4,668, $5,161, and
$6,059, for 1993, 1992, and 1991, respectively.
Intangibles - Unamortized intangibles resulting from acquisitions, primarily
goodwill, core deposit premiums and purchased mortgage servicing rights were
$58,890 at December 31, 1993, and $57,532 at December 31, 1992. Purchased
mortgage servicing rights are amortized primarily over the periods during which
the corresponding servicing revenues are anticipated to be generated.
Adjustments for portfolio runoff in excess of that originally anticipated are
made in the period when the excess runoff appears permanent. The other
intangibles are amortized principally on the straight-line method over periods
ranging from 6 to 25 years. Amortization expense was $7,204, $7,159, and
$7,429, for 1993, 1992, and 1991, respectively. The Corporation also has
approximately $14,000 of negative goodwill included in other liabilities as of
December 31, 1993. The majority of this amount arose from a 1992 acquisition
and is being accreted on a straight-line basis over a period of 10 years.
Accretion of $1,576 and $807 is included in the 1993 and 1992 results of
operations, respectively.
Foreign exchange contracts - The Corporation enters into foreign exchange
contracts primarily to enable customers involved in international trade to hedge
their exposure to foreign currency fluctuations. These contracts are carried at
market value, with realized and unrealized gains and losses included in other
income.
Stock split - Common stock per share and average share information for years
1992 and prior have been retroactively restated for the 3 for 1 stock split
effected in the form of a 200% stock dividend which was distributed to
shareholders in May 1993.
Net income per share - Primary net income per share is computed using the
weighted average number of common shares outstanding plus common equivalent
shares issuable upon the assumed conversion of the preferred stock outstanding
and shares issuable under outstanding stock option plans. The average number of
common and common equivalent shares used in computing primary net income per
share was 102,672,361 in 1993, 101,028,932 in 1992, and 97,993,374 in 1991.
Fully diluted net income per share also includes dilution resulting from the
assumed conversion of the convertible notes. The average number of shares used
in the computation of fully diluted net income per share was 108,874,600 in
1993, 107,411,875 in 1992, and 105,015,610 in 1991.
2. Business Combination
On May 31, 1994, Valley Bancorporation ("Valley") merged with and into the
Corporation in a tax-free reorganization accounted for as a pooling of
interests. Accordingly, prior year financial statements have been restated to
give effect to this transaction. In accordance with the terms of the merger,
each share of Valley Common Stock was converted into the right to receive 1.72
shares of the Corporation's Common Stock (approximately 35.7 million shares).
A reconciliation of net interest income and net income of the Corporation as
previously reported to the amounts for that period in the accompanying
Consolidated Financial Statements as restated for the 1994 pooling of interests
is as follows:
1993 1992 1991
------------------------------
Net Interest Income:
Corporation, as previously reported $ 309,178 $ 307,805 $ 288,968
Valley Bancorporation 171,101 164,746 140,530
--------- --------- ---------
Combined $ 480,279 $ 472,551 $ 429,498
========= ========= =========
Net Income:
Corporation, as previously reported $ 125,491 $ 109,235 $ 99,347
Valley Bancorporation 45,903 38,032 30,666
--------- --------- ---------
Combined $ 171,394 $ 147,267 $ 130,013
========= ========= =========
Certain divestitures were required in connection with regulatory approvals
obtained for the merger. The Corporation has filed applications with such
authorities proposing the divestiture of certain bank branches in the State of
Wisconsin with total deposits of approximately $300 million. The Federal
Regulators required and the Corporation obtained commitments for the
divestitures prior to consummation of the merger and will complete the
divestitures within six months of the consummation of the merger. The
Corporation does not anticipate that such divestitures will have a material
impact on the Consolidated Financial Statements.
The Corporation estimates that employee severance and contract costs, write-
downs and write-offs of duplicative facilities, equipment and data processing
software associated with the merger will result in a one-time merger/
restructuring charge of approximately $80 million, $48 million net of tax, in
1994. Also, an additional loan loss provision may be recorded after the
consummation of the merger to conform Valley's loan valuation policies with
those of the Corporation. While the amounts have not been quantified, it is not
anticipated that the amount of such provision will be material to the combined
entity.
The Corporation has also consummated the following business combinations:
Financial Date Method of
Organization Consummated Cash Consideration Accounting
------------ ----------- ------------------ ----------
Exchange State Bank January 2, 1991 $ 5,886 Purchase
Great American Savings
Bank, F.S.B. April 3, 1991 -- Purchase
Western Federal
Savings & Loan
Association April 3, 1991 -- Purchase
United Savings &
Loan Association,
S.S.B. July 1, 1992 -- Purchase
Pierce County Bank
and Trust Company November 6, 1993 $14,678 Purchase
The results of operations for the acquired companies accounted for as purchases
are included in the Consolidated Financial Statements from the dates of
acquisition.
3. Changes in Method of Accounting
During 1992, the Corporation adopted Financial Accounting Standard No. 106
"Employers' Accounting for Postretirement Benefits, Other than Pensions" (FAS
106). This standard, which applies to the Corporation's employee health plans,
requires that the expected cost of these postretirement benefits be charged to
expense in the years the employees render the services necessary to earn their
benefits. The Corporation elected immediate recognition of the accumulated
postretirement benefit obligation at January 1, 1992.
The Corporation also adopted during 1992, Financial Accounting Standard No. 109
"Accounting for Income Taxes." Statement 109 requires a change from the
deferred method of accounting for income taxes to an asset and liability method.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. The
cumulative effect of the change in accounting for income taxes at January 1,
1992, amounted to a $4.8 million reduction of beginning net deferred tax
liabilities.
<PAGE>
The following table summarizes the January 1, 1992 effects of these changes in
methods of accounting:
Earnings Per Share
Net Income Increase (Decrease)
Increase (Decrease) Primary Fully Diluted
------------------- ------- -------------
Adoption of accounting
standard on postretirement
benefits, net of income tax
benefits of $8,852 $(13,937) $ (.14) $ (.13)
Adoption of accounting
standard on income taxes 4,803 .05 .05
-------- ------- ------
$ (9,134) $ (.09) $ (.08)
======== ======= ======
4. Cash and Due from Banks
At December 31, 1993, $183,259 of cash and due from banks was restricted,
primarily due to requirements of the Federal Reserve System to maintain certain
reserve balances.
5. Other Short-term Investments
Other short-term investments at December 31 were:
1993 1992
------- --------
Commercial paper $ 22,550 $ 72,600
Interest bearing deposits in other banks 27,571 175,695
-------- --------
Total other short-term investments $ 50,121 $248,295
======== ========
6. Securities
The book and market values of securities at December 31 were:
1993 1992
--------------------- --------------------
Book Market Book Market
Value Value Value Value
---------- ---------- ---------- ----------
Investment Securities Held to Maturity:
U.S. Treasury and government
agencies $ -- $ -- $ 544,517 $ 549,140
States and political
subdivisions 326,154 332,614 434,296 443,444
Mortgage backed securities 58 58 122,763 122,772
Other 9,188 9,205 19,674 20,643
---------- ---------- ---------- ----------
Total $ 335,400 $ 341,877 $1,121,250 $1,135,999
========== ========== ========== ==========
Investment Securities Available for Sale:
U.S. Treasury and
government agencies $2,139,866 $2,149,011 $1,572,063 $1,588,173
Other 97,292 112,106 48,339 61,561
---------- ---------- ---------- ----------
Total $2,237,158 $2,261,117 $1,620,402 $1,649,734
========== ========== ========== ==========
<PAGE>
The unrealized gains and losses of securities at December 31 were:
1993 1992
--------------------- ---------------------
Unrealized Unrealized Unrealized Unrealized
Gains Losses Gains Losses
---------- ---------- ---------- ----------
Investment Securities Held to Maturity:
U.S. Treasury and Government
Agencies $ -- $ -- $ 5,782 $ 1,159
States and political
subdivisions 7,681 1,221 10,655 1,507
Mortgage backed securities -- -- 771 762
Other 23 6 977 8
---------- ---------- ---------- ----------
Total $ 7,704 $ 1,227 $ 18,185 $ 3,436
========== ========== ========== ==========
Investment Securities Available for Sale:
U.S. Treasury and
government agencies $ 11,413 $ 2,268 $ 19,417 $ 3,307
Other 15,885 1,071 13,224 2
---------- ---------- ---------- ----------
Total $ 27,298 $ 3,339 $ 32,641 $ 3,309
========== ========== ========= ==========
The book value and market value of securities by contractual maturity at
December 31, 1993 were:
Investment Securities Investment Securities
Held to Maturity Available for Sale
---------------------- --------------------
Book Market Book Market
Value Value Value Value
--------- --------- --------- ---------
Within one year $116,387 $117,039 $ 895,967 $ 902,127
From one through five years 153,466 158,020 1,192,795 1,195,671
From five through ten years 55,132 56,080 89,516 90,577
After ten years 10,415 10,738 58,880 72,742
--------- -------- ---------- ----------
Total $335,400 $341,877 $2,237,158 $2,261,117
========= ======== ========== ==========
The gross realized gains and losses amounted to $8,552 and $218 in 1993 and
$14,743 and $5,536 in 1992, and $6,837 and $1,731 in 1991, respectively.
At December 31, 1993, securities with a value of approximately $413,256 were
pledged to secure public deposits, short-term borrowings, and for other purposes
required by law.
In May 1993, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," (FAS 115). FAS 115 requires, among other things,
that securities classified as available for sale be carried at fair value,
however, fair value adjustments and the related income tax effects, are excluded
from earnings and reported separately as a component of shareholders' equity.
In anticipation of this new standard, the Corporation conducted a review of its
investment portfolio. This review resulted in reclassifications of Investment
Securities Held to Maturity and Investment Securities Available for Sale at
December 31, 1993. This new standard which must be adopted by the Corporation
on January 1, 1994 will not have a material impact on the Consolidated Financial
Statements.
7. Loans
Loans at December 31 were:
1993 1992
---------- ----------
Commercial, financial, and agricultural $2,538,830 $2,471,150
Industrial development revenue bonds 45,889 58,388
Real estate:
Construction 333,609 273,556
Residential mortgage 2,223,857 2,160,116
Commercial mortgage 2,000,052 1,718,452
Personal 1,217,513 1,056,901
Lease financing 257,622 242,282
---------- ----------
Total loans $8,617,372 $7,980,845
========== ==========
The Corporation's lending activities are concentrated primarily in the Midwest.
Approximately 2.5% of its portfolio consists of loans granted to customers
located in Arizona. The Corporation had $3,029 in foreign credits at December
31, 1993. The Corporation's loan portfolio consists of business loans extending
across many industry types, as well as loans to individuals. As of December 31,
1993, total loans to any group of customers engaged in similar activities and
having similar economic characteristics, as defined by standard industrial
classifications, did not exceed 10% of total loans.
The Corporation evaluates the credit risk of each customer on an individual
basis and, where deemed appropriate, collateral is obtained. Collateral varies
by Individual loan customer but may include accounts receivable, inventory,
real estate, equipment, deposits, personal and government guaranties, and
general security agreements. Access to collateral is dependent upon the type of
collateral obtained. On an on-going basis, the Corporation monitors its
collateral and the collateral value related to the loan balance outstanding.
An analysis of loans outstanding to directors and officers, including their
related interests, of the Corporation and its significant subsidiaries for 1993
is presented below. All of these loans were made in the ordinary course of
business with normal credit terms, including interest rates and collateral. The
beginning balance has been adjusted to reflect the activity of newly-appointed
directors and executive officers and directors and executive officers of
subsidiaries previously not considered significant.
Balance, beginning of year $ 134,587
New loans 242,962
Repayments (255,981)
---------
Balance, end of year $ 121,568
=========
An analysis of the allowance for loan losses follows:
1993 1992 1991
-------- -------- --------
Balance, beginning of year $123,805 $105,156 $ 94,145
Allowance of Banks Acquired 1,167 4,284 4,344
Provision charged to expense 18,034 23,546 28,924
Charge-offs (17,466) (22,344) (30,056)
Recoveries 8,060 13,163 7,799
-------- ------- -------
Balance, end of year $133,600 $123,805 $105,156
======== ======== ========
As of December 31, 1993, and 1992, nonaccrual loans totalled $44,186 and
$52,811, respectively. The effect of nonaccrual loans on net income in 1993,
1992, and 1991, was not significant.
In May 1993, the FASB also issued Statement of Financial Accounting Standards
No. 114, "Accounting by Creditors for Impairment of a Loan," (FAS 114).
FAS 114 requires that a loan's value be measured when it has been determined
that the loan is impaired and loss is probable. Write-downs which result from
the measurement process are to be expensed. This new standard must be adopted
by the first quarter of 1995. Based upon the current status of the
Corporation's loan portfolio, it is not anticipated that this pronouncement
will have a material impact on the Consolidated Financial Statements.
<PAGE>
8. Premises and Equipment
The composition of premises and equipment at December 31 was:
1993 1992
-------- --------
Land $ 40,538 $ 39,771
Buildings and leasehold improvements 215,191 198,800
Furniture and equipment 242,944 218,208
-------- --------
498,673 456,779
Less accumulated depreciation 198,872 184,405
-------- --------
Total premises and equipment $299,801 $272,374
======== ========
Depreciation expense was $42,417 in 1993, $37,171 in 1992, and $32,216 in 1991.
The Corporation leases certain of its facilities and equipment. Rent expense
under such operating leases was $20,420 in 1993, $19,925 in 1992, and $20,419 in
1991, respectively.
9. Short-term Borrowings
Short-term borrowings at December 31 were:
1993 1992
-------- --------
Funds purchased and security repurchase
agreements $515,028 $453,410
U.S. Treasury demand notes 33,977 42,468
Commercial paper 100,292 77,265
Current maturities of long-term borrowings 63,148 47,730
Other 4,271 3,940
-------- --------
Total short-term borrowings $716,716 $624,813
======== ========
Unused lines of credit primarily to support commercial paper borrowings were
$55,000 at December 31, 1993 and 1992.
10. Long-term Borrowings
Long-term borrowings at December 31 were:
Corporation: 1993 1992
-------- --------
Senior unsecured notes, Series A
9.86% due in 1994 $ 23,000 $ 23,000
Senior unsecured notes, Series B
9.97% due in 1995 30,000 30,000
Senior unsecured notes,
11.25%, due in annual installments through
1995 -- 15,000
8.5% convertible subordinated notes due in 1997 50,000 50,000
6.375% subordinated notes due in 2003 99,373 --
Medium-term Series B notes 38,000 54,000
Other -- 6,194
Subsidiaries:
Nonrecourse notes 34,116 32,331
Mortgages 4,196 4,505
9.75% obligation under capital lease
due through 2006 5,156 5,353
Other 13,725 22,208
-------- --------
297,566 242,591
Less current maturities 63,148 47,730
-------- --------
Total long-term borrowings $234,418 $194,861
======== ========
The Series A and B unsecured note agreements place certain limitations on
indebtedness which may be incurred or guaranteed by the Corporation, the payment
of cash dividends and the purchase or redemption of the Corporation's stock.
The Corporation may elect to prepay the senior unsecured notes at any time
subject to a premium.
<PAGE>
The 8.5% convertible subordinated notes (the "Notes") require semi-annual
interest payments and are convertible at the option of the holder into common
stock at a conversion price of $8.75. The holder has the right to exchange
common stock, acquired by conversion of the Notes or otherwise, for Series A
convertible preferred stock ("Series A"). The holder may own up to 24.9%
(computed as the percentage of common shares owned directly or indirectly
through conversion privileges) of the Corporation's outstanding common stock and
convertible securities, but may not own directly more than 5% of the
Corporation's outstanding common stock. Except under limited circumstances, the
holder may not sell, transfer or otherwise dispose of the Notes or common stock
acquired by conversion, and then, only under prescribed conditions and subject
to the Corporation's right of first refusal.
A portion of the Notes qualify as equity contract notes as defined by the
applicable guidelines of the Board of Governors of the Federal Reserve System.
The Notes require the holder to take common stock (or other equity securities)
in lieu of cash in satisfaction of the claim for principal repayment, unless the
Corporation sells new common stock (or certain other equity securities) and
dedicates the proceeds thereof to the redemption or retirement of the Notes.
In July 1993, the Corporation issued $100 million of unsecured subordinated
notes at a price of 99.351%. Interest is payable semiannually in January and
July of each year and the notes mature July 15, 2003. The notes are not
redeemable prior to maturity and qualify as "Tier 2" or supplementary capital
for regulatory capital purposes.
The Corporation has filed registration statements with the Securities and
Exchange Commission to issue up to $100 million of medium-term unsecured and
unsubordinated Series B and up to $150 million of medium-term unsecured and
unsubordinated Series C notes. Both issues have maturities which range from 9
months to 30 years from the date of issue, at a fixed or floating rate.
The Medium-term Series B notes outstanding at December 31, 1993 mature in 1994
through 1996, and have fixed interest rates of 4.60% to 8.65%. Approximately
$35,730 of unissued Series B notes are remaining and available to be issued in
the future. At December 31, 1993, there were no Series C notes outstanding.
The nonrecourse notes are reported net of prepaid interest and represent
borrowings by the leasing subsidiary from banks and other financial
institutions. These notes have a weighted average interest rate of 7.77% at
December 31, 1993, and are due in installments over varying periods through
2001. Lease financing receivables at least equal to the amount of the notes
are pledged as collateral.
Scheduled maturities of long-term borrowings are: $65,254, $19,150, $43,578, and
$751 for 1995 through 1998, respectively.
11. Shareholders' Equity
The Corporation has 5,000,000 shares of preferred stock authorized, of which the
Board of Directors has designated 500,000 shares as Series A convertible, with
a $100 value per share for conversion purposes. Series A is nonvoting preferred
stock. The same cash dividends will be paid on Series A as would have been paid
on the common stock exchanged for Series A. Series A has the same restrictions
on sale as are applicable to the 8.5% convertible subordinated notes.
The holder of the convertible subordinated notes has the option through 1997 to
exchange common stock of the Corporation for Series A. If the common stock is
acquired by the holder in conversion of the Notes, the exchange ratio is one
share of Series A for 11.43 shares of common stock. If acquired otherwise, the
exchange ratio is one share of Series A, valued at $100, to the holder's
weighted average purchase price per common share. Also, the holder has the
option to convert Series A into common stock at the same ratio that the common
stock was exchanged for Series A. The Corporation has issued 185,314 shares of
its Series A convertible preferred stock in exchange for 1,962,900 shares of
common stock, which were subsequently retired.
The preferred stock is treated as a common stock equivalent in all per share
calculations.
In April 1993, the Corporation's Board of Directors authorized a common share
repurchase program for 5.7 million shares in anticipation of the conversion of
its 8.5% convertible subordinated notes and reaffirmed the Corporation's
on-going program for the repurchase of up to 1.5 million shares annually to
fund obligations to deliver or have available shares of common stock for stock
option and other employee benefit plans. During 1993, the Corporation
purchased 5.0 million common shares.
<PAGE>
Federal banking regulatory agencies have established capital adequacy rules
which take into account risk attributable to balance sheet assets and
off-balance sheet activities. All banks and bank holding companies must meet
a minimum total risk-based capital ratio of 8%. Of the 8% required, half must
be comprised of core capital elements defined as Tier 1 capital. The federal
banking agencies also have adopted leverage capital guidelines which banking
organizations must meet. Under these guidelines, the most highly rated banking
organizations must meet a minimum leverage ratio of at least 3% Tier 1 capital
to total assets, while lower rated banking organizations must maintain a ratio
of at least 4% to 5%.
<PAGE>
The Corporation's risk-based capital and leverage ratios are as follows:
RISK-BASED CAPITAL RATIOS
As of December 31, 1993
($ in millions)
Amount Ratio
------ -----
Tier 1 capital $1,061 11.47%
Tier 1 capital
minimum requirement 370 4.00
------ -----
Excess $ 691 7.47%
====== =====
Total capital $1,300 14.06%
Total capital
minimum requirement 740 8.00
------ -----
Excess $ 560 6.06%
====== =====
Risk-adjusted assets $9,248
LEVERAGE RATIO
as of December 31, 1993
($ in millions)
---------------------------
Amount Ratio
---------- -----------
Tier 1 capital to
adjusted total assets $ 1,061 8.74%
Minimum leverage
requirement 364 - 607 3.00 - 5.00
---------- -----------
Excess $697 - 454 5.74 - 3.74%
========== ===========
Adjusted average total assets $12,136
All of the Corporation's banking subsidiaries' risk-based capital and leverage
ratios meet or exceed the defined minimum requirements.
Banking subsidiaries are restricted by banking regulations from making dividend
distributions above prescribed amounts and are limited in making loans and
advances to the Corporation. At December 31, 1993, the retained earnings of
subsidiaries available for distribution as dividends without regulatory approval
was approximately $287,563.
<PAGE>
12. Income Taxes
Total income tax expense for the years ended December 31, 1993 and 1992 was
allocated as follows:
1993 1992
-------- --------
Income before Cumulative Changes in
Accounting $ 93,190 $ 75,391
Cumulative Effect of Change in Accounting
for Postretirement Benefits, Other than
Pensions and Accounting for Income Taxes -- (13,655)
Shareholders' Equity, for Compensation
Expense for Tax Purposes in Excess of
Amounts Recognized for Financial Reporting
Purposes (8,154) (2,571)
-------- --------
$ 85,036 $ 59,165
======== ========
As discussed in Note 3, the Corporation adopted Financial Accounting Standard
No. 109 in 1992. This change had no significant effect on net income,
excluding the cumulative effect, in 1992. Financial statements for 1991 have
not been restated to apply the new standard.
The current and deferred portions of the provision for income taxes were:
1993 1992 1991
------- ------- -------
Current:
Federal $81,561 $71,896 $46,298
State 14,746 13,272 11,996
------- ------- -------
96,307 85,168 58,294
Deferred:
Federal (3,412) (9,545) (1,241)
State 295 (232) (328)
------- ------- -------
(3,117) (9,777) (1,569)
------- ------- -------
Total provision for income taxes $93,190 $75,391 $56,725
======= ======= =======
The following is a reconciliation between the amount of the provision for income
taxes and the amount of tax computed by applying the statutory Federal income
tax rate (35% in 1993, 34% in 1992 and 1991, respectively):
1993 1992 1991
------- ------- -------
Tax computed at statutory rates $92,604 $78,809 $63,491
Increase (decrease) in taxes
resulting from:
Federal tax-exempt income (7,714) (11,622) (15,322)
State income taxes,
net of Federal tax benefit 9,832 9,039 7,812
Adjustment to deferred tax
assets/liabilities for an
enacted change in tax rate (469) -- --
Other (1,063) (835) 744
------- ------ -------
Total provision for income taxes $93,190 $75,391 $56,725
======= ======= =======
<PAGE>
The tax effects of temporary differences that give rise to significant elements
of the deferred tax assets and deferred tax liabilities at December 31, are as
follows:
1993 1992
--------- ---------
Deferred tax assets:
Deferred compensation $ 7,996 $ 7,301
Allowance for loan losses 33,938 29,426
Accrued postretirement benefits 11,769 10,205
Purchase accounting adjustments 1,046 1,715
Other 19,006 16,049
--------- ---------
Total deferred tax assets 73,755 64,696
Deferred tax liabilities:
Lease revenue reporting 21,015 15,609
Deferred expense, net of unearned
income 7,224 4,491
Fixed assets, principally due to
depreciation 17,839 16,047
Pension funding versus expense 3,143 2,564
Other 4,306 9,431
--------- ---------
Total deferred tax liabilities 53,527 48,142
--------- ---------
Net deferred tax assets $ 20,228 $ 16,554
========= =========
The amount of income tax expense related to net securities gains amounted to
$3,103, $3,675, and $1,576, in 1993, 1992, and 1991, respectively.
13. Stock Option and Restricted Stock Plans
The Corporation has Executive Stock Option and Restricted Stock Plans which
provide for the grant of nonqualified and incentive stock options, stock
appreciation rights and rights to purchase restricted shares to key employees at
prices ranging from not less than the par value of the common shares to the fair
market value of the shares at the date of grant.
Activity relating to common stock options, restated for the 3 for 1 stock split,
was:
Number Option Price
Of Shares Per Share
--------- ---------------
Shares under option at December 31, 1991 7,749,351 $ 2.17 - 17.21
Options granted 1,222,249 12.40 - 19.92
Options lapsed or surrendered (43,230) 2.17 - 17.21
Options exercised (1,125,576) 2.17 - 13.38
--------- ---------------
Shares under option at December 31, 1992 7,802,794 $ 3.35 - 19.92
Options granted 839,040 15.38 - 23.25
Options lapsed or surrendered (18,215) 9.34 - 19.50
Options exercised (2,228,186) 3.35 - 19.50
--------- ---------------
Shares under option at December 31, 1993 6,395,433 $ 4.03 - 23.25
=========
Options exercisable at December 31, 1993, and 1992, were 5,542,645 and
6,169,783, respectively. Shares reserved for the granting of additional
options at December 31, 1993, were 3,859,774.
<PAGE>
There were no restricted stock purchase rights outstanding at December 31, 1993,
and 1992. In addition, there were no stock purchase rights exercised during
1993 and 85,500 rights exercised in 1992.
Restrictions on stock issued pursuant to the exercise of stock purchase rights
lapse within a seven-year period. Accordingly, the compensation related to
issuance of the rights is deferred and amortized over the vesting period.
Unamortized deferred compensation is reflected as a reduction of shareholders'
equity.
Aggregate compensation expense related to stock purchase rights was $1,008,
$1,004, and $1,129, in 1993, 1992, and 1991, respectively.
14. Employee Retirement and Health Plans
The Corporation has a defined contribution retirement plan for substantially all
employees. The plan provides for a guaranteed contribution for eligible
participants equal to 2% of compensation. At the Corporation's option, a profit
sharing amount may also be contributed and may vary from year to year up to a
maximum of 6% of eligible compensation. Total retirement plan expense on this
plan was $12,915, $11,927, and $10,591, in 1993, 1992, and 1991, respectively.
The Corporation also has supplemental retirement plans to provide retirement
benefits to certain of its key executives. Total expense relating to these
plans amounted to $2,703 in 1993, $4,561 in 1992, and $166 in 1991.
Valley maintained a trusteed defined benefit retirement plan which covered
substantially all its employees. The following table reflects the plan's funded
status and amounts recognized in the financial statements at December 31:
1993 1992
-------- --------
Actuarial present value of benefit obligations:
Vested benefit obligation $ 38,326 $ 26,311
Nonvested benefit obligation 1,820 1,283
-------- --------
Accumulated benefit obligation 40,146 27,594
Effect of projected future compensation levels 19,911 13,857
-------- --------
Projected benefit obligation 60,057 41,451
Plan assets at fair value 45,159 37,163
-------- --------
Plan assets less than projected
benefit obligations (14,898) (4,288)
Unrecognized net loss 23,148 9,970
Unrecognized prior service cost 2,401 2,642
Unrecognized net asset (1,672) (1,811)
-------- --------
Prepaid pension cost $ 8,979 $ 6,513
======== ========
The net pension cost for 1993, 1992, and 1991, included the following
components:
1993 1992 1991
---------- ----------- ----------
Service cost $ 3,361 $ 2,348 $ 1,898
Interest cost 3,283 2,502 2,244
Actual return on plan assets (2,885) (1,852) (3,423)
Net amortization and deferral (416) (882) 1,306
-------- -------- --------
Net periodic pension cost $ 3,343 $ 2,116 $ 2,025
======== ======== ========
The following assumptions were used in determining the projected benefit
obligation:
1993 1992
------ ------
Discount rate 6.75% 8.00%
Rate of increase in compensation levels 5.00% 5.00%
Expected long-term rate of return
on assets 10.00% 10.00%
<PAGE>
As of the merger date former Valley employees will become eligible to
participate in the Corporation's defined contribution pension plan.
The Corporation sponsors a defined benefit health plan that provides health care
benefits to all eligible current and retired employees. The plan is
contributory, with contributions adjusted periodically such that participants
contribute approximately 40% of the cost of health care benefits. The plan also
contains other cost-sharing features such as deductibles and coinsurance.
Retiree eligibility is dependent upon age, years of service, and participation
in the health plan during active service. The plan is not funded.
Valley provided postretirement health care benefits to retired employees. These
benefits are subject to deductibles, copayment provisions and other limitations.
Only those employees retiring on or before December 31, 1994 will be eligible
for such benefits. As part of the merger, all former Valley employees will
become eligible to participate in the Corporation's postretirement health plan.
The Corporation will not recognize years of service with Valley prior to the
merger.
As discussed in Note 3, the Corporation adopted FAS 106, "Employers' Accounting
for Postretirement Benefits, Other than Pensions" as of January 1, 1992. The
Corporation elected immediate recognition of the accumulated postretirement
benefit obligation as of the beginning of the year through a one-time charge to
earnings of $19,934 before income taxes. Valley's results of operations have
been restated to conform their policy to the Corporation, thereby resulting in
a total charge to earnings of $22,789. Postretirement benefit costs for 1991
were recorded on the cash basis.
The components of the accumulated postretirement benefit obligation (APBO)
reconciled with the amount recognized in the Corporation's Consolidated Balance
Sheets at December 31, were:
1993 1992
-------- --------
Accumulated postretirement benefit
obligation:
Retirees $ 13,602 $ 11,192
Fully eligible active plan
participants 9,019 4,098
Active plan participants 16,679 9,751
-------- --------
39,300 25,041
Unrecognized gain (loss) (10,837) 29
-------- --------
Accrued postretirement benefit cost $ 28,463 $ 25,070
======== ========
Weighted average discount rate
used in determining APBO 7.50% 8.50%
======== ========
Net periodic postretirement benefit cost for the years ended December 31, 1993
and 1992 includes the following components:
1993 1992
-------- --------
Service cost $ 1,385 $ 1,212
Interest on APBO 2,279 1,668
-------- --------
$ 3,664 $ 2,880
======== ========
For measurement purposes, the assumed health care cost trend rate was 14% and
13% in 1992 and 1993, respectively, and gradually declines to 6.5% in the year
2021.
The health care cost trend rate assumption has a significant effect on the
amounts reported. An increase in the assumed health care cost trend rate of one
percentage point would increase the APBO at December 31, 1993 by $4,376 and
increase 1993 postretirement benefit expense by $701.
<PAGE>
In November 1992, the FASB issued Statement of Financial Accounting Standard No.
112 "Employers' Accounting for Postemployment Benefits," (FAS 112). FAS 112
establishes accounting and reporting standards for employers who provide
benefits to former or inactive employees after employment but before retirement
and must be adopted in the first quarter of 1994. Based on the current types of
postemployment benefits provided by the Corporation, it is not anticipated that
this new standard will have a material impact on the Consolidated Financial
Statements.
15. Financial Instruments with Off-Balance Sheet Risk
Financial instruments with off-balance sheet risk at December 31 were:
1993 1992
----------- ----------
Financial instruments whose amounts
represent credit risk:
Commitments to extend credit:
To commercial customers $3,210,573 $2,639,331
To individuals 725,122 617,827
Standby letters of credit, net of
participations 295,382 268,664
Commercial letters of credit 17,032 15,131
Mortgage loans sold with recourse 8,408 12,695
Financial instruments whose amounts
exceed the amount of credit risk:
Foreign exchange contracts:
Commitments to purchase foreign exchange 229,061 152,544
Commitments to deliver foreign exchange 231,925 154,287
Options written 24,251 20,263
Interest rate swaps 105,000 50,000
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates and may require payment of a fee. Since
many of the commitments are expected to expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash requirements.
The Corporation evaluates each customer's credit worthiness on an individual
basis. Collateral obtained, if any, upon extension of credit, is based upon
management's credit evaluation of the customer. Collateral requirements and the
ability to access collateral is generally similar to that required on loans
outstanding as discussed in Note 7.
Standby and commercial letters of credit are contingent commitments issued by
the Corporation to support the financial obligations of a customer to a third
party. Standby letters of credit are issued to support public and private
financing, and other financial or performance obligations of customers.
Commercial letters of credit are issued to support payment obligations of
a customer as buyer in a commercial contract for the purchase of goods.
Letters of credit have maturities which generally reflect the maturities of
the underlying obligations. The credit risk involved in issuing letters of
credit is the same as that involved in extending loans to customers. If deemed
necessary, the Corporation holds various forms of collateral to support letters
of credit.
Mortgage loans sold with recourse are pools of residential mortgage loans sold
to government agencies subject to certain underwriting requirements. If the
loans do not meet the underwriting requirements of the government agencies, the
Corporation may be required to reacquire the loans.
Interest rate swaps are agreements to exchange, at specified intervals, interest
payment streams calculated on an agreed upon notional principal amount with at
least one stream based on a floating rate index. Periodic payments between
counterparties are typically settled on a net basis over the life of the swap.
Interest rate swaps are subject to the market risk inherent in such agreements
and the risk that a counterparty will fail to meet the terms of the agreement.
Foreign exchange contracts are commitments to purchase or deliver foreign
currency at a specified exchange rate. These contracts are entered into to
hedge the Corporation's own exposure, and to enable customers involved in
international trade to hedge their exposure, to foreign currency fluctuations.
Generally, the Corporation does not require collateral to support these
financial instruments.
<PAGE>
The Corporation's market risk from unfavorable movements in currency exchange
rates is minimized by essentially matching commitments to deliver foreign
exchange with commitments to purchase foreign exchange.
16. Fair Value of Financial Instruments
The book values and estimated fair values for on and off-balance sheet financial
instruments as of December 31, 1993 and 1992 are reflected below.
BALANCE SHEET FINANCIAL INSTRUMENTS ($ In Millions)
1993 1992
--------------------- ---------------------
Book Value Fair Value Book Value Fair Value
--------------------- ---------------------
Financial Assets:
Cash and short-term
investments $ 834.8 $ 834.8 $1,031.4 $1,031.4
Trading securities 2.9 2.9 13.0 13.0
Investment securities held
to maturity 335.4 341.9 1,121.3 1,136.0
Investment securities
available for sale 2,237.2 2,261.1 1,620.4 1,649.7
Net loans 8,483.8 8,683.1 7,857.0 8,038.2
Interest receivable 77.8 77.8 87.4 87.4
Financial Liabilities:
Deposits 10,171.8 10,221.1 10,043.8 10,082.8
Short-term borrowings 653.6 653.6 577.1 577.1
Long-term borrowings:
Convertible debt 50.0 135.0 50.7 124.8
Other long-term borrowings 247.6 255.6 191.9 202.2
Interest payable 39.1 39.1 38.9 38.9
Where readily available, quoted market prices were utilized by the Corporation.
If quoted market prices were not available, fair values were based on estimates
using present value or other valuation techniques. These techniques were
significantly affected by the assumptions used, including the discount rate and
estimates of future cash flows. The calculated fair value estimates, therefore,
cannot be substantiated by comparison to independent markets and, in many cases,
could not be realized in immediate settlement of the instrument. Statement 107
excludes certain financial instruments and all nonfinancial assets and
liabilities from its disclosure requirements. Accordingly, the aggregate fair
value amounts presented do not represent the underlying value of the
Corporation.
The following methods and assumptions were used in estimating the fair value for
financial instruments.
Cash and Short-term Investments
- - -------------------------------
The carrying amounts reported for cash and short-term investments approximates
the fair values for those assets.
Trading and Investment Securities
- - ---------------------------------
Fair value is based on quoted market prices or dealer quotes. See Note 6,
Securities, for additional information.
<PAGE>
Loans
- - -----
Loans that reprice or mature within three months of December 31 were assigned
fair values based on their book value. Market values were used on performing
loans where available. Most remaining loan balances were assigned fair values
based on a discounted cash flow analysis. The discount rate was based on the
treasury yield curve, with rate adjustments for credit quality, cost and profit
factors.
Deposits
- - --------
The fair value for demand deposits or any interest bearing deposits with no
fixed maturity date was considered to be equal to the carrying value. Time
deposits with defined maturity dates were considered to have a fair value
equal to the book value if the maturity date was within three months of
December 31. The remaining time deposits were assigned fair values based
on a discounted cash flow analysis using discount rates which approximate
interest rates currently being offered on time deposits with comparable
maturities.
Borrowings
- - ----------
Short-term borrowings are carried at cost which approximates fair value. The
Corporation has convertible debt (see Note 10) for which fair value was
considered to be the current market value of the shares that would be issued in
a full conversion. Other long-term debt was generally valued using a discounted
cash flow analysis with a discount rate based on current incremental borrowing
rates for similar types of arrangements or, if not readily available, based on
a build up approach similar to that used for loans and deposits. Long-term
borrowings include their related current maturities.
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS ($ in millions)
Fair values of Loan Commitments and Letters of Credit have been estimated based
on the equivalent fees, net of expenses, that would be charged for similar
contracts and customers at December 31. The fair value of interest rate swaps
are based on pricing models using current assumptions.
1993 1992
------ ------
Loan commitments $ 9.8 $ 7.3
Letters of credit 2.8 2.6
Interest rate swaps .1 --
Foreign exchange contracts are carried at market value (U.S. dollar equivalent
of the underlying contract).
1993 1992
------ ------
Commitments to purchase foreign exchange $229.1 $152.5
Commitments to deliver foreign exchange 231.9 154.3
Options written .5 2.4
See Note 15 for additional information on financial off-balance sheet
instruments.
<PAGE>
17. Business Segments
The following table reflects certain information regarding our banking and data
processing businesses:
Adjustments
Data and
1993 Banking Processing Eliminations Consolidation
- - -------- ---------- ---------- ------------ --------------
Revenue from:
Unaffiliated customers $ 1,030,362 $ 135,041 -- $ 1,165,403
Affiliated customers 7,920 71,775 $ (79,695) --
----------- ---------- ------------ -------------
Total revenue $ 1,038,282 $ 206,816 $ (79,695) $ 1,165,403
=========== ========== ============ =============
Operating profit $ 243,228 $ 21,356 -- $ 264,584
=========== ========== ============ =============
Identifiable assets $12,374,074 $ 160,828 $ (48,965) $12,485,937
=========== ========== ============ =============
Net capital expenditures $ 18,386 $ 47,345 -- $ 65,731
=========== ========== ============ =============
1992
- - --------
Revenue from:
Unaffiliated customers $ 1,067,394 $ 112,056 -- $ 1,179,450
Affiliated customers 7,619 69,234 $ (76,853) --
----------- ---------- ------------ -------------
Total revenue $ 1,075,013 $ 181,290 $ (76,853) $ 1,179,450
=========== ========== ============ =============
Operating profit $ 211,578 $ 20,214 -- $ 231,792
=========== ========== ============ =============
Identifiable assets $12,128,715 $ 122,758 $ (37,002) $12,214,471
=========== ========== ============ =============
Net capital expenditures $ 20,735 $ 27,304 -- $ 48,039
=========== ========== ============ =============
1991
- - --------
Revenue from:
Unaffiliated customers $ 1,124,256 $ 90,582 -- $ 1,214,838
Affiliated customers 7,125 62,075 $ (69,200) --
----------- ---------- ------------ -------------
Total revenue $ 1,131,381 $ 152,657 $ (69,200) $ 1,214,838
=========== ========== ============ =============
Operating profit $ 171,389 $ 15,349 -- $ 186,738
=========== ========== ============ =============
Identifiable assets $11,524,476 $ 111,139 $ (40,615) $11,595,000
=========== ========== ============ =============
Net capital expenditures $ 6,098 $ 29,429 -- $ 35,527
=========== ========== ============ =============
The Corporation owns 53 banks, 2 savings associations, and numerous nonbank
subsidiaries. Each subsidiary is a separate legal and operating entity. Our
banking operations provide traditional banking products along with trust,
mortgage banking, leasing, insurance agency and venture capital services. M&I
Data Services, Inc. (DSI) provides data processing, software, and other related
services to both affiliated and unaffiliated customers. In addition, a Valley
affiliate provided similar services and other operational support to affiliated
customers.
Revenues from affiliated customers are primarily accounted for at rates similar
to those charged to unaffiliated customers.
Operating profit is pretax net income. Depreciation and amortization expense
for the banking services business amounted to $30,378, $18,365, and $19,106 in
1993, 1992, and 1991, respectively, and for DSI amounted to $26,680 in 1993,
$23,012 in 1992, and $19,992 in 1991.
<PAGE>
18. Condensed Financial Information - Parent Corporation Only
Condensed Balance Sheets
December 31 1993 1992
---------- --------
Assets
------
Cash and cash equivalents $ 1,479 $ 30,420
Indebtedness of affiliates:
Banks 5,200 5,200
Nonbanks 343,397 221,637
Investments in affiliates:
Banks 966,881 917,221
Nonbanks 193,314 171,700
Other assets 39,090 35,442
---------- ----------
Total assets $1,549,361 $1,381,620
========== ==========
Liabilities and shareholders' equity
------------------------------------
Commercial paper issued $ 100,292 $ 77,265
Other short-term borrowings 50,000 --
Other liabilities 44,183 40,492
Long-term borrowings 240,373 178,194
---------- ----------
Total liabilities 434,848 295,951
Shareholders' equity 1,114,513 1,085,669
---------- ----------
Total liabilities and shareholders' equity $1,549,361 $1,381,620
========== ==========
Scheduled maturities of long-term borrowings are $45,900 in 1994, $43,500 in
1995, $11,600 in 1996, $40,000 in 1997, and $100,000 in 2003.
Condensed Statements of Income
Years Ended December 31 1993 1992 1991
-------- -------- --------
Income
------
Cash dividends:
Bank affiliates $105,738 $ 90,269 $100,786
Nonbank affiliates 17,259 12,527 8,903
Interest from affiliates 14,090 12,626 12,440
Service fees and other 35,701 29,859 37,248
-------- -------- --------
Total income 172,788 145,281 159,377
Expense
-------
Interest 19,968 22,073 24,736
Administrative and general 37,665 47,754 37,368
-------- -------- --------
Total expense 57,633 69,827 62,104
Income before income taxes,
cumulative effect of changes in
accounting principles and equity
in undistributed net income of
affiliates 115,155 75,454 97,273
Income tax benefit 2,057 10,080 3,360
-------- -------- --------
Income before cumulative effect of
changes in accounting principles and
equity in undistributed net income
of affiliates 117,212 85,534 100,633
Cumulative effect of changes in accounting
principles, net of income taxes -- (1,380) --
-------- -------- --------
Income before equity in undistributed
net income of affiliates 117,212 84,154 100,633
Equity in undistributed net
income of affiliates:
Banks 36,527 36,715 14,959
Nonbanks 17,655 26,398 14,421
-------- -------- --------
Net income $171,394 $147,267 $130,013
======== ======== ========
<PAGE>
Condensed Statements of Cash Flows
Years Ended December 31
1993 1992 1991
---------- --------- ----------
Cash Flows From Operating Activities:
Net Income $ 171,394 $ 147,267 $ 130,013
Noncash items included in income:
Equity in undistributed net income
of affiliates (54,182) (63,113) (29,380)
Depreciation and amortization 6,092 6,527 7,174
Other (5,741) 1,430 (2,001)
--------- --------- ----------
Net cash provided by operating
activities 117,563 92,111 105,806
Cash Flows From Investing Activities:
Increases in indebtedness of
affiliates (557,882) (300,227) (162,297)
Decreases in indebtedness of
affiliates 436,122 237,390 161,565
Increases in investments
in affiliates (15,040) (29,733) (35,286)
Sale of commercial paper investments -- -- 20,418
Other 3,843 2,924 6,730
-------- --------- ----------
Net cash used in
investing activities (132,957) (89,646) (8,870)
Cash Flows From Financing Activities:
Dividends paid (54,435) (48,060) (42,675)
Proceeds from issuance of commercial
paper 1,348,661 597,794 607,787
Principal payments on commercial
paper (1,325,634) (522,990) (648,733)
Proceeds from issuance of long-term
debt 99,351 24,598 17,339
Payments on long-term debt (36,677) (79,413) (18,070)
Increase (decrease) in other short-
term borrowings 50,000 (374) (4,250)
Purchase of common stock (114,686) (99) (1,588)
Proceeds from exercise of stock
options 19,887 5,014 4,155
Proceeds from the issuance of common
stock -- 32,806 3,908
Other (14) (74) (183)
-------- --------- ---------
Net cash provided by (used in)
financing activities (13,547) 9,576 (80,748)
Net increase (decrease) in cash and
cash equivalents (28,941) 12,041 16,188
Cash and cash equivalents, beginning
of year 30,420 18,379 2,191
-------- --------- ---------
Cash and cash equivalents, end of year $ 1,479 $ 30,420 $ 18,379
======== ========= =========
<PAGE>
Quarterly Financial Information (Unaudited)
($000's except share data)
Following is unaudited financial information for each of the calendar quarters
during the years ended December 31, 1993 and 1992. All per share information
has been restated for the 3 for 1 stock split effected in the form of a 200%
stock dividend distributed to shareholders in May 1993.
Quarter Ended
------------------------------------------
Dec. 31 Sept. 30 June 30 March 31
-------- --------- --------- ---------
1993
- - ----
Total Interest Income $197,155 $197,439 $198,856 $200,027
Net Interest Income 121,554 119,705 120,260 118,760
Provision for Loan Losses 4,883 4,400 4,440 4,311
Income before Income Taxes 68,093 66,878 66,248 63,365
Net Income 43,513 42,535 43,417 41,929
Net Income Per Share:
Primary 0.43 0.42 0.42 0.41
Fully Diluted 0.41 0.40 0.40 0.39
1992
- - ----
Total Interest Income $209,278 $213,414 $212,253 $216,094
Net Interest Income 123,056 121,124 116,051 112,320
Provision for Loan Losses 6,200 5,338 6,098 5,910
Income before Income Taxes
and Cumulative Effect of
Changes in Accounting
Principles 62,139 59,787 56,534 53,332
Income before Cumulative
Effect of Changes in
Accounting Principles 42,368 39,847 38,075 36,111
Net Income 42,368 39,847 38,075 26,977
Net Income Per Share:
Primary
Income before Cumulative
Effect of Changes in
Accounting Principles 0.41 0.39 0.38 0.36
Net Income 0.41 0.39 0.38 0.27
Fully Diluted
Income before Cumulative
Effect of Changes in
Accounting Principles 0.40 0.37 0.37 0.35
Net Income 0.40 0.37 0.37 0.26
Common Dividends
Declared* 1993 1992 1991 1990 1989
- - -----------------------------------------------------------------
First Quarter $0.12 $0.11 $0.10 $0.09 $0.08
Second Quarter 0.14 0.12 0.11 0.10 0.09
Third Quarter 0.14 0.12 0.11 0.10 0.09
Fourth Quarter 0.14 0.12 0.11 0.10 0.09
-------------------------------------------
$0.54 $0.48 $0.43 $0.39 $0.35
* May not add due to rounding
<PAGE>
Price Range of Stock
(Low and High Bid)
Common Dividends
Declared* 1993 1992 1991 1990 1989
- - ----------------------------------------------------------------------
First Quarter
Low 21 1/16 17 1/4 8 15/16 10 5/8 9 5/16
High 23 5/16 18 1/4 11 3/16 11 13/16 10 1/2
Second Quarter
Low 22 15/16 16 15/16 10 9/16 10 1/4 9 15/16
High 25 3/4 20 9/16 13 11/16 11 11 1/2
Third Quarter
Low 21 1/4 19 3/16 12 3/4 8 1/2 11 1/4
High 25 21 13/16 15 1/16 10 9/16 12 11/16
Fourth Quarter
Low 21 3/4 20 1/16 14 3/16 7 3/4 10 11/16
High 24 1/4 22 1/16 18 9/16 9 11/16 12 5/16
