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UNITED STATES
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
JULY 20, 1999
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
PNC BANK CORP.
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(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 1-9718
PENNSYLVANIA 25-1435979
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE PNC PLAZA
249 FIFTH AVENUE
PITTSBURGH, PENNSYLVANIA 15222-2707
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(Address of principal executive offices)
(Zip Code)
(412) 762-1553
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(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On July 20, 1999, the Corporation announced an agreement to acquire
First Data Investor Services Group, Inc. (ISG), the mutual fund
servicing subsidiary of First Data Corp. for $1.1 billion in cash. The
transaction is expected to close in the fourth quarter of 1999, pending
regulatory approvals and satisfaction of customary closing
conditions. A copy of the press release issued by the Corporation is
attached hereto as Exhibit 99.1 and incorporated herein by reference.
Certain information made available by the Corporation with respect to
the acquisition of ISG is attached hereto as Exhibit 99.2 and
incorporated herein by reference.
The information in Exhibits 99.1 and 99.2 contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act, which are based upon numerous assumptions and estimates
relating to future operations and are subject to the risks and
uncertainties described therein, among others. Many of these matters
are difficult to predict and may change over time. Forward-looking
statements contained within Exhibits 99.1 and 99.2 are not guarantees
of future performance. Actual results may differ materially from the
Corporation's current expectations. The Corporation assumes no
obligation to correct or update forward-looking statements to reflect
actual results, changes in assumptions or changes in other factors
affecting forward-looking statements or if the Corporation later
becomes aware that they are not likely to be achieved.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The exhibits listed on the Exhibit Index on page 3 of this Form 8-K
are filed herewith.
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 thereunto duly authorized.
PNC BANK CORP.
(Registrant)
Date: July 21, 1999 By: /s/ Robert L. Haunschild
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Robert L. Haunschild
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
99.1 Press release issued by the Corporation on July 20, 1999, with respect
to the announcement of an agreement to acquire ISG, filed herewith.
99.2 Certain information made available by the Corporation with respect to
the acquisition of ISG, filed herewith.
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Exhibit 99.1
[PNC BANK LOGO]
CONTACTS:
MEDIA:
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Brian E. Goerke
(412) 762-4304
[email protected]
INVESTORS:
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William H. Callihan
(412) 762-8257
[email protected]
PNC BANK ANNOUNCES ACQUISITION
OF FIRST DATA INVESTOR SERVICES GROUP
POSITIONS PFPC WORLDWIDE AS A PREMIER INVESTMENT SERVICES PROVIDER
PITTSBURGH, July 20, 1999--PNC Bank Corp. today announced an agreement
to acquire First Data Investor Services Group (ISG), the mutual fund servicing
subsidiary of First Data Corp. for $1.1 billion in cash. ISG is one of the
nation's leading providers of processing services for pooled investment
products--a high-growth industry that includes mutual funds and retirement
plans.
The addition of ISG to PFPC Worldwide, PNC's investment servicing
subsidiary, will create a leading force in a processing business that is highly
valued by the investor community. The acquisition will make PFPC one of the
nation's leading full-service mutual fund transfer agents, while significantly
strengthening PFPC's position as a full-service provider of mutual fund
accounting services. The transaction will also add key related businesses
including retirement plan servicing to PFPC's growing operations. The combined
organization will provide fund accounting services for $287 billion in mutual
fund assets and transfer agent services for 33 million shareholder accounts, and
will service over 20,000 retirement plans.
The acquisition is expected to increase the relative revenue
contribution of PNC's fee-based businesses to approximately 55 percent this year
on a pro forma basis and 60 percent in 2000. The transaction will be accounted
for as a purchase and is expected to be less than one percent dilutive to GAAP
earnings per share in the first year and accretive thereafter. On a cash basis,
the transaction is expected to be substantially accretive to earnings per share
immediately. The transaction is expected to close in the fourth quarter of 1999,
pending regulatory approvals and customary conditions to closing.
- more -
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PNC Bank Announces Acquisition of First Data Investor Services Group - Page 2
"This acquisition advances our strategies focused on building
best-of-class businesses in high-growth, high-return industries," said Thomas H.
O'Brien, chairman and chief executive officer of PNC Bank. "The acquisition of
ISG will create a market leader in virtually every major category of a
fast-growing industry, and we expect it to have a positive impact on our growth
and earnings dynamics."
"PFPC has a 25-year history of leadership and innovation in providing
customized fund services," said J. Richard Carnall, chairman and chief executive
officer of PFPC Worldwide. "The addition of ISG will further strengthen our core
businesses, while enhancing our expansion in key, related businesses such as
401(k) administration which present significant opportunities for growth. This
acquisition will also solidify PFPC's position as a leader in shareholder
services technology."
"We believe this combination will create the premier one-stop shop for
high-quality shareholder services, bringing a virtually unparalleled array of
services to our customers," said James L. Fox, president and chief operating
officer of ISG. "We are pleased to be joining an organization with a strong
commitment and proven track record in this business."
Fox will become vice chairman of PFPC Worldwide, joining the executive
management team headed by Carnall and Vincent J. Ciavardini, president and chief
operating officer.
PFPC Worldwide provides a broad range of technology-driven services
including fund accounting, administration, transfer agency, shareholder
services, custody, integrated banking transaction services, hedge products
accounting and securities lending. In 1993, PFPC established PFPC International
Ltd., based in Dublin, Ireland, to better serve the international funds
community and target opportunities to serve EU-based funds and partnerships.
PNC Bank Corp. is one of the largest diversified financial services
organizations in the United States. Its major businesses include PNC Regional
Bank, PNC Institutional Bank, PNC Advisors, PNC Mortgage, PNC Secured Finance,
PFPC Worldwide and BlackRock.
This press release contains forward-looking statements with respect to the
anticipated effect of the proposed acquisition of ISG. The following factors,
among others, could cause actual results to differ materially from PNC's
expectations: extent of ISG customer retention and generation; ability to timely
and fully realize contemplated cost savings and revenues; ability to attract and
retain management; cost and availability of acquisition financing; factors
related to ISG's Year 2000 remediation efforts and the Year 2000 compliance of
other parties; technological changes; changes in economic conditions, interest
rates, and financial and capital markets; competition; and changes in
legislation or regulatory requirements. PNC does not assume any duty to update
forward-looking statements.
# # #
Visit PNC Bank on the World Wide Web at http://www.pncbank.com
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Exhibit 99.2
Forward-Looking Information
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This presentation contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act with respect to cost savings, revenue
enhancements and accretion/dilution to reported earnings that may result from
the acquisition; anticipated revenues and expenses after the acquisition; PNC's
future financial performance; and other financial and business matters.
In addition to factors previously disclosed in our SEC reports and those
identified elsewhere in this presentation, the following factors, among others,
could cause actual results to differ materially from these forward-looking
statements: changes in global and domestic economic conditions; changes in
interest rates and financial and capital markets; competition; the impact,
extent, timing and cost of technological changes; the combined company's ability
to retain existing customers and to attract new ones; the ability to timely and
fully realize contemplated cost savings and revenues following the acquisition;
the combined company's ability to attract and retain qualified management and
personnel; the cost and availability of acquisition financing; factors related
to FDISG's year 2000 remediation efforts and the year 2000 compliance of other
parties; and changes in legislation or regulatory requirements. We assume no
duty to update forward-looking statements.
PNCBANK
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Incremental Impact on PNC Earnings
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($ millions, after tax) Estimates
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2000 2001 2002
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FDISG earnings contribution,
excluding existing intangible amortization $58 $62 $67
Cost savings (1) 10 23 29
Net revenue enhancements (2) 2 6 9
Financing costs (36) (33) (30)
Intangibles amortization (3) (32) (32) (32)
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Incremental net income 2 26 43
Preferred financing costs (13) (13) (13)
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Net income available to common ($11) $13 $30
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Cash earnings $42 $66 $83
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(1) Total after-tax cost savings $29 million (12% of proforma combined
operating costs)
(2) Total after-tax benefits of net revenue synergies $9 million (total revenue
synergies of $63 million in 2002 representing 11% of proforma combined
revenue and profit margin of 25%)
(3) Total customer intangibles and goodwill of $1,066 million amortized over
lives ranging from 10 to 25 years
PNCBANK
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Impact on PNC Consolidated
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Estimates
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2000 2001 2002
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PNC Bank Corp. earnings per share (1) $4.35 $4.80 $5.30
Earnings per share ($0.04) $0.04 $0.11
Accretion (dilution) (1%) 1% 2%
Cash earnings per share $0.14 $0.23 $0.30
Accretion 3% 5% 6%
(1) Salomon Smith Barney estimates as of July 19, 1999
PNCBANK
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Proforma PFPC Worldwide
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($ millions) Proforma Estimates
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2000 2001 2002 CAGR
---- ---- ---- ----
Revenue
PFPC / FDISG $706 $819 $955
Revenue enhancements 11 43 63
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Total revenue 717 862 1,018 19%
Expense
PFPC / FDISG 541 630 736
Financing costs 81 77 72
Cost savings (16) (38) (48)
Costs for revenue enhancements 8 33 48
Incremental intangible amortization 33 33 33
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Total expense 647 735 841 14%
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Income before income taxes 70 127 177
Income taxes 28 51 71
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Earnings contribution $42 $76 $106 59%
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PNCBANK
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Overview of FDISG
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<TABLE>
<CAPTION>
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First Data Investor Services Group
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<S> <C>
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o Headquartered in Westborough, MA
o Currently employs approximately 3,400
o 2nd largest full service transfer agent
o 8th largest full service accounting agent
o Significant provider of retirement plan services
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| | |
| | |
- --------------- --------------- -------------------
Fund Accounting Transfer Agency Retirement Services
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o Accounting o Full-Service Outsourcing o Full-Service Outsourcing
o Administration o Remote Access o Remote Access
o Tax o Subaccounting o Automated Voice Response
o Legal Compliance o Proxy Services o Internet Access
o Blue Sky o Call Center
o Broker / Dealer Services
o Internet Access
</TABLE>
PNCBANK
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First Data Investor Services Group
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($ millions) Year Ended December 31
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1999 1998 1997
Estimate Actual Actual
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Revenue
Shareholder service fees $282 $250 $228
Service and other revenue 98 87 72
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Total revenue 380 337 300
Expense
Staff expense 181 163 136
All other 130 110 116
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Total expense 311 273 252
--- --- ---
Income before income taxes 69 64 48
Income taxes 28 25 19
--- --- ---
Net income $41 $39 $29
=== === ===
PNCBANK
