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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
Date of Report (date of earliest event reported): April 21, 1999
WELLS FARGO & COMPANY
(Exact name of registrant as specified in its charter)
Delaware 001-2979 No. 41-0449260
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
420 Montgomery Street, San Francisco, California 94163
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 1-800-411-4932
Not applicable
(Former name or former address, if changed since last report)
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Item 5: OTHER EVENTS
Wells Fargo & Company is placing on file as Exhibit 99 a copy of the
Company's financial results for the quarter ended March 31, 1999.
Final financial statements with additional analyses will be filed as
part of the Company's Form 10-Q for the quarter ended March 31, 1999.
Item 7: FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
3(a) Certificate Eliminating the Certificate of
Designations for the Company's Series A Junior
Participating Preferred Stock
3(b) Certificate of Designations for the Company's 1999
ESOP Cumulative Convertible Preferred Stock
27 Financial Data Schedule
99 Wells Fargo & Company's financial results for the
quarter ended March 31, 1999
SIGNATURE
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, on April 21, 1999.
WELLS FARGO & COMPANY
By: /s/ LES L. QUOCK
----------------------------
Les L. Quock
Senior Vice President and Controller
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Exhibit 3(a)
CERTIFICATE ELIMINATING THE CERTIFICATE OF DESIGNATIONS
WITH RESPECT TO THE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
WELLS FARGO & COMPANY
-----------------------------------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
-----------------------------------------------
The undersigned DOES HEREBY CERTIFY that the following resolutions were
duly adopted by the Board of Directors of Wells Fargo & Company, a Delaware
corporation (the "Company"), at a meeting duly convened and held on February 23,
1999, at which a quorum was present and acting throughout:
WHEREAS resolutions were adopted by the Board of Directors,
which resolutions are set forth in a Certificate of Designations filed
with the Secretary of State of the State of Delaware on December 21,
1988, providing for and authorizing the issuance of 1,000,000 shares of
Series A Junior Participating Preferred Stock ("Series A Preferred
Stock"); and
WHEREAS no shares of the Series A Preferred Stock are
outstanding because none were issued, and the Board of Directors
desires to eliminate from the Company's Restated Certificate of
Incorporation, as amended, all matters set forth in the Certificate of
Designations with respect to the Series A Preferred Stock.
RESOLVED that none of the authorized shares of Series A
Preferred Stock are outstanding and none will be issued subject to the
Certificate of Designations previously filed on December 21, 1988 with
the Secretary of State of the State of Delaware with respect to such
series.
RESOLVED that the Chairman, the President, any Vice Chairman,
any Vice President, the Secretary and any Assistant Secretary are
hereby authorized to execute, acknowledge, and file such instruments
and documents as they, or any of them, may deem necessary or advisable
to eliminate from the Company's Restated Certificate of Incorporation,
as amended, all matters set forth in said Certificate of Designations
with respect to the Series A Preferred Stock.
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IN WITNESS WHEREOF, WELLS FARGO & COMPANY has caused its corporate seal
to be hereunto affixed and this Certificate to be signed by Laurel A. Holschuh,
its Senior Vice President, and attested by Rachelle M. Graham, its Assistant
Secretary, this 22nd day of March, 1999.
WELLS FARGO & COMPANY
By /s/Laurel A. Holschuh
----------------------------
Senior Vice President
ATTEST:
/s/Rachelle M. Graham
- ----------------------------------------
Assistant Secretary
[Filed in the Office of the Delaware Secretary of State on March 24, 1999]
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Exhibit 3(b)
WELLS FARGO & COMPANY
-----------------------------------
CERTIFICATE OF DESIGNATIONS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-----------------------------------
1999 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK
(Without Par Value)
-----------------------------------
WELLS FARGO & COMPANY, a corporation organized and existing under the laws
of the State of Delaware (the "Company"), HEREBY CERTIFIES that, pursuant to
authority conferred upon the Board of Directors of the Company (the "Board") by
the provisions of the Restated Certificate of Incorporation of the Company, as
amended, which authorizes the issuance of not more than 20,000,000 shares of
Preferred Stock, without par value (the "Preferred Stock"), and pursuant to
authority conferred upon the ESOP Preferred Stock Committee I of the Board (the
"ESOP Committee") in accordance with Section 141(c) of the General Corporation
Law of the State of Delaware (the "General Corporation Law") and by the
resolutions of the Board set forth herein, the following resolutions were duly
adopted by the Board at a meeting of the Board duly held on February 23, 1999,
and by the ESOP Committee pursuant to the written consent of the ESOP Committee
duly adopted on March 25, 1999, in accordance with Section 141(f) of the General
Corporation Law:
1. On February 23, 1999, the Board adopted the following resolutions (the
"ESOP Board Resolutions") appointing the ESOP Committee and delegating to the
ESOP Committee the full powers of the Board, subject to the ESOP Board
Resolutions, in all matters relating to issuance of one or more series of
Preferred Stock ("ESOP Preferred Stock") to the trustee on behalf of the
Company's Savings-Investment Plan hereinafter referred to:
RESOLVED that a committee of one member of the Board of the Company is
hereby appointed by the Board as the ESOP Preferred Stock Committee I (the
"First Committee"), which shall have and may exercise the full powers of the
Board, subject to these resolutions, in all matters relating to the issuance in
1999 of ESOP Preferred Stock, and in connection therewith, to fix the
designations, voting powers, preferences, and all other rights, qualifications
and restrictions of such ESOP Preferred Stock, to sell such ESOP Preferred Stock
to the Plan on such terms and conditions and for such purchase price as the
First Committee in its discretion shall approve, and to take any and all actions
as the First Committee shall deem necessary or appropriate.
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RESOLVED that Richard M. Kovacevich is designated to serve as the sole
member of the First Committee until his successor is duly elected and qualified.
* * * *
RESOLVED that any series of ESOP Preferred Stock authorized for issuance by
the First Committee . . . shall have the voting rights set forth in Appendix A
to these resolutions.
APPENDIX A - VOTING RIGHTS
No series of the Preferred Stock, except as hereinafter set forth or as
otherwise from time to time required by law, shall have voting rights.
Whenever, at any time or times, dividends payable on any shares of a designated
series of the Preferred Stock (such shares of such designated series of
Preferred Stock being hereinafter referred to as the "Shares of such series")
shall be in arrears for such number of dividend periods which shall in the
aggregate contain not less than 540 days, the holders of the outstanding Shares
of such series shall have the exclusive right, voting together as a class with
holders of shares of any one or more other series of Preferred Stock ranking on
a parity with the Shares of such series, either as to dividends or on the
distribution of assets upon liquidation, dissolution or winding up, and upon
which like voting rights have been conferred and are exercisable, to elect two
directors of the Company at the Company's next annual meeting of stockholders
and at each subsequent annual meeting of stockholders. At elections for such
directors, each holder of the Shares of such series shall be entitled to one
vote for each share held (the holders of shares of any other series of Preferred
Stock ranking on such a parity being entitled to such number of votes, if any,
for each share of Preferred Stock held as may be granted to them). Upon the
vesting of such right of such holders, the maximum authorized number of members
of the Board shall automatically be increased by two and the two vacancies so
created shall be filled by vote of the holders of such outstanding Shares of
such series (together with the holders of shares of any one or more other series
of Preferred Stock ranking on such a parity and upon which like voting rights
have been conferred and are exercisable) as herein set forth. The right of such
holders of such Shares of such series (voting together as a class with the
holders of shares of any one or more other series of Preferred Stock ranking on
such a parity and upon which lke voting rights have been conferred and are
exercisable) to elect members of the Board as aforesaid shall continue until
such time as all dividends accumulated on such Shares of such series shall have
been paid in full, at which time such right with respect to such Shares of such
series shall terminate, except as herein or by law expressly provided, subject
to revesting in the event of each and every subsequent default of the character
above mentioned.
Upon any termination of the right of the holders of all shares of Preferred
Stock entitled to vote for directors as herein provided, the term of office of
all directors then in office elected by such holders voting as a class shall
terminate immediately. If the office of any director elected by such holders
voting as a class becomes vacant by reason of
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death, resignation, retirement, disqualification, removal from office or
otherwise, the remaining director elected by such holders may choose a successor
to fill such vacancy, which such successor shall hold office for the unexpired
term in respect of which such vacancy occurred. Whenever the term of office of
the directors elected by such holders voting as a class shall end and the
special voting powers vested in such holders as provided in this resolution
shall have expired, the number of directors shall be such number as may be
provided for in the By-laws of the Company irrespective of any increase made
pursuant to the provisions of this resolution.
So long as any Shares of such series remain outstanding, the consent of the
holders of the outstanding Shares of such series and outstanding shares of all
other series of Preferred Stock ranking on a parity with such Shares of such
series either as to dividends or the distribution of assets upon liquidation,
dissolution or winding up and upon which like voting rights have been conferred
and are exercisable, by a vote of at least two-thirds of all such outstanding
Shares of such series and such other series of Preferred Stock voting together
as a class, given in person or by proxy, either in writing or at any special or
annual meeting called for the purpose, shall be necessary to permit, effect or
validate any one or more of the following:
(a) the authorization, creation or issuance, or any increase in the
authorized or issued amount, of any class or series of stock ranking prior
to the Shares of such series with respect to payment of dividends or the
distribution of assets on liquidation, dissolution or winding up, or
(b) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Certificate of Incorporation or of the resolutions set forth in a
Certificate of Designation for the Shares of such series designating the
Shares of such series and the preferences and relative, participating,
optional and other special rights and qualifications, limitations and
restrictions thereof which would materially and adversely affect any right,
preference, privilege or voting power of the Shares of such series or of
the holders thereof; provided, however, that any increase in the amount of
authorized Preferred Stock or the creation and issuance of other series of
Preferred Stock, or any increase in the amount of authorized shares of any
series of Preferred Stock, in each case ranking on a parity with or junior
to the Shares of such series with respect to the payment of dividends and
the distribution of assets upon liquidation, dissolution or winding up,
shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
The foregoing voting provisions shall not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding Shares of such series shall have been redeemed or
sufficient funds shall have been deposited in trust to effect such redemption.
3
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2. On March 25, 1999, pursuant to authority conferred upon it by the
Board in the ESOP Board Resolutions, the ESOP Committee adopted the following
resolutions by written consent in accordance with Section 141(f) of the General
Corporation Law:
RESOLVED that the issuance of a series of Preferred Stock, without par
value, of the Company is hereby authorized and the designation, voting powers,
preferences, and relative, participating, optional, and other special rights,
and qualifications, limitations and restrictions thereof, in addition to those
set forth in the Restated Certificate of Incorporation of the Company, as
amended, are hereby fixed as follows:
1999 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK
1. DESIGNATION AND NUMBER OF SHARES; RESTRICTED ISSUE.
(a) The designation of the series of Preferred Stock, without par
value, provided for herein shall be "1999 ESOP Cumulative Convertible Preferred
Stock" (hereinafter referred to as the "1999 ESOP Preferred Stock") and the
number of authorized shares constituting the 1999 ESOP Preferred Stock is
75,000, based on an offering price for the 1999 ESOP Preferred Stock of
$1,065.00 per share. Each share of 1999 ESOP Preferred Stock shall have a
stated value of $1,000.00 per share. The number of authorized shares of 1999
ESOP Preferred Stock may be reduced by further resolution duly adopted by the
Board or the Securities Committee and by the filing of a certificate pursuant to
the provisions of the General Corporation Law of the State of Delaware stating
that such reduction has been so authorized, provided, however, that the
authorized number of shares of 1999 ESOP Preferred Stock shall not be decreased
below the then outstanding number of such shares, and provided further that the
number of authorized shares of 1999 ESOP Preferred Stock shall not be increased.
All shares of the 1999 ESOP Preferred Stock purchased, redeemed, or converted by
the Company shall be retired and canceled and shall be restored to the status of
authorized but unissued shares of Preferred Stock, without designation as to
series, and may thereafter be issued, but not as shares of 1999 ESOP Preferred
Stock.
(b) Shares of 1999 ESOP Preferred Stock shall be issued only to a
trustee (the "Trustee") acting on behalf of the Norwest Corporation Savings
Investment Plan and Master Savings Trust, or any successor to such plan (the
"Plan"). All references to the holder of shares of 1999 ESOP Preferred Stock
shall mean the Trustee or any company with which or into which the Trustee may
merge or any successor trustee under the trust agreement with respect to the
Plan. In the event of any transfer of record ownership of shares of 1999 ESOP
Preferred Stock to any person other than any successor trustee under the Plan,
the shares of 1999 ESOP Preferred Stock so transferred, upon such transfer and
without any further action by the Company or the holder thereof, shall be
automatically converted into shares of the common stock, par value $1-2/3 per
share, of the Company (the "Common Stock") on the terms otherwise provided for
the conversion of the shares of 1999 ESOP Preferred Stock into shares of Common
Stock pursuant to paragraph (a) of Section 4 hereof, and no such transferee
shall have any of the voting powers, preferences, and relative, participating,
optional or special rights ascribed to
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shares of 1999 ESOP Preferred Stock hereunder but, rather, only the powers and
rights pertaining to the Common Stock into which such shares of 1999 ESOP
Preferred Stock shall be so converted. In the event of such a conversion, the
transferee of the shares of 1999 ESOP Preferred Stock shall be treated for all
purposes as the record holder of the shares of Common Stock into which such
shares of 1999 ESOP Preferred Stock have been automatically converted as of the
date of such transfer. Shares of 1999 ESOP Preferred Stock may be certificated
or uncertificated, at the Company's option. Certificates representing shares of
1999 ESOP Preferred Stock shall bear a legend to reflect the foregoing
provisions. In the case of uncertificated 1999 ESOP Preferred Stock, the
transfer agent for the 1999 ESOP Preferred Stock shall note the foregoing
provisions on each 1999 ESOP Preferred Stock book entry account. The Company may
require that, as a condition to transferring record ownership of any
uncertificated 1999 ESOP Preferred Stock, the proposed transferee acknowledge in
writing that the shares of 1999 ESOP Preferred Stock are subject to the
foregoing provisions. Notwithstanding the foregoing provisions of this paragraph
(b) of Section 1, shares of 1999 ESOP Preferred Stock (i)(A) shall be converted
into shares of Common Stock as provided in paragraph (a) of Section 4 hereof,
and (B) may be converted into shares of Common Stock as provided by paragraph
(b) of Section 4 hereof and the shares of Common Stock issued upon such
conversion may be transferred by the holder thereof as permitted by law and (ii)
shall be redeemable by the Company upon the terms and conditions provided in
Sections 5 and 6(c) hereof.
2. VOTING RIGHTS. No shares of 1999 ESOP Preferred Stock shall have
voting rights except such voting rights as may from time to time be required by
law and as set forth in this Section 2, as follows:
(a) Whenever, at any time or times, dividends payable on shares of
1999 ESOP Preferred Stock shall be in arrears for such number of dividend
periods which shall in the aggregate contain not less than 540 days, the holders
of the outstanding shares of 1999 ESOP Preferred Stock shall have the exclusive
right, voting together as a class with holders of shares of any one or more
other series of Preferred Stock ranking on a parity with the shares of 1999 ESOP
Preferred Stock, either as to dividends or on the distribution of assets upon
liquidation, dissolution or winding up, and upon which like voting rights have
been conferred and are exercisable, to elect two directors of the Company at the
Company's next annual meeting of stockholders and at each subsequent annual
meeting of stockholders. At elections for such directors, each holder of the
shares of 1999 ESOP Preferred Stock shall be entitled to one vote for each share
held (the holders of shares of any other series of Preferred Stock ranking on
such a parity being entitled to such number of votes, if any, for each share of
Preferred Stock held as may be granted to them). Upon the vesting of such right
of such holders, the maximum authorized number of members of the Board shall
automatically be increased by two and the two vacancies so created shall be
filled by vote of the holders of such outstanding shares of 1999 ESOP Preferred
Stock (together with the holders of shares of any one or more other series of
Preferred Stock ranking on such a
5
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parity and upon which like voting rights have been conferred and are
exercisable) as herein set forth. The right of such holders of such shares of
1999 ESOP Preferred Stock (voting together as a class with the holders of shares
of any one or more other series of Preferred Stock ranking on such a parity and
upon which like voting rights have been conferred and are exercisable) to elect
members of the Board as aforesaid shall continue until such time as all
dividends accumulated on such shares of 1999 ESOP Preferred Stock shall hav been
paid in full, at which time such right with respect to such shares of 1999 ESOP
Preferred Stock shall terminate, except as herein or by law expressly provided,
subject to revesting in the event of each and every subsequent default of the
character above mentioned.
(b) Upon any termination of the right of the holders of all
shares of Preferred Stock entitled to vote for directors as herein provided, the
term of office of all directors then in office elected by such holders voting as
a class shall terminate immediately. If the office of any director elected by
such holders voting as a class becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office or otherwise, the remaining
director elected by such holders may choose a successor to fill such vacancy,
which such successor shall hold office for the unexpired term in respect of
which such vacancy occurred. Whenever the term of office of the directors
elected by such holders voting as a class shall end and the special voting
powers vested in such holders as provided in this resolution shall have expired,
the number of directors shall be such number as may be provided for in the
By-laws of the Company irrespective of any increase made pursuant to the
provisions of this resolution.
(c) So long as any shares of 1999 ESOP Preferred Stock remain
outstanding, the consent of the holders of the outstanding shares of 1999 ESOP
Preferred Stock and outstanding shares of all other series of Preferred Stock
ranking on a parity with such shares of 1999 ESOP Preferred Stock either as to
dividends or the distribution of assets upon liquidation, dissolution or winding
up and upon which like voting rights have been conferred and are exercisable, by
a vote of at least two-thirds of all such outstanding shares of 1999 ESOP
Preferred Stock and such other series of Preferred Stock voting together as a
class, given in person or by proxy, either in writing or at any special or
annual meeting called for the purpose, shall be necessary to permit, effect or
validate any one or more of the following:
(i) the authorization, creation or issuance, or any increase in
the authorized or issued amount, of any class or series of stock ranking prior
to shares of 1999 ESOP Preferred Stock with respect to payment of dividends or
the distribution of assets on liquidation, dissolution or winding up, or
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated Certificate
of Incorporation or of the resolutions set forth in a Certificate of
Designations designating shares of 1999 ESOP Preferred Stock and the preferences
and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof which would materially and
adversely affect any right, preference, privilege or voting power of the shares
of 1999 ESOP Preferred Stock or of the holders thereof; provided, however, that
any increase in the amount of authorized Preferred Stock, or the creation and
issuance of other series of Preferred Stock, or any increase in the amount of
authorized shares of any series of Preferred Stock, in each case ranking on a
parity with
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or junior to the shares of 1999 ESOP Preferred Stock with respect to the payment
of dividends and the distribution of assets upon liquidation, dissolution or
winding up, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
(d) The foregoing voting provisions shall not apply if, at or prior
to the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of 1999 ESOP Preferred Stock
shall have been redeemed or sufficient funds shall have been deposited in trust
to effect such redemption.
3. DIVIDENDS. (a)(i) Holders of shares of 1999 ESOP Preferred Stock
will be entitled to receive, when and as declared by the Board or a duly
authorized committee thereof, out of assets of the Company legally available for
payment, an annual cash dividend of $103.00 (the "Base Dividend") per share,
which Base Dividend shall be subject to adjustment from time to time as provided
in this Section 3.
(ii) The Base Dividend shall be adjusted, effective on December
1, 2000 and on each December 1 thereafter until December 1, 2008, as follows:
(1) If the Current Market Price (as hereinafter defined) of
one share of Common Stock on November 30 (or the next preceding Trading Day
(as hereinafter defined) if November 30 is not a Trading Day) of any year
listed in the Dividend Adjustment Table below is equal to the First Target
Price but less than the Second Target Price shown opposite that year in
such table, then holders of shares of the 1999 ESOP Preferred Stock will be
entitled to receive a cash dividend for the immediately following twelve
month period equal to $108.00 per share (the "First Adjusted Dividend").
(2) If the Current Market Price of one share of Common
Stock on November 30 (or the next preceding Trading Day if November 30 is
not a Trading Day) of any year listed in the Dividend Adjustment Table
below is equal to or greater than the Second Target Price shown opposite
that year in such table, then holders of shares of 1999 ESOP Preferred
Stock will be entitled to receive a cash dividend for the immediately
following twelve month period equal to $113.00 per share (the "Second
Adjusted Dividend").
(3) If the Current Market Price of one share of Common
Stock on November 30 (or next preceding Trading Day if November 30 is not a
Trading Day) of any year listed in the Dividend Adjustment Table below is
less than the First Target Price shown opposite that year in such table,
then the holders of shares of 1999 ESOP Preferred Stock will be entitled to
receive a cash dividend for the immediately following twelve month period
equal to the Base Dividend.
7
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Dividend Adjustment Table
<TABLE>
<CAPTION>
CLOSING PRICE ON 11/30 FIRST TARGET PRICE SECOND TARGET PRICE
<S> <C> <C>
2000 48.801 54.902
2001 54.169 64.784
2002 60.127 76.446
2003 66.741 90.206
2004 74.083 106.443
2005 82.232 125.603
2006 91.277 148.211
2007 101.318 174.889
2008 112.463 206.369
</TABLE>
(4) As an example of the adjustments described in
subparagraphs (1) through (3) above, if on November 30, 2002, the Current
Market Price of one share of Common Stock is $70.00, then the cash dividend
payable for the immediately following twelve month period per share of 1999
ESOP Preferred Stock would equal $108.00, with the first quarterly payment
of such $108.00 dividend to be made on March 1, 2003. If on November 30,
2003, the Current Market Price of one share of Common Stock is $95.00, then
the cash dividend payable for the immediately following twelve month period
per share of 1999 ESOP Preferred Stock would equal $113.00, with the first
quarterly payment of such $113.00 dividend to be made on March 1, 2004. If
on November 30, 2004, the Current Market Price of one share of Common Stock
is $65.00, then the cash dividend payable for the immediately following
twelve month period per share of 1999 ESOP Preferred Stock would equal
$103.00, with the first quarterly payment of such $103.00 dividend to be
made on March 1, 2005.
(5) For purposes of this Section 3, the terms "First
Adjusted Dividend" and "Second Adjusted Dividend" are sometimes referred to
as an "Adjusted Dividend;" the term "Current Market Price" shall have the
meaning given to it in Section 4(c)(iv); and the term "Trading Day" shall
have the meaning given to it in Section 4(c)(vi).
(iv) If one share of Common Stock in any year listed in the
Dividend Adjustment Table shall be changed into a different number of shares or
a different class of shares by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or if a stock
dividend thereon shall be declared with a record date within such period, then
the First Target Price and the Second Target Price listed in such table for that
year and each subsequent year will be appropriately and proportionately
adjusted.
(v) Dividends payable on shares of the 1999 ESOP Preferred Stock
(whether such dividends are equal to the Base Dividend or to an Adjusted
Dividend) shall be payable quarterly on March 1, June 1, September 1, and
December 1 of each year, commencing June 1, 1999. Dividends on shares of the
1999 ESOP Preferred Stock will be cumulative from the date of initial issuance
of such shares of 1999 ESOP
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Preferred Stock. Dividends will be payable, in arrears, to holders of record as
they appear on the stock books of the Company on such record dates, not more
than 30 days nor less than 15 days preceding the payment dates thereof, as shall
be fixed by the Board or a duly authorized committee thereof. The amount of
dividends payable per share for each dividend period shall be computed by
dividing by four the Base Dividend or the Adjusted Dividend, whichever is then
applicable. The amount of dividends payable for the initial dividend period or
any period shorter than a full dividend period shall be calculated on the basis
of actual days elapsed in a 360-day year of twelve 30-day months.
(b)(i) No full dividends shall be declared or paid or set apart for
payment on any stock of the Company ranking, as to dividends, on a parity with
or junior to the 1999 ESOP Preferred Stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof has been set apart for such payment on
shares of 1999 ESOP Preferred Stock for all dividend payment periods terminating
on or prior to the date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the shares of 1999 ESOP
Preferred Stock and any other series of Preferred Stock ranking on a parity as
to dividends with 1999 ESOP Preferred Stock, all dividends declared upon shares
of 1999 ESOP Preferred Stock and any other series of Preferred Stock ranking on
a parity as to dividends with 1999 ESOP Preferred Stock shall be declared pro
rata so that the amount of dividends declared per share on 1999 ESOP Preferred
Stock and such other series of Preferred Stock shall in all cases bear to each
other the same ratio that accrued dividends per share on the shares of 1999 ESOP
Preferred Stock and such other series of Preferred Stock bear to each other.
Holders of shares of 1999 ESOP Preferred Stock shall not be entitled to any
dividend, whether payable in cash, property, or stock, in excess of full
cumulative dividends, as herein provided, on 1999 ESOP Preferred Stock. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on 1999 ESOP Preferred Stock which may be in
arrears.
(ii) So long as any shares of 1999 ESOP Preferred Stock are
outstanding, no dividend (other than dividends or distributions paid in shares
of, or options, warrants, or rights to subscribe for or purchase shares of,
Common Stock or any other stock ranking junior to 1999 ESOP Preferred Stock as
to dividends or upon liquidation and other than as provided in paragraph (b)(i)
of this Section 3) shall be declared or paid or set aside for payment or other
distribution declared or made upon Common Stock or any other capital stock of
the Company ranking junior to or on a parity with 1999 ESOP Preferred Stock as
to dividends or upon liquidation, nor shall any Common Stock or any other
capital stock of the Company ranking junior to or on a parity with 1999 ESOP
Preferred Stock as to dividends or upon liquidation be redeemed, purchased, or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
by the Company (except by conversion into or exchange for stock of the Company
ranking junior to 1999 ESOP Preferred Stock as to dividends or upon
liquidation), unless, in each case, the full cumulative dividends on all
outstanding shares of 1999 ESOP Preferred
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Stock shall have been paid or declared and set aside for payment of the then
current dividend payment period and all past dividend payment periods.
4. CONVERSION. Shares of 1999 ESOP Preferred Stock are convertible from
time to time hereafter pursuant to the provisions of paragraphs (a) or (b) of
this Section 4 into that number of shares of Common Stock determined by dividing
the stated value of each share of 1999 ESOP Preferred Stock by the then
applicable Conversion Price, (as determined in accordance with the provisions of
paragraph (c)(iii) of this Section 4), as follows:
(a) Each share of 1999 ESOP Preferred Stock released from the
unallocated reserve of the Plan in accordance with the terms thereof shall be
automatically converted, without any further action by the Company or the holder
thereof, as of the date such release occurs (the "Release Date"), into fully
paid and nonassessable shares of Common Stock at the then applicable Conversion
Price for the 1999 ESOP Preferred Stock provided for in paragraph (c) of this
Section 4.
(b) Subject to and upon compliance with the provisions of this
Section 4, a holder of 1999 ESOP Preferred Stock shall be entitled at any time,
prior to the close of business on the date fixed for redemption of such shares
pursuant to Sections 5 or 6 hereof, to cause any or all of the shares of 1999
ESOP Preferred Stock held by such holder to be converted into fully paid and
nonassessable shares of Common Stock at the then applicable Conversion Price for
1999 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.
(c) For purposes of these resolutions, the following terms shall have
the meanings set forth below:
(i) The "Average Current Market Price" per share of Common Stock
on any date shall be deemed to be the average of the Current Market Price for
one share of Common Stock for the twenty (20) consecutive Trading Days ending on
the Trading Day occurring prior to the date the "Purchase Offer" is made (as
that term is defined in Section 6(d) hereof).
(ii) A "Business Day" means each day that is not a Saturday,
Sunday, or a day on which state or federally chartered banking institutions in
the State of New York are not required to be open.
(iii) (A) For purposes of a mandatory conversion of shares of
1999 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions
of paragraph (a) of this Section 4, the "Conversion Price" for such shares of
1999 ESOP Preferred Stock shall be the Current Market Price of one share of
Common Stock on the relevant Release Date.
(B) For purposes of an optional conversion of shares of
1999 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions
of
10
<PAGE>
paragraph (b) of this Section 4, the "Conversion Price" for such shares of 1999
ESOP Preferred Stock shall be the Current Market Price of one share of Common
Stock on the date the Conversion Notice (as that term is defined in paragraph
(d) of this Section 4) is received by the Company, by the transfer agent for the
1999 ESOP Preferred Stock or by any agent for conversion of the 1999 ESOP
Preferred Stock designated as such pursuant to paragraph (d) of this Section 4.
(C) For purposes of a conversion of shares of 1999 ESOP
Preferred Stock into shares of Common Stock in connection with a "Purchase
Offer" (as defined in Section 6(d) hereof), the "Conversion Price" for such
shares of 1999 ESOP Preferred Stock shall be the Average Current Market Price of
one share of Common Stock.
Each share of 1999 ESOP Preferred Stock shall be valued at its stated value of
$1,000.00 for purposes of computing, based on the applicable Conversion Price,
the number of shares of Common Stock into which the shares of 1999 ESOP
Preferred Stock will be converted.
(iv) The "Current Market Price" of publicly traded shares of
Common Stock or any other class of capital stock or other security of the
Company or any other issuer for any day shall mean the reported last sale price,
regular way, or, in case no sale takes place on such day, the average of the
reported closing bid and asked prices, regular way, in either case as reported
on the New York Stock Exchange Composite Tape or, if the Common Stock is not
listed or admitted to trading on the New York Stock Exchange, on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or, if the
Common Stock is not quoted on such National Market System, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for the Common Stock on each such
day shall not have been reported through NASDAQ, the average of the bid and
asked prices for such day as furnished by any New York Stock Exchange member
firm regularly making a market in the Common Stock selected for such purpose by
the Board or a committee thereof or, if no such quotations are available, the
fair market value of the Common Stock as determined by a New York Stock Exchange
member firm regularly making a market in the Common Stock selected for such
purpose by the Board or a committee thereof.
(v) "Common Stock" shall mean the Common Stock of the Company as
the same exists at the date of this Certificate of Designations or as such stock
may be constituted from time to time.
(vi) "Trading Day" with respect to Common Stock means (x) if the
Common Stock is listed or admitted for trading on the New York Stock Exchange or
another national securities exchange, a day on which the New York Stock Exchange
or such other national securities exchange is open for business or (y) if the
Common Stock
11
<PAGE>
is quoted on the National Market System of NASDAQ, a day on which trades may be
made on such National Market System or (z) otherwise, any Business Day.
(d) In connection with any conversion of 1999 ESOP Preferred Stock
pursuant to this Section 4, a written notice of conversion (the "Conversion
Notice") shall be delivered to the Company at its principal executive office or
the offices of the transfer agent for the 1999 ESOP Preferred Stock or such
office or offices in the continental United States of an agent for conversion as
may from time to time be designated by notice to the holders of the 1999 ESOP
Preferred Stock by the Company or the transfer agent for the 1999 ESOP Preferred
Stock, which notice shall be accompanied by (a) in the case of certificated 1999
ESOP Preferred Stock, the certificate or certificates representing the shares of
1999 ESOP Preferred Stock being converted pursuant to this Section 4, duly
assigned or endorsed for transfer to the Company (or accompanied by duly
executed stock powers relating thereto) or (b) in the case of uncertificated
1999 ESOP Preferred Stock, duly executed assignment and transfer documents for
the shares of 1999 ESOP Preferred Stock being converted pursuant to this Section
4. Each Conversion Notice shall specify (i)(y) in the case of a mandatory
conversion pursuant to paragraph (a) of this Section 4, the number of shares of
1999 ESOP Preferred Stock released from the unallocated reserve of the Plan on
the Release Date or (z) in the case of an optional conversion pursuant to
paragraph (b) of this Section 4, the number of shares of 1999 ESOP Preferred
Stock being converted, and (ii) in connection with any conversion hereunder, (x)
the name or names in which such holder wishes the certificate or certificates
for Common Stock and, in the case of certificated 1999 ESOP Preferred Stock, for
any shares of 1999 ESOP Preferred Stock not to be so converted to be issued, (y)
the address to which such holder wishes delivery to be made of such new
certificates to be issued upon such conversion, and (z) such other information
as the Company or its agents may reasonably request.
(e) Upon delivery to the Company or the transfer agent for the 1999
ESOP Preferred Stock of the Conversion Notice and all other documentation and
certificates required to effect the conversion, as provided in paragraph (d) of
this Section 4, the Company shall issue and send by hand delivery, by courier
or by first-class mail (postage prepaid) to the holder thereof or to such
holder's designee, at the address designated by such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled upon conversion. If there shall have been surrendered a certificate
or certificates representing shares of 1999 ESOP Preferred Stock only part of
which are to be converted, the Company shall issue and deliver to such holder or
such holder's designee, in the manner set forth in the preceding sentence, a new
certificate or certificates representing the number of shares of 1999 ESOP
Preferred Stock which shall not have been converted.
(f) The issuance by the Company of shares of Common Stock upon a
conversion of shares of 1999 ESOP Preferred Stock into shares of Common Stock
made pursuant to this Section 4 shall be effective (i) in the case of a
mandatory conversion of shares of 1999 ESOP Preferred Stock pursuant to
paragraph (a) of this Section 4, as of the Release Date; and (ii) in the case of
an optional conversion of such shares pursuant to paragraph (b) of this Section
4, as of the earlier of (A) the delivery to such holder or such
12
<PAGE>
holder's designee of the certificates representing the shares of Common Stock
issued upon conversion thereof or (B) the commencement of business on the second
Business Day after the delivery to the Company or the transfer agent for the
1999 ESOP Preferred Stock of the Conversion Notice and all other documentation
and certificates required to effect the conversion, as provided in paragraph (d)
of this Section 4. On and after the effective date of conversion, the person or
persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock, but no allowance or adjustment shall be made in respect of
dividends payable to holders of Common Stock in respect of any period prior to
such effective date. The Company shall not be obligated to pay any dividends
which shall have accrued or have been declared and shall be payable to holders
of shares of 1999 ESOP Preferred Stock if the date on which such dividends are
paid is on or after the effective date of conversion of such shares.
(g) The Company shall not be obligated to deliver to holders of 1999
ESOP Preferred Stock any fractional share or shares of Common Stock issuable
upon any conversion of such shares of 1999 ESOP Preferred Stock, but in lieu
thereof may make a cash payment in respect thereof in any manner permitted by
law.
(h) The Company shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of shares of 1999 ESOP Preferred Stock as herein provided, free from
any preemptive rights, such number of shares of Common Stock as shall from time
to time be issuable upon the conversion of all the shares of 1999 ESOP Preferred
Stock then outstanding.
(i) The Company will use its best efforts to cause the listing of the
shares of Common Stock required to be delivered upon conversion of the 1999 ESOP
Preferred Stock prior to distribution to Plan participants on the national
securities exchange, if any, upon which the outstanding Common Stock is listed
at the time of such delivery.
(j) The Company will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock on conversions of the 1999 ESOP Preferred Stock pursuant hereto;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issue or delivery of
shares of Common Stock in a name other than that of the holder of the 1999 ESOP
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Company the amount of any such tax or has established, to the satisfaction of
the Company, that such tax has been paid.
(k) Upon the issuance of shares of Common Stock following conversion
of shares of 1999 ESOP Preferred Stock as contemplated by this Section 4, the
Company shall, to the extent provided for, and subject to the limitations set
forth in the Rights Agreement hereafter described, issue together with each such
share of Common Stock one right to purchase Series C Junior Participating
Preferred Stock of the Company (or other securities in lieu thereof) pursuant to
the Rights Agreement dated as of October 21, 1998 between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights
13
<PAGE>
Agent, as such agreement may from time to time be amended, or any rights issued
to holders of Common Stock of the Company in addition thereto or in replacement
therefor, whether or not such rights shall be exercisable at such time, but only
if such rights are issued and outstanding and held by other holders of Common
Stock of the Company at such time and have not expired.
5. REDEMPTION AT THE OPTION OF THE COMPANY. (a) The 1999 ESOP Preferred
Stock shall be redeemable, in whole or in part, at the option of the Company at
any time, at a redemption price per share of 1999 ESOP Preferred Stock equal to
the higher of (x) $1,000.00 per share, plus an amount equal to all accrued and
unpaid dividends thereon to the date fixed for redemption, and (y) the Fair
Market Value (as that term is defined in paragraph (d) of this Section 5) per
share of 1999 ESOP Preferred Stock on the date fixed for redemption. Payment of
the redemption price shall be made by the Company in cash or shares of Common
Stock, or a combination thereof, as permitted by paragraph (c) of this Section
5. From and after the date fixed for redemption, dividends on shares of 1999
ESOP Preferred Stock called for redemption will cease to accrue and all rights
in respect of such shares of the Company shall cease, except the right to
receive the redemption price. Upon payment of the redemption price, such shares
shall be deemed to have been transferred to the Company, to be retired as
provided in paragraph (a) of Section 1. If the full cumulative dividends have
not been paid, or contemporaneously declared and set aside for payment, on all
outstanding shares of 1999 ESOP Preferred Stock, the Company may not redeem
fewer than all the outstanding shares of 1999 ESOP Preferred Stock pursuant to
this Section 5.
(b) Unless otherwise required by law, notice of any redemption
pursuant to this Section 5 will be sent to the holders of 1999 ESOP Preferred
Stock at the address shown on the books of the Company or any transfer agent for
the 1999 ESOP Preferred Stock by hand delivery, by courier, by standard form of
telecommunication or by first-class mail (postage prepaid) delivered, sent or
mailed, as the case may be, not less than twenty (20) days nor more than sixty
(60) days prior to the redemption date. Each such notice shall state: (i) the
redemption date; (ii) the total number of shares of the 1999 ESOP Preferred
Stock to be redeemed and, if fewer than all the shares held by such holder are
to be redeemed, the number of such shares to be redeemed from such holder; (iii)
the redemption price; (iv) whether the redemption price shall be paid in cash or
in shares of Common Stock, or in a combination of such Common Stock and cash;
(v) in the case of certificated 1999 ESOP Preferred Stock the place or places
where certificates for such shares are to be surrendered for payment of the
redemption price; (vi) that dividends on the shares to be redeemed will cease to
accrue on such redemption date; and (vii) the conversion rights of the shares to
be redeemed, the period within which conversion rights may be exercised and the
manner in which the number of shares of Common Stock issuable upon conversion of
a share of 1999 ESOP Preferred Stock will be determined. The Company shall
redeem shares so called for redemption and not previously converted at the date
fixed for redemption and at the redemption price set forth in this Section 5,
provided that, in the case of certificated 1999 ESOP Preferred Stock, the
Company shall not be obligated to pay the redemption price until the
certificates for the shares to be redeemed are surrendered (properly endorsed or
assigned for transfer, if the Board of Directors of the Company shall so require
and the notice shall so state).
14
<PAGE>
(c) The Company, at its option, may make payment of the redemption
price required upon redemption of shares of 1999 ESOP Preferred Stock in cash or
in shares of Common Stock, or in a combination of such Common Stock and cash,
any such shares of Common Stock to be valued for such purposes at their Fair
Market Value (as defined in paragraph (d)(ii) of this Section 5) or their
Current Market Price, in either case as of the date fixed for redemption of the
1999 ESOP Preferred Stock, whichever value will result in the issuance of the
greater number of shares of Common Stock to the holder of the 1999 ESOP
Preferred Stock then being redeemed.
(d) For purposes of these resolutions, the following terms shall have
the meanings set forth below:
(i) "Adjustment Period" shall mean the period of five (5)
consecutive Trading Days preceding the date as of which the Fair Market Value of
a security is to be determined.
(ii) "Fair Market Value" shall mean, as to shares of Common
Stock or any other class of capital stock or securities of the Company or any
other issue which are publicly traded, the average of the Current Market Prices
of such shares or securities for each day of the Adjustment Period. The "Fair
Market Value" of any security which is not publicly traded (other than the 1999
ESOP Preferred Stock) or of any other property shall mean the fair value thereof
on the date as of which the Fair Market Value of the security is to be
determined, as determined by an independent investment banking or appraisal firm
experienced in the valuation of such securities or property selected in good
faith by the Board or a committee thereof. The "Fair Market Value" of the 1999
ESOP Preferred Stock for purposes of paragraph (a) of Section 5, and for
purposes of paragraph (c) of Section 6 shall mean the fair market value thereof
determined by an independent appraiser, appointed by the Trustee of the Plan in
accordance with the provisions of the Plan, as of the date fixed for redemption
of the 1999 ESOP Preferred Stock (in the case of a redemption pursuant to
Section 5) or as of the date specified in paragraph (c) of Section 6 (in the
case of a redemption under that section). For purposes of determining the Fair
Market Value of the 1999 ESOP Preferred Stock, the independent appraiser shall
assume (i) that all dividends on the 1999 ESOP Preferred Stock would have been
paid when due, and (ii) that the mandatory conversion of shares of 1999 ESOP
Preferred Stock held by the Plan into shares of Common Stock pursuant to Section
4(a) hereof would have occurred when and as payments of principal (together with
accrued interest thereon) would have been made by the Trustee of the Plan in
accordance with the terms of that certain 1999 ESOP Convertible Preferred Stock
Note Agreement dated March 29, 1999 between the Company and the Plan (including
any amendments or modifications thereto).
6. CONSOLIDATION, MERGER, ETC. (a) If the Company consummates any
consolidation or merger or similar business combination, pursuant to which the
outstanding shares of Common Stock are by operation of law exchanged solely for
or changed, reclassified or converted solely into stock of any successor or
resulting corporation (including the Company) that constitutes "qualifying
employer securities" with respect to a holder of 1999 ESOP Preferred Stock
within the meaning of Section
15
<PAGE>
409(1) of the Internal Revenue Code of 1986, as amended, and Section 407(d)(5)
of the Employee Retirement Income Security Act of 1974, as amended, or any
successor provisions of law, and, if applicable, for a cash payment in lieu of
fractional shares, if any, the shares of 1999 ESOP Preferred Stock of such
holder shall, in connection with such consolidation, merger or similar business
combination, be assumed by and shall become Preferred Stock of such successor or
resulting corporation, having in respect of such corporation, insofar as
possible, the same powers, preferences and relative, participating, optional or
other special rights (including the redemption rights provided by Sections 5 and
6 hereof), and the qualifications, limitations or restrictions thereon, that the
1999 ESOP Preferred Stock had immediately prior to such transaction, subject to
the following:
(1) After such transaction each share of the 1999 ESOP
Preferred Stock shall be convertible, otherwise on the terms and
conditions provided by Section 4 hereof, into the number and kind of
qualifying employer securities so receivable by a holder of the number
of shares of Common Stock into which such shares of 1999 ESOP
Preferred Stock could have been converted immediately prior to such
transaction.
(2) The Company shall not consummate any such merger,
consolidation or similar transaction unless all then outstanding
shares of 1999 ESOP Preferred Stock shall be assumed and authorized by
the successor or resulting corporation as aforesaid.
(b) If the Company consummates any consolidation or merger or
similar business combination, pursuant to which the outstanding shares of
Common Stock are by operation of law exchanged for or changed, reclassified
or converted into other stock or securities or cash or any other property, or
any combination thereof, other than any such consideration which is
constituted solely of qualifying employer securities (as referred to in
paragraph (a) of this Section 6) and cash payments, if applicable, in lieu of
fractional shares, outstanding shares of 1999 ESOP Preferred Stock shall,
without any action on the part of the Company or any holder thereof (but
subject to paragraph (c) of this Section 6), be automatically converted by
virtue of such merger, consolidation or similar transaction immediately prior
to such consummation into the number of shares of Common Stock into which
such shares of 1999 ESOP Preferred Stock could have been converted at such
time so that each share of 1999 ESOP Preferred Stock shall, by virtue of such
transaction and on the same terms as apply to the holders of Common Stock, be
converted into or exchanged for the aggregate amount of stock, securities,
cash or other property (payable in like kind) receivable by a holder of the
number of shares of Common Stock into which such shares of 1999 ESOP
Preferred Stock could have been converted immediately prior to such
transaction. However, if by virtue of the structure of such transaction, a
holder of Common Stock is required to make an election with respect to the
nature and kind of consideration to be received in such transaction, which
election cannot practicably be made by the holders of the 1999 ESOP Preferred
Stock, then the shares of 1999 ESOP Preferred Stock shall, by virtue of such
transaction and on the same terms as apply to the holders of Common Stock, be
converted into or exchanged for the aggregate amount of stock, securities,
cash or other property (payable in kind) receivable by a holder of the
16
<PAGE>
number of shares of Common Stock into which such shares of 1999 ESOP
Preferred Stock could have been converted immediately prior to such
transaction if such holder of Common Stock failed to exercise any rights of
election as to the kind or amount of stock, securities, cash or other
property receivable upon such transaction. If the kind or amount of stock,
securities, cash or other property receivable upon such transaction is not
the same for each non-electing share, then the kind and amount of stock,
securities, cash or other property receivable upon such transaction for each
non-electing share shall be the kind and amount so receivable per share by a
plurality of the non-electing shares.
(c) In the event the Company shall enter into any agreement providing
for any consolidation or merger or similar business combination described in
paragraph (b) of this Section 6 (a "Business Combination"), then the Company
shall as soon as practicable thereafter (and in any event at least fifteen (15)
Business Days before consummation of such transaction) give notice of such
agreement and the material terms thereof to each holder of 1999 ESOP Preferred
Stock and each such holder shall have the right to elect, by written notice to
the Company, to receive, upon consummation of such transaction (if and when such
transaction is consummated), from the Company or the successor of the Company,
in redemption and retirement of such 1999 ESOP Preferred Stock, a cash payment
per share of 1999 ESOP Preferred Stock equal to the higher of (x) $1,000.00,
plus accrued and unpaid dividends thereon to the date of consummation of such
transaction or (y) the Fair Market Value per share of 1999 ESOP Preferred Stock,
as of the last Business Day (as defined in paragraph (c) of Section 4 hereof)
immediately preceding the date the Business Combination is consummated. No such
notice of redemption shall be effective unless given to the Company prior to the
close of business on the last Business Day prior to consummation of such
transaction, unless the Company or the successor of the Company shall waive such
prior notice, but any notice of redemption so given prior to such time may be
withdrawn by notice of withdrawal given to the Company prior to the close of
business on the last Business Day prior to consummation of such transaction.
(d) In the event that a Purchase Offer (as defined below) shall have
been made and shall be continuing, each holder of 1999 ESOP Preferred Stock
shall have the right to convert shares of 1999 ESOP Preferred Stock into shares
of Common Stock at the Conversion Price specified in Section 4(c)(iii)(C) hereof
until the date the Purchase Offer is terminated, including without limitation
because the original Purchase Offer is withdrawn or because the Purchase Offer
has expired and is not renewed, upon notice of such conversion given to the
Company not later than the close of business on the date the Purchase Offer
terminates (the "Purchase Offer Conversion Period"), unless the Company or any
successor of the Company shall waive such prior notice, but any notice of
conversion so given may be withdrawn by notice of withdrawal given to the
Company prior to the end of the Purchase Offer Conversion Period.
For purposes of this paragraph (d), the following terms shall have the
meanings set forth below:
(i) "Beneficial Ownership" shall have the meaning ascribed to it
in Rule 13d-3 under the Securities Exchange Act of 1934 (the "Exchange Act") and
17
<PAGE>
"person" shall have the meanings specified in Sections 3(a)(9) and 13(d)(3) of
the Exchange Act.
(ii) A "Purchase Offer" shall have been made when any person
(other than the Company or any affiliate of the Company) shall have "commenced"
(as such term is defined in Rule 14d-2 under the Exchange Act) a tender offer or
exchange offer to purchase shares of Common Stock, such that, upon consummation
of such offer, such person would have Beneficial Ownership (as defined herein)
or the right to acquire Beneficial Ownership, of twenty percent (20%) or more of
the voting power of the Company.
7. LIQUIDATION RIGHTS. (a) Upon the dissolution, liquidation, or winding
up of the Company, the holders of the shares of 1999 ESOP Preferred Stock shall
be entitled to receive and to be paid out of the assets of the Company available
for distribution to its stockholders, before any payment or distribution shall
be made on the Common Stock or any other class of stock ranking junior to 1999
ESOP Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a
sum equal to all dividends (whether or not earned or declared) on such shares
accrued and unpaid thereon to the date of final distribution.
(b) Neither the sale of all or substantially all the property and
assets of the Company, nor the merger or consolidation of the Company into or
with any other corporation, nor the merger or consolidation of any other
corporation into or with the Company shall be deemed to be a dissolution,
liquidation, or winding up, voluntary or involuntary, for the purposes of this
Section 7.
(c) After the payment to the holders of the shares of 1999 ESOP
Preferred Stock of the full preferential amounts provided for in this Section 7,
the holders of 1999 ESOP Preferred Stock, as such, shall have no right or claim
to any of the remaining assets of the Company.
(d) In the event the assets of the Company available for distribution
to the holders of shares of 1999 ESOP Preferred Stock upon any dissolution,
liquidation, or winding up of the Company, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to paragraph (a) of this Section 7, no such distribution shall
be made on account of any shares of any other series of Preferred Stock or other
capital stock of the Company ranking on a parity with the shares of 1999 ESOP
Preferred Stock upon such dissolution, liquidation, or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
1999 ESOP Preferred Stock, ratably, in proportion to the full distributable
amounts for which holders of all such parity shares are respectively entitled
upon such dissolution, liquidation, or winding up.
(e) Subject to the rights of the holders of the shares of any series
or class or classes of stock ranking on a parity with or prior to the shares of
1999 ESOP Preferred Stock upon liquidation, dissolution, or winding up, upon any
liquidation, dissolution, or
18
<PAGE>
winding up of the Company, after payment shall have been made in full to the
holders of the shares of 1999 ESOP Preferred Stock as provided in this Section
7, but not prior thereto, any other series or class or classes of stock ranking
junior to the shares of 1999 ESOP Preferred Stock upon liquidation shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the shares of 1999 ESOP Preferred Stock shall not be entitled to
share therein.
8. RANKING. For the purposes of these resolutions, any stock of any
series or class or classes of the Company shall be deemed to rank:
(a) prior to the shares of 1999 ESOP Preferred Stock, either as to
dividends or upon liquidation, if the holders of such series or class or classes
shall be entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation, or winding up of the Company, as the case may be, in
preference or priority to the holders of shares of 1999 ESOP Preferred Stock;
(b) on a parity with shares of 1999 ESOP Preferred Stock, either as
to dividends or upon liquidation, whether or not the dividend rates, dividend
payment dates, or redemption or liquidation prices per share, or sinking fund
provisions, if any, be different from those of 1999 ESOP Preferred Stock, if the
holders of such stock shall be entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation, or winding up of the
Company, as the case may be, in proportion to their respective dividend rates or
liquidation prices, without preference or priority, one over the other, as
between the holders of such stock and the holders of shares of 1999 ESOP
Preferred Stock; and
(c) junior to shares of 1999 ESOP Preferred Stock, either as to
dividends or upon liquidation, if such class shall be Common Stock or if the
holders of shares of 1999 ESOP Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon dissolution, liquidation, or winding
up of the Company, as the case may be, in preference or priority to the holders
of shares of such series or class or classes.
9. PRIORITY OF 1999 ESOP PREFERRED STOCK. The shares of 1999 ESOP
Preferred Stock will rank on a parity, both as to payment of dividends and the
distribution of assets upon liquidation, with the Company's ESOP Cumulative
Convertible Preferred Stock, its 1995 ESOP Cumulative Convertible Preferred
Stock, its 1996 ESOP Cumulative Convertible Preferred Stock, its 1997 ESOP
Cumulative Convertible Preferred Stock, its 1998 ESOP Cumulative Convertible
Preferred Stock, its Adjustable Cumulative Preferred Stock, Series B, its
Fixed/Adjustable Rate Noncumulative Preferred Stock, Series H and its Cumulative
Tracking Preferred Stock. The 1999 ESOP Preferred Stock will rank prior, both
as to payment of dividends and the distribution of assets upon liquidation, to
the Common Stock and the Company's Series C Junior Participating Preferred
Stock.
19
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate of Designations
to be signed by Richard M. Kovacevich, its President, and attested by Robert S.
Singley, its Assistant Secretary, whereby such President affirms, under
penalties of perjury, that this Certificate of Designations is the act and deed
of the Company and that the facts stated herein are true, this 25th day of
March, 1999.
WELLS FARGO & COMPANY
By /s/ Richard M. Kovacevich
--------------------------------
Richard M. Kovacevich
President
Attest:
/s/ Robert S. Singley
- ----------------------------------
Robert S. Singley
Assistant Secretary
[Filed with the Delaware Secretary of State's Office on March 26, 1999]
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROOM THE 8-K FOR
THE PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL INFORMATION.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 11,364
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 869
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 35,801
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 108,108
<ALLOWANCE> 3,161
<TOTAL-ASSETS> 201,430
<DEPOSITS> 132,340
<SHORT-TERM> 17,270
<LIABILITIES-OTHER> 9,396
<LONG-TERM> 21,148
0
459
<COMMON> 2,777
<OTHER-SE> 18,040
<TOTAL-LIABILITIES-AND-EQUITY> 201,430
<INTEREST-LOAN> 2,579
<INTEREST-INVEST> 510
<INTEREST-OTHER> 399
<INTEREST-TOTAL> 3,488
<INTEREST-DEPOSIT> 717
<INTEREST-EXPENSE> 1,222
<INTEREST-INCOME-NET> 2,266
<LOAN-LOSSES> 270
<SECURITIES-GAINS> (2)
<EXPENSE-OTHER> 2,342
<INCOME-PRETAX> 1,381
<INCOME-PRE-EXTRAORDINARY> 884
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 884
<EPS-PRIMARY> 0.53<F1>
<EPS-DILUTED> 0.53
<YIELD-ACTUAL> 5.58
<LOANS-NON> 703
<LOANS-PAST> 0
<LOANS-TROUBLED> 1
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,134
<CHARGE-OFFS> 362
<RECOVERIES> 89
<ALLOWANCE-CLOSE> 3,161
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>AMOUNT REPRESENTS BASIC EARNINGS PER COMMON SHARE PURSUANT TO FAS 128.
</FN>
</TABLE>
<PAGE>
Exhibit 99
Wells Fargo & Company's financial results for the quarter ended March 31, 1999
Wells Fargo & Company reported net income of $884 million for the first
quarter of 1999, compared with $684 million for the first quarter of 1998, an
increase of 29 percent. Diluted earnings per common share for the quarter were
$.53, compared with $.41 for the first quarter of 1998, an increase of 29
percent. Return on average assets was 1.80 percent and return on average common
equity was 17.33 percent for the first quarter of 1999, compared with 1.51
percent and 14.20 percent, respectively, for the first quarter of 1998.
Diluted cash earnings for the first quarter of 1999 were $.61 per
share, compared with $.50 for the first quarter of 1998. Cash return on average
assets was 2.17 percent and cash return on average tangible common equity was
34.38 percent for the first quarter of 1999, compared with 1.91 percent and
31.99 percent, respectively, for the first quarter of 1998. Cash earnings are
earnings before the amortization of goodwill and nonqualifying core deposit
intangible (related primarily to the 1996 acquisition of First Interstate
Bancorp).
"We're very pleased with the company's financial performance in the
first quarter," said Richard M. Kovacevich, Wells Fargo's president and chief
executive officer. "Both net income and diluted earnings per share increased
over 29 percent from the first quarter of 1998. We believe this financial
performance is indicative of the progress so far in combining Wells Fargo and
Norwest and is consistent with our earnings objectives. Thanks to the hard work
of thousands of our team members across the franchise, our plan to integrate
systems continues to be on schedule. We are taking a deliberate, measured
approach with a goal of flawless execution."
On November 2, 1998, Wells Fargo & Company (the former Wells Fargo)
merged with WFC Holdings Corporation (WFC Holdings), a wholly-owned subsidiary
of Norwest Corporation. In connection with the merger, Norwest Corporation
changed its name to "Wells Fargo & Company." The merger was accounted for as a
pooling of interests and, accordingly, the information included in this release
presents the combined results of Wells Fargo & Company and its subsidiaries (the
Company) as if the merger had been in effect for all periods presented.
Net interest income on a taxable-equivalent basis was $2,281 million in
the first quarter of 1999, compared with $2,210 million for the same quarter a
year ago. The Company's net interest margin for the first quarter of 1999 was
5.58 percent, compared with 5.87 percent in the same quarter of 1998. The
decrease in the net interest margin was primarily due to lower yields on
consumer and commercial loans as well as higher balances of lower yielding
investment securities and mortgages held for sale, partially offset by decreased
rates on consumer deposits.
-1-
<PAGE>
Noninterest income in the first quarter of 1999 was $1,727 million,
compared with $1,533 million in the same quarter of 1998. The increase was
primarily due to net gains on sales of mortgages, net venture capital gains and
higher trust and investment fees and commissions. A significant portion of the
increase was offset by higher amortization of mortgage servicing rights.
Noninterest expense in the first quarter of 1999 was $2,342 million,
compared with $2,296 million in the first quarter of 1998, an increase of 2
percent. The efficiency ratio was reduced to 58.7 percent for the first quarter
of 1999, compared with 61.6 percent for the same quarter of 1998.
The loan loss provision was $270 million for the first quarter of 1999,
compared with $305 million for the same period in 1998. Net charge-offs totaled
$273 million, or 1.03 percent of average loans (annualized), in the first
quarter of 1999. Net charge-offs totaled $310 million, or 1.19 percent of
average loans (annualized), for the first quarter of 1998.
At March 31, 1999, the allowance for loan losses of $3,161 million was
2.92 percent of total loans, compared with 2.90 percent at December 31, 1998 and
2.92 percent at March 31, 1998. Total nonaccrual and restructured loans were
$704 million at March 31, 1999, compared with $710 million at December 31, 1998
and $721 million at March 31, 1998.
- ------------------------------------------------------------------------------
The following appears in accordance with the Securities Litigation Reform Act:
This discussion of financial results includes forward-looking statements about
the Company's financial condition, results of operations, plans, objectives and
future performance and business. These statements generally include the words
"believe," "expect," "anticipate," "estimate," "may," "will" or similar
expressions that suggest the statements are forward looking in nature.
These forward-looking statements involve inherent risks and uncertainties. The
Company cautions readers that a number of factors--many of which are beyond the
control of the Company--could cause actual results to differ materially from
those in the forward-looking statements. Among these factors are changes in
political and economic conditions, interest rate fluctuations, technological
changes (including the "Year 2000" data systems compliance issue), customer
disintermediation, competitive product and pricing pressures in the Company's
geographic and product markets, equity and fixed income market fluctuations,
personal and commercial customers' bankruptcies, inflation, changes in law,
changes in fiscal, monetary, regulatory and tax policies, monetary fluctuations,
credit quality and credit risk management, mergers and acquisitions, the
integration of merged and acquired companies, and success in gaining regulatory
approvals when required.
Also, actual results may differ materially from those in the forward-looking
statements because of factors relating to the combination of the former Wells
Fargo and the former Norwest Corporation, including the following: expected cost
savings from the merger are not fully realized within the expected time frame or
additional or unexpected costs are incurred; and costs or difficulties related
to the integration of the former Wells Fargo and the former Norwest Corporation
are greater than expected.
-2-
<PAGE>
-3-
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
% Change
Quarter ended March 31, 1999 from
------------------------------------------------- --------------------
MARCH 31, Dec. 31, March 31, Dec. 31, March 31,
(in millions, except per share amounts) 1999 1998 1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE QUARTER
Net income (loss) $ 884 $ (194) $ 684 -- % 29%
Net income (loss) applicable to common stock 875 (203) 675 -- 30
Earnings (loss) per common share $ .53 $ (.12) $ .42 -- 26
Diluted earnings (loss) per common share .53 (.12) .41 -- 29
Dividends declared per common share .185 .185 .165 -- 12
Average common shares outstanding 1,647.1 1,642.4 1,615.7 -- 2
Diluted average common shares outstanding 1,664.2 1,642.4 1,639.1 1 2
Profitability ratios (annualized)
Net income to average total assets (ROA) 1.80% --% 1.51% -- 19
Net income applicable to common stock to
average common stockholders' equity (ROE) 17.33 -- 14.20 -- 22
Efficiency ratio (1) 58.7% 90.2% 61.6% (35) (5)
Average loans $107,834 $107,324 $105,398 -- 2
Average assets 198,723 197,772 183,267 -- 8
Average core deposits 128,133 127,810 121,247 -- 6
Net interest margin 5.58% 5.60% 5.87% -- (5)
NET INCOME AND RATIOS EXCLUDING
GOODWILL AND NONQUALIFYING CORE DEPOSIT
INTANGIBLE AMORTIZATION AND BALANCES
("CASH" OR "TANGIBLE") (2)
Net income (loss) applicable to common stock $ 1,008 $ (66) $ 812 -- 24
Earnings (loss) per common share .61 (.04) .50 -- 22
Diluted earnings (loss) per common share .61 (.04) .50 -- 22
ROA 2.17% --% 1.91% -- 14
ROE 34.38 -- 31.99 -- 7
Efficiency ratio 54.9 86.1 57.3 (36) (4)
AT QUARTER END
Securities available for sale $ 35,801 $ 31,997 $ 31,148 12 15
Loans 108,108 107,994 105,141 -- 3
Allowance for loan losses 3,161 3,134 3,066 1 3
Goodwill 7,747 7,664 7,970 1 (3)
Assets 201,430 202,475 190,853 (1) 6
Core deposits 127,996 132,289 125,528 (3) 2
Common stockholders' equity 20,817 20,296 19,311 3 8
Stockholders' equity 21,276 20,759 19,772 2 8
Capital ratios
Common stockholders' equity to assets 10.33% 10.02% 10.12% 3 2
Stockholders' equity to assets 10.56 10.25 10.36 3 2
Risk-based capital (3)
Tier 1 capital 8.30 8.08 8.19 3 1
Total capital 11.05 10.90 11.15 1 (1)
Leverage (3) 6.75 6.58 6.74 3 --
Book value per common share $ 12.60 $ 12.35 $ 11.99 2 5
Staff (active, full-time equivalent) 91,352 92,178 89,376 (1) 2
COMMON STOCK PRICE
High $ 40.44 $ 40.88 $ 43.88 (1) (8)
Low 32.13 30.19 34.75 6 (8)
Quarter end 35.06 39.94 41.56 (12) (16)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The efficiency ratio is defined as noninterest expense divided by the
total of net interest income and noninterest income.
(2) Nonqualifying core deposit intangible (CDI) amortization and average
balance excluded from these calculations are, with the exception of the
efficiency ratio, net of applicable taxes. The after-tax amounts for the
amortization and average balance of nonqualifying CDI were $29 million and
$863 million, respectively, for the quarter ended March 31, 1999. Goodwill
amortization and average balance (which are not tax effected) were $104
million and $7,734 million, respectively, for the quarter ended March 31,
1999.
(3) The March 31, 1999 ratios are preliminary.
<PAGE>
-4-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Quarter ended March 31,
----------------------- %
(in millions, except per share amounts) 1999 1998 Change
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
(1) Securities available for sale $ 510 $ 459 11%
(2) Mortgages held for sale 258 170 52
(3) Loans held for sale 99 91 9
(4) Loans 2,579 2,661 (3)
(5) Other interest income 42 58 (28)
-------- --------
(6) Total interest income 3,488 3,439 1
-------- --------
INTEREST EXPENSE
(7) Deposits 717 777 (8)
(8) Short-term borrowings 208 171 22
(9) Long-term debt 283 272 4
(10) Guaranteed preferred beneficial interests
in Company's subordinated debentures 14 25 (44)
-------- --------
(11) Total interest expense 1,222 1,245 (2)
-------- --------
(12) NET INTEREST INCOME 2,266 2,194 3
(13) Provision for loan losses 270 305 (11)
-------- --------
Net interest income after
(14) provision for loan losses 1,996 1,889 6
NONINTEREST INCOME
(15) Service charges on deposit accounts 344 305 13
(16) Trust and investment fees and commissions 300 259 16
(17) Credit card fee revenue 132 121 9
(18) Other fees and commissions 238 221 8
(19) Mortgage banking 327 276 18
(20) Insurance 85 95 (11)
(21) Net venture capital gains 112 59 90
(22) Net gains (losses) on securities available for sale (2) 19 --
(23) Other 191 178 7
-------- --------
(24) Total noninterest income 1,727 1,533 13
-------- --------
NONINTEREST EXPENSE
(25) Salaries 725 684 6
(26) Incentive compensation 134 135 (1)
(27) Employee benefits 199 188 6
(28) Equipment 191 184 4
(29) Net occupancy 186 189 (2)
(30) Goodwill 104 104 --
(31) Core deposit intangible 52 63 (17)
(32) Net losses on dispositions of premises and equipment 2 7 (71)
(33) Other 749 742 1
-------- --------
(34) Total noninterest expense 2,342 2,296 2
-------- --------
(35) INCOME BEFORE INCOME TAX EXPENSE 1,381 1,126 23
(36) Income tax expense 497 442 12
-------- --------
(37) NET INCOME $ 884 $ 684 29%
-------- -------- -----
-------- -------- -----
(38) NET INCOME APPLICABLE TO
COMMON STOCK $ 875 $ 675 30%
-------- -------- -----
-------- -------- -----
(39) EARNINGS PER COMMON SHARE $ .53 $ .42 26%
-------- -------- -----
-------- -------- -----
(40) DILUTED EARNINGS PER COMMON SHARE $ .53 $ .41 29%
-------- -------- -----
-------- -------- -----
(41) DIVIDENDS DECLARED PER COMMON SHARE $ .185 $ .165 12%
-------- -------- -----
-------- -------- -----
(42) Average common shares outstanding 1,647.1 1,615.7 2%
-------- -------- -----
-------- -------- -----
(43) Diluted average common shares outstanding 1,664.2 1,639.1 2%
-------- -------- -----
-------- -------- -----
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-5-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
% Change
March 31, 1999 from
-------------------
MAR. 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31,
(in millions, except shares) 1999 1998 1998 1998 1998
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
(1) Cash and due from banks $ 11,364 $ 12,731 $ 12,977 (11)% (12)%
(2) Federal funds sold and securities
purchased under resale agreements 869 1,517 483 (43) 80
(3) Securities available for sale 35,801 31,997 31,148 12 15
(4) Mortgages held for sale 11,717 19,770 12,408 (41) (6)
(5) Loans held for sale 5,630 5,322 4,585 6 23
(6) Loans 108,108 107,994 105,141 -- 3
(7) Allowance for loan losses 3,161 3,134 3,066 1 3
---------- --------- ---------
(8) Net loans 104,947 104,860 102,075 -- 3
---------- --------- ---------
(9) Mortgage servicing rights 3,627 3,080 3,113 18 17
(10) Premises and equipment, net 3,130 3,130 3,320 -- (6)
(11) Core deposit intangible 1,437 1,510 1,670 (5) (14)
(12) Goodwill 7,747 7,664 7,970 1 (3)
(13) Interest receivable and other assets 15,161 10,894 11,104 39 37
---------- --------- ---------
(14) Total assets $201,430 $202,475 $190,853 (1)% 6%
---------- --------- --------- --- ---
---------- --------- --------- --- ---
LIABILITIES
(15) Noninterest-bearing deposits $ 42,322 $ 46,732 $ 43,027 (9)% (2)%
(16) Interest-bearing deposits 90,018 90,056 87,121 -- 3
---------- --------- ---------
(17) Total deposits 132,340 136,788 130,148 (3) 2
(18) Short-term borrowings 17,270 15,897 15,626 9 11
(19) Accrued expenses and other liabilities 9,396 8,537 7,261 10 29
(20) Long-term debt 20,363 19,709 16,747 3 22
(21) Guaranteed preferred beneficial interests
in Company's subordinated debentures 785 785 1,299 -- (40)
STOCKHOLDERS' EQUITY
(22) Preferred stock 524 547 569 (4) (8)
(23) Unearned ESOP shares (65) (84) (108) (23) (40)
---------- --------- ---------
(24) Total preferred stock 459 463 461 (1) --
(25) Common stock - $1 2/3 par value,
authorized 4,000,000,000 shares;
issued 1,666,095,279 shares, 1,661,392,590 shares
and 1,621,957,949 shares 2,777 2,769 2,703 -- 3
(26) Additional paid-in capital 8,733 8,673 7,893 1 11
(27) Retained earnings 9,525 9,045 8,668 5 10
(28) Cumulative other comprehensive income 307 463 404 (34) (24)
(29) Note receivable from ESOP (3) (3) (8) -- (63)
(30) Treasury stock - 13,478,913 shares,
17,334,787 shares and 11,502,502 shares (522) (651) (349) (20) 50
---------- --------- ---------
(31) Total stockholders' equity 21,276 20,759 19,772 2 8
---------- --------- ---------
(32) Total liabilities and stockholders' equity $201,430 $202,475 $190,853 (1)% 6%
---------- --------- --------- --- ---
---------- --------- --------- --- ---
------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-6-
Wells Fargo & Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Quarter ended March 31,
----------------------
(in millions) 1999 1998
- -----------------------------------------------------------------------------------
<S> <C> <C>
BALANCE, BEGINNING OF QUARTER $ 20,759 $ 19,778
Net income 884 684
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments 1 --
Change in investment securities valuation allowance (157) (60)
Common stock issued 242 80
Common stock issued for acquisitions 63 19
Common stock repurchased (221) (491)
Preferred stock released to ESOP 18 9
Preferred stock dividends (9) (9)
Common stock dividends (304) (238)
-------- --------
BALANCE, END OF QUARTER $ 21,276 $ 19,772
-------- --------
-------- --------
- -----------------------------------------------------------------------------------
</TABLE>
LOANS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
MARCH 31, December 31, March 31,
(in millions) 1999 1998 1998
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial $ 35,232 $ 35,450 $ 32,416
Real estate 1-4 family first mortgage 11,328 10,709 12,589
Other real estate mortgage 16,903 16,668 16,329
Real estate construction 3,942 3,790 3,423
Consumer:
Real estate 1-4 family junior lien mortgage 10,786 10,691 10,073
Credit card 5,394 5,795 6,232
Other revolving credit and monthly payment 16,392 16,902 17,727
-------- -------- --------
Total consumer 32,572 33,388 34,032
Lease financing 6,645 6,380 5,231
Foreign 1,486 1,609 1,121
-------- -------- --------
Total loans (net of unearned discount) $108,108 $107,994 $105,141
-------- -------- --------
-------- -------- --------
- --------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-7-
Wells Fargo & Company and Subsidiaries
CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Quarter ended
-----------------------------------
MAR. 31, Dec. 31, Mar. 31,
(in millions) 1999 1998 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, BEGINNING OF QUARTER $ 3,134 $ 3,170 $ 3,062
Allowance related to business combinations, net 30 26 9
Provision for loan losses 270 624 305
Loan charge-offs:
Commercial (81) (72) (58)
Real estate 1-4 family first mortgage (1) (8) (5)
Other real estate mortgage (8) (12) (3)
Real estate construction -- (1) (1)
Consumer:
Real estate 1-4 family junior lien mortgage (9) (13) (6)
Credit card (110) (126) (141)
Other revolving credit and monthly payment (127) (509) (179)
------- ------- -------
Total consumer (246) (648) (326)
Lease financing (11) (13) (12)
Foreign (15) (37) (10)
------- ------- -------
Total loan charge-offs (362) (791) (415)
------- ------- -------
Loan recoveries:
Commercial 13 22 25
Real estate 1-4 family first mortgage 1 2 4
Other real estate mortgage 17 10 11
Real estate construction -- 1 1
Consumer:
Real estate 1-4 family junior lien mortgage 3 2 2
Credit card 13 12 15
Other revolving credit and monthly payment 36 51 42
------- ------- -------
Total consumer 52 65 59
Lease financing 3 2 3
Foreign 3 3 2
------- ------- -------
Total loan recoveries 89 105 105
------- ------- -------
Total net loan charge-offs (273) (686) (310)
------- ------- -------
BALANCE, END OF QUARTER $ 3,161 $ 3,134 $ 3,066
------- ------- -------
------- ------- -------
Total net loan charge-offs as a percentage
of average loans (annualized) 1.03% 2.59% 1.19%
------- ------- -------
------- ------- -------
Allowance as a percentage of total loans 2.92% 2.90% 2.92%
------- ------- -------
------- ------- -------
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-8-
Wells Fargo & Company and Subsidiaries
NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MARCH 31, December 31, March 31,
(in millions) 1999 1998 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans $703 $709 $712
Restructured loans 1 1 9
---- ---- ----
Nonaccrual and restructured loans 704 710 721
As a percentage of total loans .7% .7% .7%
Foreclosed assets 212 167 205
Real estate investments (1) 1 1 4
---- ---- ----
Total nonaccrual and restructured loans
and other assets $917 $878 $930
---- ---- ----
---- ---- ----
- --------------------------------------------------------------------------------
</TABLE>
(1) Represents the amount of real estate investments (contingent interest loans
accounted for as investments) that would be classified as nonaccrual if
such assets were loans. Real estate investments totaled $130 million, $128
million and $162 million at March 31, 1999, December 31, 1998 and March 31,
1998, respectively.
<PAGE>
-9-
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Quarter ended March 31,
----------------------- %
(in millions) 1999 1998 Change
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service charges on deposit accounts $ 344 $ 305 13%
Trust and investment fees and commissions:
Asset management and custody fees 184 161 14
Mutual fund and annuity sales fees 90 75 20
All other 26 23 13
------- -------
Total trust and investment fees
and commissions 300 259 16
Credit card fee revenue 132 121 9
Other fees and commissions:
ATM network fees 58 51 14
Charges and fees on loans 76 71 7
All other 104 99 5
------- -------
Total other fees and commissions 238 221 8
Mortgage banking:
Origination and other closing fees 113 109 4
Servicing fees, net of amortization (45) 56 --
Net gains on sales of mortgages 200 54 270
All other 59 57 4
------- -------
Total mortgage banking 327 276 18
Insurance 85 95 (11)
Net venture capital gains 112 59 90
Net gains (losses) on securities available for sale (2) 19 --
Income from equity investments accounted
for by the:
Cost method 33 50 (34)
Equity method 21 15 40
Net gains on sales of loans 13 18 (28)
Net losses from dispositions of operations (1) (3) (67)
All other 125 98 28
------- -------
Total $1,727 $1,533 13%
------- ------- --
------- ------- --
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NONINTEREST EXPENSE
- ------------------------------------------------------------------------------------------------
Quarter ended March 31,
----------------------- %
(in millions) 1999 1998 Change
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Salaries $ 725 $ 684 6%
Incentive compensation 134 135 (1)
Employee benefits 199 188 6
Equipment 191 184 4
Net occupancy 186 189 (2)
Goodwill 104 104 --
Core deposit intangible:
Nonqualifying (1) 46 56 (18)
Qualifying 6 7 (14)
Net losses on dispositions of premises
and equipment 2 7 (71)
Operating losses 29 39 (26)
Outside professional services 73 58 26
Contract services 90 73 23
Telecommunications 61 58 5
Outside data processing 76 49 55
Advertising and promotion 50 54 (7)
Postage 57 54 6
Travel and entertainment 55 49 12
Stationery and supplies 39 41 (5)
Insurance 36 38 (5)
Security 21 22 (5)
All other 162 207 (22)
------- -------
Total $2,342 $2,296 2%
------- ------- --
------- ------- --
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Amortization of core deposit intangible acquired after February 1992 that
is subtracted from stockholders' equity in computing regulatory capital
for bank holding companies.
<PAGE>
-10-
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Quarter ended March 31,
-----------------------------------------------------------------
1999 1998
----------------------------- -----------------------------
INTEREST Interest
AVERAGE YIELDS/ INCOME/ Average Yields/ income/
(in millions) BALANCE RATES EXPENSE balance rates expense
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Federal funds sold and securities purchased
(1) under resale agreements $ 1,160 5.01% $ 14 $ 1,197 5.59% $ 17
Securities available for sale (3):
(2) Securities of U.S. Treasury and federal agencies 4,716 5.63 65 4,817 6.02 71
(3) Securities of U.S. states and political subdivisions 1,686 8.30 33 1,513 8.56 31
Mortgage-backed securities:
(4) Federal agencies 19,655 6.72 326 17,477 7.21 308
(5) Private collateralized mortgage obligations 3,308 6.75 56 2,400 6.87 41
-------- -------- -------- --------
(6) Total mortgage-backed securities 22,963 6.72 382 19,877 7.17 349
(7) Other securities 2,843 6.07 42 1,445 5.26 19
-------- -------- -------- --------
(8) Total securities available for sale 32,208 6.58 522 27,652 6.93 470
(9) Loans held for sale (3) 5,561 7.24 99 4,746 7.70 91
(10) Mortgages held for sale (3) 15,407 6.71 258 9,790 6.97 170
Loans:
(11) Commercial 34,875 8.53 735 31,769 9.22 723
(12) Real estate 1-4 family first mortgage 11,263 8.90 251 13,331 8.67 285
(13) Other real estate mortgage 16,731 9.03 373 16,359 9.24 373
(14) Real estate construction 3,902 9.36 90 3,368 9.54 79
Consumer:
(15) Real estate 1-4 family junior lien mortgage 10,784 9.31 248 9,807 10.77 261
(16) Credit card 5,549 13.64 189 6,428 14.95 240
(17) Other revolving credit and monthly payment 16,683 11.76 489 18,137 11.95 540
-------- -------- -------- --------
(18) Total consumer 33,016 11.27 926 34,372 12.28 1,041
(19) Lease financing 6,574 7.88 129 5,110 8.41 107
(20) Foreign 1,473 21.05 77 1,089 20.50 56
-------- ----- -------- -----
(21) Total loans (4) 107,834 9.65 2,581 105,398 10.19 2,664
(22) Other 2,420 4.72 30 2,659 6.09 42
-------- -------- -------- --------
(23) Total earning assets $164,590 8.59 3,504 $151,442 9.20 3,454
-------- -------- -------- --------
-------- -------- -------- --------
FUNDING SOURCES
Deposits:
(24) Interest-bearing checking $ 2,250 .77 4 $ 2,162 1.56 8
(25) Market rate and other savings 56,051 2.37 328 51,849 2.62 334
(26) Savings certificates 27,062 4.90 327 28,062 5.30 367
(27) Other time deposits 3,714 5.13 47 4,186 5.54 57
(28) Deposits in foreign offices 1,047 4.20 11 783 5.01 10
-------- -------- -------- --------
Total interest-bearing deposits 90,124 3.23 717 87,042 3.62 776
(29) Short-term borrowings 17,556 4.80 208 12,729 5.46 171
(30) Long-term debt 18,887 6.01 283 16,946 6.43 272
Guaranteed preferred beneficial interests in Company's
(31) subordinated debentures 785 7.53 15 1,299 7.80 25
-------- -------- -------- --------
(32) Total interest-bearing liabilities 127,352 3.88 1,223 118,016 4.27 1,244
(33) Portion of noninterest-bearing funding sources 37,238 -- -- 33,426 -- --
-------- -------- -------- --------
(34) Total funding sources $164,590 3.01 1,223 $151,442 3.33 1,244
-------- -------- -------- --------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
(35) A TAXABLE-EQUIVALENT BASIS (5) 5.58% $ 2,281 5.87% $ 2,210
---- -------- ---- --------
---- -------- ---- --------
NONINTEREST-EARNING ASSETS
(36) Cash and due from banks $ 11,239 $ 10,749
(37) Goodwill 7,734 8,022
(38) Other 15,160 13,054
-------- --------
(39) Total noninterest-earning assets $ 34,133 $ 31,825
-------- --------
-------- --------
NONINTEREST-BEARING FUNDING SOURCES
(40) Deposits $ 42,770 $ 39,174
(41) Other liabilities 7,652 6,337
(42) Preferred stockholders' equity 462 462
(43) Common stockholders' equity 20,487 19,278
Noninterest-bearing funding sources used to
(44) fund earning assets (37,238) (33,426)
-------- --------
(45) Net noninterest-bearing funding sources $ 34,133 $ 31,825
-------- --------
-------- --------
(46) TOTAL ASSETS $198,723 $183,267
-------- --------
-------- --------
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</TABLE>
(1) The average prime rate of the Company was 7.75% and 8.50% for the quarters
ended March 31, 1999 and 1998, respectively. The average three-month London
Interbank Offered Rate (LIBOR) was 5.00% and 5.66% for the same quarters,
respectively.
(2) Interest rates and amounts include the effects of hedge and
risk management activities associated with the respective asset and
liability categories.
(3) Yields are based on amortized cost balances.
(4) Nonaccrual loans and related income are included in their respective loan
categories.
(5) Includes taxable-equivalent adjustments that primarily relate to income on
certain loans and securities that is exempt from federal and applicable
state income taxes. The federal statutory tax rate was 35% for both
quarters presented.
