<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 18, 1997
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
H. F. AHMANSON & COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
<TABLE>
<S> <C> <C>
DELAWARE 6035 95-0479700
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
4900 RIVERGRADE ROAD
IRWINDALE, CALIFORNIA 91706
(818) 960-6311
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
MADELEINE A. KLEINER
SENIOR EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
H. F. AHMANSON & COMPANY
4900 RIVERGRADE ROAD
IRWINDALE, CALIFORNIA 91706
(818) 960-6311
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
H. RODGIN COHEN AND
ALAN J. SINSHEIMER
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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- --------------------------------------------------------------------------------------------------------
<CAPTION>
PROPOSED
AMOUNT PROPOSED MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE(2)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per
share (including associated stock 157,200,000
purchase rights).................. shares $30.80 $4,841,389,970 $1,467,088
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) The number of shares to be registered pursuant to this Registration
Statement is based upon the number of shares of common stock, par value
$1.00 per share ("GWF Common Stock"), of Great Western Financial
Corporation presently outstanding or reserved for issuance under various
plans or otherwise expected to be issued upon the consummation of the
proposed transaction to which this Registration Statement relates (less
the 100 shares of GWF Common Stock beneficially owned by H.F. Ahmanson &
Company) multiplied by the exchange ratio of 1.05 shares of common stock,
par value $0.01 per share, of H.F. Ahmanson & Company for each share of
GWF Common Stock.
(2) The registration fee was computed pursuant to Rules 457(f) and 457(c)
under the Securities Act of 1933, as amended, based on the average of the
high and low sales prices of GWF Common Stock, as reported by the New York
Stock Exchange on February 10, 1997.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED FEBRUARY 18, 1997
PRELIMINARY COPY
----------
JOINT PROXY STATEMENT/PROSPECTUS
OF
H. F. AHMANSON & COMPANY
----------
On February 17, 1997, H. F. Ahmanson & Company, a Delaware corporation
("Ahmanson"), submitted a written proposal to Great Western Financial
Corporation, a Delaware corporation ("GWF"), for a tax-free merger of the two
companies (the "Proposed Merger") pursuant to which each outstanding share of
common stock, par value $1.00 per share ("GWF Common Stock"), of GWF would be
converted into 1.05 shares of common stock, par value $0.01 per share
("Ahmanson Common Stock"), of Ahmanson (the "Ahmanson Proposal").
Based on the closing price of the Ahmanson Common Stock on February 14, 1997
(the last trading day before announcement of the Ahmanson Proposal), GWF common
stockholders would receive in the Proposed Merger shares of Ahmanson Common
Stock with a value of $42.53 for each of their shares of GWF Common Stock--
representing a 24.2% premium over the closing price of the GWF Common Stock.
Ahmanson believes that the Proposed Merger represents a unique and compelling
opportunity to enhance value for stockholders of both Ahmanson and GWF.
Specifically, Ahmanson believes that the Proposed Merger would (a) be
significantly accretive to cash earnings per share in the first year and
accretive to reported earnings per share approximately twelve months after
completion of the Proposed Merger, (b) allow the combined company to realize
cost savings estimated at over $400 million per year (Ahmanson expects to be
able to achieve substantially all of such annual savings within 15 months after
closing the Proposed Merger), (c) enhance the combined company's competitive
position in its major markets in California, where the combined company would
rank third (with about $50 billion in deposits), and in Florida, where the
combined company would rank fifth (with about $10 billion in deposits), and
(d) provide additional scale in key business lines (mortgage lending, loan
servicing, consumer and small business lending and investment services). The
combined company would be the 10th largest depository organization in the
United States (based on deposits). See "The Proposed Merger--Background of the
Ahmanson Proposal; Reasons for the Proposed Merger". Ahmanson is confident that
it will be able to obtain the regulatory approvals required for the Proposed
Merger on a timely basis and without imposition of any condition that would
have a material adverse effect on the combined company. Accordingly, Ahmanson
believes that the Board of Directors of GWF (the "GWF Board") should find the
Proposed Merger highly attractive. However, as of the date of this Preliminary
Joint Proxy Statement/Prospectus, GWF has not yet responded to the Ahmanson
Proposal and the parties have not yet entered into any negotiations concerning
the Proposed Merger or any other business combination between Ahmanson and GWF.
Assuming the GWF Board approves the Proposed Merger, a definitive version of
this Joint Proxy Statement/Prospectus (the "Definitive Joint Proxy
Statement/Prospectus") would be furnished by Ahmanson in connection with its
solicitation of proxies for use at a special meeting of stockholders of
Ahmanson (including any adjournments or postponements thereof, the "Ahmanson
Meeting"). At the Ahmanson Meeting, holders of Ahmanson Common Stock would be
asked to consider and vote upon a proposal to adopt an agreement and plan of
merger providing for the Proposed Merger (the "Merger Agreement"). In addition,
at the Ahmanson Meeting, holders of Ahmanson Common Stock would be asked to
consider and vote upon a proposal to amend Ahmanson's Restated Certificate of
Incorporation (the "Ahmanson Charter") to increase the number of authorized
shares of Ahmanson Common Stock from 220 million to 350 million shares (the
"Ahmanson Charter Amendment"). The Ahmanson Charter Amendment is necessary to
permit the issuance of Ahmanson Common Stock required for completion of the
Proposed Merger.
Assuming the GWF Board approves the Proposed Merger, the Definitive Joint
Proxy Statement/Prospectus would also be furnished by GWF in connection with
its solicitation of proxies for use at a special meeting of stockholders of GWF
(including any adjournments or postponements thereof, the "GWF Meeting"). At
the GWF Meeting, holders of GWF Common Stock would be asked to consider and
vote upon a proposal to adopt the Merger Agreement.
(continued on next page)
----------
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS
ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
----------
The date of this Joint Proxy Statement/Prospectus is , 1997.
<PAGE>
(continued from previous page)
This Joint Proxy Statement/Prospectus also constitutes a prospectus of
Ahmanson with respect to the Ahmanson Common Stock issuable to holders of GWF
Common Stock upon consummation of the Proposed Merger. Assuming the GWF Board
approves the Proposed Merger, copies of the Definitive Joint Proxy
Statement/Prospectus would also be furnished to the holders of the GWF 8.30%
Preferred Stock and the GWF Depositary Shares (each as defined herein) for
informational purposes, but proxies would not be solicited from such holders
and such holders would not be entitled, and would not be asked, to vote at the
Ahmanson Meeting or the GWF Meeting.
Assuming the Proposed Merger is consummated, at the effective time of the
Proposed Merger (the "Effective Time"), (i) each outstanding share of GWF
Common Stock, other than shares held in GWF's treasury or beneficially owned
directly or indirectly by Ahmanson or its subsidiaries or by GWF or its
subsidiaries, would be converted into 1.05 shares of Ahmanson Common Stock
(the "Exchange Ratio"), with cash being paid in lieu of fractional shares, and
(ii) each outstanding share of GWF 8.30% Cumulative Preferred Stock,
liquidation preference $250 per share ("GWF 8.30% Preferred Stock"; the GWF
Common Stock and the GWF 8.30% Preferred Stock are collectively referred to
herein as the "GWF Capital Stock"), would be converted into one share of
Ahmanson 8.30% Cumulative Preferred Stock, liquidation preference $250 per
share ("New Ahmanson 8.30% Preferred Stock"; the Ahmanson Common Stock, the
Ahmanson Preferred Stock (as defined herein) and the New Ahmanson 8.30%
Preferred Stock are collectively referred to herein as the "Ahmanson Capital
Stock"). The terms, designations, preferences, limitations, privileges and
rights of the New Ahmanson 8.30% Preferred Stock would be substantially the
same as those of the GWF 8.30% Preferred Stock. The New Ahmanson 8.30%
Preferred Stock would be represented by depositary shares (the "New Ahmanson
Depositary Shares"). See "Description of Ahmanson Capital Stock".
The Ahmanson Common Stock, GWF Common Stock and depositary shares ("GWF
Depositary Shares") representing the GWF 8.30% Preferred Stock are listed on
the New York Stock Exchange (the "NYSE"). The closing prices of Ahmanson
Common Stock (NYSE Symbol: "AHM") and GWF Common Stock (NYSE Symbol: "GWF") on
the NYSE on February 14, 1997 (the last trading day before announcement of the
Ahmanson Proposal) were $40.50 and $34.25 per share, respectively. Based on
such closing price of the Ahmanson Common Stock, the Exchange Ratio would
result in an implied market value per share for the GWF Common Stock of
$42.53, which represents a 24.2% premium over the closing price of GWF Common
Stock on February 14, 1997. Because the Exchange Ratio is fixed, a change in
the market price of the Ahmanson Common Stock before the Effective Time would
affect the implied market value of the Ahmanson Common Stock to be received in
the Proposed Merger in exchange for the GWF Common Stock. THERE CAN BE NO
ASSURANCE AS TO THE MARKET PRICE PER SHARE OF THE AHMANSON COMMON STOCK AT ANY
TIME PRIOR TO, AT OR AFTER THE EFFECTIVE TIME. GWF stockholders are urged to
obtain current market quotations.
All references to the GWF Common Stock in this Joint Proxy
Statement/Prospectus include the associated GWF Rights (as defined herein)
issued pursuant to the GWF Rights Plan (as defined herein) and all references
to the Ahmanson Common Stock include the associated Ahmanson Rights (as
defined herein) issued pursuant to the Ahmanson Rights Plan (as defined
herein).
Assuming the GWF Board approves the Proposed Merger, the Definitive Joint
Proxy Statement/Prospectus and appropriate forms of proxies for the Ahmanson
Meeting and the GWF Meeting (collectively the "Meetings") would be mailed to
the stockholders of Ahmanson and GWF as soon thereafter as practicable.
2
<PAGE>
AVAILABLE INFORMATION
Ahmanson and GWF are both subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements and other information filed by Ahmanson and GWF with the
Commission may be inspected and copied at the Commission's public reference
room located at 450 Fifth Street, N.W., Room 1024, Washington D.C. 20549, and
at the public reference facilities in the Commission's regional offices
located at: 7 World Trade Center, 13th Floor, New York, New York 10048; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60601.
Copies of such material may be obtained at prescribed rates by writing to the
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549. Certain of such reports, proxy statements and other information are
also available from the Commission over the Internet at http://www.sec.gov.
The shares of Ahmanson Common Stock and GWF Common Stock are listed on the
NYSE and the Pacific Stock Exchange (the "PSE"). The periodic reports, proxy
statements and other information filed by Ahmanson and GWF with the Commission
may be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005 and at the offices of the PSE, 301 Pine Street, San Francisco,
California 94104.
This Joint Proxy Statement/Prospectus is included as part of a registration
statement on Form S-4 (together with all amendments and exhibits thereto,
including documents and information incorporated by reference, the
"Registration Statement") filed with the Commission by Ahmanson, relating to
the registration under the Securities Act of 1933, as amended (the "Securities
Act"), of up to 157,200,000 shares of Ahmanson Common Stock. This Joint Proxy
Statement/Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which have been omitted pursuant
to the rules and regulations of the Commission, to which reference is hereby
made for further information with respect to Ahmanson and GWF and the Ahmanson
Common Stock offered hereby. Statements contained herein concerning any
documents are not necessarily complete and, in each instance, reference is
made to the copies of such documents filed as exhibits to the Registration
Statement. Each such statement is qualified in its entirety by such reference.
3
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission by Ahmanson (File No. 1-
8930) are incorporated herein by reference: (a) Ahmanson's Annual Report on
Form 10-K for the year ended December 31, 1995 (the "1995 Ahmanson 10-K"); (b)
the portions of Ahmanson's Proxy Statement for the Annual Meeting of
Stockholders held on May 13, 1996 that have been incorporated by reference in
the 1995 Ahmanson 10-K; (c) Ahmanson's Quarterly Reports on Form 10-Q for the
periods ended March 31, 1996, June 30, 1996 and September 30, 1996; (d)
Ahmanson's Current Reports on Form 8-K dated January 24, 1996, March 28, 1996,
April 16, 1996, May 14, 1996, June 26, 1996, July 16, 1996, October 16, 1996,
January 15, 1997 and February 17, 1997; and (e) the description of the
Ahmanson Rights contained in Item 1 of the Ahmanson Registration Statement on
Form 8-A dated August 2, 1988, and any amendment or report updating such
description filed on or after the date of this Joint Proxy
Statement/Prospectus to and including the date of the applicable Meeting.
The following documents filed with the Commission by GWF (File No. 1-4075)
are incorporated herein by reference: (a) GWF's Annual Report on Form 10-K for
the year ended December 31, 1995 (the "1995 GWF 10-K"); (b) the portions of
GWF's Proxy Statement for the Annual Meeting of Stockholders held on April 23,
1996 that have been incorporated by reference in the 1995 GWF 10-K; (c) GWF's
Quarterly Reports on Form 10-Q for the periods ended March 31, 1996, June 30,
1996 and September 30, 1996; (d) GWF's Current Reports on Form 8-K dated
December 2, 1996, January 22, 1997 and January 27, 1997; (e) the description
of GWF Capital Stock contained in the GWF Registration Statement on Form S-8
(File No. 333-12655) filed with the Commission on September 25, 1996, and any
amendment or report updating such description filed on or after the date of
this Joint Proxy Statement/Prospectus to and including the date of the
applicable Meeting; and (f) the description of the GWF Rights contained in
Item 1 of the GWF Registration Statement on Form 8-A dated June 25, 1986, as
amended by the Form 8-A/A dated June 30, 1995, and any amendment or report
updating such description filed on or after the date of this Joint Proxy
Statement/Prospectus to and including the date of the applicable Meeting.
All documents filed by either Ahmanson or GWF pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior
to the date of the applicable Meeting shall be deemed to be incorporated
herein by reference and to be a part hereof from the date of such filing. Any
statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein or in any
other subsequently filed document which also is, or is deemed to be,
incorporated herein by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed to constitute a
part hereof, except as so modified or superseded.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS ARE AVAILABLE
WITHOUT CHARGE UPON REQUEST TO H. F. AHMANSON & COMPANY, 4900 RIVERGRADE ROAD,
IRWINDALE, CALIFORNIA 91706, ATTENTION: INVESTOR RELATIONS. TELEPHONE REQUESTS
MAY BE DIRECTED TO (818) 814-7986.
GWF INFORMATION
Although Ahmanson has included information concerning GWF insofar as it is
known or reasonably available to Ahmanson, Ahmanson is not currently
affiliated with GWF and GWF has not to date permitted access by Ahmanson to
GWF's books and records. Therefore, information concerning GWF which has not
been made public is not available to Ahmanson. Although Ahmanson has no
knowledge that would indicate that statements relating to GWF contained or
incorporated by reference in this Joint Proxy Statement/Prospectus in reliance
upon publicly available information are inaccurate or incomplete, Ahmanson was
not involved in the preparation of such information and statements and, for
the foregoing reasons, is not in a position to verify any such information or
statements. Accordingly, Ahmanson takes no responsibility for the accuracy of
such information or statements.
4
<PAGE>
Pursuant to Rule 409 promulgated under the Securities Act and Rule 12b-21
promulgated under the Exchange Act, Ahmanson is requesting that GWF and its
independent accountants provide to Ahmanson the information required for
complete disclosure concerning the business, operations, financial condition
and management of GWF. As of the date of this preliminary Joint Proxy
Statement/Prospectus, neither GWF nor its independent accountants had provided
any information in response to such request. Ahmanson will provide any and all
information which it receives from GWF or its independent accountants prior to
the Meetings and which Ahmanson deems material, reliable and appropriate in a
subsequently prepared amendment or supplement hereto.
----------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION IN CONNECTION WITH THE AHMANSON PROPOSAL OTHER THAN THOSE
CONTAINED OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AHMANSON.
THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A
SOLICITATION TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. THE DELIVERY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS SHALL UNDER NO CIRCUMSTANCES CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF AHMANSON OR GWF SINCE THE DATE AS
OF WHICH INFORMATION IS FURNISHED OR THE DATE HEREOF.
FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS.
THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS CERTAIN FORWARD LOOKING
STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
BUSINESS OF AHMANSON FOLLOWING THE CONSUMMATION OF THE PROPOSED MERGER,
INCLUDING STATEMENTS RELATING TO: (A) THE COST SAVINGS AND ACCRETION TO CASH
EARNINGS AND REPORTED EARNINGS THAT WILL BE REALIZED FROM THE PROPOSED MERGER
(SEE "THE PROPOSED MERGER--BACKGROUND OF THE AHMANSON PROPOSAL; REASONS FOR
THE PROPOSED MERGER"); (B) THE IMPACT ON REVENUES OF THE PROPOSED MERGER,
INCLUDING THE POTENTIAL FOR ENHANCED REVENUES AND THE IMPACT ON REVENUES OF
CONSOLIDATION OF RETAIL BRANCHES AND OTHER OPERATIONS AS PLANNED (SEE "THE
PROPOSED MERGER--BACKGROUND OF THE AHMANSON PROPOSAL; REASONS FOR THE PROPOSED
MERGER"); AND (C) THE RESTRUCTURING CHARGES EXPECTED TO BE INCURRED IN
CONNECTION WITH THE PROPOSED MERGER (SEE "PRO FORMA COMBINED FINANCIAL
INFORMATION"). THESE FORWARD LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND
UNCERTAINTIES. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS,
THE FOLLOWING POSSIBILITIES: (1) EXPECTED COST SAVINGS FROM THE PROPOSED
MERGER CANNOT BE FULLY REALIZED OR REALIZED WITHIN THE EXPECTED TIME FRAME;
(2) REVENUES FOLLOWING THE PROPOSED MERGER ARE LOWER THAN EXPECTED; (3)
COMPETITIVE PRESSURE AMONG DEPOSITORY INSTITUTIONS INCREASES SIGNIFICANTLY;
(4) COSTS OR DIFFICULTIES RELATED TO THE INTEGRATION OF THE BUSINESSES OF
AHMANSON AND GWF ARE GREATER THAN EXPECTED; (5) CHANGES IN THE INTEREST RATE
ENVIRONMENT REDUCE INTEREST MARGINS; (6) GENERAL ECONOMIC CONDITIONS, EITHER
NATIONALLY OR IN THE STATES IN WHICH THE COMBINED COMPANY WILL BE DOING
BUSINESS, ARE LESS FAVORABLE THAN EXPECTED; AND (7) LEGISLATION OR REGULATORY
CHANGES ADVERSELY AFFECT THE BUSINESSES IN WHICH THE COMBINED COMPANY WOULD BE
ENGAGED. FURTHER INFORMATION ON OTHER FACTORS WHICH COULD AFFECT THE FINANCIAL
RESULTS OF AHMANSON AFTER THE PROPOSED MERGER IS INCLUDED IN THE COMMISSION
FILINGS INCORPORATED BY REFERENCE HEREIN.
5
<PAGE>
SUMMARY
The information below is qualified in its entirety by the more detailed
information appearing elsewhere in this Joint Proxy Statement/Prospectus,
including the documents incorporated in this Joint Proxy Statement/Prospectus
by reference. As used in this Joint Proxy Statement/Prospectus, the term
"Ahmanson" refers to Ahmanson and, unless the context otherwise requires, its
subsidiaries, and the term "GWF" refers to GWF and, unless the context
otherwise requires, its subsidiaries. The term "Surviving Corporation" is
sometimes used herein to refer to Ahmanson following consummation of the
Proposed Merger.
BACKGROUND OF THE AHMANSON PROPOSAL; REASONS FOR THE PROPOSED MERGER
On a number of occasions during the last several years, the current and
predecessor chief executive officers of Ahmanson and GWF have informally
discussed the possibility of a merger of the two companies. These discussions
took place against the background of a rapidly changing banking industry
undergoing substantial consolidation, primarily as a result of increased
competition and a need to reduce costs through economies of scale. In addition,
in recent years, the two companies have been pursuing compatible business
strategies.
Consolidation among depository institutions has increased in recent years and
has included the merger or sale of a number of large California-based banks and
savings institutions. Among the major transactions that have occurred in recent
years are the combinations of: the six largest California banks (Wells Fargo
and First Interstate, Bank America and Security Pacific, and Union Bank and
Bank of California); the fifth and seventh largest California savings
institutions (First Nationwide and California Federal) (which followed a
proposal by Golden West, the third largest California savings institution, to
acquire California Federal); and the fourth largest California savings
institution and one of the largest savings institutions outside of California
(American Savings and Washington Mutual) (size references are to asset rankings
as of June 30 of the year of the referenced merger). Ahmanson has taken
advantage of this trend toward consolidation to enlarge its presence and
enhance its market share in key markets while disposing of assets in other,
"non-core" markets. Since June 1992, Ahmanson has engaged in transactions
which, taken together, have resulted in the acquisition of $6.8 billion in
deposits, primarily in California, at an average deposit premium (i.e., the
ratio of net purchase price to acquired deposits) of 2.9% and the sale of over
$12.7 billion in deposits in non-core markets at an average deposit premium of
7.1%. In addition, in September 1996, Ahmanson acquired approximately $1.9
billion in deposits by completing its purchase of 61 former First Interstate
branches.
Ahmanson believes that GWF also recognizes the merits of a focus on core
markets and the inevitability of consolidation. For example, in December 1993,
GWF acquired 119 branches of HomeFed in California having $4.1 billion in
deposits and, in December 1994, sold its 31 branches on the west coast of
Florida having $1.0 billion in deposits.
In light of the foregoing, on February 17, 1997, Charles R. Rinehart,
Chairman of the Board and Chief Executive Officer of Ahmanson, contacted John
F. Maher, President and Chief Executive Officer, of GWF and delivered to him a
written proposal for a tax-free merger of the two companies pursuant to which
each outstanding share of GWF Common Stock would be converted into 1.05 shares
of Ahmanson Common Stock. Ahmanson subsequently issued a press release publicly
disclosing the Ahmanson Proposal.
Based on the closing price of the Ahmanson Common Stock on the NYSE on
February 14, 1997 (the last trading day before announcement of the Ahmanson
Proposal), GWF common stockholders would receive in the Proposed Merger shares
of Ahmanson Common Stock with a value of $42.53 for each of their shares of GWF
Common Stock, representing a 24.2% premium over the February 14, 1997 closing
price of the GWF Common Stock.
6
<PAGE>
Ahmanson believes that the Proposed Merger represents a unique and compelling
opportunity to enhance value for stockholders of both Ahmanson and GWF.
Specifically, Ahmanson believes that the Proposed Merger would (a) be
significantly accretive to cash earnings per share (i.e., reported earnings
before amortization of intangibles) in the first year and accretive to reported
earnings per share approximately twelve months after completion of the Proposed
Merger, (b) allow the combined company to realize cost savings estimated at
over $400 million per year (Ahmanson expects to be able to achieve
substantially all of such annual savings within 15 months after closing the
Proposed Merger), (c) enhance the combined company's competitive position in
its major markets in California, where the combined company would rank third
(with about $50 billion in deposits), and in Florida, where the combined
company would rank fifth (with about $10 billion in deposits), and (d) provide
additional scale in key business lines (mortgage lending, loan servicing,
consumer and small business lending and investment services). See "The Proposed
Merger--Background of the Ahmanson Proposal; Reasons for the Proposed Merger".
Ahmanson is confident that it will be able to obtain the regulatory approvals
necessary for the Proposed Merger on a timely basis and without imposition of
any condition that would have a material adverse effect on the combined
company. See "The Proposed Merger--Regulatory Approvals". Accordingly, Ahmanson
believes that the GWF Board should find the Proposed Merger highly attractive.
However, as of the date of this Preliminary Joint Proxy Statement/Prospectus,
GWF has not yet responded to the Ahmanson Proposal and the parties have not yet
entered into any negotiations concerning the Proposed Merger or any other
business combination between Ahmanson and GWF.
THE PARTIES TO THE PROPOSED MERGER
Ahmanson
Ahmanson, a Delaware corporation, conducts its principal business operations
through Home Savings of America, FSB, a federally chartered savings bank ("Home
Savings"). Although Home Savings has traditionally focused on deposit-taking
and residential real estate lending, Home Savings has changed its focus toward
becoming a full-service consumer bank. Home Savings' acquisition of 61 First
Interstate Bank branches has accelerated Home Savings' progress toward
effecting this change. See "Business of Ahmanson".
At December 31, 1996, Ahmanson had total assets of $50 billion, deposits of
$35 billion and stockholders' equity of $2.4 billion. Based on deposits,
Ahmanson was at that date the third largest depository institution in
California and the 17th largest in the United States.
Ahmanson has its principal executive offices at 4900 Rivergrade Road,
Irwindale, California 91706, telephone number (818) 960-6311.
GWF
GWF is a savings and loan holding company organized in 1955 under the laws of
the state of Delaware. The principal assets of GWF are the capital stock of
Great Western Bank, a Federal Savings Bank ("GW Bank"), and Aristar, Inc.
("Aristar"). GW Bank is a federally chartered stock savings bank which has 416
branches in California and Florida. Aristar conducts consumer finance
operations through 528 offices in 24 states, which provide direct installment
loans and related credit insurance services and purchase retail installment
contracts. See "Business of GWF".
At December 31, 1996, GWF reported total assets of $43 billion, deposits of
$29 billion and stockholders' equity of $2.6 billion. Based on deposits, GWF
was at that date the fourth largest depositary institution in California and
the 23rd largest in the United States.
GWF has its principal executive offices at 9200 Oakdale Avenue, Chatsworth,
California 91311, telephone number (818) 775-3111.
7
<PAGE>
CONVERSION OF GWF CAPITAL STOCK
Assuming the Proposed Merger is consummated, at the Effective Time, (i) each
outstanding share of GWF Common Stock, other than shares held in GWF's treasury
or beneficially owned directly or indirectly by Ahmanson or its subsidiaries or
by GWF or its subsidiaries, would be converted into 1.05 shares of Ahmanson
Common Stock, with cash being paid in lieu of fractional shares, and (ii) each
outstanding share of GWF 8.30% Preferred Stock would be converted into one
share of New Ahmanson 8.30% Preferred Stock. The terms, designations,
preferences, limitations, privileges and rights of the New Ahmanson 8.30%
Preferred Stock would be substantially the same as those of the GWF 8.30%
Preferred Stock. See "The Proposed Merger--Conversion of GWF Capital Stock".
Assuming the Proposed Merger is consummated, at the Effective Time, each
option to purchase shares of GWF Common Stock (each a "GWF Common Stock
Option") issued by GWF pursuant to any of its employee or director stock option
programs (each a "GWF Common Stock Plan") that is outstanding and unexercised
immediately prior to the Effective Time would be converted automatically into
an option to purchase shares of Ahmanson Common Stock (each an "Ahmanson Stock
Option"). The number of shares of Ahmanson Common Stock subject to an Ahmanson
Stock Option would be equal to the product of the number of shares of GWF
Common Stock underlying the GWF Common Stock Option multiplied by the Exchange
Ratio and rounded to the nearest share, and the exercise price per share of
Ahmanson Common Stock subject to an Ahmanson Stock Option would be equal to the
exercise price per share of GWF Common Stock underlying the GWF Common Stock
Option divided by the Exchange Ratio and rounded to the nearest cent. See "The
Proposed Merger--Conversion of GWF Capital Stock".
VOTES REQUIRED
The Proposed Merger would be conditioned on, among other things, obtaining
the approval of the GWF Board and obtaining required approvals from the
stockholders of Ahmanson and GWF.
Ahmanson Stockholder Vote Required. Under the General Corporation Law of
Delaware (the "DGCL"), the affirmative vote of the holders of at least a
majority of the total number of outstanding shares of Ahmanson Common Stock
entitled to vote at the Ahmanson Meeting would be required both to adopt the
Merger Agreement and to approve the Ahmanson Charter Amendment. Holders of
Ahmanson Preferred Stock would not be entitled to and would not be requested to
vote at the Ahmanson Meeting.
Assuming the GWF Board approves the Proposed Merger, it is expected that all
of the shares of Ahmanson Common Stock (excluding shares subject to stock
options) beneficially owned by directors and executive officers of Ahmanson and
their affiliates at the close of business on the Record Date would be voted for
adoption of the Merger Agreement and approval of the Ahmanson Charter
Amendment.
GWF Stockholder Vote Required. Under the DGCL, the affirmative vote of the
holders of at least a majority of the total number of outstanding shares of GWF
Common Stock entitled to vote at the GWF Meeting would be required to adopt the
Merger Agreement. Holders of GWF Preferred Stock and GWF Depositary Shares
would not be entitled to and would not be requested to vote at the GWF Meeting.
See "The Proposed Merger--Votes Required".
REGULATORY APPROVALS
The Proposed Merger would also be conditioned on obtaining all required
regulatory approvals (the "Requisite Regulatory Approvals").
8
<PAGE>
The principal Requisite Regulatory Approval is approval of the Office of
Thrift Supervision (the "OTS") under the Home Owners' Loan Act and the Federal
Deposit Insurance Act. As described under "The Proposed Merger--Regulatory
Approvals", Ahmanson intends to file an application seeking this OTS approval
promptly. Ahmanson is confident that it will be able to obtain the OTS approval
on a timely basis and without the imposition of any condition that would have a
material adverse effect on the combined company. See "The Proposed Merger--
Regulatory Approvals".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Proposed Merger would be treated as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended, and that, accordingly, for federal income tax purposes no gain or loss
would be recognized by either GWF or Ahmanson as a result of the Proposed
Merger. Assuming the GWF Board approves the Proposed Merger, Ahmanson expects
that Sullivan & Cromwell, special counsel to Ahmanson, and tax counsel to GWF
would deliver opinions substantially to the effect that GWF's stockholders will
not recognize gain or loss upon the receipt solely of Ahmanson Common Stock or
New Ahmanson 8.30% Preferred Stock in exchange for GWF Common Stock or GWF
8.30% Preferred Stock, respectively, except with respect to any cash received
in lieu of a fractional share interest in Ahmanson Common Stock.
All stockholders should carefully read the discussion of the material federal
income tax consequences of the Proposed Merger under "The Proposed Merger--
Certain Federal Income Tax Consequences" and are urged to consult with their
own tax advisors as to the federal, state, local and foreign tax consequences
in their particular circumstances.
ACCOUNTING TREATMENT
If the Proposed Merger is consummated, Ahmanson would account for the
acquisition of GWF using the purchase method of accounting. Accordingly, the
consideration to be paid in the Proposed Merger would be allocated to assets
acquired and liabilities assumed based on their estimated fair values at the
consummation date. Net income (or loss) of GWF prior to the consummation date
would not be included in net income of the combined company. See "The Proposed
Merger--Background of the Ahmanson Proposal; Reasons for the Proposed Merger--
Purchase Accounting; Stock Repurchase Program".
APPRAISAL RIGHTS
Under the DGCL, holders of GWF Common Stock, GWF Preferred Stock (including
the holders of GWF Depositary Shares), Ahmanson Common Stock and Ahmanson
Preferred Stock (including the holders of Ahmanson Depositary Shares) would
have no appraisal rights in connection with the Proposed Merger. See "The
Proposed Merger--Appraisal Rights".
9
<PAGE>
MARKETS AND MARKET PRICES
The Ahmanson Common Stock is listed on the NYSE and the PSE under the symbol
"AHM" and the GWF Common Stock is listed on the NYSE and the PSE under the
symbol "GWF". The following table sets forth the closing price per share of
Ahmanson Common Stock and the closing price per share of GWF Common Stock on
the NYSE, and the "equivalent per share price" (as defined below) of GWF Common
Stock, as of February 14, 1997, the last trading day before public announcement
of the Ahmanson Proposal. The "equivalent per share price" of GWF Common Stock
equals the closing price per share of Ahmanson Common Stock on such date
multiplied by the Exchange Ratio. See "The Proposed Merger--Conversion of GWF
Capital Stock".
<TABLE>
<CAPTION>
MARKET PRICES PER SHARE
--------------------------------------------
AHMANSON EQUIVALENT PER
COMMON STOCK GWF COMMON STOCK SHARE PRICE
------------ ---------------- --------------
<S> <C> <C> <C>
February 14, 1997............ $40.50 $34.25 $42.53
</TABLE>
Because the Exchange Ratio is fixed, a change in the market price of Ahmanson
Common Stock before the Effective Time would affect the implied market value of
the Ahmanson Common Stock to be received in the Proposed Merger in exchange for
the GWF Common Stock. THERE CAN BE NO ASSURANCE AS TO THE MARKET PRICE OF THE
AHMANSON COMMON STOCK AT ANY TIME BEFORE, AT OR AFTER THE EFFECTIVE TIME.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR AHMANSON COMMON
STOCK AND GWF COMMON STOCK. SEE "THE PROPOSED MERGER CONVERSION OF GWF CAPITAL
STOCK".
Assuming the Proposed Merger is consummated, the GWF Common Stock and the GWF
Depositary Shares would no longer exist and, as a result, would no longer be
listed on the NYSE or, in the case of the GWF Common Stock, on the PSE or the
London Stock Exchange. It is expected that the Ahmanson Common Stock and the
New Ahmanson Depositary Shares issued in connection with the Proposed Merger
would be listed on the NYSE and, in the case of the Ahmanson Common Stock, on
the PSE.
COMPARISON OF RIGHTS OF THE HOLDERS OF GWF COMMON STOCK AND AHMANSON COMMON
STOCK
Assuming the Proposed Merger is consummated, stockholders of GWF would become
stockholders of Ahmanson. As each of GWF and Ahmanson is organized under the
laws of Delaware, differences in the rights of the holders of Ahmanson Common
Stock and GWF Common Stock arise solely from various provisions of the
certificate of incorporation and by-laws of each of GWF and Ahmanson, and from
differences between the Rights Agreement, dated June 25, 1986, between GWF and
First Chicago Trust Company of New York, as Rights Agent, as amended by the
First Amendment, dated February 19, 1988 (as so amended, the "GWF Rights
Plan"), and the Rights Agreement, dated as of July 26, 1988, between Ahmanson
and Union Bank, as Rights Agent (the "Ahmanson Rights Plan"). For a discussion
of certain similarities and differences between the rights of holders of GWF
Common Stock and the rights of holders of Ahmanson Common Stock, see
"Comparison of Rights of Holders of GWF Common Stock and Ahmanson Common
Stock".
DESCRIPTION OF AHMANSON CAPITAL STOCK
The authorized capital stock of Ahmanson consists of 220,000,000 shares of
Ahmanson Common Stock, par value $.01 per share (which would be increased to
350,000,000 if the Ahmanson Charter Amendment is approved), and 10,000,000
shares of preferred stock, par value $.01 per share. As of December 31, 1996,
there were 102,153,052 shares (excluding 17,390,562 shares held in treasury) of
Ahmanson Common Stock, 780,000 shares of 8.40% Preferred Stock, Series C, and
575,000 shares of 6% of Cumulative Convertible Preferred Stock, Series D,
issued and outstanding (such series of preferred stock, the "Ahmanson Preferred
Stock"). The outstanding shares of Ahmanson Preferred Stock are represented by
depositary shares (the "Ahmanson Depositary Shares"), which are listed on the
NYSE. 1,100,000 shares of Junior Participating Cumulative Preferred Stock are
designated but unissued with respect to the Ahmanson Rights Plan.
10
<PAGE>
Holders of shares of Ahmanson Common Stock are entitled to one vote per share
for each share held. Subject to the rights of holders of shares of the
outstanding Ahmanson Preferred Stock, holders of shares of Ahmanson Common
Stock have equal rights to participate in dividends when declared and, in the
event of liquidation, in the net assets of Ahmanson available for distribution
to stockholders. Ahmanson may not declare any dividends on the Ahmanson Common
Stock unless full preferential amounts to which holders of the Ahmanson
Preferred Stock are entitled have been paid or declared and set apart for
payment. Ahmanson is also subject to certain contractual and regulatory
restrictions on the payment of dividends.
Each share of Ahmanson Common Stock currently has attached thereto stock
purchase rights ("Ahmanson Rights") issued under the Ahmanson Rights Plan.
For additional information concerning the capital stock of Ahmanson, see
"Description of Ahmanson Capital Stock".
ACTIONS RELATED TO THE AHMANSON PROPOSAL
Ahmanson anticipates delivering to the Secretary of GWF on February 18, 1997
a notice stating Ahmanson's intention (a) to nominate three persons (the
"Ahmanson Nominees") as directors of GWF at GWF's 1997 annual meeting of
stockholders (the "GWF Annual Meeting") and to nominate one or more additional
persons as directors in the event that one of the Ahmanson Nominees is unable
to stand for election or the size of the GWF Board is increased and (b) to
submit a non-binding stockholder resolution and seven proposals to amend the
By-laws of GWF (the "GWF By-laws") intended to facilitate the maximization of
stockholder value by implementing certain procedures to ensure that the views
of the stockholders and the Ahmanson Nominees, if elected, are considered by
the entire GWF Board. On February 18, 1997, Ahmanson announced that it
anticipated filing preliminary proxy solicitation materials with the Commission
for use in soliciting proxies from stockholders of GWF to vote for the election
of the Ahmanson Nominees and for the adoption of the stockholder resolution and
the proposed amendments to the GWF By-laws (the "Proxy Solicitation"). Ahmanson
also announced that it anticipated filing preliminary consent solicitation
materials with the Commission for use in soliciting written consents from
stockholders of GWF to adopt proposals, without a stockholders' meeting, that
would (a) urge the GWF Board to arrange a merger to maximize stockholder value
and (b) prevent the GWF Board from granting excessive "lock-up" fees, stock
options, "crown jewel" options or "break-up" fee arrangements that could deter
a merger maximizing stockholder value, unless the GWF stockholders approve
those arrangements.
As part of the February 18, 1997 announcement, Ahmanson also stated that it
intended to acquire, through open-market purchases or otherwise, shares of GWF
with a market value in excess of $15 million, and would file a notification and
report under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") with respect to such acquisition.
Ahmanson also announced on February 18, 1997 the filing of a complaint
against GWF and the members of the GWF Board in the Delaware Chancery Court
which, among other things, generally seeks injunctive relief (a) against any
application of the GWF Rights Plan to impede the Proposed Merger, (b) requiring
the GWF Board to exempt the Proposed Merger from the operation of Section 203
of the DGCL and (c) prohibiting GWF and the members of the GWF Board from
adopting any defensive measure that would have the effect of impeding or
interfering with the Proposed Merger or the Proxy Solicitation.
11
<PAGE>
CAPITALIZATION OF AHMANSON
The following table sets forth the capitalization of Ahmanson and its
subsidiaries as of December 31, 1996 and as adjusted to give effect to the
Proposed Merger based on (a) the issuance of 144,769,760 shares of Ahmanson
Common Stock, assuming that none of the GWF Common Stock Options are exercised,
(b) the conversion of GWF 8.30% Preferred Stock into New Ahmanson 8.30%
Preferred Stock and (c) the additional assumptions described under "Pro Forma
Combined Financial Information".
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1996
(ACTUAL) (ADJUSTED)
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Deposits and borrowings(1)
Deposits........................................... $34,773,945 $63,360,718
Short-term borrowings under agreements to
repurchase securities sold........................ 1,820,000 1,820,000
Other short-term borrowings........................ 210,529 210,529
FHLB advances...................................... 3,138,725 3,138,725
FHLB notes......................................... 1,302,647 1,302,647
Other term notes................................... 3,915,499 3,915,499
Medium-term floating rate notes.................... 219,361 219,361
Subordinated debt.................................. 721,584 721,584
Senior debt........................................ 247,997 247,997
GWF borrowings..................................... -- 10,501,813
Other long-term borrowings......................... 4,179 4,179
----------- -----------
Total deposits and borrowings.................... 46,354,466 85,443,052
Company-obligated mandatorily redeemable capital
securities of subsidiary trust...................... 148,413 248,413
Preferred stock, $.01 par value; authorized
10,000,000 shares:
8.40% Series C, outstanding 780,000 shares;
liquidation preference $195,000................... 195,000 195,000
6% Cumulative Convertible Series D, outstanding
575,000 shares; liquidation preference $287,500... 287,500 287,500
8.30% Cumulative Preferred stock, outstanding
660,000 shares; liquidation preference $165,000... -- 165,000
Common stock, $.01 par value; authorized 220,000,000
shares(2): outstanding 102,153,052 after deducting
17,390,562 shares in treasury....................... 1,022 2,470
Additional paid-in capital........................... 178,810 6,040,539
Net unrealized loss on securities available for sale,
net of taxes........................................ (74,124) (74,124)
Retained earnings.................................... 1,847,367 1,847,367
----------- -----------
2,435,575 8,463,752
Unearned compensation................................ (2,526) (2,526)
----------- -----------
Total stockholders' equity....................... 2,433,049 8,461,226
----------- -----------
Total capitalization............................. $48,935,928 $94,152,691
=========== ===========
</TABLE>
- --------
(1) Deposits and borrowings are subject to fluctuation from time to time.
(2) After giving effect to the Ahmanson Charter Amendment, Ahmanson's
authorized shares of Ahmanson Common Stock would be 350,000,000.
12
<PAGE>
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following table sets forth certain historical, pro forma combined and pro
forma equivalent per share financial information for the common stock of
Ahmanson and of GWF. The pro forma amounts included in the table assume
completion of the Proposed Merger and are based on the purchase method of
accounting, a preliminary determination and allocation of the total purchase
price and the assumptions described under "Pro Forma Combined Financial
Information". This information should be read in conjunction with and is
qualified in its entirety by reference to the condensed consolidated statement
of financial condition (unaudited) and condensed consolidated statement of
operations (unaudited) at and for the year ended December 31, 1996, of Ahmanson
and the selected financial statistics (unaudited) and the consolidating
statement of operations (unaudited) at and for the year ended December 31,
1996, of GWF included in the documents described under "Incorporation of
Certain Information by Reference", and the pro forma combined financial
statements and accompanying discussion and notes set forth under "Pro Forma
Combined Financial Information". The pro forma amounts in the table below are
presented for information purposes and are not necessarily indicative of the
financial position or the results of operations of the combined company that
actually would have occurred had the Proposed Merger been consummated as of the
dates or for the periods presented. The pro forma amounts are also not
necessarily indicative of the future financial position or future results of
operations of the combined company. In particular, Ahmanson expects to achieve
significant cost savings as a result of the Proposed Merger. These annual cost
savings, if they are realized (which cannot be assured as to amount or timing),
would significantly reduce noninterest expense and increase net income. See
"The Proposed Merger--Background of the Ahmanson Proposal; Reasons for the
Proposed Merger". No adjustment has been included in the pro forma amounts for
such cost savings.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
AHMANSON COMMON STOCK
INCOME PER COMMON SHARE (FULLY DILUTED):
Historical(1)............................................ $ 0.91
Pro forma combined....................................... 0.26
DIVIDENDS DECLARED PER COMMON SHARE:
Historical............................................... $ 0.88
Pro forma combined(2).................................... 0.88
BOOK VALUE PER COMMON SHARE (AT PERIOD END):
Historical............................................... $19.09
Pro forma combined(3).................................... 31.64
GWF COMMON STOCK
INCOME PER COMMON SHARE (FULLY DILUTED):
Historical(1)............................................ $ 0.69
Pro forma equivalent(4).................................. 0.27
DIVIDENDS DECLARED PER COMMON SHARE:
Historical............................................... $ 0.98
Pro forma equivalent(4).................................. 0.92
BOOK VALUE PER COMMON SHARE (AT PERIOD END):
Historical............................................... $17.63
Pro forma equivalent(4).................................. 33.22
</TABLE>
- --------
(1) Income per common share for both Ahmanson and GWF in 1996 was significantly
affected by a special assessment in the third quarter to recapitalize the
Savings Association Insurance Fund which was mandated by federal
legislation.
(2) Amounts represent historical dividends per common share. For a discussion
of Ahmanson's current and future dividend policy, see "Market Prices and
Dividends--Ahmanson".
(3) Amount is calculated by dividing total pro forma common stockholders'
equity by the sum of total outstanding shares of Ahmanson Common Stock plus
new shares of Ahmanson Common Stock to be issued in the Proposed Merger
(based on the number of shares of GWF Common Stock outstanding at period
end).
(4) Amounts are calculated by multiplying Ahmanson's pro forma combined amounts
by the Exchange Ratio.
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF AHMANSON
The selected consolidated financial data of Ahmanson set forth below have
been derived from the audited consolidated financial statements of Ahmanson for
each of the years in the four-year period ended December 31, 1995 and the
condensed consolidated statement of financial condition (unaudited) and
condensed consolidated statement of operations (unaudited) at and for the year
ended December 31, 1996. The selected consolidated financial data set forth
below should be read in conjunction with and is qualified in its entirety by
reference to the financial statements and accompanying notes contained in the
1995 Ahmanson 10-K and Ahmanson's Current Report on Form 8-K dated January 15,
1997, which are incorporated by reference herein. See "Incorporation of Certain
Information by Reference".
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
SUMMARY OF FINANCIAL
CONDITION
Cash and investment
securities............ $ 1,876,435 $ 1,645,450 $ 2,773,573 $ 3,906,044 $ 2,362,563
Loans and mortgage-
backed securities..... 46,085,670 47,407,521 48,791,165 44,624,365 42,878,383
Real estate............ 395,428 460,421 475,264 623,519 1,127,271
Premises and
equipment............. 424,567 410,947 614,817 673,879 686,693
Goodwill and other
intangible assets..... 308,083 147,974 468,542 428,444 478,017
Other assets........... 811,861 457,273 603,432 614,994 607,580
----------- ----------- ----------- ----------- -----------
Total assets......... $49,902,044 $50,529,586 $53,726,793 $50,871,245 $48,140,507
=========== =========== =========== =========== ===========
Deposits............... $34,773,945 $34,244,481 $40,655,016 $38,018,653 $39,273,192
Borrowings............. 11,580,521 12,236,428 9,176,085 8,879,345 4,978,583
Other liabilities...... 966,116 991,755 931,091 1,024,216 1,143,088
Company-obligated
Capital Securities of
Subsidiary Trust...... 148,413 -- -- -- --
Stockholders' equity... 2,433,049 3,056,922 2,964,601 2,949,031 2,745,644
----------- ----------- ----------- ----------- -----------
Total liabilities,
Company-obligated
Capital Securities
of Subsidiary Trust
and stockholders'
equity.............. $49,902,044 $50,529,586 $53,726,793 $50,871,245 $48,140,507
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income........ $3,514,795 $3,699,091 $3,095,375 $3,003,422 $3,428,979
Interest expense....... 2,262,281 2,472,336 1,798,454 1,666,350 2,070,413
---------- ---------- ---------- ---------- ----------
Net interest income.... 1,252,514 1,226,755 1,296,921 1,337,072 1,358,566
Provision for loan
losses................ 144,924 119,111 176,557 574,970 367,366
---------- ---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses........... 1,107,590 1,107,644 1,120,364 762,102 991,200
Gain on sales of
retail deposit branch
systems............... 6,861 514,671 77,901 -- --
Other noninterest
income................ 244,937 183,738 182,455 317,828 266,857
SAIF recapitalization
assessment............ 243,862 -- -- -- --
Other noninterest
expense............... 934,968 981,407 970,050 1,299,996 968,443
---------- ---------- ---------- ---------- ----------
Income (loss) before
provision for income
taxes (benefit),
extraordinary loss
and cumulative effect
of accounting
changes............... 180,558 824,646 410,670 (220,066) 289,614
Provision for income
taxes (benefit)....... 35,300 373,700 173,312 (82,034) 133,222
---------- ---------- ---------- ---------- ----------
Income (loss) before
extraordinary loss
and cumulative effect
of accounting
changes............... 145,258 450,946 237,358 (138,032) 156,392
Extraordinary loss on
early extinguishment
of debt (net of tax
benefit).............. -- -- -- (21,607) --
Cumulative effect of
changes in accounting
for goodwill (1995)
and income taxes
(1992)................ -- (234,742) -- -- 47,677
---------- ---------- ---------- ---------- ----------
Net income (loss)...... $ 145,258 $ 216,204 $ 237,358 $ (159,639) $ 204,069
========== ========== ========== ========== ==========
PER SHARE INFORMATION--
COMMON SHARE
Primary--
Income (loss) before
extraordinary loss
and cumulative
effect of accounting
changes............. $ 0.91 $ 3.39 $ 1.59 $ (1.51) $ 1.19
Net income (loss).... 0.91 1.40 1.59 (1.69) 1.60
Fully diluted--
Income (loss) before
extraordinary loss
and cumulative
effect of accounting
changes............. 0.91 3.20 1.58 (1.51) 1.19
Net income (loss).... 0.91 1.40 1.58 (1.69) 1.60
Book value at December
31.................... 19.09 20.75 19.70 19.61 22.04
Tangible book value at
December 31........... 17.31 19.47 15.70 15.94 17.94
Dividends.............. 0.88 0.88 0.88 0.88 0.88
</TABLE>
14
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF GWF
The selected consolidated financial data of GWF set forth below have been
derived from the audited consolidated financial statements of GWF for each of
the years in the four-year period ended December 31, 1995 and the selected
financial statistics (unaudited) and the consolidating statement of operations
(unaudited) at and for the year ended December 31, 1996. The selected
consolidated financial data set forth below should be read in conjunction with
and is qualified in its entirety by reference to the financial statements and
accompanying notes contained in the 1995 GWF 10-K and GWF's Current Report on
Form 8-K dated January 22, 1997, which are incorporated by reference herein.
See "Incorporation of Certain Information by Reference".
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
SUMMARY OF FINANCIAL
CONDITION
Cash and securities... $ 2,113,575 $ 2,186,876 $ 2,065,660 $ 1,846,780 $ 1,660,485
Loans and mortgage-
backed securities.... 38,611,743 39,690,790 37,647,975 33,850,799 33,752,661
Real estate........... 159,997 217,112 256,967 434,077 1,153,383
Other assets.......... 1,989,257 2,491,986 2,247,655 2,216,704 1,872,657
----------- ----------- ----------- ----------- -----------
Total assets........ $42,874,572 $44,586,764 $42,218,257 $38,348,360 $38,439,186
=========== =========== =========== =========== ===========
Deposits.............. $28,586,773 $29,234,928 $28,700,947 $31,531,563 $30,908,665
Borrowings............ 10,501,813 11,345,634 10,120,660 3,479,341 4,151,052
Other liabilities..... 1,090,786 1,083,726 912,864 914,055 929,735
Company-obligated
Capital Securities of
Subsidiary Trust..... 100,000 100,000 -- -- --
Stockholders' equity.. 2,595,200 2,822,476 2,483,786 2,423,401 2,449,734
----------- ----------- ----------- ----------- -----------
Total liabilities,
Company-obligated
Capital Securities
of Subsidiary Trust
and stockholders'
equity............. $42,874,572 $44,586,764 $42,218,257 $38,348,360 $38,439,186
=========== =========== =========== =========== ===========
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income....... $ 3,233,931 $ 3,238,711 $ 2,629,718 $ 2,680,784 $ 3,091,093
Interest expense...... 1,855,914 1,936,582 1,307,448 1,297,930 1,668,731
----------- ----------- ----------- ----------- -----------
Net interest income... 1,378,017 1,302,129 1,322,270 1,382,854 1,422,362
Provision for loan
losses............... 208,971 187,700 207,200 463,000 420,000
----------- ----------- ----------- ----------- -----------
Net interest income
after provision for
loan losses.......... 1,169,046 1,114,429 1,115,070 919,854 1,002,362
Noninterest income.... 331,825 327,668 367,897 327,855 282,131
SAIF recapitalization
assessment........... 188,359 -- -- -- --
Other noninterest
expense.............. 1,125,890 1,019,975 1,076,433 1,155,662 1,188,981
----------- ----------- ----------- ----------- -----------
Income before
provision for income
taxes and cumulative
effect of accounting
change............... 186,622 422,122 406,534 92,047 95,512
Provision for income
taxes................ 70,800 161,100 155,300 30,000 41,600
----------- ----------- ----------- ----------- -----------
Income before
cumulative effect of
accounting change.... 115,822 261,022 251,234 62,047 53,912
Cumulative effect of
change in accounting
for income taxes..... -- -- -- -- 31,094
----------- ----------- ----------- ----------- -----------
Net income............ $ 115,822 $ 261,022 $ 251,234 $ 62,047 $ 85,006
=========== =========== =========== =========== ===========
PER SHARE INFORMATION--
COMMON SHARE
Primary--
Income before
cumulative effect
of accounting
change............. $ 0.69 $ 1.72 $ 1.69 $ 0.28 $ 0.30
Net income.......... 0.69 1.72 1.69 0.28 0.53
Fully diluted--
Income before
cumulative effect
of accounting
change............. 0.69 1.71 1.69 0.28 0.30
Net income.......... 0.69 1.71 1.69 0.28 0.53
Book value at December
31................... 17.63 18.42 16.30 16.05 16.48
Tangible book value at
December 31.......... 15.55 16.06 13.59 12.80 14.01
Dividends............. 0.98 0.92 0.92 0.92 0.91
</TABLE>
15
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following table sets forth certain selected historical financial data for
Ahmanson and GWF and selected pro forma combined financial data. The pro forma
amounts included in the table below assume completion of the Proposed Merger
and are based on the purchase method of accounting, a preliminary determination
and allocation of the total purchase price and the assumptions described under
"Pro Forma Combined Financial Information". This information should be read in
conjunction with and is qualified in its entirety by reference to the condensed
consolidated statement of financial condition (unaudited) and the condensed
consolidated statement of operations (unaudited) at and for the year ended
December 31, 1996, of Ahmanson and the selected financial statistics
(unaudited) and the consolidating statement of operations (unaudited) at and
for the year ended December 31, 1996, of GWF included in the documents
described under "Incorporation of Certain Information by Reference", and the
pro forma combined financial statements and accompanying discussion and notes
set forth under "Pro Forma Combined Financial Information". The pro forma
amounts in the table below are presented for informational purposes and are not
necessarily indicative of the financial position or the results of operations
of the combined company that actually would have occurred had the Proposed
Merger been consummated as of the dates or for the periods presented. The pro
forma amounts are also not necessarily indicative of the future financial
position or future results of operations of the Surviving Corporation. In
particular, Ahmanson expects to achieve significant cost savings as a result of
the Proposed Merger. These annual cost savings, if they are realized (which
cannot be assured as to amount or timing), would significantly reduce
noninterest expense and increase net income. See "The Proposed Merger--
Background of the Ahmanson Proposal; Reasons for the Proposed Merger". No
adjustment has been included in the pro forma amounts for such cost savings.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-------------------------------
HISTORICAL
------------------- PRO FORMA
AHMANSON GWF COMBINED
------------------- -----------
(IN MILLIONS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
CONSOLIDATED SUMMARY OF INCOME
Net interest income........................ $ 1,252.5 $ 1,378.0 $ 2,630.5
Provision for loan losses.................. 144.9 209.0 353.9
Noninterest income......................... 251.8 331.8 583.6
Noninterest expense........................ 1,178.8 1,314.2 2,632.0
Net income................................. 145.3 115.8 125.0
PER COMMON SHARE--FULLY DILUTED
Net income................................. 0.91 0.69 0.26
Dividends declared......................... 0.88 0.98 0.88
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING--
FULLY DILUTED............................... 109.7 139.3 254.5
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
--------------------------
HISTORICAL
---------------- PRO FORMA
AHMANSON GWF COMBINED
-------- ------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA
Mortgage-backed securities...................... $14,297 $ 7,789 $22,086
Loans receivable................................ 31,789 30,823 62,612
Assets.......................................... 49,902 42,875 96,274
Deposits........................................ 34,774 28,587 63,361
Borrowings...................................... 11,581 10,502 22,083
Stockholders' equity............................ 2,433 2,595 8,461
</TABLE>
16
<PAGE>
INFORMATION CONCERNING THE SPECIAL MEETINGS
Assuming the GWF Board approves the Proposed Merger, information about the
Meetings (including the date and time of the Meetings, the record dates
therefor, voting by proxy and certain other matters) would be set forth in the
Definitive Joint Proxy Statement/Prospectus.
THE PROPOSED MERGER
The following information relating to the Proposed Merger is qualified in
its entirety by reference to the other information contained elsewhere in this
Joint Proxy Statement/Prospectus, including the Appendices hereto, and the
documents incorporated herein by reference.
BACKGROUND OF THE AHMANSON PROPOSAL; REASONS FOR THE PROPOSED MERGER
On a number of occasions during the last several years, the current and
predecessor chief executive officers of Ahmanson and GWF have informally
discussed the possibility of a merger of the two companies. These discussions
took place against the background of a rapidly changing banking industry
undergoing substantial consolidation, primarily as a result of increased
competition and a need to reduce costs through economies of scale. In
addition, in recent years, the two companies have been pursuing compatible
business strategies.
Consolidation among depository institutions has increased in recent years
and has included the merger or sale of a number of large California-based
banks and savings institutions. Among the major transactions that have
occurred in recent years are the combinations of: the six largest California
banks (Wells Fargo and First Interstate, Bank America and Security Pacific,
and Union Bank and Bank of California); the fifth and seventh largest
California savings institutions (First Nationwide and California Federal),
which followed a proposal by Golden West, the third largest California savings
institution, to acquire California Federal; and the fourth largest California
savings institution and one of the largest savings institutions outside of
California (American Savings and Washington Mutual) (size references are to
asset rankings as of June 30 of the year of the referenced merger). Ahmanson
has taken advantage of this trend toward consolidation to enlarge its presence
and enhance its market share in key markets while disposing of assets in
other, "non-core" markets. Since June 1992, Ahmanson has engaged in
transactions which, taken together, have resulted in the acquisition of $6.8
billion in deposits, primarily in California, at an average deposit premium
(i.e., the ratio of net purchase price to acquired deposits) of 2.9% and the
sale of over $12.7 billion in deposits in non-core markets at an average
deposit premium of 7.1%. In addition, in September 1996, Ahmanson acquired
approximately $1.9 billion in deposits by completing its purchase of 61 former
First Interstate branches.
Ahmanson believes that GWF also recognizes the merits of a focus on core
markets and the inevitability of consolidation. For example, in December 1993,
GWF acquired 119 branches of HomeFed in California having $4.1 billion in
deposits and, in December 1994, sold its 31 branches on the west coast of
Florida having $1.0 billion in deposits.
In light of the foregoing, on February 17, 1997, Charles R. Rinehart,
Chairman of the Board and Chief Executive Officer of Ahmanson, contacted
John F. Maher, President and Chief Executive Officer, of GWF and delivered to
him a written proposal for a tax-free merger of the two companies pursuant to
which each outstanding share of GWF Common Stock would be converted into
1.05 shares of Ahmanson Common Stock. Ahmanson subsequently issued a press
release publicly disclosing the Ahmanson Proposal.
Based on the closing price of the Ahmanson Common Stock on the NYSE on
February 14, 1997 (the last trading day before announcement of the Ahmanson
Proposal), GWF common stockholders would receive in the Proposed Merger shares
of Ahmanson Common Stock with a value of $42.53 for each of their shares of
GWF Common Stock--representing a 24.2% premium over the February 14, 1997
closing price of the GWF Common Stock. Such per share value is equal to 2.4
times GWF's book value per share, and 2.7 times GWF's tangible book value per
share, at December 31, 1996.
17
<PAGE>
Ahmanson believes that the Proposed Merger represents a unique and
compelling opportunity to enhance value for stockholders of both Ahmanson and
GWF. Specifically, Ahmanson believes that the Proposed Merger would (a) be
significantly accretive to cash earnings per share in the first year and
accretive to reported earnings per share approximately twelve months after the
completion of the Proposed Merger, (b) allow the combined company to realize
cost savings estimated at over $400 million per year (Ahmanson expects to be
able to achieve substantially all of such annual savings within 15 months
after closing the Proposed Merger), (c) enhance the combined company's
competitive position in California, where the combined company would rank
third (with about $50 billion in deposits), and in Florida, where the combined
company would rank fifth (with about $10 billion in deposits), and (d) provide
additional scale in key business lines (mortgage lending, loan servicing,
consumer and small business lending and investment services). Ahmanson is
confident that it will be able to obtain the regulatory approvals necessary
for the Proposed Merger on a timely basis and without imposition of any
condition that would have a material adverse effect on the combined company.
See "The Proposed Merger--Regulatory Approvals". Accordingly, Ahmanson
believes that the GWF Board should find the Proposed Merger highly attractive.
However, as of the date of this Preliminary Joint Proxy Statement/Prospectus,
GWF has not yet responded to the Ahmanson Proposal and the parties have not
yet entered into any negotiations concerning the Proposed Merger or any other
business combination between Ahmanson and GWF.
Cost Savings Estimates. As a result of the high degree of geographic and
operational overlap between the two companies--in California, 46% of GWF's
branches are within one mile, and 67% are within two miles, of an Ahmanson
branch, and in Florida, 52% of Ahmanson's branches are within one mile, and
100% are within two miles, of a GWF branch--Ahmanson believes that the
Proposed Merger offers significant opportunities for net cost savings and
operating efficiencies. Although Ahmanson expects that the Proposed Merger
would result in a consolidation of approximately 25% of the combined company's
branches, the current customers of each of Ahmanson and GWF will gain access
to at least an additional 150 branches as a result of the combination.
Ahmanson believes that as a result of the Proposed Merger the combined company
would enjoy significantly enhanced operating performance relative to that of
Ahmanson or GWF independently, as well as a significant accretion in cash
earnings per share in the first year and accretion in reported earnings per
share within twelve months after the completion of the Proposed Merger. See
"--Accretion Projections".
In order to estimate cost savings that would be realized as a result of the
Proposed Merger, Ahmanson conducted a business line analysis of GWF intended
to estimate the annual cost of operating GWF as part of a combined company.
Ahmanson estimated the annual cost to operate GWF on a stand-alone basis,
based in part on published reports of independent analysts. Ahmanson then
looked at the business lines of GWF in order to estimate at what cost such
business lines could be operated as a part of Ahmanson, without reducing
revenues attributable to GWF. Because Ahmanson has had no access to GWF's
internal information about its costs, Ahmanson used publicly available
information for its analysis. Ahmanson also used its general knowledge of the
marketplace in which Ahmanson and GWF compete. With respect to each cost
category, Ahmanson looked not only at estimates of GWF's direct costs, but
also estimated the expense of any incremental indirect costs, such as changes
in shared resources and facilities which would be required by business line.
Ahmanson compared the estimated annual cost to operate GWF as part of a
combined company to the estimated annual cost to operate GWF on a stand-alone
basis. The difference represents Ahmanson's estimate of annual cost savings
from the Proposed Merger.
18
<PAGE>
The table below presents Ahmanson's estimate of the annual cost to operate
GWF on a stand-alone basis, the annual cost to operate GWF as part of a
combined entity and the annual cost savings represented by such estimates,
with detail by category of expense. It should be recognized, however, that
these estimates are subject to uncertainties both with respect to GWF's
current expenses and the ability of the combined company to reduce expenses,
as well as general economic conditions.
<TABLE>
<CAPTION>
ESTIMATED COST
ESTIMATED COST TO OPERATE GWF
TO OPERATE GWF AS PART OF % ESTIMATED ESTIMATED
ON STAND-ALONE COMBINED COST COST
BASIS ENTITY SAVINGS SAVINGS
-------------- -------------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Administration............. $141 $ 38 73% $103
Data Processing and
Operations................. 124 60 52 64
Retail Banking............. 318 174 45 144
Residential, Consumer and
Multi-Family Lending....... 143 82 43 61
Loan Servicing............. 37 17 54 20
FDIC Deposit Insurance
Assessment................. 17 17 0 0
Aristar.................... 120 108 10 12
---- ---- ----
Total.................... $900 $496 45% $404
==== ==== ====
</TABLE>
The estimated cost savings are not dependent on any assumption of revenue
enhancements as a result of the Proposed Merger. Ahmanson expects to be able
to achieve substantially all of such cost savings within 15 months after
closing the Proposed Merger. In combining the two companies and realizing the
foregoing savings, Ahmanson would expect to incur a restructuring charge and
acquisition costs, together estimated at $400 million (approximately equal to
one year of estimated cost savings, but subject to change in light of
additional information). See Note C to "Pro Forma Combined Financial
Information". In addition, Ahmanson expects that the combined company may need
to take an additional provision for loan losses of up to $150 million to
conform to Ahmanson's allowance methodology.
Ahmanson believes that its cost savings estimates are in line with estimates
made in other major in-market combinations involving depository organizations
and that its estimated restructuring charge is reasonable in light of the
restructuring charges estimated for such in-market combinations, as
demonstrated by the following table. In making comparisons with other
transactions, stockholders are cautioned, however, that no two transactions
are identical, the table deals only with estimates and not actual cost savings
or restructuring charges, and each transaction has its own unique facts and
circumstances (including the actual level of direct market overlap) that may
affect both the estimates and the actual amounts of cost savings and
restructuring charges.
19
<PAGE>
COST SAVINGS ESTIMATES FOR SELECTED IN MARKET TRANSACTIONS ANNOUNCED IN 1995
AND 1996 WITH VALUE GREATER THAN $1 BILLION
<TABLE>
<CAPTION>
COST SAVINGS ESTIMATES
----------------------------------------------
AS A
PERCENTAGE OF TIME TO
SMALLER RESTRUCTURING ACHIEVE
COMPANY'S CHARGE AS A 100% COST
ANNOUNCEMENT OPERATING PERCENTAGE OF SAVINGS
DATE EXPENSE BASE(1) COST SAVINGS(2) (IN MONTHS)(3)
------------ --------------- --------------- --------------
<S> <C> <C> <C> <C>
IN-MARKET
TRANSACTIONS(4)
Bank of Boston/BayBanks. 12/12/95 39% 74% 12
Chemical/Chase
Manhattan.............. 08/28/95 40 112 21
Fleet Financial/Shawmut. 02/21/95 43 100 15
Mercantile/Roosevelt.... 12/23/96 37 107 18
NationsBank/Bank South.. 09/05/95 60 49 8
Wells Fargo/First
Interstate............. 11/13/95 46 90 18
AVERAGE................. 44% 89% 15
AHMANSON/GWF(5)......... 02/18/97 45% 99% 15
</TABLE>
- --------
(1) Source: Investor presentations. Cost savings estimates as a percentage of
operating expense base for the company with the smaller expense base.
(2) Source: Investor presentations. Percentage is based on fully phased-in
cost savings. Restructuring charges do not include additional provision
for loan losses, if required. See Note C to "Pro Forma Combined Financial
Information."
(3) Source: Investor presentations.
(4) For purposes of this discussion, "in-market" transactions selected by
Ahmanson are combinations of depository organizations (1) of comparable
size, (2) having an overlap between their geographic markets generally
comparable to that between Ahmanson and GWF and (3) having compatible
lines of business and products.
(5) Based on Ahmanson Proposal. Announcement date is the date of the public
announcement of the Ahmanson Proposal.
Impact on Revenues. In describing proposed merger transactions, depository
organizations have generally not provided detail about the impact on revenues
because of the uncertainty and difficulty of calculation. Both Ahmanson and
GWF have been actively attempting to increase both interest and noninterest
revenue, and Ahmanson believes that the combined company's greater resources
and larger customer base should assist revenue growth. Ahmanson intends to
implement its branch consolidations and other cost saving measures in a manner
designed to reduce loss of revenues. Ahmanson currently estimates that the
revenue growth of the combined company would exceed any revenue losses
associated with consolidations, although there can be no assurances that some
revenues will not be lost.
Markets and Competitive Position. Ahmanson believes that a depository
organization's level of profitability is directly tied to the markets it
serves and the organization's competitive position in those markets. The
principal markets common to Ahmanson and GWF are California, where, on a
combined basis, they have $50 billion in deposits, and Florida, where they
have $10 billion in deposits. California is the largest state in the country
in terms of population, with approximately 32 million inhabitants. After a
serious economic decline in the early part of this decade, the California
economy has significantly rebounded, with the overall unemployment rate
declining to 6.9% in October 1996 from 9.4% in 1993 and per capita income
rising 5.7% in 1995 as compared with annual increases of 3.3% or less in the
1991-1994 period. Florida, with a population of approximately 14 million, is
now the fourth largest state in the country and the second fastest growing
state (trailing only Texas). Together, California and Florida represent
approximately 17% of the U.S. population.
20
<PAGE>
As a result of the Proposed Merger, the combined company would gain
substantial market share in both California and Florida and significantly
improve its competitive position. At June 30, 1996, Ahmanson had only 36% and
51% of the California deposits of BankAmerica and Wells Fargo, and GWF had
only 28% and 39% of those deposits. The Proposed Merger would increase these
percentages to 64% and 90%. Likewise, in southeast Florida, which is the focus
of both companies' Florida operations, the combined company's market share
would increase to 70% of the market share of the market leader. The Proposed
Merger would improve Ahmanson's market share position among depository
organizations, based on deposits, in 17 of the 20 Metropolitan Statistical
Areas ("MSAs") in California where they overlap.
The California and Florida operations of both Ahmanson and GWF have focused
on the major markets in these states. In each of the top five MSAs (based on
population) in California, which collectively represent approximately 62% of
the population of California and 62% of its deposits, a combined Ahmanson/GWF
would rank 1, 2 or 3 among depository organizations in terms of deposits. The
following table shows the rankings of a combined Ahmanson/GWF entity by
deposits in key markets in California and Florida.
PRO FORMA RANKINGS IN CALIFORNIA AND FLORIDA MARKETS(1)
<TABLE>
<CAPTION>
MARKET RANK DEPOSITS(2)
------ ---- -------------
(IN BILLIONS)
<S> <C> <C>
California
LA-Long Beach....................................... 2 $20.0
Orange County....................................... 2 5.5
San Diego........................................... 1 5.2
Riverside-San Bernardino............................ 2 3.2
Oakland............................................. 3 3.0
California Overall.................................... 3 $50.2
Florida
Fort Lauderdale..................................... 4 $ 3.1
Miami............................................... 4 3.4
W. Palm Beach-Boca Raton............................ 3 2.5
Florida Overall(3).................................... 5 $10.4
</TABLE>
- --------
(1) Rankings of a combined Ahmanson/GWF company by amount of deposits in the
indicated markets (as defined by the Federal Reserve Banks). Includes only
markets where a combined Ahmanson/GWF company would have more than $2.5
billion in deposits on a pro forma basis.
(2) Source: SNL Securities. Deposits are as of June 30, 1996.
(3) Excluding the deposits of Ahmanson's 12 west coast Florida branches, the
sale of which was announced on February 11, 1997.
In addition to market share in geographic markets, Ahmanson believes that
market share and scale are also important with respect to product lines.
Ahmanson believes that the Proposed Merger would provide additional scale in
the key businesses of mortgage lending, loan servicing, consumer and small
business lending and investment services. A combined Ahmanson/GWF entity would
rank third in both California and Florida in its volume of mortgage loan
originations and would have a loan servicing business 85% larger than
Ahmanson's, based on the dollar value of serviced loans as of December 31,
1996.
Accretion Projections. Ahmanson believes that the Ahmanson Proposal presents
an opportunity for significant accretion in Cash Earnings per share (i.e.,
reported earnings per share excluding amortization of goodwill and core
deposit intangibles). Using a pre-merger base case based upon analysts' stand-
alone earnings estimates for Ahmanson and GWF and assuming a continuation of
Ahmanson's current capital management program and the cost savings estimates
described above, Ahmanson estimates that the Proposed Merger would result in
accretion to its Cash Earnings per share in the first, second and third year
after closing of 5%, 15% and
21
<PAGE>
26%, respectively, and accretion to its reported earnings per share
approximately 12 months after consummation of the Proposed Merger.
Purchase Accounting; Stock Repurchase Program. Effective capital management
has increasingly become a focus of financial institutions as a result of the
significant amount of excess capital generated by depository institutions in
recent years. Believing effective capital management to be an integral part of
its strategic plan, Ahmanson has aggressively utilized stock repurchases as a
means to return excess capital to its stockholders. As of December 31, 1996,
since initiating its first stock repurchase program in October 1995, Ahmanson
had repurchased 17 million shares of Ahmanson Common Stock, representing 14%
of the shares then outstanding, at an average price of $26.11 per share.
The Ahmanson Proposal contemplates using the purchase method of accounting
to account for the acquisition of GWF. Ahmanson believes there are significant
advantages to purchase accounting over pooling of interests accounting. In
particular, Ahmanson intends to use purchase accounting for the Proposed
Merger because it would not require Ahmanson or GWF to reissue previously
repurchased shares and allows for greater flexibility in repurchasing shares
after completion of the transaction than is available given current accounting
practices under pooling of interests accounting. The pro forma levels of
tangible and regulatory capital are identical in all material respects,
regardless of whether purchase or pooling of interests accounting is utilized.
Although under purchase accounting goodwill and certain other intangibles will
be recorded in the transaction and amortized over time (with the result that
reported net income will be lower), amortization is not a cash expense and
thus the true earnings power of the institution, as represented by reported
earnings before amortization of intangibles (i.e., cash earnings), is
unaffected.
The purchase method of accounting was used by Wells Fargo for its merger
with First Interstate and by NationsBank for its merger with Boatmen's
Bancshares and has become more common in the financial services industry over
the last few years: in 1992, 24% of the bank and thrift mergers in the U.S.
valued at over $100 million were accounted for as purchases; by 1996, that
percentage had risen to 63%. Many of the country's major financial
institutions, including Bank of America, Wells Fargo, Fleet Financial, Mellon,
NationsBank, First Union, First Bank System, US Bancorp and Bank of New York,
report cash earnings information to the investor community on a regular basis.
Ahmanson views the flexibility to repurchase shares as critical because
Ahmanson fully expects to continue its previously announced repurchase program
as a means of returning to stockholders excess capital being generated by
operations. As of December 31, 1996, since initiating its first stock purchase
program in October 1995, Ahmanson had repurchased 17 million shares of
Ahmanson Common Stock, or 14% of the shares then outstanding, at an average
price of $26.11. Ahmanson expects to continue its current capital management
program. If the Proposed Merger is consummated and Ahmanson's earnings
estimates for the combined company are realized, Ahmanson would expect to
repurchase shares of Ahmanson Common Stock having an aggregate market value of
approximately $2 billion over the nine fiscal quarters beginning October 1,
1997. See "Description of Ahmanson Capital Stock--Repurchase of Ahmanson
Common Stock".
RECOMMENDATIONS OF THE BOARDS OF GWF AND AHMANSON AND OPINIONS OF FINANCIAL
ADVISORS
Assuming the GWF Board approves the Proposed Merger, information about the
recommendations made by the GWF and Ahmanson Boards to their respective
stockholders and opinions of the GWF and Ahmanson financial advisors relating
to the Proposed Merger would be contained in the Definitive Joint Proxy
Statement/Prospectus.
EFFECTS OF THE PROPOSED MERGER
Assuming the Proposed Merger is consummated, at the Effective Time it is
presently contemplated that GWF would merge with and into Ahmanson. Ahmanson
would be the surviving corporation in the Proposed Merger, and would continue
its corporate existence under the DGCL under the same name. At the Effective
22
<PAGE>
Time, the separate corporate existence of GWF would terminate. The Ahmanson
Charter, as amended by the Ahmanson Charter Amendment, and Ahmanson's By-Laws
(the "Ahmanson By-Laws"), as in effect at the Effective Time, would be the
certificate of incorporation and by-laws, respectively, of the Surviving
Corporation.
CONVERSION OF GWF CAPITAL STOCK
Conversion of GWF Common Stock. Assuming the Proposed Merger is consummated,
at the Effective Time each outstanding share of GWF Common Stock, other than
shares held in GWF's treasury or directly or indirectly by Ahmanson or its
subsidiaries or by GWF or its subsidiaries, would be converted into 1.05
shares of Ahmanson Common Stock, with cash being paid in lieu of fractional
shares.
Conversion of GWF 8.30% Preferred Stock. Assuming the Proposed Merger is
consummated, at the Effective Time, each outstanding share of GWF 8.30%
Preferred Stock would be converted into one share of New Ahmanson 8.30%
Preferred Stock. The terms of the New Ahmanson 8.30% Preferred Stock would be
substantially the same as the terms of the GWF 8.30% Preferred Stock. At the
Effective Time, Ahmanson would assume the obligations of GWF under the Deposit
Agreement, dated as of September 10, 1992 (the "Preferred Stock Deposit
Agreement"), between GWF and First Interstate Bank of California, as
depositary (the "Preferred Stock Depositary"). Assuming the GWF Board approves
the Proposed Merger, Ahmanson would instruct the Preferred Stock Depositary to
treat the shares of New Ahmanson 8.30% Preferred Stock received by it in
exchange for shares of GWF 8.30% Preferred Stock as newly deposited securities
under the Preferred Stock Deposit Agreement. In accordance with the terms of
the Preferred Stock Deposit Agreement, receipts evidencing GWF Depositary
Shares ("GWF Depositary Receipts") then outstanding would thereafter represent
shares of New Ahmanson 8.30% Preferred Stock. Ahmanson would request that the
Preferred Stock Depositary call for surrender of all outstanding GWF
Depositary Receipts to be exchanged for receipts evidencing New Ahmanson
Depositary Shares ("New Ahmanson Depositary Receipts"). See "Description of
Ahmanson Capital Stock".
Each outstanding share of GWF Capital Stock held in GWF's treasury or
directly or indirectly by Ahmanson or its subsidiaries or GWF or its
subsidiaries would be canceled at the Effective Time and would cease to exist,
and no securities of Ahmanson or other consideration would be delivered in
exchange therefor. All shares of Ahmanson Common Stock that are owned by GWF
or its subsidiaries would become treasury stock of Ahmanson.
Conversion of Common Stock Options. Assuming the Proposed Merger is
consummated, at the Effective Time, each GWF Common Stock Option issued by GWF
pursuant to any GWF Common Stock Plan that is outstanding and unexercised
immediately prior to the Effective Time would be converted automatically into
one Ahmanson Stock Option with (i) the number of shares of Ahmanson Common
Stock subject to the Ahmanson Stock Option being equal to the product of the
number of shares of GWF Common Stock subject to the GWF Common Stock Option
multiplied by the Exchange Ratio and rounded down to the nearest share and
(ii) the exercise price per share of Ahmanson Common Stock subject to the
Ahmanson Stock Option being equal to the exercise price per share of GWF
Common Stock under the GWF Common Stock Option divided by the Exchange Ratio
and rounded up to the nearest cent. The conversion would be intended to be
effected in a manner such that any GWF Common Stock Options that are
"incentive stock options" within the meaning of Section 422 of the Code shall
remain so. Pursuant to the terms of the GWF Common Stock Plans and the
Ahmanson Stock Option Plans, respectively consummation of the Proposed Merger
may constitute a change in control of GWF and Ahmanson, resulting in
accelerated vesting of outstanding GWF Common Stock Options and Ahmanson Stock
Options.
VOTES REQUIRED
The Proposed Merger would be conditioned on, among other things, obtaining
the approval of the GWF Board and obtaining required approvals from the common
stockholders of Ahmanson and GWF.
Ahmanson Stockholder Vote Required. Under the DGCL, the affirmative vote of
the holders of at least a majority of the total number of outstanding shares
of Ahmanson Common Stock entitled to vote at the Ahmanson
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Meeting would be required both to adopt the Merger Agreement and to approve
the Ahmanson Charter Amendment. Holders of Ahmanson Preferred Stock would not
be entitled to and would not be requested to vote at the Ahmanson Meeting. The
Proposed Merger would be unable to proceed in the absence of the approval of
both the Merger Agreement and the Ahmanson Charter Amendment.
Assuming the GWF Board approves the Proposed Merger, it is expected that all
of the shares of Ahmanson Common Stock (excluding shares subject to stock
options) beneficially owned by directors and executive officers of Ahmanson
and their affiliates at the close of business on the Record Date would be
voted for adoption of the Merger Agreement and approval of the Ahmanson
Charter Amendment.
GWF Stockholder Vote Required. Under the DGCL, the affirmative vote of the
holders of at least a majority of the total number of outstanding shares of
GWF Common Stock entitled to vote at the GWF Meeting would be required to
adopt the Merger Agreement. Holders of GWF Preferred Stock and GWF Depositary
Shares would not be entitled to and would not be requested to vote at the GWF
Meeting.
EXCHANGE OF CERTIFICATES AND DEPOSITARY RECEIPTS; FRACTIONAL SHARES
GWF. Assuming the Proposed Merger is consummated, at or prior to the
Effective Time, Ahmanson would deposit, or cause to be deposited, with an
exchange agent (the "Exchange Agent"), for the benefit of the holders of
certificates of GWF Capital Stock, certificates representing the shares of
Ahmanson Common Stock and New Ahmanson 8.30% Preferred Stock (and cash in lieu
of fractional shares of Ahmanson Common Stock, if applicable).
As soon as is practicable after the Effective Time, and in no event later
than ten business days thereafter, the Exchange Agent would mail a form of
transmittal letter to the holders of certificates representing shares of GWF
Capital Stock. The form of transmittal letter would contain instructions with
respect to the surrender of such certificates in exchange for shares of
Ahmanson Common Stock (and cash in lieu of fractional shares of Ahmanson
Common Stock, if applicable).
THE PREFERRED STOCK DEPOSITARY IS THE ONLY HOLDER OF RECORD OF SHARES OF THE
GWF 8.30% PREFERRED STOCK, WHICH IS REPRESENTED BY THE GWF DEPOSITARY SHARES.
ASSUMING THE PROPOSED MERGER IS CONSUMMATED, THE EXCHANGE AGENT WOULD EFFECT
THE EXCHANGE OF CERTIFICATES REPRESENTING THE GWF 8.30% PREFERRED STOCK FOR
CERTIFICATES REPRESENTING THE NEW AHMANSON 8.30% PREFERRED STOCK IN CONNECTION
WITH THE PROPOSED MERGER. ALL HOLDERS OF RECORD OF GWF DEPOSITARY SHARES
EVIDENCED BY GWF DEPOSITARY RECEIPTS WOULD BE INSTRUCTED TO FOLLOW THE
EXCHANGE PROCEDURES OUTLINED IMMEDIATELY BELOW.
Assuming the Proposed Merger is consummated, promptly after the Effective
Time, the Preferred Stock Depositary would mail to each holder of record of
GWF Depositary Shares a notice advising the holder of the effectiveness of the
Proposed Merger accompanied by a transmittal form (the "Depositary Receipt
Transmittal Form"). The Depositary Receipt Transmittal Form would contain
instructions with respect to the surrender of GWF Depositary Receipts
evidencing the GWF Depositary Shares and would specify that delivery will be
effected, and risk of loss and title to such GWF Depositary Receipts would
pass, only upon delivery of the GWF Depositary Receipts to the Preferred Stock
Depositary. Upon surrender in accordance with the instructions contained in
the Depositary Receipt Transmittal Form to the Preferred Stock Depositary of
GWF Depositary Receipts evidencing the GWF Depositary Shares, the holder
thereof would be entitled to receive in exchange therefor New Ahmanson
Depositary Receipts evidencing the appropriate number of corresponding New
Ahmanson Depositary Shares.
No dividends or other distributions declared with respect to Ahmanson Common
Stock or New Ahmanson 8.30% Preferred Stock (including the related New
Ahmanson Depositary Shares) with a record date after the Effective Time would
be paid to the holder of any certificate representing shares of GWF Capital
Stock or GWF Depositary Receipts until such certificate or receipt had been
surrendered for exchange. Holders of certificates representing shares of GWF
Common Stock or GWF 8.30% Preferred Stock (or GWF Depositary Receipts
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representing GWF Depositary Shares) would be paid the amount of dividends or
other distributions with a record date after the Effective Time after
surrender of such certificates, without any interest thereon.
No fractional shares of Ahmanson Common Stock would be issued to any holder
of GWF Common Stock upon consummation of the Proposed Merger. In lieu of each
fractional share that would otherwise be issued, Ahmanson would pay cash in an
amount equal to such fraction multiplied by the average of the closing sale
prices of Ahmanson Common Stock on the NYSE for the five trading days
immediately preceding the date of the Effective Time. No interest would be
paid or accrued on the cash in lieu of fractional shares payable to holders of
such certificates. No such holder would be entitled to dividends, voting
rights or any other rights as a shareholder in respect of any fractional share
of Ahmanson Common Stock that such holder otherwise would have been entitled
to receive.
None of Ahmanson, GWF, the Exchange Agent, the Preferred Stock Depositary or
any other person would be liable to any former holder of GWF Capital Stock or
a GWF Depositary Receipt for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
If a certificate representing GWF Common Stock or a GWF Depositary Receipt
has been lost, stolen or destroyed, the Exchange Agent, in the case of GWF
Common Stock, or the Preferred Stock Depositary, in the case of a GWF
Depositary Receipt, would issue the consideration properly payable in
accordance with the Merger Agreement upon receipt of appropriate evidence as
to such loss, theft or destruction, appropriate evidence as to the ownership
of such certificate or receipt by the claimant, and appropriate and customary
indemnification.
For a description of the differences between the rights of the holders of
Ahmanson Common Stock and GWF Common Stock, see "Comparison of Rights of
Holders of GWF Common Stock and Ahmanson Common Stock". For a description of
the Ahmanson Capital Stock, including the New Ahmanson 8.30% Preferred Stock
and the New Ahmanson Depositary Shares, see "Description of Ahmanson Capital
Stock".
Ahmanson. Assuming the Proposed Merger is consummated, shares of Ahmanson
Common Stock and Ahmanson Preferred Stock issued and outstanding immediately
prior to the Effective Time would remain issued and outstanding and be
unaffected by the Proposed Merger, and holders of such stock would not be
required to exchange the certificates representing such stock or take any
other action by reason of the consummation of the Proposed Merger.
MERGER AGREEMENT
If approved by the GWF Board, the terms and conditions of the Proposed
Merger would be contained in the Merger Agreement and described in the
Definitive Joint Proxy Statement/Prospectus. The Merger Agreement would be
expected to include representations and warranties made by each of Ahmanson
and GWF to the other party, conditions to the consummation of the Proposed
Merger (including receipt of all Requisite Regulatory Approvals), covenants
relating to the conduct of GWF's business prior to the Effective Time,
provisions for the possible termination of the agreement, transaction-related
expenses and indemnification and other provisions.
REGULATORY APPROVALS
The Proposed Merger would be conditioned on, among other things, obtaining
the Requisite Regulatory Approvals.
The principal Requisite Regulatory Approval is the approval of the Office of
Thrift Supervision ("OTS") under the Home Owners' Loan Act, the Federal
Deposit Insurance Act and related OTS regulations of the Proposed Merger and
the subsequent combination of Home Savings and GW Bank. Ahmanson intends to
file an application for such approval promptly. This approval would require
consideration by the OTS of various factors, including assessments of the
competitive effect of the contemplated transaction, the managerial and
financial resources and future prospects of the resulting institution and the
effect of the contemplated transaction on the
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convenience and needs of the communities to be served. These regulatory
considerations also include, among other things, an assessment of compliance
with the Community Reinvestment Act of 1977 (the "CRA"). Home Savings
currently has an "outstanding" CRA rating. The regulations of the OTS require
publication of notice of, and an opportunity for public comment with respect
to, the application filed in connection with the Proposed Merger.
The Proposed Merger may not be consummated for a period of 15 to 30 days
following the OTS's approval (the precise length of the period to be
determined by the OTS with the concurrence of the Attorney General of the
United States), during which time the United States Department of Justice
could challenge the Proposed Merger on antitrust grounds. The commencement of
an antitrust action would stay the effectiveness of any approval granted by
the OTS unless a court specifically ordered otherwise.
Based upon the advice of Sullivan & Cromwell, its special counsel, as well
as Ahmanson's experience in obtaining approvals for other transactions,
Ahmanson is confident that it will be able to obtain the requisite
OTS approval on a timely basis and without the imposition of any condition
that would have a material adverse effect on the combined company. The
remaining Requisite Regulatory Approvals consist of approvals or consents of
state licensing authorities with respect to the resultant change in control of
GWF's insurance agency, finance company and mortgage banking subsidiaries
under applicable state law. Ahmanson anticipates no difficulty in obtaining
such approvals or consents promptly. Of course, the regulatory approval
process is such that Ahmanson can give no definitive assurance as to the
specific terms of such approval or as to the exact timing thereof.
ACTIONS RELATED TO THE AHMANSON PROPOSAL
Ahmanson anticipates delivering to the Secretary of GWF on February 18, 1997
a notice stating Ahmanson's intention (a) to nominate the Ahmanson Nominees as
directors of GWF at the GWF Annual Meeting and to nominate one or more
additional persons as directors in the event that one of the three Ahmanson
Nominees is unable to stand for election or the size of the GWF Board is
increased and (b) to submit a non-binding stockholder resolution and seven
proposals to amend the By-laws of GWF intended to facilitate the maximization
of stockholder value by implementing certain procedures to ensure that the
views of the stockholders and the Ahmanson Nominees, if elected, are
considered by the entire GWF Board. On February 18, 1997, Ahmanson announced
that it anticipated filing preliminary proxy solicitation materials with the
Commission for use in the Proxy Solicitation. Ahmanson also announced that it
anticipated filing preliminary consent solicitation materials with the
Commission for use in soliciting written consents from stockholders of GWF to
adopt proposals, without a stockholders' meeting, that would (a) urge the GWF
Board to arrange a merger to maximize stockholder value and (b) prevent the
GWF Board from granting excessive "lock-up" fees, stock options, "crown jewel"
options or "break-up" fee arrangements that could deter a merger maximizing
stockholder value, unless the GWF stockholders approve those arrangements.
As part of the February 18, 1997 announcement, Ahmanson also stated that it
intended to acquire, through open-market purchases or otherwise, shares of GWF
with a market value in excess of $15 million, and would file a notification
and report under the HSR Act with respect to such acquisition.
LITIGATION
Ahmanson also announced on February 18, 1997 the filing of a complaint
against GWF and the members of the GWF Board in the Delaware Chancery Court
which, among other things, generally seeks injunctive relief (a) against any
application of the GWF Rights Plan to impede the Proposed Merger, (b)
requiring the GWF Board to exempt the Proposed Merger from the operation of
Section 203 of the DGCL and (c) prohibiting GWF and the members of the GWF
Board from adopting any defensive measure that would have the effect of
impeding or interfering with the Proposed Merger or the Proxy Solicitation.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material federal income tax consequences of the
Proposed Merger to holders who hold shares of GWF Common Stock or GWF 8.30%
Preferred Stock as capital assets deals only with holders who are (i) citizens
or residents of the United States, (ii) domestic corporations or (iii)
otherwise subject to United States federal income tax on a net income basis in
respect of Shares ("U.S. Holders"). This summary may not apply to certain
classes of taxpayers, including, without limitation, insurance companies, tax-
exempt organizations, financial institutions, dealers in securities, persons
who acquired or acquire shares of GWF Capital Stock pursuant to the exercise
of employee stock options or rights or otherwise as compensation and persons
who hold shares of GWF Capital Stock in a hedging transaction or as part of a
straddle or conversion transaction. Also, the summary does not address state,
local or foreign tax consequences of the Proposed Merger. Consequently, each
holder should consult such holder's own tax advisor as to the specific tax
consequences of the Proposed Merger to such holder.
This summary is based on current law and the advice of Sullivan & Cromwell,
special counsel to Ahmanson. Future legislative, judicial or administrative
changes or interpretations, which may be retroactive, could alter or modify
the statements set forth herein. The advice of Sullivan & Cromwell set forth
in this summary is based on, among other things, assumptions relating to
certain facts and circumstances of, and the intentions of the parties to, the
Proposed Merger, which assumptions have been made with the consent of
Ahmanson. Ahmanson would not expect to request any ruling from the Internal
Revenue Service as to the United States federal income tax consequences of the
Proposed Merger.
It is intended that the Proposed Merger would be treated as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that, accordingly, for federal income tax purposes
no gain or loss would be recognized by either GWF or Ahmanson as a result of
the Proposed Merger.
Assuming the GWF Board approves the Proposed Merger, Ahmanson expects that
Sullivan & Cromwell and tax counsel to GWF would deliver opinions
substantially to the effect that the material federal income tax consequences
of the Proposed Merger to each of Ahmanson, GWF and U.S. Holders who exchange
shares of GWF Common Stock or GWF 8.30% Preferred Stock (or GWF Depositary
Shares) for shares of Ahmanson Common Stock or New Ahmanson 8.30% Preferred
Stock (or New Ahmanson Depositary Shares), respectively, pursuant to the
Proposed Merger would be as follows:
(i) no gain or loss would be recognized by Ahmanson or GWF;
(ii) no gain or loss would be recognized by a U.S. Holder, except as
described below with respect to a U.S. Holder who receives cash in lieu of
a fractional share interest in Ahmanson Common Stock;
(iii) the aggregate adjusted tax basis of shares of Ahmanson Common Stock
(including a fractional share interest in Ahmanson Common Stock deemed
received and redeemed as described below) and New Ahmanson 8.30% Preferred
Stock (or New Ahmanson Depositary Shares) received by a U.S. Holder would
be the same as the aggregate adjusted tax basis of the shares of GWF Common
Stock or GWF 8.30% Preferred Stock (or GWF Depositary Shares), as the case
may be, exchanged therefor;
(iv) the holding period of shares of Ahmanson Common Stock (including the
holding period of a fractional share interest in Ahmanson Common Stock) or
New Ahmanson 8.30% Preferred Stock (or New Ahmanson Depositary Shares)
received by a U.S. Holder would include the holding period of the GWF
Common Stock or GWF 8.30% Preferred Stock (or GWF Depositary Shares), as
the case may be, exchanged therefor; and
(v) a U.S. Holder of GWF Common Stock who receives cash in lieu of a
fractional share interest in Ahmanson Common Stock would be treated as
having received such fractional share interest and then as having received
the cash in redemption of such fractional share interest. Under Section 302
of the Code, if such deemed distribution were "substantially
disproportionate" with respect to the U.S Holder or were "not
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essentially equivalent to a dividend" after giving effect to the
constructive ownership rules of the Code, the U.S. Holder would generally
recognize capital gain or loss equal to the difference between the amount
of cash received and the U.S. Holder's adjusted tax basis in the fractional
share interest. Such capital gain or loss would be long-term capital gain
or loss if the U.S. Holder's holding period in the fractional share
interest is more than one year.
Ahmanson expects that each such opinion would be based on, among other
things, customary factual assumptions and representations, made by each of
Ahmanson, GWF and the Preferred Stock Depositary. Each such opinion may state
that no opinion is expressed as to the effect of the Proposed Merger on
Ahmanson, GWF or any U.S. Holder with respect to any asset as to which any
unrealized gain or loss is required to be recognized for federal income tax
purposes at the end of a taxable year (or on the termination or transfer
thereof) under a mark-to-market system of accounting.
This summary does not address state, local or foreign tax consequences of
the Proposed Merger. Consequently, each holder should consult such holder's
own tax advisor as to the specific tax consequences of the Merger to such
holder.
ACCOUNTING TREATMENT
Upon consummation of the Proposed Merger, Ahmanson would account for the
acquisition of GWF using the purchase method of accounting. Accordingly, the
consideration to be paid in the Proposed Merger would be allocated to assets
acquired and liabilities assumed based on their estimated fair values at the
consummation date. Income (or loss) of GWF prior to the consummation date will
not be included in income of the combined company. See "Background of the
Ahmanson Proposal; Reasons for the Proposed Merger--Purchase Accounting; Stock
Repurchase Program".
APPRAISAL RIGHTS
Under the DGCL, no stockholders of GWF or Ahmanson would have any appraisal
rights in connection with the Merger Agreement, the Ahmanson Charter Amendment
or the consummation of the transactions contemplated thereby.
INTERESTS OF CERTAIN PERSONS IN THE PROPOSED MERGER
Depending on the terms and conditions of the Merger Agreement and related
documents, certain members of Ahmanson's management and the Ahmanson Board,
and GWF's management and the GWF Board, respectively, could be deemed to have
certain interests in the Proposed Merger in addition to their interests as
stockholders of Ahmanson or GWF, as the case may be, generally. Such
interests, if any, would be described in the Definitive Joint Proxy
Statement/Prospectus.
STOCK EXCHANGE LISTING OF AHMANSON COMMON STOCK AND NEW AHMANSON DEPOSITARY
SHARES
Assuming the GWF Board approves the Proposed Merger, Ahmanson intends to
cause the shares of Ahmanson Common Stock and New Ahmanson Depositary Shares
that would be issued pursuant to in the Proposed Merger to be approved for
listing on the NYSE and, in the case of the Ahmanson Common Stock, the PSE,
prior to the Effective Time, subject to official notice of issuance.
RESALE OF AHMANSON CAPITAL STOCK RECEIVED BY GWF COMMON STOCKHOLDERS
The shares of Ahmanson Common Stock that would be issued to common
stockholders of GWF upon consummation of the Proposed Merger have been
registered under the Securities Act. The shares of Ahmanson Common Stock and
New Ahmanson Depositary Shares that would be issued to stockholders of GWF
upon consummation of the Proposed Merger could be traded freely without
restriction by those stockholders who are
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not deemed to be "affiliates" of GWF or Ahmanson, as that term is defined in
rules promulgated under the Securities Act.
Shares of Ahmanson Common Stock received by those stockholders of GWF who
are deemed to be "affiliates" of GWF at the time of the GWF Meeting may be
resold without registration under the Securities Act only as permitted by Rule
145 under the Securities Act or as otherwise permitted under the Securities
Act.
COMPARISON OF RIGHTS OF HOLDERS OF GWF COMMON STOCK
AND AHMANSON COMMON STOCK
As a consequence of the Proposed Merger, as of the Effective Time
stockholders of GWF would become stockholders of Ahmanson. The following is a
summary of certain similarities and all material differences between the
rights of holders of GWF Common Stock and the rights of holders of Ahmanson
Common Stock. As each of GWF and Ahmanson is organized under the laws of
Delaware, these differences arise solely from various provisions of the
certificate of incorporation and by-laws of each of GWF and Ahmanson, as well
as from the Ahmanson Rights Plan and the GWF Rights Plan.
The following summary does not purport to be a complete statement of the
rights of stockholders under the Restated Certificate of Incorporation of GWF
(the "GWF Charter"), the By-laws of GWF and the GWF Rights Plan as compared
with the rights of Ahmanson's stockholders under the Ahmanson Charter, the
Ahmanson By-Laws and the Ahmanson Rights Plan, or a complete description of
the specific provisions referred to herein. The summary is qualified in its
entirety by reference to the governing corporate instruments, including the
aforementioned instruments, of GWF and Ahmanson, copies of which have been
filed as exhibits hereto or to documents incorporated herein by reference.
Meetings of Stockholders
Under Delaware law, special meetings of the stockholders may be called by
the board of directors or such other persons as may be authorized by the
certificate of incorporation or by-laws. The GWF Charter and By-laws do not
authorize any other person to call a special meeting. The Ahmanson Charter and
By-laws provide that a special meeting may also be called by a committee of
the Ahmanson Board which has been designated by the Ahmanson Board and
authorized to call a special meeting by a resolution of the Ahmanson Board or
by the Ahmanson By-laws.
Number of Directors
Under Delaware law, the number of directors shall be fixed by or in the
manner provided in the by-laws, unless the certificate of incorporation fixes
the number of directors, in which case a change in the number of directors
shall be made only by amendment to the certificate. The GWF By-laws provide
that the number of directors shall be determined by a resolution of the
majority of the GWF Board, but until some other number is fixed, the number of
directors shall be 12. The Ahmanson By-laws provide that the number of
directors shall be determined by a resolution of the majority of the Ahmanson
Board or a majority of the voting power of the outstanding shares of voting
stock.
Advance Notice of Stockholder Nominations of Directors
Under the GWF By-laws, nominations of persons for election to the GWF Board
may be made at a meeting of stockholders by any stockholder, provided that the
Secretary of GWF receives written notice not less than 60 days nor more than
90 days prior to the anniversary date of the immediately preceding annual
meeting. If the annual meeting is not called within 30 days before or after
such anniversary, the notice of a nomination must be received not later than
the close of business on the fifteenth day following the day on which such
notice of the date of the annual meeting was mailed or public disclosure was
made. Notices of nominations, among other
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things, must state the nominee's name, age, business and residential address
and principal occupation and employment, as well as the class and number of
shares of GWF stock beneficially owned by such nominee and the nominee's
consent to such nomination. In addition, the notice must state the name and
record address of the nominating stockholder and the class and number of
shares of GWF stock beneficially owned by the stockholder.
Under the Ahmanson By-laws, nominations of persons for election to the
Ahmanson Board may be made at a meeting of stockholders by any stockholder,
provided that the Secretary of Ahmanson receives written notice not less than
60 days nor more than 120 days prior to the meeting. If less than 65 days'
notice or prior public disclosure of the date of the meeting is given or made
by Ahmanson to stockholders, the notice of a nomination must be received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or public disclosure was
made. Notices of nominations, among other things, must state the nominee's
name, age, business and residential address and principal occupation and
employment, as well as the class and number of shares of Ahmanson stock
beneficially owned by such nominee and any other information about the nominee
required to be disclosed in solicitations for proxies for the election of
directors pursuant to Regulation 14A under the Exchange Act. In addition, the
notice must state the name and record address of the nominating stockholder
and the class and number of shares of Ahmanson stock beneficially owned by the
stockholder.
Stockholder Proposal Procedures
Under the GWF By-laws, business is properly brought before an annual meeting
if the Secretary of GWF receives written notice not less than 60 days nor more
than 90 days prior to the anniversary date of the immediately preceding annual
meeting. If the annual meeting is not called within 30 days before or after
such anniversary date, notice by the stockholder must be received not later
than the close of business on the fifteenth day following the day on which
notice of the date of the annual meeting was mailed or public disclosure was
made. Stockholder notices must state, among other things, a brief description
of the business desired to be brought before the annual meeting and the
reasons for conducting such business at the annual meeting, the name and
record address of the stockholder proposing the business, the class and number
of shares of GWF stock beneficially owned by the stockholder and any material
interest in such business.
Under the Ahmanson By-laws, business is properly brought before an annual
meeting if the Secretary of Ahmanson receives written notice not less than 60
days nor more than 120 days prior to the annual meeting. If less than 65 days'
notice or prior public disclosure of the date of the annual meeting is given
or made by Ahmanson to stockholders, notice by the stockholder must be
received not later than the close of business on the tenth day following the
day on which such notice of the date of the annual meeting was mailed or
public disclosure was made. Stockholder notices must state, among other
things, a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, the name and record address of the stockholder proposing the
business, the class and number of shares of Ahmanson stock beneficially owned
by the stockholder, any material interest in such business any other
information relating to the stockholder or the proposal required to be
disclosed in solicitations for proxies for the election of directors pursuant
to Regulation 14A under the Exchange Act.
Indemnification
Both the GWF By-laws and the Ahmanson By-Laws generally provide for the
indemnification of persons serving as a director, officer, employee or agent
of the respective corporations or at the request of the respective
corporations as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, to the fullest
extent authorized by the DGCL. The Ahmanson By-laws provide that such right to
indemnification may only be extended to employees and agents in a specific
case by action of the Ahmanson Board.
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Certain Voting Rights with Respect to Proposed Mergers
Under Delaware law, certain mergers and consolidations or the sale of all or
substantially all of the assets of a corporation requires the approval of the
holders of a majority (unless the certificate of incorporation requires a
higher percentage) of the outstanding shares of such corporation entitled to
vote thereon. Neither the GWF Charter nor the Ahmanson Charter requires a
higher percentage generally.
Certain Voting Rights With Respect to Transactions With Substantial
Stockholders
The Ahmanson Charter provides that certain transactions between Ahmanson and
a substantial stockholder (generally a person or group holding capital stock
representing 10% or more of the outstanding voting power of Ahmanson) require
the approval of the holders of 80% of the capital stock of Ahmanson entitled
to vote for the election of directors, including (i) the repurchase by
Ahmanson of capital stock representing 10% or more of the total voting power
of Ahmanson from such a substantial stockholder, (ii) certain mergers,
consolidations, combinations or reorganizations of Ahmanson or the sale of all
or a substantial part of the assets of Ahmanson or its subsidiaries where such
a substantial stockholder or its affiliates are parties to the transaction and
(iii) certain other exchanges of securities, cash or other properties or
assets of Ahmanson involving such a substantial stockholder or its affiliates,
except, in the case of (ii) or (iii), for any transaction which has been
approved by the Ahmanson Board, including by the vote of at least two-thirds
of the directors unaffiliated with the substantial stockholder and its
affiliates. The GWF Charter contains no similar provision.
Cumulative Voting
Under Delaware law, stockholders of a corporation are not entitled to
cumulate their votes in the election of directors unless the corporation's
certificate of incorporation so provides. Neither the GWF Charter nor the
Ahmanson Charter provides for cumulative voting.
Removal of Directors; Filling Vacancies on the Board of Directors
Under Delaware law, any or all directors of a corporation which does not
have cumulative voting or a classified board may be removed, with or without
cause, by the holders of a majority of the shares entitled to vote at an
election of directors, unless such corporation's certificate of incorporation
provides otherwise. GWF has a classified board and the GWF Charter provides
that directors may be removed only for cause. The Ahmanson Charter does not
limit the right of stockholders to remove directors with or without cause.
Under Delaware law, unless otherwise provided in the corporation's
certificate of incorporation or by-laws, vacancies and newly-created
directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors in office. The GWF
Charter provides that any vacancy, whether arising through death, resignation
or removal of a director, or through an increase in the number of directors of
any class, shall be filled by a majority vote of the remaining directors of
the class in which the vacancy occurs or by the sole remaining director of
that class if only one such director remains. Neither the Ahmanson Charter nor
the Ahmanson By-laws provide for vacancies or newly-created directorships to
be filled by stockholder vote.
Stockholder Action by Written Consent
Under Delaware law, unless otherwise provided in the certificate of
incorporation, any action which may be taken at any annual or special meeting
may be taken without a meeting and without prior notice if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. The GWF Charter contains no
provisions restricting action by written stockholder consent. The Ahmanson
Charter prohibits any action by written stockholder consent.
31
<PAGE>
Amendment of By-laws
Under Delaware law, the power to adopt, amend or repeal by-laws is vested in
the stockholders unless the certificate of incorporation confers the power to
adopt, amend or repeal by-laws upon the directors as well. Both the GWF
Charter and the Ahmanson Charter grant such power to their respective boards
of directors.
Classification of Board of Directors
Delaware law permits (but does not require) a certificate of incorporation
to provide that a board of directors be divided into classes, with each class
having a term of office longer than one year but not longer than three years.
The GWF Charter provides that the GWF Board shall have three classes, which
shall be as nearly equal in number as possible. The directors of each class
shall serve for a term ending at the third annual meeting following the annual
meeting at which they were elected. The Ahmanson Charter does not provide for
a classified board.
Ahmanson Rights Plan
On July 26, 1988, the Ahmanson Board declared a dividend distribution of
stock purchase rights, consisting of one common stock purchase right (a
"Primary Right") and one preferred stock purchase right (a "Secondary Right"),
to holders of Ahmanson Common Stock outstanding on August 8, 1988; together,
the Primary Rights and Secondary Rights are referred to as the "Ahmanson
Rights".
In the event that any person or affiliated group becomes the beneficial
owner of 15% or more of the outstanding shares of Ahmanson Common Stock,
proper provision shall be made so that each holder of a Primary Right (other
than Primary Rights beneficially owned by the 15% beneficial owner) will
thereafter have the right to purchase from Ahmanson one share of Ahmanson
Common Stock for each two outstanding Primary Rights at an exercise price
equal to 20% of the then current per share market price of the Ahmanson Common
Stock. In the event that any person or affiliated group becomes the beneficial
owner of 15% or more of the outstanding Ahmanson Common Stock and thereafter
Ahmanson is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, proper
provision will be made so that each holder of a Secondary Right, will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Secondary Right (currently, $60), that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of the
Secondary Right. In the event that any person or affiliated group becomes the
beneficial owner of 25% or more of the outstanding shares of Ahmanson Common
Stock, proper provision shall be made so that each holder of a Secondary
Right, other than Secondary Rights beneficially owned by the acquiring person,
will thereafter have the right to receive upon exercise that number of shares
of Ahmanson Common Stock having a market value of two times the exercise price
of the Secondary Right.
GWF Rights Plan
On June 24, 1986, the GWF Board declared a dividend distribution of one
GWF Right for each share of GWF Common Stock outstanding on July 14, 1986. On
June 27, 1995, the GWF Board approved a number of amendments to the GWF Rights
Plan.
In the event that any person or group becomes the beneficial owner of 15% or
more of the outstanding shares of GWF Common Stock other than pursuant to a
Qualifying Offer (as defined in the GWF Rights Plan), proper provision shall
be made so that each holder of a GWF Right, other than GWF Rights beneficially
owned by the acquiring person, will thereafter have the right to receive upon
exercise that number of shares of GWF Common Stock having a market value of
two times the exercise price of the GWF Right. In the event that, at any time
following such acquisition of 15% or more of the outstanding GWF Common Stock,
GWF is acquired in a merger or other business combination transaction or 50%
or more of its consolidated assets or earning power are sold (other than such
a transaction resulting from a Qualifying Offer and meeting certain fair price
criteria),
32
<PAGE>
proper provision will be made so that each holder of a GWF Right will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the GWF Right, that number of shares of common stock
of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the GWF Right.
MARKET PRICES AND DIVIDENDS
AHMANSON
The Ahmanson Common Stock is listed and principally traded on the NYSE and
is also listed on the PSE. The following table sets forth the range of high
and low sales prices as reported on the NYSE Composite Tape, together with the
per share dividends declared by Ahmanson, during the periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE
---------------
QUARTER HIGH LOW DIVIDENDS
------- ------- ------- ---------
<S> <C> <C> <C>
1994:
First......................................... $20 1/4 $16 3/8 $.22
Second........................................ 20 1/8 16 1/2 .22
Third......................................... 22 3/4 18 7/8 .22
Fourth........................................ 21 15 1/4 .22
1995:
First......................................... $18 5/8 $16 $.22
Second........................................ 23 3/4 18 1/8 .22
Third......................................... 25 3/4 20 5/8 .22
Fourth........................................ 28 3/8 24 1/8 .22
1996:
First......................................... $26 3/4 $21 1/4 $.22
Second........................................ 27 5/8 22 1/4 .22
Third......................................... 28 3/8 23 3/8 .22
Fourth........................................ 34 1/2 27 7/8 .22
1997:
January 1 to February 14, 1997................ $40 5/8 $ 32 $.22
</TABLE>
On February 14, 1997, the last trading day before public announcement of the
Ahmanson Proposal, the closing price per share of Ahmanson Common Stock on the
NYSE was $40.50. Past price performance is not necessarily indicative of
likely future price performance. Holders of GWF Common Stock are urged to
obtain current market quotations for shares of Ahmanson Common Stock.
Holders of Ahmanson Common Stock are entitled to receive dividends from
funds legally available therefor when, as and if declared by the Ahmanson
Board. Although the Ahmanson Board presently intends to continue the policy of
paying quarterly cash dividends, future dividends of Ahmanson would depend
upon the earnings of Ahmanson and its subsidiaries, their financial condition
and other factors including applicable governmental regulations and policies.
See "Description of Ahmanson Capital Stock--Certain Regulatory
Considerations". In addition, the Ahmanson Board presently intends to continue
its current stock purchase program, since it currently believes that doing so
is more advantageous to stockholders generally than increasing the level of
dividends. Ahmanson believes that its current dividend yield is above the
average dividend yield for comparable savings institutions. The Ahmanson Board
will continue to determine dividends by considering the factors listed above
and expects that dividends will continue to be paid in amounts consistent with
prior levels. As the factors used to determine dividends necessarily involve a
number of future contingencies to which all companies are subject, there can
be no certainty that dividends of the combined entity will equal Ahmanson's
current dividend rate per share.
33
<PAGE>
GWF
The GWF Common Stock is listed and principally traded on the NYSE and is
also listed on the PSE and the London Stock Exchange. The following table sets
forth the range of high and low sales prices as reported on the NYSE Composite
Tape, together with the per share dividends declared by GWF, during the
periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE
---------------
QUARTER HIGH LOW DIVIDENDS
------- ------- ------- ---------
<S> <C> <C> <C>
1994:
First......................................... $20 1/2 $16 1/8 $.23
Second........................................ 19 3/8 15 3/8 .23
Third......................................... 20 7/8 18 3/8 .23
Fourth........................................ 19 15 3/4 .23
1995:
First......................................... $18 7/8 $16 $.23
Second........................................ 22 1/2 18 7/8 .23
Third......................................... 23 3/4 20 1/4 .23
Fourth........................................ 27 1/8 22 5/8 .23
1996:
First......................................... $26 3/8 $22 1/2 $.23
Second........................................ 24 5/8 21 1/2 .25
Third......................................... 26 7/8 21 1/8 .25
Fourth........................................ 31 1/2 26 1/4 .25
1997:
January 1 to February 14, 1997................ $35 1/4 $28 1/8 $.25
</TABLE>
On February 14, 1997, the last trading day before public announcement of the
Ahmanson Proposal, the closing price per share of GWF Common Stock on the NYSE
was $34.25. Past price performance is not necessarily indicative of likely
future price performance. Holders of shares of GWF Common Stock are urged to
obtain current market quotations for shares of GWF Common Stock.
Holders of shares of GWF Common Stock are entitled to receive dividends from
funds legally available therefor when, as and if declared by the GWF Board.
Ahmanson has no information with respect to the GWF Board's present intentions
with respect to its policy of paying quarterly cash dividends.
34
<PAGE>
BUSINESS OF AHMANSON
Ahmanson, a Delaware corporation, is one of the largest residential real
estate and consumer finance-oriented financial services companies in the
United States, owning subsidiaries principally engaged in the consumer banking
business and related financial service activities. Ahmanson was originally
organized in 1928 in California and changed its state of incorporation from
California to Delaware in 1985.
Approximately 97% of Ahmanson's consolidated revenues in 1996 were derived
from the operations of Home Savings, which is wholly owned by Ahmanson. Home
Savings represented over 99% of Ahmanson's consolidated assets at December 31,
1996. Home Savings is currently the largest savings institution in the
United States. Home Savings is regulated by the OTS and the Federal Deposit
Insurance Corporation ("FDIC") which, through the Savings Association
Insurance Fund ("SAIF") and the Bank Insurance Fund ("BIF"), insures the
deposit accounts of Home Savings. Home Savings is a member of the Federal Home
Loan Bank ("FHLB") of San Francisco, which is one of the twelve regional banks
for federally insured depository institutions comprising the Federal Home Loan
Bank System. Home Savings is further subject to regulations of the Board of
Governors of the Federal Reserve System ("Federal Reserve Board") with respect
to reserves required to be maintained against certain deposits and certain
other matters.
Home Savings conducts the majority of its business in California. Home
Savings currently conducts certain of its savings and lending operations
outside of California under the name "Savings of America, a division of Home
Savings of America, FSB". Home Savings also conducts certain of its lending
operations through Ahmanson Mortgage Company, a wholly-owned subsidiary.
Ahmanson's principal business is attracting funds from the general public
and institutions and originating and investing in residential real estate
mortgage loans, consumer and small business loans, MBSs and investment
securities. MBSs include securities issued or guaranteed by government-
sponsored enterprises such as the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation and the Government National Mortgage
Association, mortgage pass-through securities issued by other entities,
including Home Savings, and collateralized mortgage obligations. Ahmanson's
primary sources of revenues are interest earned on loans and MBSs, income from
investment securities, gains on sales of loans and MBSs, fees earned in
connection with loans and deposits, and income earned on its portfolio of
loans and MBSs serviced for investors. Its principal expense is interest
incurred on interest-costing liabilities, including deposits and borrowings.
Ahmanson's primary sources of funds are deposits, principal and interest
payments on loans and MBSs, proceeds from sales of loans and MBSs and
borrowings. Scheduled payments on loans and MBSs are a relatively stable
source of funds, while prepayments of loans and MBSs and flows in deposits
vary widely. Ahmanson, through certain subsidiaries, engages in real estate
development and investment ("REI") activities.
Ahmanson's operations are significantly influenced by general economic
conditions, the monetary and fiscal policies of the federal government and the
regulatory policies of governmental authorities. Deposit flows and the cost of
interest-costing liabilities ("cost of funds") to Ahmanson are influenced by
interest rates on competing investments and general market interest rates.
Similarly, Ahmanson's loan volume and yields on loans and MBSs and the level
of prepayments on such loans and MBSs are affected by market interest rates,
as well as additional factors affecting the supply of and demand for housing
and the availability of funds.
Home Savings is in the process of changing its focus from being a
traditional savings institution to being a consumer bank. One significant
aspect of this change in focus is an increase in the types of services and
products offered to Home Savings' customers. This has been implemented in part
through the creation of a consumer lending division which offers products such
as home equity loans, automobile loans and unsecured personal lines of credit,
the development of a business banking group which offers products such as
small business loans and cash management services, the expansion of the
securities and insurance products and services offered by Griffin Financial
Services, which is a subsidiary of Ahmanson and an affiliate of Home Savings,
and the introduction of electronic banking. Home Savings's acquisition of 61
former First Interstate branches, completed on September 20, 1996, accelerated
Ahmanson's progress toward its objective of becoming a full-service provider
35
<PAGE>
of consumer and small business banking products. In the transaction, Ahmanson
acquired approximately $1.9 billion in deposits and $1.1 billion in loans.
Ahmanson recorded approximately $185 million in goodwill related to the
acquisition. Ahmanson's results of operations for the year ended 1996 included
operating results of the acquired branches only after September 20, 1996.
The change in focus is reflected at Ahmanson by increased scrutiny of the
use of capital. Ahmanson's goal is to hold an asset or engage in an activity
only if the income generated by such asset or activity adequately compensates
Ahmanson and its stockholders for the use of the capital necessary to hold the
asset or engage in the activity. Between October 1995 and December 1996,
Ahmanson returned capital to its stockholders by repurchasing 17 million
shares of Ahmanson Common Stock.
36
<PAGE>
BUSINESS OF GWF
GWF, with consolidated assets of approximately $42.9 billion at December 31,
1996, is a savings and loan holding company organized in 1955 under the laws
of the state of Delaware. The principal assets of GWF are the capital stock of
GW Bank and Aristar. GW Bank is a federally chartered stock savings bank and
conducts most of its retail banking through 416 offices located in California
and Florida. Real estate lending operations are conducted directly by GW Bank
or by direct subsidiaries through 261 offices in 23 states with concentrations
in California, Florida, Texas and Washington. Directly or through its
subsidiaries, GW Bank also engages in consumer finance, mortgage banking, and
other related financial services. Aristar conducts consumer finance operations
through 528 offices in 24 states, most of which operate principally under the
names Blazer Financial Services or City Finance Company and provide direct
installment loans and related credit insurance services and purchase retail
installment contracts.
37
<PAGE>
AHMANSON AND GWF
PRO FORMA COMBINED FINANCIAL INFORMATION
(UNAUDITED)
The following unaudited pro forma combined financial statements were
prepared in connection with the Proposed Merger (in which each outstanding
share of GWF Common Stock will be exchanged for 1.05 shares of Ahmanson Common
Stock) and give effect to the purchase accounting adjustments and other
assumptions described in the accompanying notes. The unaudited pro forma
combined statement of financial condition is based upon the condensed
consolidated statement of financial condition (unaudited) of Ahmanson and the
selected financial statistics (unaudited) of GWF as of December 31, 1996. The
unaudited pro forma combined statement of operations is based upon the
condensed consolidated statement of operations (unaudited) of Ahmanson and the
consolidating statement of operations (unaudited) of GWF for the year ended
December 31, 1996.
The adjustments already included in the unaudited pro forma combined
financial statements are subject to update as additional information becomes
available. An increase in the unallocated portion of the purchase price
remaining after fair value adjustments will result in a greater final
allocation to goodwill, which will have a corresponding effect on amortization
expense and will reduce tangible common equity. A decrease in the unallocated
portion of the purchase price remaining after fair value adjustments will have
the opposite effects. Accordingly, the final pro forma combined amounts will
differ from those set forth in the unaudited pro forma combined financial
statements.
The information shown below should be read in conjunction with, and is
qualified in its entirety by reference to the condensed consolidated statement
of financial condition (unaudited) and condensed consolidated statement of
operations (unaudited) at and for the year ended December 31, 1996, of
Ahmanson and the selected financial statistics (unaudited) and consolidating
statement of operations (unaudited) at and for the year ended December 31,
1996, of GWF. The pro forma data are presented for informational purposes and
are not necessarily indicative of the financial position or the results of
operations of the combined company that actually would have occurred had the
Proposed Merger been consummated as of the dates or for the periods presented.
The pro forma amounts are also not necessarily indicative of the future
financial position or future results of operations of the Surviving
Corporation. In particular, Ahmanson expects to achieve significant operating
cost savings as a result of the Proposed Merger. These cost savings, assuming
they are realized, would significantly reduce noninterest expense and increase
net income. See "The Proposed Merger--Background of the Ahmanson Proposal;
Reasons for the Proposed Merger". No adjustment has been included in the pro
forma amounts for such cost savings.
38
<PAGE>
AHMANSON AND GWF
PRO FORMA COMBINED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1996(A)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------- ADJUSTMENTS PRO FORMA
AHMANSON GWF (B, C & D) COMBINED
-------- ------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Cash and investment securities........ $ 1,876 $ 2,114 $ -- $ 3,990
Mortgage-backed securities............ 14,297 7,789 -- 22,086
Loans, net of the allowance for loan
losses............................... 31,789 30,823 -- 62,612
Goodwill and core deposit intangibles. 308 286 3,497 (E) 4,091
Other assets.......................... 1,632 1,863 -- 3,495
------- ------- ------- -------
Total assets...................... $49,902 $42,875 $ 3,497 $96,274
======= ======= ======= =======
LIABILITIES, COMPANY-OBLIGATED CAPITAL
SECURITIES OF SUBSIDIARY TRUST AND
STOCKHOLDERS' EQUITY
Deposits.............................. $34,774 $28,587 $ -- $63,361
Borrowings............................ 11,581 10,502 -- 22,083
Other liabilities..................... 966 1,091 64 (H) 2,121
------- ------- ------- -------
Total liabilities................. 47,321 40,180 64 87,565
Company-obligated Capital Securities
of Subsidiary Trust.................. 148 100 -- 248
Stockholders' equity
Preferred stock....................... 483 165 -- 648
Common stock.......................... 1 138 (137) 2
Additional paid-in capital............ 178 714 5,148 6,040
Retained earnings..................... 1,847 1,501 (1,501) 1,847
Other................................. (76) 77 (77) (76)
------- ------- ------- -------
Total stockholders' equity........ 2,433 2,595 3,433 (F) 8,461
------- ------- ------- -------
Total liabilities, Company-
obligated Capital Securities of
Subsidiary Trust and
stockholders' equity............. $49,902 $42,875 $ 3,497 $96,274
======= ======= ======= =======
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
39
<PAGE>
AHMANSON AND GWF
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996(A)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------- ADJUSTMENTS PRO FORMA
AHMANSON GWF (C & G) COMBINED
-------- ------ ----------- ---------
(IN MILLIONS EXCEPT PER COMMON SHARE
DATA)
<S> <C> <C> <C> <C>
Interest income
Loans.................................... $2,297 $2,482 $ -- $4,779
Mortgage-backed securities............... 1,161 638 -- 1,799
Other.................................... 57 114 -- 171
------ ------ ----- ------
Total interest income.................. 3,515 3,234 6,749
------ ------ ----- ------
Interest expense
Deposits................................. 1,524 1,179 -- 2,703
Borrowings............................... 739 677 -- 1,416
------ ------ ----- ------
Total interest expense................. 2,263 1,856 -- 4,119
------ ------ ----- ------
Net interest income...................... 1,252 1,378 -- 2,630
Provision for loan losses................ 145 209 -- 354
------ ------ ----- ------
Net interest income after provision for
loan losses............................. 1,107 1,169 -- 2,276
------ ------ ----- ------
Noninterest income....................... 252 332 584
------ ------ ----- ------
Noninterest expense
SAIF recapitalization assessment......... 244 188 -- 432
Other.................................... 935 1,126 139 2,200
------ ------ ----- ------
Total noninterest expense.............. 1,179 1,314 139 2,632
------ ------ ----- ------
Income before income taxes............... 180 187 (139) 228
Income tax expense....................... 35 71 (3) 103
------ ------ ----- ------
Net income............................... $ 145 $ 116 $(136) $ 125
====== ====== ===== ======
Net income applicable to common stock.... $ 100 $ 96 $(130) $ 66
====== ====== ===== ======
Per common share
Net income............................... $ 0.91 $ 0.26
====== ======
Dividends declared....................... $ 0.88 $ 0.88
====== ======
Average common shares outstanding........ 109.7 144.8 254.5
====== ===== ======
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
40
<PAGE>
AHMANSON AND GWF
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A: BASIS OF PRESENTATION
The unaudited pro forma combined statement of condition combines the
historical condensed consolidated statement of condition (unaudited) of
Ahmanson and the historical selected financial statistics (unaudited) of GWF
as if the Proposed Merger had become effective on December 31, 1996. The
unaudited pro forma combined statement of operations for the year ended
December 31, 1996 combines the unaudited historical condensed consolidated
statement of operations (unaudited) of Ahmanson and the consolidating
statement of operations (unaudited) of GWF as if the Proposed Merger had
become effective immediately prior to January 1, 1996. Certain amounts in the
unaudited historical financial statements of GWF have been reclassified in the
unaudited pro forma combined financial statements to conform to Ahmanson's
historical financial statements.
The Proposed Merger would be accounted for as a purchase. Under this method
of accounting, assets and liabilities of GWF are adjusted to their estimated
fair value and combined with the recorded book values of the assets and
liabilities of Ahmanson. Applicable income tax effects of such adjustments are
included as a component of Ahmanson's net deferred taxes with a corresponding
offset to goodwill.
Ahmanson has not had access to GWF's records in order to make a
determination of the fair value of its assets and liabilities. For purposes of
the unaudited pro forma combined financial statements, it has been assumed
that the net book value of GWF's assets (excluding intangibles) minus
liabilities approximates fair value.
Ahmanson expects to achieve significant operating cost savings as a result
of the Proposed Merger. See "The Proposed Merger--Background of the Ahmanson
Proposal; Reasons for the Proposed Merger". No adjustment has been included in
the unaudited pro forma combined financial statements for the operating cost
savings.
NOTE B: PURCHASE PRICE
The purchase price is based on exchanging 1.05 shares of Ahmanson Common
Stock for each outstanding share of GWF Common Stock at the closing price per
share of Ahmanson Common Stock on February 14, 1997, the last trading day
before the announcement of the proposal. Shares issuable upon the exercise of
GWF's stock options are not included in the number of outstanding shares of
GWF Common Stock on the assumption that all options will become equivalent
options to purchase Ahmanson Common Stock. In addition, the number of shares
of GWF Common Stock used in calculating the total market value of Ahmanson
Common Stock to be issued in connection with the Proposed Merger reflects an
exchange of Ahmanson Common Stock for the outstanding shares of GWF Common
Stock, exclusive of GWF's common stock equivalents.
The total market value of the Ahmanson Common Stock to be issued in
connection with the Proposed Merger is calculated as follows:
<TABLE>
<S> <C>
Shares of GWF Common Stock outstanding on December 31, 1996
(in thousands)................................................... 137,876
Exchange ratio.................................................... 1.05
-------
Ahmanson Common Stock to be issued (in thousands)................. 144,770
Closing market price per share of Ahmanson Common Stock on
February 14, 1997................................................ $ 40.50
-------
Total market value of Ahmanson Common Stock to be issued
(in millions).................................................. $ 5,863
=======
</TABLE>
41
<PAGE>
AHMANSON AND GWF
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
In addition to the total market value of the Ahmanson Common Stock to be
issued, the total purchase price would include other direct acquisition costs,
such as investment banking, legal, accounting and other professional fees;
printing and mailing costs; and other miscellaneous expenses. These costs,
which are not expected to be material to the transaction and are preliminarily
expected to be approximately $60 million, have not been included in the
unaudited pro forma combined financial statements.
NOTE C: RESTRUCTURING CHARGES
Ahmanson's management estimates that approximately $400 million of costs
related to premises, severance and restructuring charges and other direct
acquisition costs would be incurred in connection with the Proposed Merger;
these estimates of costs are not yet based on sufficient factual data so as to
be included as adjustments to the unaudited pro forma combined financial
statements and are subject to change as additional information becomes
available. Of this amount, approximately $325 million of costs relate to GWF's
premises, severance and operations and would affect the final amount of
goodwill as of the consummation of the Proposed Merger, which goodwill will be
amortized as described in Note G below. The remaining estimated amount of
approximately $75 million of costs relates to Ahmanson's premises, severance
and operations, as well as all costs relating to systems conversions and other
indirect integration costs, and will be expensed upon consummation of the
Proposed Merger or as incurred. With respect to timing, it has been assumed
that the integration would be complete and that the costs referred to above
would be incurred not later than 15 months after the closing of the Proposed
Merger.
Ahmanson's estimate of restructuring charges is in the range of
restructuring charges announced in connection with other similar transactions
and is based on the assumption that Ahmanson's experience in integrating GWF's
organization and operations will be similar to comparable transactions in the
past.
NOTE D: ALLOCATION OF PURCHASE PRICE
Certain matters are still pending that would have an effect on the ultimate
allocation of the purchase price. Accordingly, the allocation of the purchase
price has not been finalized and the portion of the purchase price allocated
to fair value adjustments, goodwill and the identifiable intangibles
(discussed below) is subject to change.
Subject to the foregoing, the purchase price has been allocated as described
in the table below:
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Net assets applicable to GWF's Common Stock at December 31,
1996...................................................... $2,430
Increase to GWF's net asset value at December 31, 1996 for
core deposit intangibles (see Note H)(1).................. 266
Elimination of GWF's existing goodwill and identifiable
intangibles, net of applicable income tax effects(2)...... (172)
------
Total preliminary allocation of purchase price........... 2,524
Goodwill due to the Proposed Merger........................ 3,339
------
Total purchase price..................................... $5,863
======
</TABLE>
- --------
(1) Amounts are net of applicable income tax effects, using an estimated
marginal tax rate of 40.0%.
(2) Assumes that GWF's existing goodwill and core deposit intangibles are
deductible for tax purposes.
42
<PAGE>
AHMANSON AND GWF
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
NOTE E: CALCULATION OF GOODWILL ADJUSTMENT AND TOTAL GOODWILL DUE TO PROPOSED
MERGER
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Purchase price.............................................. $ 5,863
GWF total common stockholders' equity....................... (2,430)
Core deposit intangibles(1)................................. (266)
-------
Goodwill adjustment......................................... 3,167
GWF existing goodwill(2).................................... 172
-------
Total goodwill due to Proposed Merger..................... $ 3,339
=======
</TABLE>
- --------
(1)Net of applicable income tax effects.
(2)Assumes that GWF's existing goodwill and core deposit intangibles are
deductible for tax purposes.
For purposes of the Pro Forma Combined Statement of Condition, it has been
assumed that the net book value of GWF's assets (excluding intangibles) minus
liabilities approximate fair value.
NOTE F: STOCKHOLDERS' EQUITY
The purchase price of $5,863 million is reduced by GWF's common
stockholders' equity of $2,430 million. In the Proposed Merger, Ahmanson would
issue 1.05 shares of Ahmanson Common Stock in exchange for each of the
137,875,955 outstanding shares of GWF Common Stock (based on the number of
shares outstanding as of December 31, 1996). The per share price of Ahmanson
Common Stock on February 14, 1997 was $40.50; total par value of new common
stock of Ahmanson is $1 million. The remaining $5,862 million represents
additional paid-in capital. GWF 8.30% Preferred Stock will be converted into
New Ahmanson 8.30% Preferred Stock.
Adjustments to stockholders' equity are as follows:
<TABLE>
<CAPTION>
PURCHASE GWF
PRICE COMMON EQUITY ADJUSTMENT
-------- ------------- ----------
(IN MILLIONS)
<S> <C> <C> <C>
Common stock.............................. $ 1 $ (138) $ (137)
Additional paid-in capital................ 5,862 (714) 5,148
Retained earnings......................... -- (1,501) (1,501)
Other (net unrealized gains on available-
for-sale securities)..................... -- (77) (77)
------ ------- -------
Total common stockholders' equity....... $5,863 $(2,430) $ 3,433
====== ======= =======
</TABLE>
43
<PAGE>
AHMANSON AND GWF
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
NOTE G: PURCHASE ACCOUNTING ADJUSTMENTS
Adjustments are made to reflect the recording of intangibles as well as to
eliminate any intangible balances previously recorded by GWF in accordance
with the purchase method of accounting. It has been assumed that the Net Book
Value of GWF's assets (excluding intangibles) minus liabilities approximates
fair value. Purchase accounting adjustments are based on the best available
information and are subject to update as additional information becomes
available. Purchase accounting adjustments would be booked on a gross basis
with related adjustments to Ahmanson's net deferred taxes as follows:
<TABLE>
<CAPTION>
RELATED
(INCREASE)
DECREASE TO
NET OF NET INCOME
APPLICABLE FOR YEAR ENDED
INCOME TAXES GROSS 12/31/96*
------------ ------ --------------
(IN MILLIONS)
<S> <C> <C> <C>
Goodwill and identifiable intangibles
of GWF................................ $ (172) $ (286) $(38)
Goodwill due to the Proposed Merger*... 3,339 3,339 133
Core deposit intangibles due to the
Proposed Merger*...................... 266 444 44
------ ------ ----
3,433 3,497 139
Adjustment to Ahmanson net deferred
taxes related to purchase accounting
adjustments........................... -- (64) (3)
------ ------ ----
Total................................ $3,433 $3,433 $136
====== ====== ====
</TABLE>
- --------
* Goodwill due to the Proposed Merger is amortized on a straight-line basis
over 25 years. Core deposit intangibles due to the Proposed Merger are
amortized on a straight-line basis over 10 years.
The incremental effect on net income of the purchase accounting adjustments
is estimated to be a net after-tax expense of approximately $136 million for
each of the five 12-month periods subsequent to the Proposed Merger. Amounts
exclude amortization of existing goodwill and identifiable intangibles of GWF.
NOTE H: OTHER LIABILITIES
Adjustments to other liabilities are as follows:
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Deferred tax liability from core deposit intangible............ $ 178
Reversal of GWF deferred tax liability from intangibles........ (114)
-----
Total adjustment to other liabilities........................ $ 64
=====
</TABLE>
44
<PAGE>
DESCRIPTION OF AHMANSON CAPITAL STOCK
AHMANSON COMMON STOCK
Ahmanson is currently authorized to issue up to 220,000,000 shares of
Ahmanson Common Stock. Prior to the consummation of the Proposed Merger, and
subject to receipt of the approval of holders of record of Ahmanson Common
Stock sought herein, the Ahmanson Charter will be amended to increase the
number of authorized shares of Ahmanson Common Stock to 350,000,000. On the
Record Date, there were [ ] shares of Ahmanson Common Stock issued
and outstanding. In 1996, Ahmanson authorized the continuation of certain
stock repurchase programs. For a full description of these programs see "--
Repurchases of Ahmanson Common Stock".
Holders of shares of Ahmanson Common Stock are entitled to one vote per
share for each share held. Subject to the rights of holders of shares of the
Ahmanson Preferred Stock (as described below), holders of shares of Ahmanson
Common Stock are entitled to receive such dividends as may be declared by the
Board of Directors from funds legally available therefor and, in the event of
liquidation, from the net assets of Ahmanson available for distribution to
stockholders. Ahmanson may not declare any dividends on the Ahmanson Common
Stock (other than in shares of Ahmanson Common Stock) unless full preferential
amounts to which holders of Ahmanson Preferred Stock are entitled have been
paid or declared and set apart for payment upon all outstanding shares of
Ahmanson Preferred Stock. Ahmanson is also subject to certain contractual and
regulatory restrictions on the payment of dividends. See "-- Certain
Regulatory Considerations".
The holders of shares of Ahmanson Common Stock do not have preemptive rights
or preferential rights of subscription for any shares of Ahmanson Common Stock
or other securities of Ahmanson. Outstanding shares of Ahmanson Common Stock
are, and shares to be issued pursuant to the Proposed Merger will be, validly
issued, fully paid and nonassessable.
The Ahmanson Common Stock is listed on the NYSE and the PSE. Application
will be made to list the shares of Ahmanson Common Stock to be issued pursuant
to the Proposed Merger on the NYSE and the PSE.
AMENDMENTS TO THE AHMANSON CHARTER
If the Ahmanson Charter Amendment is approved, the Ahmanson Charter would be
amended in accordance with the DGCL to provide (a) that the number of shares
of authorized Common Stock of the combined company shall be increased to
350,000,000, and (b) for the New Ahmanson 8.30% Preferred Stock.
Uncommitted authorized but unissued shares of Ahmanson Common Stock of the
combined company would be able to be issued from time to time to such persons
and for such considerations as the Board of Directors of the combined company
may determine and holders of the then outstanding shares of Ahmanson Common
Stock may or may not be given the opportunity to vote thereon, depending upon
the nature of any such transactions, applicable law, the rules and policies of
the NYSE and the judgment of the Board of Directors of the combined company
regarding the submission thereof to stockholders of the combined company.
First Chicago Trust Company of New York is the transfer agent and registrar
for the Ahmanson Common Stock.
REPURCHASES OF AHMANSON COMMON STOCK
In the fourth quarter of 1996, Ahmanson completed its second stock purchase
program and began its third program, which was approved by the Ahmanson Board
of Directors on November 15, 1996. In the second program, Ahmanson purchased
5.2 million shares of outstanding Ahmanson Common Stock at an average price
per share of $28.61. During the fourth quarter Ahmanson purchased a total of 4
million shares, investing $126.6 million at an average price per share of
$31.86. Of the $250 million authorized for Ahmanson's third round of purchase
activity, $205 million remains. At December 31, 1996, the parent company had
$219 million in cash.
45
<PAGE>
As of December 31, 1996, since initiating the first stock program in October
1995, Ahmanson had repurchased 17 million shares of Ahmanson Common Stock, or
14% of the then outstanding shares, at an average price of $26.11. In
addition, in September of 1996, Ahmanson redeemed its 9.60% Preferred Stock,
Series B, and, in December of 1996, issued $150 million of 8.36% Capital
Securities, Series A.
AHMANSON PREFERRED STOCK
The Ahmanson Charter provides that Ahmanson is authorized to issue
10,000,000 shares of Ahmanson Preferred Stock. The Ahmanson Preferred Stock
may be issued from time to time in one or more series and the Ahmanson Board
is authorized to fix the voting rights, designations, powers, preferences and
the relative, participating, optional or other rights, if any, and the
qualifications, limitations or restrictions thereof, of any wholly unissued
series of Ahmanson Preferred Stock, and to fix the number of shares
constituting such series, and to increase or decrease the number of shares of
any such series, all without further action by the holders of Ahmanson Common
Stock.
Because Ahmanson is a holding company, its rights, the rights of its
creditors and of its stockholders, including the holders of the shares of the
Ahmanson Preferred Stock, to participate in any distribution of the assets of
any subsidiary upon the latter's liquidation or recapitalization will be
subject to the prior claims of the subsidiary's creditors, except to the
extent that Ahmanson may itself be a creditor with recognized claims against
the subsidiary. The principal source of Ahmanson's revenues are dividends
received from its banking and other subsidiaries. Various statutory provisions
limit the amount of dividends its subsidiaries may pay without regulatory
approval, and various regulations can also restrict the payment of dividends.
In addition, federal statutes limit the ability of certain subsidiaries to
make loans to Ahmanson. See "--Certain Regulatory Considerations".
The following is a brief description of certain terms of the outstanding
series of Ahmanson Preferred Stock. This description does not purport to be
complete and is qualified in its entirety by reference to the Ahmanson
Charter, including the certificate of designations with respect to each such
series.
The shares of Ahmanson Preferred Stock currently outstanding have preference
over Ahmanson Common Stock with respect to the payment of dividends and the
distribution of assets in the event of liquidation, winding up or dissolution
of Ahmanson. Each outstanding series ranks on a parity with the other as to
dividends and the distribution of assets upon liquidation, winding up or
dissolution.
Generally, the holders of each series of Ahmanson Preferred Stock have no
voting rights. However, if the equivalent of six quarterly dividends payable
on a series of Ahmanson Preferred Stock are in default, the number of
directors of Ahmanson will be increased by two and the holders of such
outstanding series of Ahmanson Preferred Stock together with the holders of
shares of every other series of Ahmanson Preferred Stock similarly entitled to
vote for the election of two directors, acting together as a single class,
will be entitled to elect two of the authorized number of members of the
Ahmanson Board at the next annual meeting and at each subsequent annual
meeting of stockholders, to serve until all dividends accumulated have been
fully paid for four consecutive quarterly dividend periods, including the last
preceding quarterly dividend period. Ahmanson Depositary Shares representing
each series of Ahmanson Preferred Stock are listed on the NYSE.
Ahmanson Series C Preferred Stock. As of December 31, 1996, there were
issued and outstanding 780,000 shares of Ahmanson 8.40% Preferred Stock,
Series C, liquidation preference $250 per share (the "Ahmanson Series C
Preferred Stock"), represented by 7,800,000 depositary shares, each
representing a one-tenth interest in a share of Ahmanson Series C Preferred
Stock. The Ahmanson Series C Preferred Stock is redeemable at the option of
Ahmanson, in whole or in part, on and after March 1, 1998 at a price of $250
per share (equivalent to $25 per depositary share) plus accrued and unpaid
dividends to the redemption date.
Dividends on the Ahmanson Series C Preferred Stock of $21.00 per share
(8.40% annualized rate) are cumulative and paid quarterly on the first day of
March, June, September and December (equivalent to $2.10 per annum per
depositary share).
46
<PAGE>
Ahmanson Series D Preferred Stock. As of December 31, 1996, there were
issued and outstanding 575,000 shares of 6% Cumulative Convertible Preferred
Stock, Series D, liquidation preference $500 per share (the "Ahmanson Series D
Preferred Stock"), evidenced by 5,750,000 depositary shares, each representing
a one-tenth interest in a share of Ahmanson Series D Preferred Stock. The
Ahmanson Series D Preferred Stock is redeemable at the option of Ahmanson, in
whole or in part, on and after September 1, 1998 at a price commencing at $515
per share and declining to $500 per share on September 1, 2003 and thereafter,
plus accrued and unpaid dividends to the redemption date.
Dividends on the Ahmanson Series D Preferred Stock of $30 per share (6%
annualized rate) are cumulative and are paid quarterly on the first day of
March, June, September and December (equivalent to $3 per annum per depositary
share).
The Ahmanson Series D Preferred Stock is convertible into Ahmanson Common
Stock, at the option of its holders, at a conversion rate of approximately
20.5465 shares of Ahmanson Common Stock per share of Ahmanson Series D
Preferred Stock (equivalent to a conversion rate of 2.05465 shares of Ahmanson
Common Stock per depositary share) (subject to adjustments upon the occurrence
of certain events).
NEW AHMANSON 8.30% PREFERRED STOCK
The summary of terms of the New Ahmanson 8.30% Preferred Stock contained
herein does not purport to be complete and is subject to, and qualified in its
entirety by, the provisions of the Ahmanson Charter, as amended through the
Effective Time, and the provisions of the Preferred Stock Deposit Agreement.
If the Proposed Merger is consummated, pursuant to the terms of the Merger
Agreement, each share of GWF 8.30% Preferred Stock would be converted into one
share of New Ahmanson 8.30% Preferred Stock. The New Ahmanson 8.30% Preferred
Stock will be substantially the same as the GWF 8.30% Preferred Stock.
Rank. The New Ahmanson 8.30% Preferred Stock will rank on a parity as to
payment of dividends and distribution of assets upon dissolution, liquidation
or winding up of Ahmanson with each other currently outstanding series of
Ahmanson Preferred Stock. See "Description of Ahmanson Capital Stock--Ahmanson
Preferred Stock". The New Ahmanson 8.30% Preferred Stock will rank prior to
the Ahmanson Common Stock with respect to the payment of dividends and
distribution of assets upon dissolution, liquidation or winding up of
Ahmanson.
Dividends. Holders of shares of the New Ahmanson 8.30% Preferred Stock will
be entitled to receive, when, as and if declared by the Ahmanson Board out of
funds of Ahmanson legally available for payment, cash dividends at the rate of
8.30% per annum (equivalent to $2.075 per New Ahmanson Depositary Share).
Dividends on the New Ahmanson 8.30% Preferred Stock will be payable quarterly
on February 1, May 1, August 1 and November 1 of each year, commencing upon
consummation of the Proposed Merger, at such annual rate. Each dividend will
be payable to holders of record as they appear on the stock books of Ahmanson
(or, if applicable, the records of the Preferred Stock Depositary) on such
record dates, not exceeding 45 days preceding the payment dates thereof, as
shall be fixed by the Ahmanson Board. Dividends will be cumulative from the
date of original issue. Dividends payable on the New Ahmanson 8.30% Preferred
Stock for any period greater or less than a full dividend period shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
Dividends payable on the New Ahmanson 8.30% Preferred Stock for each full
dividend period shall be computed by dividing the annual dividend rate by
four.
Redemption. Shares of New Ahmanson 8.30% Preferred Stock will not be
redeemable prior to November 1, 1997. The shares of New Ahmanson 8.30%
Preferred Stock will be redeemable at the option of Ahmanson, in whole or in
part, at any time or from time to time, on or after November 1, 1997, on not
less than 30 nor more than 60 days' notice by mail, at a redemption price of
$250 per share (equivalent to $25 per New Ahmanson Depositary Share) plus
accrued and unpaid dividends to the redemption date.
47
<PAGE>
The New Ahmanson 8.30% Preferred Stock will not be subject to any sinking
fund or other obligation of Ahmanson to redeem or retire the New Ahmanson
8.30% Preferred Stock.
Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of Ahmanson, the holders of shares of
New Ahmanson 8.30% Preferred Stock are entitled to receive out of assets of
Ahmanson available for distribution to stockholders, before any distribution
of assets is made to holders of Ahmanson Common Stock or of any other shares
of stock of Ahmanson ranking as to such a distribution junior to the shares of
New Ahmanson 8.30% Preferred Stock, liquidating distributions in the amount of
$250 per share (equivalent to $25 per New Ahmanson Depositary Share) plus
accrued and unpaid dividends. After payment of such liquidating distributions,
the holders of shares of New Ahmanson 8.30% Preferred Stock will not be
entitled to any further participation in any distribution of assets by
Ahmanson.
Voting Rights. Except as indicated below or except as expressly required by
applicable law, the holders of the New Ahmanson 8.30% Preferred Stock will not
be entitled to vote for any purpose.
If the equivalent of six quarterly dividends payable on the New Ahmanson
8.30% Preferred Stock are in arrears, the number of directors of Ahmanson will
be increased by two and the holders of New Ahmanson 8.30% Preferred Stock,
voting separately as a class together with any other series of Ahmanson
Preferred Stock ranking on a parity with the New Ahmanson 8.30% Preferred
Stock as to dividends and distributions of assets and which by its terms
provides for similar voting rights (the "Other Ahmanson Preferred Stock"),
will be entitled to elect two directors to fill such vacancies. Such right to
elect two additional directors shall continue until all dividends in arrears
have been paid or declared and set apart for payment. Each director elected by
the holders of shares of the New Ahmanson 8.30% Preferred Stock and any other
class of Ahmanson Preferred Stock shall continue to serve as such director for
the full term for which he shall have been elected, notwithstanding that prior
to the end of such term such default shall cease to exist.
So long as any shares of the New Ahmanson 8.30% Preferred Stock remain
outstanding, the consent or the affirmative vote of the holders of at least 66
2/3% of the vote entitled to be cast with respect to the then outstanding
shares of such series of the New Ahmanson 8.30% Preferred Stock together with
any Other Ahmanson Preferred Stock, voting as one class, either expressed in
writing or at a meeting called for that purpose, will be necessary (i) to
permit, effect or validate the authorization, or any increase in the
authorized amount, of any class or series of shares of Ahmanson ranking prior
to the New Ahmanson 8.30% Preferred Stock as to dividends, voting or upon
distribution of assets and (ii) to repeal, amend or otherwise change any of
the provisions applicable to the New Ahmanson 8.30% Preferred Stock in any
manner which adversely affects the powers, preferences, voting power or other
rights or privileges of the New Ahmanson 8.30% Preferred Stock. In case the
New Ahmanson 8.30% Preferred Stock would be so affected by any such action
referred to in clause (ii) above in a different manner than one or more series
of the Other Ahmanson Preferred Stock then outstanding, the holders of shares
of the New Ahmanson 8.30% Preferred Stock, together with any series of the
Other Ahmanson Preferred Stock which will be similarly affected, will be
entitled to vote as a class, and Ahmanson will not take such action without
the consent or affirmative vote of the holders of at least 66 2/3% of the
total number of votes entitled to be cast with respect to each such series of
the New Ahmanson 8.30% Preferred Stock and the Other Ahmanson Preferred Stock
then outstanding.
With respect to any matter as to which the New Ahmanson 8.30% Preferred
Stock is entitled to vote, holders of the New Ahmanson 8.30% Preferred Stock
and any Other Ahmanson Preferred Stock will be entitled to cast the number of
votes assigned to the outstanding shares of New Ahmanson 8.30% Preferred
Stock. As a result of the provisions described in the preceding paragraph
requiring the holders of shares of the New Ahmanson 8.30% Preferred Stock to
vote together as a class with the holders of shares of one or more series of
Other Ahmanson Preferred Stock, it is possible that the holders of such shares
of Other Ahmanson Preferred Stock could approve action that would adversely
affect New Ahmanson 8.30% Preferred Stock, including the creation of a class
of capital stock ranking prior to such series of New Ahmanson 8.30% Preferred
Stock as to dividends, voting or distributions of assets.
48
<PAGE>
Conversion Rights. The New Ahmanson 8.30% Preferred Stock is not convertible
into shares of any other class or series of Ahmanson Capital Stock.
NEW AHMANSON DEPOSITARY SHARES
At the Effective Time, Ahmanson will assume the obligations of GWF under the
Preferred Stock Deposit Agreement and will instruct the Preferred Stock
Depositary to treat the shares of New Ahmanson 8.30% Preferred Stock as new
deposited securities under the Preferred Stock Deposit Agreement. In
accordance with the terms of the Preferred Stock Deposit Agreement, the GWF
Depositary Shares then outstanding shall thereafter represent the shares of
New Ahmanson 8.30% Preferred Stock. Ahmanson will request that the Preferred
Stock Depositary call for surrender of all outstanding GWF Depositary Receipts
to be exchanged for New Ahmanson Depositary Receipts specifically describing
the New Ahmanson 8.30% Preferred Stock. The New Ahmanson Depositary Receipts
to be issued in exchange for the GWF Depositary Receipts will evidence the New
Ahmanson Depositary Shares.
Each New Ahmanson Depositary Share will represent a one-tenth interest in a
share of New Ahmanson 8.30% Preferred Stock. Ahmanson has agreed to use its
best efforts to list the New Ahmanson Depositary Shares on the NYSE, subject
to official notice of issuance. The New Ahmanson Depositary Shares will be
freely transferable under the Securities Act.
Subject to the terms of the Preferred Stock Deposit Agreement, each owner of
a New Ahmanson Depositary Share will be entitled through the Preferred Stock
Depositary, in proportion to the one-tenth interest in a share of New Ahmanson
8.30% Preferred Stock underlying such New Ahmanson Depositary Share, to all
rights and preferences of a share of New Ahmanson 8.30% Preferred Stock
(including, voting, redemption and liquidation rights). Because each share of
New Ahmanson 8.30% Preferred Stock entitles the holder thereof to one vote on
matters on which the New Ahmanson 8.30% Preferred Stock is entitled to vote,
each related New Ahmanson Depositary Share, will, in effect, entitle the
holder thereof to one-tenth of a vote thereon, rather than one full vote. See
"--New Ahmanson 8.30% Preferred Stock--Voting Rights".
Pending the preparation of definitive, engraved New Ahmanson Depositary
Receipts, the Preferred Stock Depositary may, upon the written order of
Ahmanson, issue temporary New Ahmanson Depositary Receipts substantially
identical to (and entitling the holders thereof to all the rights pertaining
to) the definitive form. Definitive New Ahmanson Depositary Receipts will be
prepared thereafter without unreasonable delay, and temporary New Ahmanson
Depositary Receipts will be exchangeable for definitive New Ahmanson
Depositary Receipts at Ahmanson's expense.
Dividends and Other Distributions. The Preferred Stock Depositary will
distribute all cash dividends or other cash distributions received in respect
of the New Ahmanson 8.30% Preferred Stock to the record holders of New
Ahmanson Depositary Receipts in proportion, insofar as practicable, to the
respective numbers of New Ahmanson Depositary Shares evidenced by the New
Ahmanson Depositary Receipts held by such holders on the relevant record date.
The Preferred Stock Depositary shall distribute only such amount, however, as
can be distributed without attributing to any holder of New Ahmanson
Depositary Receipts a fraction of one cent, and any balance not so distributed
shall be added to and treated as part of the next sum received by the
Preferred Stock Depositary for distribution to record holders of New Ahmanson
Depositary Receipts then outstanding.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute such amounts of the securities or property received
by it as are, as nearly as practicable, in proportion to the respective
numbers of New Ahmanson Depositary Shares evidenced by the New Ahmanson
Depositary Receipts held by such holders on the relevant record date, unless
the Preferred Security Depositary determines that it is not feasible to make
such distribution, in which case the Preferred Stock Depositary may, with the
approval of Ahmanson, adopt such method as it deems equitable and practicable
for the purpose of effecting such distribution, including the sale of such
securities or property.
49
<PAGE>
The Preferred Stock Deposit Agreement also contains provisions relating to
the manner in which any subscription or similar rights offered by Ahmanson to
holders of the New Ahmanson 8.30% Preferred Stock shall be made available to
holders of the related New Ahmanson Depositary Receipts.
The amounts distributed in all of the foregoing cases will be reduced by any
amounts required to be withheld by Ahmanson or the Depositary on account of
taxes and governmental charges.
Redemption of New Ahmanson Depositary Shares. If shares of New Ahmanson
8.30% Preferred Stock represented by New Ahmanson Depositary Shares are
redeemed, the New Ahmanson Depositary Shares will be redeemed from the
proceeds received by the Preferred Stock Depositary resulting from the
redemption, in whole or in part, of the New Ahmanson 8.30% Preferred Stock
held by the Preferred Stock Depositary. The Preferred Stock Depositary shall
mail notice of redemption not less than 30 and not more than 60 days prior to
the date fixed for redemption to the record holders of the New Ahmanson
Depositary Receipts evidencing the New Ahmanson Depositary Shares to be so
redeemed at their respective addresses appearing in the Preferred Stock
Depositary's books. The redemption price per New Ahmanson Depositary Share
will be equal to the applicable fraction of the redemption price per share
payable with respect to such series of the New Ahmanson 8.30% Preferred Stock
plus all money and other property, if any, payable with respect to such New
Ahmanson Depositary Share, including all amounts payable by Ahmanson in
respect of any accumulated but unpaid dividends. Whenever Ahmanson redeems
shares of New Ahmanson 8.30% Preferred Stock held by a Preferred Stock
Depositary, the Preferred Stock Depositary will redeem as of the same
redemption date the number of New Ahmanson Depositary Shares representing
shares of the New Ahmanson 8.30% Preferred Stock so redeemed. If less than all
the New Depositary Shares are to be redeemed, the New Ahmanson Depositary
Shares to be redeemed will be selected by lot or pro rata (subject to rounding
to avoid fractions of New Ahmanson Depositary Shares) as may be determined by
the Preferred Stock Depositary.
After the date fixed for redemption, the New Ahmanson Depositary Shares so
called for redemption will no longer be deemed to be outstanding and all
rights of the holders of New Ahmanson Depositary Receipts evidencing such New
Ahmanson Depositary Shares will cease, except the right to receive the moneys
payable upon such redemption and any money or other property to which such
holders were entitled upon such redemption upon surrender to the Preferred
Stock Depositary of the New Ahmanson Depositary Receipts evidencing such New
Ahmanson Depositary Shares.
Voting the New Ahmanson 8.30% Preferred Stock. Upon receipt of notice of any
meeting or action to be taken by written consent at or as to which the holders
of the New Ahmanson 8.30% Preferred Stock are entitled to vote or consent, the
Preferred Stock Depositary will mail the information contained in such notice
of meeting or action to the record holders of the New Ahmanson Depositary
Receipts evidencing the New Ahmanson Depositary Shares. Each record holder of
such New Ahmanson Depositary Receipts on the record date (which will be the
same date as the record date for the New Ahmanson 8.30% Preferred Stock) will
be entitled to instruct the Preferred Stock Depositary as to the exercise of
the voting rights or the giving or refusal of consent, as the case may be,
pertaining to the number of shares of the New Ahmanson 8.30% Preferred Stock
represented by the New Ahmanson Depositary Shares evidenced by such holder's
New Ahmanson Depositary Receipts. The Preferred Stock Depositary will
endeavor, insofar as practicable, to vote, or give or withhold consent with
respect to, the maximum number of whole shares of the New Ahmanson 8.30%
Preferred Stock represented by all New Ahmanson Depositary Shares as to which
any particular voting or consent instructions are received, and Ahmanson will
agree to take all action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting, or giving consents with
respect to, shares of the New Ahmanson 8.30% Preferred Stock to the extent it
does not receive specific instructions from the holders of New Ahmanson
Receipts evidencing New Ahmanson Depositary Shares.
Amendment and Termination of the Preferred Stock Deposit Agreement. The form
of New Ahmanson Depositary Receipts evidencing the New Ahmanson Depositary
Shares and any provision of the Preferred Stock Deposit Agreement may at any
time and from time to time be amended by agreement between Ahmanson and
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the Preferred Stock Depositary in any respect which they may deem necessary or
desirable. However, any amendment which imposes or increases any fees, taxes
or charges upon holders of New Ahmanson Depositary Shares or New Ahmanson
Depositary Receipts or which materially and adversely alters the existing
rights of such holders will not be effective unless such amendment has been
approved by the record holders of New Ahmanson Depositary Receipts evidencing
at least a majority of such New Ahmanson Depositary Shares then outstanding.
Notwithstanding the foregoing, no such amendment may impair the right of any
holder of New Ahmanson Depositary Shares or New Ahmanson Depositary Receipts
to receive any moneys or other property to which such holder may be entitled
under the terms of such New Ahmanson Depositary Receipts or the related
Preferred Stock Deposit Agreement at the times and in the manner and amount
provided for therein. The Preferred Stock Deposit Agreement may be terminated
by Ahmanson or the Preferred Stock Depositary only after (i) all outstanding
New Ahmanson Depositary Shares relating thereto have been redeemed and any
accumulated and unpaid dividends on the New Ahmanson 8.30% Preferred Stock,
together with all other moneys and property, if any, to which holders of the
related New Ahmanson Depositary Shares are entitled under the terms of such
New Ahmanson Depositary Shares or the Preferred Stock Deposit Agreement, have
been paid or distributed as provided in the Preferred Stock Deposit Agreement
or provision therefor has been duly made or (ii) there has been a final
distribution in respect of the New Ahmanson 8.30% Preferred Stock in
connection with any liquidation, dissolution or winding up of Ahmanson and
such distribution has been distributed to the holders of the New Ahmanson
Depositary Receipts.
Miscellaneous. The Preferred Stock Depositary will forward to record holders
of New Ahmanson Depositary Receipts, at their respective addresses appearing
in the Preferred Stock Depositary's books, all reports and communications from
Ahmanson which are delivered to the Preferred Stock Depositary and which
Ahmanson is required to furnish to holders of such New Ahmanson Depositary
Receipts.
The Preferred Stock Deposit Agreement contains provisions relating to
adjustments in the fraction of a share of New Ahmanson 8.30% Preferred Stock
represented by New Ahmanson Depositary Shares in the event of a change in par
or stated value, split-up, combination or other reclassification of the New
Ahmanson 8.30% Preferred Stock or upon any recapitalization, merger or sale of
substantially all of the assets of Ahmanson.
Neither the Preferred Stock Depositary nor any of its agents nor any
registrar nor Ahmanson will be (i) liable if it is prevented or delayed by law
or any circumstance beyond its control in performing its obligations under the
Preferred Stock Deposit Agreement, (ii) subject to any liability under the
Preferred Stock Deposit Agreement to holders of New Ahmanson Depositary
Receipts other than for the relevant party's gross negligence or willful
misconduct, or (iii) obligated to prosecute or defend any legal proceeding in
respect of any New Ahmanson Depositary Receipts, New Ahmanson Depositary
Shares or the New Ahmanson 8.30% Preferred Stock unless satisfactory indemnity
is furnished. They may rely upon written advice of counsel or accountants, or
information provided by holders of New Ahmanson Depositary Shares or other
persons in good faith believed to be competent and on documents reasonably
believed to be genuine.
Charges of the Preferred Stock Depositary. Ahmanson will pay all transfer
and other taxes and governmental charges arising solely from the existence of
the depositary arrangements. Ahmanson will pay charges of the Preferred Stock
Depositary in connection with the initial deposit of the related Ahmanson
Preferred Stock and the initial issuance of the New Ahmanson Depositary
Receipts evidencing the New Ahmanson Depositary Shares, any redemption of the
New Ahmanson 8.30% Preferred Stock and any withdrawals of New Ahmanson 8.30%
Preferred Stock by the holders of New Ahmanson Depositary Shares. Holders of
New Ahmanson Depositary Shares will pay other transfer and other taxes and
governmental charges and such other charges as are expressly provided in the
Preferred Stock Deposit Agreement to be for their accounts.
Resignation or Removal of the Preferred Stock Depositary. The Preferred
Stock Depositary may resign at any time by delivering to Ahmanson notice of
its election to do so, and Ahmanson may at any time remove the Preferred Stock
Depositary, any such resignation or removal to take effect upon the
appointment of a successor
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depositary and its acceptance of such appointment. Such successor depositary
must be appointed within 60 days after delivery of the notice of resignation
or removal.
CERTAIN REGULATORY CONSIDERATIONS
The following discussion addresses in general terms the regulatory framework
applicable to savings and loan holding companies and their subsidiaries, and
provides certain information relevant to Ahmanson. Regulation of financial
institutions such as Ahmanson and its subsidiaries is intended primarily for
the protection of depositors, the deposit insurance funds of the FDIC and the
banking system as a whole, and generally is not intended for the protection of
stockholders or other investors.
General. Ahmanson is a savings and loan holding company and, as such, is
subject to the OTS's regulations, examination, supervision and reporting
requirements. Home Savings is a federal savings bank and a member of the FHLB
System, and its deposits are insured by the FDIC. It is subject to examination
and supervision by the OTS and the FDIC and to regulations governing such
matters as capital standards, mergers, establishment and closing of branch
offices, subsidiary investments and activities, and general investment
authority.
The descriptions of the statutes and regulations that are applicable to
Ahmanson and the effects thereof that are set forth below and elsewhere in
this document do not purport to be a complete description of such statutes and
regulations and their effects on Ahmanson or to identify every statute and
regulation that may apply to Ahmanson.
Savings and Loan Holding Company Regulations. Subject to certain limited
exceptions, control of a savings association or a savings and loan holding
company may only be obtained with the approval (or in the case of an
acquisition of control by an individual, the absence of disapproval) of the
OTS, after a public comment and application review process. Any company
acquiring control of a savings association becomes a savings and loan holding
company, must register and file periodic reports with the OTS, and is subject
to OTS examination.
Affiliate and Insider Transactions. Savings associations are subject to
affiliate and insider transaction rules under Section 11 of the Home Owner's
Loan Act; including those applicable to member banks of the Federal Reserve
System set forth in Sections 23A, 23B and 22(h) of the Federal Reserve Act.
Savings associations are also subject to Section 22(g) of the Federal Reserve
Act. These provisions, among other things, prohibit or limit a savings
association from extending credit to, or entering into certain transactions
with, its affiliates (which generally include holding companies such as
Ahmanson and any company under common control with the savings association)
and principal stockholders, directors and executive officers of the savings
association and its affiliates.
Limitations on Acquisitions. Ahmanson is generally prohibited, either
directly or indirectly, from acquiring control of any savings association or
savings and loan holding company absent prior approval by the OTS and from
acquiring more than 5% of any class of voting stock of any savings association
or savings and loan holding company that is not a subsidiary of Ahmanson.
Payment of Dividends. Ahmanson's principal sources of funds are cash
dividends paid to it by Home Savings and other subsidiaries, investment income
and borrowings. There are significant restrictions on the ability of Home
Savings to pay dividends to Ahmanson. Savings association subsidiaries of
savings and loan holding companies, such as Home Savings, must notify the OTS
of their intent to declare dividends at least 30 days before declaration. The
OTS has the authority to preclude those associates from declaring a dividend.
OTS regulations impose limitations upon certain "capital distributions" by
savings associations, including dividends. The regulations establish a three-
tiered system of regulation, with the greatest flexibility being afforded to
institutions that meet or exceed the fully phased-in capital requirements.
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A savings institution that has capital immediately prior to, and on a pro
forma basis after giving effect to, a proposed capital distribution that is at
least equal to its fully phased-in capital requirements is considered a Tier I
institution ("Tier I Institution"). At December 31, 1996 Home Savings was a
Tier I Institution. A Tier I Institution may, without the approval of but with
prior notice to the OTS, make capital distributions during a calendar year up
to the greater of (1) 100% of its net income to date during the calendar year
plus the amount that would reduce the savings institution's "surplus capital
ratio" (the excess over its fully phased-in risk-based capital requirement) to
one-half of its surplus capital ratio at the beginning of the calendar year or
(2) 75% of the institution's net income over the most recent four quarter
period. Any additional capital distributions would require prior regulatory
approval. The OTS retains discretion to subject Tier I Institutions to the
more stringent capital distribution rules applicable to institutions with less
capital if the OTS determines that the institution is in need of more than
normal supervision and has provided the institution with notice to that
effect. The OTS also retains the authority to prohibit any capital
distribution otherwise authorized under the regulations if the OTS determines
that the capital distribution would constitute an unsafe or unsound practice.
Deposit Insurance. The FDIC administers two separate deposit insurance
funds: the BIF, which insures the deposits of institutions the deposits of
which were insured by the FDIC prior to the enactment of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, and the SAIF,
which insures the deposits of institutions the deposits of which were insured
by the Federal Savings and Loan Insurance Corporation. Home Savings is a
member of the BIF and currently is obligated to pay deposit insurance
assessments ratably to the SAIF and the BIF based on 85% and 15% of total
deposits, respectively. These percentages are subject to change in the future
based on future events.
The FDIC has established a risk-based system for setting deposit insurance
assessments. Under the risk-based assessment system, an institution's
insurance assessments vary depending upon the level of capital the institution
holds and the degree to which it is the subject of supervisory concern to the
FDIC. During the first three quarters of 1996, the assessment rate for SAIF
deposits varied from 0.23% of covered deposits for well-capitalized
institutions that were deemed to have no more than a few minor weaknesses, to
0.31% of covered deposits for less than adequately capitalized institutions
that posed substantial supervisory concern. The lowest assessment rate for BIF
deposits was $2,000 per institution per year. The assessment rate for both
SAIF and BIF deposits currently varies from zero to 0.27% of covered deposits.
Ahmanson paid $55.1 million in deposit insurance premiums to SAIF in 1996
compared to $79.9 million in 1995.
Prior to enactment of the Deposit Insurance Funds Act of 1996 ("DIFA"), the
SAIF's three major obligations were to fund losses associated with the failure
of institutions with SAIF-insured deposits; to increase its reserves to 1.25%
of insured deposits over a reasonable period of time; and to make interest
payments on debt incurred through the Financing Corporation to provide funds
to the former Federal Savings and Loan Insurance Corporation ("FICO Debt").
The reserves of the SAIF were lower than the reserves of the BIF and the BIF
did not have an obligation to pay interest on the FICO Debt. Therefore,
premiums assessed on deposits insured by the SAIF were higher than premiums
assessed on deposits insured by the BIF. Such a premium structure provided
FDIC-insured institutions whose deposits were exclusively or primarily BIF-
insured (such as almost all commercial banks) certain competitive advantages
over institutions whose deposits were primarily SAIF-insured (such as Home
Savings).
DIFA required FDIC-insured depository institutions with SAIF-insured
deposits to pay a special assessment designed to increase SAIF's reserves to
the required 1.25% of insured deposits. DIFA also altered the obligation to
make interest payments on the FICO Debt so that assessments to collect the
necessary funds are imposed separately from the deposit insurance premium and
are now assessed on BIF-insured deposits, although at a lower rate, as well as
on SAIF-insured deposits. Because the reserves of both the SAIF and the BIF
equal or exceed the required minimum amount and FICO Debt assessments are
collected separately from deposit insurance assessments, deposit insurance
premiums are currently assessed on SAIF-insured and BIF-insured deposits
according to the same schedule.
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The FDIC may initiate a proceeding to terminate an institution's deposit
insurance after a 30-day notice period if, among other things, the institution
is in an unsafe and unsound condition to continue operations. It is the policy
of the FDIC to deem an insured institution to be in an unsafe and unsound
condition if its ratio of Tier I capital to total assets is less than 2%. Tier
I capital is similar to core capital but includes certain investments in and
extensions of credit to subsidiaries engaged in activities not permitted for
national banks. In addition, the FDIC has the new power to suspend temporarily
a savings association's insurance on deposits received after the issuance of a
suspension order in the event that the savings association has no tangible
capital.
FICO Debt. Until December 31, 1999 or, if earlier, the date on which the
last savings association ceases to exist, the rate at which SAIF-insured
deposits are assessed with respect to FICO Debt interest payments will be five
times the rate at which BIF-insured deposits are assessed. Accordingly,
institutions whose deposits are exclusively or primarily BIF-insured (such as
almost all commercial banks) continue to have a competitive advantage over
institutions whose deposits are primarily SAIF-insured (such as Home Savings)
although the extent of the advantage is less than the deposit insurance
premium advantage which existed prior to the enactment of DIFA.
Classification of Assets. Federal regulations require savings associations
to review their assets on a regular basis and to classify them as
"substandard," "doubtful" or "loss" if warranted. Adequate valuation
allowances for loan losses are required for assets classified as substandard
or doubtful. If an asset is classified as loss, the institution must either
establish a specific allowance for loss in the amount classified as loss or
charge off such amount. The institution's OTS District Director has the
authority to approve, disapprove or modify any asset classification and any
amounts established as allowances for loan losses.
At present, certain general allowances may be included within regulatory
capital, while specific allowances may not. If an OTS examiner concludes that
additional assets should be classified or that the valuation allowances
established by the savings association are inadequate, the examiner may
determine, subject to internal review by the OTS, the need for and extent of
additional classification or any increase necessary in the savings
association's general or specific valuation allowances. An insured savings
association is also required to set aside adequate valuation allowances to the
extent that an affiliate possesses assets posing a risk to the institution and
to establish liabilities for off-balance sheet items, such as letters of
credit, when loss becomes probable and estimable.
Capital Requirements. The OTS has adopted capital regulations ("Capital
Regulations") for savings associations which establish three capital
requirements--a core capital requirement, a tangible capital requirement and a
risk-based capital requirement. The capital standards contained in the Capital
Regulations generally must be no less stringent than the capital standards
applicable to national banks. The Capital Regulations require savings
associations to maintain core capital of at least 3% of adjusted total assets,
tangible capital of at least 1.5% of adjusted total assets, and total capital
(being the sum of Core Capital and Supplementary Capital) of at least 8% of
risk-weighted assets. In addition, institutions whose exposure to interest-
rate risk is deemed to be above normal will be required to deduct a portion of
such exposure in calculating their risk-based capital. The OTS may establish,
on a case by case basis, individual minimum capital requirements for savings
associations that vary from the requirements that would otherwise apply under
the Capital Regulations. The OTS has not established such individual minimum
capital requirements for Home Savings. Home Savings was in compliance with the
Capital Regulations at December 31, 1996. As of December 31, 1996, Home
Savings' core capital ratio was 5.54%. The Capital Regulations do not apply to
Ahmanson, on a consolidated or non-consolidated basis.
Core capital generally includes common stockholders' equity (including
retained earnings but excluding the net unrealized gain or loss on securities
available for sale), noncumulative perpetual preferred stock and related
surplus, and minority interests in the equity accounts of fully consolidated
subsidiaries. Intangible assets (other than a limited amount of purchased
mortgage servicing rights and purchased credit card relationships) must be
deducted from core capital. Certain deferred tax assets also must be deducted.
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Tangible capital generally means core capital less any intangible assets,
plus certain purchased mortgage servicing rights.
Supplementary capital includes, among other things, certain types of
preferred stock and subordinated debt and, subject to certain limits. general
valuation loan and lease loss allowances. A savings association's
supplementary capital may be used to satisfy the risk-based capital
requirement only to the extent of that institution's core capital. Risk-
weighted assets are determined by multiplying each category of an
institution's assets, including off balance sheet equivalents, by a risk
weight assigned by the OTS based on the credit risk associated with those
assets, and adding the resulting amounts. The risk weight categories range
from zero percent for cash and government securities to 100% for assets that
do not quality for preferential risk weighting as determined by the OTS.
The Capital Regulations treat asset sales with recourse as if they did not
occur, and generally require a savings association to maintain capital against
the entire amount of assets sold with recourse, even if recourse is for less
than the full amount. However, when assets are sold with recourse and the
amount of recourse is less than the risk-based capital requirement for such
assets, the assets are not included in risk-weighted assets and capital is
required to be maintained in an amount equal to such recourse amount. A
savings association's retention of the subordinated portion of a
senior/subordinated loan participation or package of loans is treated in the
same manner as an asset sale with recourse.
The Capital Regulations contain special capital rules affecting savings
associations with certain kinds of subsidiaries. For purposes of determining
compliance with each of the capital standards, a savings association's
investments in and extensions of credit to subsidiaries engaged in activities
not permissible for a national bank are deducted from the savings
association's capital, net of reserves against such investment. Home Savings'
REI subsidiaries are its only significant subsidiaries engaged in activities
not permissible for a national bank. At December 31, 1996, Home Savings'
investment in its REI subsidiary aggregated $39.7 million as a result of which
Home Savings was required to deduct $39.7 million from its capital.
Each bank regulatory agency and the OTS is required to review its capital
standards every two years to determine whether those standards require
sufficient capital to facilitate prompt corrective action to prevent or
minimize loss to the deposit insurance funds.
Prompt Corrective Action. Under OTS regulations which implement the "prompt
corrective action" system established in the Federal Deposit Insurance Act
(the "FDIA"), a FDIC-insured savings association is well capitalized if its
ratio of total capital to risk-weighted assets is 10% or more, its ratio of
core capital to risk-weighted assets is 6% or more, its ratio of core capital
to total assets is 5% or more and it is not subject to any written agreement,
order or directive to meet a specified capital level. At December 31, 1996
Home Savings met these standards. An institution which is not well capitalized
is "adequately capitalized" if its ratio of total capital to risk-weighted
assets is at least 8%, its ratio of core capital to risk-adjusted assets is at
least 4% and its ratio of core capital to total assets is at least 4% (3% if
the institution receives the highest rating on the OTS's CAMEL rating system).
Any institution which is not adequately capitalized is undercapitalized,
significantly undercapitalized or critically undercapitalized, depending upon
its capital ratios.
A FDIC-insured savings association that is undercapitalized must submit a
capital restoration plan to the OTS. The plan may be approved only if the OTS
determines it is likely to succeed in restoring the institution's capital and
will not appreciably increase the risks to which the institution is exposed.
The association's performance under the plan must be guaranteed by any company
which controls the association, up to a maximum of 5% of the institution's
assets. The OTS may also require the association to take various actions
deemed appropriate to minimize potential losses to the deposit insurance fund.
A significantly undercapitalized association is subject to additional
sanctions and a critically undercapitalized association generally must be
placed in receivership or conservatorship.
Enforcement and Penalties. The FDIA contains extensive enforcement
provisions applicable to all FDIC-insured depository institutions, including
savings associations and "institution-affiliated parties," which
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includes, among others, directors, officers, employees, agents and controlling
stockholders of depository institutions, including holding companies such as
Ahmanson. An institution or institution-affiliated party may be subject to a
three tier penalty regime that ranges from a maximum penalty of $5,000 per day
for a simple violation to a maximum penalty of $1 million per day for certain
knowing violations including the failure to submit or submission of
incomplete, false or misleading reports. An institution-affiliated party may
also be subject to loss of voting rights with respect to the stock of
depository institutions.
Whenever the OTS has reasonable cause to believe that the continuation by a
savings and loan holding company of any activity or of ownership or control of
any subsidiary not insured by the FDIC constitutes a serious risk to the
financial safety, soundness or stability of a subsidiary savings association
and is inconsistent with the sound operation of the savings association, the
OTS may order the holding company to terminate such activities or divest such
non-insured subsidiary. The OTS, without notice or opportunity for hearing,
may also (i) limit the payment of dividends by the savings association, (ii)
limit transactions between the savings association and its holding company or
other affiliates and (iii) limit any activity of the savings association which
creates a serious risk that the liabilities of the holding company and its
affiliates may be imposed upon the savings association.
FDIA, as amended, requires the OTS to prescribe minimum operational and
managerial standards and standards for asset quality, earnings and stock
valuation for savings associations. Any savings association that fails to meet
the standards may be required to submit a plan for corrective action. If a
savings association fails to submit or implement an acceptable plan, the OTS
may require the association to take any action the OTS determines will best
carry out the purpose of prompt corrective action. The OTS and the bank
regulatory agencies have jointly published a regulation prescribing the
required safety and soundness standards. Home Savings believes that it is in
compliance with the regulation.
Loans and Investments. Aggregate loans to a single borrower are limited to
specified percentages of a savings association's capital, depending upon the
existence and type of any collateral. Aggregate loans secured by non-
residential real property are limited to a specified percentage of capital.
Savings associations generally may not invest directly in equity securities,
non-investment grade securities or real estate. Indirect investments in real
estate are permitted through subsidiaries subject to limitations based,
generally, on the institution's capital ratios. Investments in subsidiaries,
and the activities conducted through subsidiaries, are subject to regulatory
restrictions.
Federal Home Loan Bank System. The FHLBs provide a central credit facility
for member institutions. As a federal savings bank, Home Savings is required
to be a member of the FHLB system. Members of the FHLB system are required to
own capital stock in an FHLB at least equal to the greater of 1% of the
member's outstanding home mortgage loans and 5% of the member's advances from
the FHLB. At December 31, 1996 Home Savings' investment in FHLB stock was
$421.0 million, substantially all of which can not be withdrawn as long as
Home Savings' real estate loan portfolio remains at its current size.
Federal Reserve System. Home Savings is subject to various regulations
promulgated by the Federal Reserve Board, including, among others, Regulation
B (Equal Credit Opportunity), Regulation D (Reserves), Regulation E
(Electronic Fund Transfers), Regulation Z (Truth in Lending), Regulation CC
(Availability of Funds) and Regulation DD (Truth in Savings). As holders of
loans secured by real property, and as owners of real property, financial
institutions, including Home Savings, may be subject to potential liability
under various statutes and regulations applicable to property owners
generally, including statutes and regulations relating to the environmental
condition of the property.
Liquidity. OTS regulations require a savings association to maintain, for
each calendar month, an average daily balance of liquid assets equal to at
least 5% of the average daily balance of its net withdrawable accounts plus
short-term borrowings during the preceding calendar month. The OTS may vary
the required percentage within a range of 4% to 10% and may also vary the
definition of liquid assets. OTS regulations also require a
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savings association to maintain, for each calendar month, an average daily
balance of short-term liquid assets equal to at least 1% of the average daily
balance of its net withdrawable accounts plus short-term borrowings during the
preceding calendar month. Monetary penalties may be imposed for failure to
meet liquidity ratio requirements.
Community Reinvestment Act. The Community Reinvestment Act ("CRA") requires
each savings association, as well as other depository institutions, to
identify the communities served by the institution's offices and to identify
the types of credit the institution is prepared to extend within such
communities. The CRA also requires the OTS to assess the performance of the
institution in meeting the credit needs of its community and to take such
assessments into consideration in reviewing applications for mergers,
acquisitions and other transactions. In connection with its assessment of a
savings association's CRA performance, the OTS will assign a rating of
"outstanding," "satisfactory," "needs to improve" or "substantial
noncompliance." Based on an examination conducted as of September 5, 1995,
Home Savings was rated "outstanding."
Qualified Thrift Lender. A savings association must invest at least 65% of
its portfolio assets in "qualified thrift investments" (each as defined by
statute and OTS regulations) on a monthly average basis in nine out of every
12 months on a rolling 12-month "look back" basis. Home Savings is in
compliance with this requirement as of December 31, 1996 and would be in
compliance on a pro forma basis after giving effect to the Proposed Merger.
VALIDITY OF AHMANSON COMMON STOCK
Assuming the Proposed Merger is consummated, the validity of the shares of
Ahmanson Common Stock issued in connection therewith would be passed upon for
Ahmanson by Sullivan & Cromwell, New York, New York.
EXPERTS
The consolidated financial statements of Ahmanson as of December 31, 1995
and 1994, and for each of the years in the three-year period ended December
31, 1995, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the management, executive compensation,
various benefit plans (including stock plans), voting securities and the
principal holders thereof, certain relationships and related transactions and
other related matters as to Ahmanson and GWF is set forth in or incorporated
by reference in the respective Annual Reports on Form 10-K for the year ended
December 31, 1995 of Ahmanson and GWF, which are incorporated by reference in
this Joint Proxy Statement/Prospectus. See "Incorporation of Certain
Information by Reference". Ahmanson stockholders who wish to obtain copies of
Ahmanson's reports may contact Ahmanson at its address or telephone number set
forth under "Incorporation of Certain Information by Reference".
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 102(b)(7) of the DGCL, Article Sixteenth of the
Ahmanson Charter (Exhibit 4.1 hereto) eliminates the monetary liability of a
director to the corporation or its stockholders for breach of fiduciary duty
as a director, with the following exceptions, as required by Delaware law: (i)
breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) payment of
unlawful dividends or making unlawful stock purchases or redemptions; or (iv)
transactions from which the director derived an improper personal benefit.
In addition, under Section 145 of the DGCL, a corporation may indemnify a
director, officer, employee or agent of the corporation against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any threatened,
pending or completed Proceeding (other than an action by or in the right of
the corporation) if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. In the case of an action brought by or in
the right of the corporation, the corporation may indemnify a director,
officer, employee or agent of the corporation against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of any threatened, pending or completed action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that a court determines upon application that,
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court deems proper.
Article VII of the Ahmanson By-laws (Exhibit 4.2 hereto) provides for
indemnification of its directors, officers, employees, and other agents to the
fullest extent permitted by the DGCL.
Ahmanson has insured its liability where indemnification of its directors
and officers is proper under the foregoing provisions of the Ahmanson Charter
and the Ahmanson By-laws up to an aggregate of $45,000,000.
II-1
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ITEM 21. EXHIBITS AND FINANCIAL DATA SCHEDULE
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.1 Composite Certificate of Incorporation of the Registrant dated
July 16, 1984 (filed as Exhibit 3.1 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1991).*
4.2 By-laws of the Registrant, as amended (filed as Exhibit 3.2 to the
Registrant's Quarterly Report on Form 10-Q for the year ended June
30, 1994).*
4.3 Rights Agreement, dated as of July 26, 1988, between the
Registrant and Union Bank, as Rights Agent (filed as Exhibit 4.3
to the Registrant's Registration Statement on Form 8-A, dated
August 2, 1988).*
4.4 Certificate of Designations of the 8.40% Preferred Stock, Series C
(Par Value $.01 Per Share), dated February 9, 1993 (filed as
Exhibit 3.5 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992).*
4.5 Certificate of Designations of the 6% Cumulative Convertible
Preferred Stock, Series D (Par Value $.01 Per Share), dated July
30, 1993 (filed as Exhibit 4.1 to the Registrant's Current Report
on Form 8-K for the event on July 24, 1993).*
4.6 Form of Certificate of Designations of the New Ahmanson 8.30%
Preferred Stock.**
4.7 Form of Deposit Agreement for the New Ahmanson Depositary Shares,
each representing a one-tenth interest in a share of New Ahmanson
8.30% Preferred Stock.**
5.1 Opinion of Sullivan & Cromwell.**
8.1 Tax opinion of Sullivan & Cromwell.**
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Sullivan & Cromwell (included in Exhibit 5.1).**
23.3 Consent of Sullivan & Cromwell (included in Exhibit 8.1).**
24.1 Powers of Attorney.
27.1 Financial Data Schedule.**
99.1 Letter of Charles R. Rinehart, Chairman of the Board and Chief
Executive Officer of Ahmanson, to the Board of Directors of GWF,
dated February 17, 1997.
</TABLE>
- --------
* Incorporated by reference.
** To be filed by amendment.
ITEM 22. UNDERTAKINGS
The Undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Irwindale,
State of California on February 17, 1997.
H. F. AHMANSON & COMPANY
By: /s/ Tim S. Glassett
-------------------------------------
Name: Tim S. Glassett
Title: First Vice President and
Assistant General Counsel
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Charles R. Rinehart* Chairman of the Board and February 17, 1997
____________________________________ Chief Executive Officer
Charles R. Rinehart (Principal Executive
Officer)
/s/ Kevin M. Twomey* Senior Executive Vice February 17, 1997
____________________________________ President and Chief
Kevin M. Twomey Financial Officer
(Principal Financial
Officer)
/s/ George Miranda* First Vice President and February 17, 1997
____________________________________ Principal Accounting
George Miranda Officer
/s/ Byron Allumbaugh* Director February 17, 1997
____________________________________
Byron Allumbaugh
/s/ Harold A. Black* Director February 17, 1997
____________________________________
Harold A. Black
Director February 17, 1997
____________________________________
Richard M. Bressler
/s/ David R. Carpenter* Director February 17, 1997
____________________________________
David R. Carpenter
/s/ Phillip D. Matthews* Director February 17, 1997
____________________________________
Phillip D. Matthews
/s/ Richard L. Nolan* Director February 17, 1997
____________________________________
Richard L. Nolan
/s/ Delia M. Reyes* Director February 17, 1997
____________________________________
Delia M. Reyes
/s/ Frank M. Sanchez* Director February 17, 1997
____________________________________
Frank M. Sanchez
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Elizabeth A. Sanders* Director February 17, 1997
____________________________________
Elizabeth A. Sanders
/s/ Arthur W. Schmutz* Director February 17, 1997
____________________________________
Arthur W. Schmutz
/s/ William D. Schulte* Director February 17, 1997
____________________________________
William D. Schulte
/s/ Bruce G. Willison* Director February 17, 1997
____________________________________
Bruce G. Willison
</TABLE>
*By
/s/ Tim S. Glassett
____________________________
Tim S. Glassett
Attorney-in-fact
II-5
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
H. F. Ahmanson & Company:
We consent to incorporation by reference in the Form S-4 Registration
Statement of H. F. Ahmanson & Company, of our report dated January 23, 1996,
relating to the consolidated statements of financial condition as of December
31, 1995 and 1994, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1995, which report appears in the December 31, 1995
report on Form 10-K of H. F. Ahmanson & Company, and to the reference to our
firm under the heading "Experts" in the prospectus.
Our report dated January 23, 1996, contains an explanatory paragraph that
states that as discussed in Note 1 of the notes to the consolidated financial
statements, the Company changed its method of accounting for goodwill in 1995.
KPMG Peat Marwick LLP
Los Angeles, California
February 17, 1997
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Charles R. Rinehart, Bruce G. Willison,
Kevin M. Twomey, Madeleine A. Kleiner and Tim S. Glassett, and each of them,
as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities to sign the Registration Statement on
Form S-4 of H. F. Ahmanson & Company to which this Power of Attorney is an
Exhibit and any or all amendments (including post-effective amendments) to the
Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue thereof.
<TABLE>
<S> <C> <C>
SIGNATURE CAPACITY DATE
--------- -------- ----
/s/ Byron Allumbaugh Director February 17, 1997
____________________________________
Byron Allumbaugh
/s/ Harold A. Black Director February 17, 1997
____________________________________
Harold A. Black
Director February 17, 1997
____________________________________
Richard M. Bressler
/s/ David R. Carpenter Director February 17, 1997
____________________________________
David R. Carpenter
/s/ Phillip D. Matthews Director February 17, 1997
____________________________________
Phillip D. Matthews
/s/ Richard L. Nolan Director February 17, 1997
____________________________________
Richard L. Nolan
/s/ Delia M. Reyes Director February 17, 1997
____________________________________
Delia M. Reyes
/s/ Frank M. Sanchez Director February 17, 1997
____________________________________
Frank M. Sanchez
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ Charles R. Rinehart Director and Chief Executive February 17, 1997
____________________________________ Officer (Principal
Charles R. Rinehart Executive Officer)
/s/ Elizabeth A. Sanders Director February 17, 1997
____________________________________
Elizabeth A. Sanders
/s/ Arthur W. Schmutz Director February 17, 1997
____________________________________
Arthur W. Schmutz
/s/ William D. Schulte Director February 17, 1997
____________________________________
William D. Schulte
</TABLE>
<TABLE>
<S> <C> <C>
/s/ Bruce G. Willison Director February 17, 1997
____________________________________
Bruce G. Willison
/s/ Kevin M. Twomey Senior Executive Vice February 17, 1997
____________________________________ President and Chief
Kevin M. Twomey Financial Officer
(Principal Financial
Officer)
/s/ George Miranda First Vice President February 17, 1997
____________________________________ (Principal Accounting
George Miranda Officer)
</TABLE>
<PAGE>
EXHIBIT 99.1
[LETTERHEAD OF H. F. AHMANSON & COMPANY]
February 17, 1997
Board of Directors
of Great Western Financial Corporation
c/o Mr. John F. Maher
President & Chief Executive Officer
Great Western Financial Corporation
9200 Oakdale Avenue
Chatsworth, CA 91311
Dear John:
H. F. Ahmanson & Company and Great Western Financial Corporation have an
historic opportunity to combine our organizations and provide our respective
shareholders, customers and communities with extraordinary and unparalleled
benefits. The forces reshaping the financial services landscape demand that we
act now on this opportunity.
Accordingly, we propose a merger transaction between Ahmanson and Great
Western which will create one of the nation's leading, largest and most
competitive financial institutions, well-positioned to meet the needs of our
customers and to achieve greater profitability than either organization would be
able to realize on its own. As you know, securities analysts and investors have
publicly recognized the compelling logic of a combination of our companies.
Together, we will also be able to capitalize on our rich heritage of service to
our communities and customers, and help solidify Los Angeles' standing as one of
the world's leading financial centers. The transaction we propose is a win for
our respective shareholders, a win for our customers, a win for our
organizations, and a win for the Los Angeles community.
Under the terms of our proposal, each share of Great Western would be
converted into 1.05 shares of Ahmanson. Based on the closing price for Ahmanson
stock on February 14, 1997, this exchange ratio would produce a value of $42.53
for each Great Western share. That value represents a 24.2% initial premium over
Great Western's current market price and a multiple of 2.7 times Great Western's
tangible book value as of December 31, 1996. The transaction would be tax-free
to Great Western's shareholders and would be accounted for as a purchase.
Moreover, the initial premium for Great Western's shareholders represents
only a portion of the extraordinary value that they will receive. A combination
of Ahmanson
1
<PAGE>
and Great Western would produce far greater earnings than the sum of the two
companies' earnings if they remain separate. Without even considering potential
revenue enhancements, cost savings alone should produce over $400 million in
incremental pre-tax earnings per year. Ahmanson's earnings momentum should
further enhance the future profitability of the combined company. Great
Western's shareholders, who would own almost 60% of the combined company, would
gain the benefit of these higher earnings. In short, no other transaction could
produce so much value for both of our shareholders because of our shared
geographic, strategic, product and operational focus.
We and our financial advisors, Credit Suisse First Boston Corporation and
Montgomery Securities, are confident that the market will evaluate the
transaction on a cash earnings per share basis. The market has fully accepted
Wells Fargo's use of cash earnings per share as the proper standard for
evaluating its merger with First Interstate, and a number of major bank holding
companies now provide cash earnings per share information to investors. As you
know, there is no true economic difference created by accounting for a
transaction as a purchase or a pooling, and a purchase affords considerably
greater flexibility in terms of future capital management. (For example, we
could increase our dividend or use the cash to repurchase additional shares.) We
believe that the proposed merger will be accretive to cash earnings per share by
approximately 15% in 1998 and 26% in 1999, and that even on a reported earnings
per share basis, the merger will be accretive by about 9% in 1999.
We also believe that a merger of our two companies presents a unique
opportunity because of our compatible business strategies. A strategic business
combination of Ahmanson and Great Western will both facilitate the
implementation of our strategy and accelerate the returns which that strategy
can produce.
The strategy business combination we propose also offers unique value for
our communities. As a major banking institution headquartered in Los Angeles
County, we can bring enormous benefits to our home market in terms of jobs,
community programs, capital investment, civic participation and overall prestige
and economic well-being. Los Angeles' standing as a financial center has been
jeopardized by the recent acquisitions of its two largest banks; by combining,
we can fill that void. Conversely, if either or both our institutions sold to an
out-of-state acquiror, it is likely to have a significantly adverse impact on
the Los Angeles area.
The strategic combination of our two companies would position us to achieve
enhanced service to all our communities. As you know, Ahmanson has achieved an
"Outstanding" CRA rating, and we are committed to strive to achieve that rating
for the combined organization. Our combined companies will be able to develop
new and expanded programs so that our communities will participate in the
benefits of our combination.
2
<PAGE>
[LOGO OF H. F. AHMANSON & COMPANY]
By combining our companies, we will be far better positioned to provide
enhanced services to our existing and potential customers. We will have the
resources, the customer base and expertise to participate fully in the
technological revolution which is reshaping the financial services industry. We
will be better able to reposition our company to offer a more complete range of
financial services. As one of the leading financial institutions in the country,
we will be able to offer enhanced career opportunities for our employees. At the
same time, an objective of the highest priority will be sensitivity to and an
effort to minimize employee dislocation. We will immediately curtail new hiring
in order to maximize the number of positions available for existing employees of
both of our companies. We hope that you will take a similar action. We would
then seek to work with you to develop further programs to combine our
organizations in a manner that is as seamless and minimally disruptive as
possible to employees.
We would hope that our proposed merger would bring together the very best
of our cultures, our people and our programs. In that connection, we would hope
that a number of your directors will serve on the board of the combined company
and that certain of your executives would continue to serve on our combined
management team.
We are convinced that the proposed transaction will obtain expeditious
regulatory approval. The combined institution will be financially sound, a
stronger competitor and fully committed to serve its communities.
In closing, I want to emphasize how enthusiastic the entire Board of
Ahmanson and I are about this proposal to combine Ahmanson and Great Western. We
have a unique and compelling opportunity to advance the best interests of our
shareholders, employees, communities and customers. Given the changing financial
services environment, we all know time is of the essence for both our companies.
We urge you and your Board to work with us to achieve that result.
Very truly yours,
H. F. Ahmanson & Company
By: /s/ CHARLES R. RINEHART
----------------------------------
Charles R. Rinehart
Chairman of the Board
& Chief Executive Officer
cc: James F. Montgomery
3
