<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
OCTOBER 31, 1997
BOSTON PRIVATE BANCORP, INC.
--------------------------------------------------
(Exact name of registrant as specified in charter)
MASSACHUSETTS 0-17089 04-2976299
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
TEN POST OFFICE SQUARE, BOSTON, MASSACHUSETTS 02109
---------------------------------------------------
(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 912-1900
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<PAGE> 2
ITEM 2 - ACQUISITION OR DISPOSITION OF ASSETS
On October 31, 1997, Boston Private Investment Management, Inc., the
investment arm of Boston Private Bancorp, Inc. (the "Company"), acquired
Boston-based Westfield Capital Management Company, Inc. ("Westfield"). In this
transaction, which is accounted for as a pooling of interests, Westfield's
stockholders received 3,918,367 shares of common stock, $1.00 par value per
share, of the Company. The purchase price was based on the Company's common
stock price average from January 1, 1997 through August 12, 1997, which was
approximately 6 1/8. During such period the price of the Company's common stock
ranged from 4 7/8 to 8 1/4. The purchase price was determined as a result of
arms-length negotiations between the Company and Westfield. Westfield will
maintain its name and its offices at Boston's One Financial Center. In
connection with this transaction, Arthur J. Bauernfeind and C. Michael Hazard,
stockholders of Westfield, were elected Class II Directors of the Company with
terms to expire at the 1999 annual meeting of the stockholders of the Company.
The Company granted certain demand and piggyback registration rights to the
stockholders of Westfield in connection with the shares issued in this
transaction.
ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(A) Financial Statements of Business Acquired
(i) Audited Balance Sheets of Westfield as of December 31, 1996 and
1995 and unaudited Balance Sheets of Westfield as of September 30, 1997 and
1996;
(ii) Audited Statements of Income and Retained Earnings of Westfield
for the years ended December 31, 1996 and 1995 and unaudited Statements of
Income and Retained Earnings of Westfield for the nine month periods ended
September 30, 1997 and 1996;
(iii) Audited Statements of Cash Flows of Westfield for the years
ended December 31, 1996 and 1995 and unaudited Statements of Cash Flows of
Westfield for the nine month periods ended September 30, 1997 and 1996; and
(iv) Notes to audited and unaudited Financial Statements of Westfield.
(B) Pro Forma Financial Information
The pro forma financial information required to be filed pursuant to
Article 11 of Regulation S-X will be filed by amendment as soon as it is
prepared and not later than January 14, 1998.
2
<PAGE> 3
WESTFIELD CAPITAL MANAGEMENT
COMPANY, INC.
COMPILED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
<PAGE> 4
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
TABLE OF CONTENTS
PAGE
----
Compilation Report 1
Balance Sheets 2
Statements of Income and Retained Earnings 3
Statements of Cash Flows 4
Notes to Financial Statements 5-8
<PAGE> 5
[BARIL & SMITH LETTERHEAD]
================================================================================
CERTIFIED PUBLIC ACCOUNTANTS
October 30, 1997
To the Board of Directors and Stockholders of
Westfield Capital Management Company, Inc.
We have compiled the accompanying balance sheets of Westfield Capital
Management Company, Inc. as of September 30, 1997 and 1996 and the related
statements of income and retained earnings and cash flows for the nine months
then ended in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
and supplementary schedules information that is the representation of
management. We have not audited or reviewed the accompanying financial
statements and supplementary schedules and, accordingly, do not express an
opinion or any other form of assurance on them.
/s/ Baril & Smith
-1-
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<PAGE> 6
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
BALANCE SHEETS
SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
ASSETS
1997 1996
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $2,493,575 $2,657,798
Management fees receivable (net of allowance for
doubtful accounts of $45,312 for 1997) 2,606,978 2,109,083
Prepaid expenses 141,480 46,470
---------- ----------
Total current assets 5,242,033 4,813,351
---------- ----------
Property and equipment (Note 2) 802,956 603,584
Less - Accumulated depreciation 223,570 124,033
---------- ----------
579,386 479,551
Investment in partnerships (Note 3) 492,830 1,005,082
---------- ----------
$6,314,249 $6,297,984
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 41,032 $ 266,368
Accrued expenses 2,529,893 1,822,952
---------- ----------
Total current liabilities 2,570,925 2,089,320
---------- ----------
Deferred compensation (Note 4) 1,475,526 1,418,194
---------- ----------
Commitments (Note 5)
Stockholders' equity (Note 7):
Common stock:
Class A; par value $.01 per share
Authorized - 100,000 shares
Issued and outstanding - 750 shares 8 8
Class B; par value $.01 per share
Authorized - 100,000 shares
Issued and outstanding - 905 shares
(825 shares in 1996) 9 8
Additional paid-in capital 1,010,786 452,316
Retained earnings 1,929,948 2,628,699
---------- ----------
2,940,751 3,081,031
Less - stock subscriptions receivable 672,953 290,561
---------- ----------
2,267,798 2,790,470
---------- ----------
$6,314,249 $6,297,984
========== ==========
</TABLE>
READ ACCOMPANYING NOTES AND ACCOUNTANTS' REPORT
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<PAGE> 7
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Management fee revenue $ 6,736,654 $ 5,698,627
----------- -----------
Operating expenses:
Salaries 4,281,472 3,044,535
Profit sharing contribution (Note 6) 250,785 193,000
Rent expense, net 249,573 109,752
Travel and entertainment 166,307 137,561
Payroll taxes 131,322 76,024
Depreciation 120,665 77,000
Professional fees 118,265 94,228
Employee benefits 87,307 65,849
Provision for uncollectible accounts 45,312 -
Supplies and copying 39,347 38,639
Telephone 37,114 35,046
Insurance 24,837 18,974
Professional development 23,339 42,176
Automobile expense 17,608 10,248
Repairs and maintenance 17,479 11,232
Office supplies and expense 15,472 10,207
Contributions 14,200 10,400
Delivery and storage expense 11,386 10,375
Other taxes 5,036 9,802
Other operating expenses 12,076 18,033
----------- -----------
5,668,902 4,013,081
----------- -----------
Income from operations 1,067,752 1,685,546
----------- -----------
Other income (loss):
Equity in earnings of partnership investments 274,435 856,129
Interest income 63,571 49,567
Loss on disposal of property and equipment (9,701) (13,684)
----------- -----------
328,305 892,012
Income before provision for state income taxes 1,396,057 2,577,558
Provision for state income taxes 78,000 77,500
----------- -----------
Net income 1,318,057 2,500,058
Retained earnings at beginning of period 2,701,090 1,357,032
Dividends paid (2,089,199) (1,228,391)
----------- -----------
Retained earnings at end of period $ 1,929,948 $ 2,628,699
=========== ===========
</TABLE>
READ ACCOMPANYING NOTES AND ACCOUNTANTS' REPORT
-3-
<PAGE> 8
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,318,057 $ 2,500,058
Adjustments to reconcile net income to net
cash provided by operating activities:
Undistributed earnings of partnership investments (274,435) (856,129)
Depreciation 120,665 77,000
Deferred compensation 9,116 145,000
Loss on disposal of property and equipment 9,701 13,684
Provision for uncollectible accounts 45,312
(Increase) decrease in operating assets:
Management fee receivable (591,982) (466,823)
Prepaid expenses (70,269) (6,600)
Increase (decrease) in operating liabilities:
Accounts payable (217,526) 203,564
Accrued expenses 2,146,730 1,561,985
----------- -----------
Net cash provided by operating activities 2,495,369 3,171,739
----------- -----------
INVESTING ACTIVITIES
Proceeds from the sale of property and equipment 800
Purchase of property and equipment (219,352) (483,482)
Distributed earnings of partnership investments 1,089,199 1,227,881
Capital contribution for partnership investment (20,000)
----------- -----------
Net cash provided by investing activities 849,847 745,199
----------- -----------
FINANCING ACTIVITIES
Dividends paid (2,089,199) (2,003,881)
Proceeds from stock subscriptions receivable 174,309 21,284
----------- -----------
Net cash used by financing activities (1,914,890) (1,982,597)
----------- -----------
Increase in cash and cash equivalents 1,430,326 1,934,341
Cash and cash equivalents at beginning of period 1,063,249 723,457
----------- -----------
Cash and cash equivalents at end of period $ 2,493,575 $ 2,657,798
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
State income taxes $ 141,501 $ 9,802
</TABLE>
READ ACCOMPANYING NOTES AND ACCOUNTANTS' REPORT
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<PAGE> 9
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NOTE 1 - BUSINESS ACTIVITIES AND ACCOUNTING POLICIES
BUSINESS ACTIVITIES
The Company was incorporated March 15, 1989 under the laws of the
Commonwealth of Massachusetts to provide investment management advice.
ACCOUNTING POLICIES
The Company's policy is to prepare its financial statements on the basis of
generally accepted accounting principles. This basis of accounting involves the
application of accrual accounting; consequently, revenues and gains are
recognized when earned and expenses and losses are recognized when incurred.
Financial statements items are recorded at historical costs and often involve
the utilization of estimates. Consequently, financial statement items do not
necessarily represent current values.
The significant accounting policies utilized by the Company are described
below:
USE OF ESTIMATES
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
CASH AND CASH EQUIVALENTS
The Company has established a policy of defining cash equivalents as all
highly liquid investments with a maturity of three months or less when
purchased.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist primarily of cash, cash equivalents and
accounts receivable. Cash and cash equivalents include cash on deposit in
checking, savings and money market accounts. These cash and cash equivalents are
maintained with high credit quality financial institutions.
-5-
<PAGE> 10
NOTE 1 - BUSINESS ACTIVITIES AND ACCOUNTING POLICIES - CONTINUED
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost and depreciation is provided using
the straight-line method and accelerated methods. Expenditures for repairs and
maintenance are charged to operations as incurred. Renewals and betterments
which extend the lives of the assets are capitalized. The cost of property
retired or sold, together with the related accumulated depreciation, is removed
from the appropriate accounts and any resulting gain or loss is included in
operations.
INVESTMENT IN PARTNERSHIPS
The investments are accounted for under the equity method of accounting.
Accordingly, the Company recognizes its proportionate share of the income or
loss from its partnership investments in the current period and records the
income or loss as an increase or decrease in its investment.
MANAGEMENT FEES EARNED
The Company records asset management fees, which are based upon a
percentage of the assets under management, in the period services are rendered.
INCOME TAXES
The Company has elected to be taxed as an S Corporation. For Federal income
tax purposes, the undistributed taxable income of the Company at the end of its
taxable year is included in the income of the Company's stockholders in
proportion to their stock ownership.
Massachusetts recognizes S Corporation status which allows the
undistributed taxable income of the Company to be included in the income of the
stockholders, but imposes an additional income tax on corporations with gross
receipts over six million, at a rate of 3%.
NOTE 2 - PROPERTY AND EQUIPMENT
The cost of property and equipment and the estimated useful lives used for
computing depreciation at September 30, 1997 and 1996 are:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1997 1996
----------- ---- ----
<S> <C> <C> <C>
Office equipment 5-7 years $ 74,471 $ 68,310
Furniture and fixtures 7 years 459,494 284,688
Leasehold improvements 5 years 112,886 109,409
Computer equipment 3-5 years 156,105 141,177
-------- --------
$802,956 $603,584
======== ========
</TABLE>
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<PAGE> 11
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company is a general and limited partner and the Company's chief
executive officer and spouse are limited partners in the Westfield Performance
Fund Limited Partnership. As general partner, the Company receives a quarterly
maintenance fee at rate of .25% of the net asset value of the Partnership which
amounted to $250,858 and $290,127 as of September 30, 1997 and 1996,
respectively.
The Company is also entitled to an allocation of net income at the end of
each performance period (generally a calendar year) equal to 15% of the excess
over the performance base (defined as net income less any performance loss
carryforward). This allocation, if any, becomes vested as a partnership interest
at year end. The net allocation amounted to $54,657 and $815,408 for the nine
months ended September 30, 1997 and 1996, respectively.
In 1996, the Company agreed to invest $87,000 for a general partnership
position in the Westfield Technology Fund Limited Partnership. As general
partner, the Company receives a quarterly maintenance fee at a rate of .25% of
the net asset value of the partnership which amounted to $62,423 and $18,272 as
of September 30, 1997 and 1996, respectively. The general partner is also
entitled to share in 20% of the partnership's realized and unrealized profits at
the end of each performance period (defined as "profit share" less any losses
carried over from a previous performance period). The general partner shall also
share 1% in all profits and losses of the partnership after the maintenance fee
and the "profit share".
NOTE 4 - DEFERRED COMPENSATION
The Company has a deferred compensation agreement with the chief executive
officer that provides for continued payments over a ten year period commencing
with his retirement, disability or death. The payments are determined by formula
and subject to escalation clauses.
The estimated present value of the obligation is $1,475,526 at September
30, 1997 and has been charged to operations ratably over his employment term.
The 1997 charge amounted to $9,116.
Effective October, 1997 the deferred compensation agreement has been
terminated.
NOTE 5 - COMMITMENTS
The Company leases its office facilities under an operating lease which
expires August 2001 and is renewable for an additional five years. Minimum lease
payments under the noncancellable term are as follows:
<TABLE>
<S> <C>
1997 $365,070
1998 365,070
1999 365,070
2000 365,070
2001 243,380
</TABLE>
Rent expense amounted to $274,592 for the nine months ended September 30,
1997.
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<PAGE> 12
NOTE 5 - COMMITMENTS - CONTINUED
The Company also subleases approximately 13% of the office space to a
tenant under a noncancellable lease which expires August 2001. The minimum
future rental revenues are as follows:
<TABLE>
<S> <C>
1997 $47,250
1998 47,250
1999 47,250
2000 47,250
2001 31,500
</TABLE>
Rental income amounted to $35,438 for the nine months ended September 30,
1997.
NOTE 6 - PROFIT-SHARING PLAN
The Company has a defined contribution employee profit-sharing plan which
covers all of its eligible employees. The annual contribution to the plan is
determined by the Board of Directors of the Company. The Company has accrued
$250,785 and $193,000 for the nine months ended September 30, 1997 and 1996,
respectively.
NOTE 7 - STOCKHOLDER'S EQUITY
The Company has issued 185 shares of Class B common stock in 1995 and 1996
under subscription agreements for a total consideration of $872,000. Payment is
over a five year period with interest at the prevailing treasury rates at the
time of issuance.
Under a stock transfer agreement, the Company and its stockholders have the
right of first refusal before the purchase of an and all shares by an outside
party from a selling shareholder. The agreement also provides for the purchase
of shares by the Company in the case of death, incapacitation or termination of
employment. The agreement provides a formula for determining the value of the
shares to be purchased based on specific circumstances.
NOTE 8 - BUSINESS COMBINATION
On August 13, 1997, an Agreement and Plan of Merger was entered into
between the Company, its' shareholders, Boston Private Bancorp, Inc. and Boston
Private Investment Management, Inc. Under the agreement the shareholders of
Westfield Capital Management Company, Inc. will receive 3,918,700 common shares
of Boston Private Bancorp, Inc. in exchange for 100% of the Company's
outstanding common stock. The merger was completed October 31, 1997 and will be
accounted for as a pooling of interests.
-8-
<PAGE> 13
WESTFIELD CAPITAL MANAGEMENT
COMPANY, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1996 AND 1995
<PAGE> 14
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
TABLE OF CONTENTS
PAGE
----
Independent Auditor's Report 1
Balance Sheets 2
Statements of Income and Retained Earnings 3
Statements of Cash Flows 4
Notes to Financial Statements 5-8
<PAGE> 15
[BARIL & SMITH LETTERHEAD]
================================================================================
CERTIFIED PUBLIC ACCOUNTANTS
March 11, 1997
To the Board of Directors and Stockholders of
Westfield Capital Management Company, Inc.
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Westfield Capital
Management Company, Inc. as of December 31, 1996 and 1995 and the related
statements of income and retained earnings, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above presents fairly,
in all material respects, the financial position of Westfield Capital Management
Company, Inc. as of December 31, 1996 and 1995 and the results of its operations
and cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ Baril & Smith
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<PAGE> 16
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $1,063,249 $ 723,457
Management fees receivable 2,060,308 1,642,260
Prepaid expenses 71,211 29,795
---------- ----------
Total current assets 3,194,768 2,395,512
---------- ----------
Property and equipment, (Note 2) 641,387 236,375
Less - Accumulated depreciation 150,987 140,416
---------- ----------
490,400 95,959
---------- ----------
Investment in partnerships (Note 4) 1,287,594 1,376,834
---------- ----------
$4,972,762 $3,868,305
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 258,558 $ 62,804
Accrued expenses 383,163 260,967
Dividends payable 775,490
---------- ----------
Total current liabilities 641,721 1,099,261
---------- ----------
Deferred compensation (Note 3) 1,466,410 1,273,194
---------- ----------
Commitments (Note 5)
Stockholders' equity (Note 7):
Common stock:
Class A; par value $.01 per share 8 8
100,000 shares Authorized
750 shares Issued and outstanding
Class B; par value $.01 per share 9 7
100,000 shares Authorized
905 shares Issued and outstanding
Additional paid-in capital 1,010,786 223,853
Retained earnings 2,701,090 1,357,032
---------- ----------
3,711,893 1,580,900
Less - stock subscriptions receivable 847,262 85,050
---------- ----------
2,864,631 1,495,850
---------- ----------
$4,972,762 $3,868,305
========== ==========
</TABLE>
READ ACCOMPANYING NOTES AND ACCOUNTANTS' REPORT
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<PAGE> 17
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Management fee revenue $ 7,770,047 $ 5,471,627
----------- -----------
Operating expenses:
Salaries 4,148,283 3,143,983
Profit sharing contribution (Note 6) 257,512 234,644
Professional fees 225,265 152,899
Rent expense, net 203,388 120,508
Travel and entertainment 191,003 160,743
Payroll taxes 130,667 101,896
Depreciation 103,086 37,288
Employee benefits 87,767 94,060
Supplies and copying 52,502 53,911
Telephone 52,072 27,381
Professional development 51,086 27,197
Insurance 26,599 8,670
Office supplies and expense 26,221 19,938
Delivery and storage expense 17,106 9,035
Repairs and maintenance 16,529 7,101
Automobile expense 15,861 11,615
Contributions 13,095 9,275
Other taxes 5,933 -
Other operating expenses 21,945 19,317
----------- -----------
5,645,920 4,239,461
----------- -----------
Income from operations 2,124,127 1,232,166
----------- -----------
Other income (loss):
Equity in earnings of partnership investments 1,138,641 1,321,858
Interest income, net 89,645 43,271
Loss on disposal of property and equipment (13,684)
----------- -----------
1,214,602 1,365,129
----------- -----------
Income before provision for state income taxes
and extraordinary item 3,338,729 2,597,295
Provision for state income taxes 100,500
----------- -----------
Income before extraordinary item 3,238,229 2,597,295
Extraordinary item - gain on early extinguishment of
indebtness (Note 8) - 64,831
----------- -----------
Net income 3,238,229 2,662,126
Retained earnings at beginning of year 1,357,032 (72,104)
Dividends paid (1,894,171) (1,232,990)
----------- -----------
Retained earnings at end of year $ 2,701,090 $ 1,357,032
=========== ===========
</TABLE>
READ ACCOMPANYING NOTES AND ACCOUNTANTS' REPORT
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<PAGE> 18
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 3,238,229 $ 2,662,126
Adjustments to reconcile net income to net
cash provided by operating activities:
Undistributed earnings of partnership investments (1,138,641) (1,321,858)
Depreciation 103,086 37,288
Deferred compensation 193,216 350,867
Loss on disposal of property and equipment 13,684
Early extinguishment of indebtedness - (64,831)
Original issue discount interest expense - 8,293
(Increase) decrease in operating assets:
Management fee receivable (418,048) (567,172)
Prepaid expenses (41,416) (16,556)
Increase (decrease) in operating liabilities:
Accounts payable 195,754 17,653
Accrued expenses 122,196 102,437
----------- -----------
Net cash provided by operating activities 2,268,060 1,208,247
----------- -----------
INVESTING ACTIVITIES
Proceeds from the sale of property and equipment 10,075
Purchase of property and equipment (521,284) (50,990)
Distributed earnings of partnership investments 1,227,881
----------- -----------
Net cash provided (used) by investing activities 716,672 (50,990)
----------- -----------
FINANCING ACTIVITIES
Dividends paid (2,669,661) (457,500)
Proceeds from stock subscriptions receivable 24,721
Payment of long-term debt - (600,000)
Proceeds from purchase of treasury stock - 623,700
----------- -----------
Net cash used by financing activities (2,644,940) (433,800)
----------- -----------
Increase in cash and cash equivalents 339,792 723,457
Cash and cash equivalents at beginning of year 723,457 0
----------- -----------
Cash and cash equivalents at end of year $ 1,063,249 $ 723,457
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during year for:
State income taxes $ 60,342 --
</TABLE>
READ ACCOMPANYING NOTES AND ACCOUNTANTS' REPORT
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<PAGE> 19
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - BUSINESS ACTIVITIES AND ACCOUNTING POLICIES
BUSINESS ACTIVITIES
The Company was incorporated March 15, 1989 under the laws of the
Commonwealth of Massachusetts to provide investment management advice.
ACCOUNTING POLICIES
The Company's policy is to prepare its financial statements on the basis of
generally accepted accounting principles. This basis of accounting involves the
application of accrual accounting; consequently, revenues and gains are
recognized when earned and expenses and losses are recognized when incurred.
Financial statements items are recorded at historical costs and often involve
the utilization of estimates. Consequently, financial statement items do not
necessarily represent current values.
The significant accounting policies utilized by the Company are described
below:
USE OF ESTIMATES
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
CASH AND CASH EQUIVALENTS
The Company has established a policy of defining cash equivalents as all
highly liquid investments with a maturity of three months or less when
purchased.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist primarily of cash, cash equivalents and
accounts receivable. Cash and cash equivalents include cash on deposit in
checking, savings and money market accounts. These cash and cash equivalents are
maintained with high credit quality financial institutions.
MANAGEMENT FEES EARNED
The Company records asset management fees, which are based upon a
percentage of the assets under management, in the period services are rendered.
-5-
<PAGE> 20
NOTE 1 - BUSINESS ACTIVITIES AND ACCOUNTING POLICIES - CONTINUED
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost and depreciation is provided using
the straight-line method and accelerated methods. Expenditures for repairs and
maintenance are charged to operations as incurred. Renewals and betterments
which extend the lives of the assets are capitalized. The cost of property
retired or sold, together with the related accumulated depreciation, is removed
from the appropriate accounts and any resulting gain or loss is included in
operations.
INVESTMENT IN PARTNERSHIPS
The investments are accounted for under the equity method of accounting.
Accordingly, the Company recognizes its proportionate share of the income or
loss from its partnership investments in the current period and records the
income or loss as an increase or decrease in its investment.
INCOME TAXES
The Company has elected to be taxed as an S Corporation. For Federal income
tax purposes, the undistributed taxable income of the Company at the end of its
taxable year is included in the income of the Company's stockholders in
proportion to their stock ownership.
Massachusetts recognizes S Corporation status which allows the
undistributed taxable income of the Company to be included in the income of the
stockholders, but imposes an additional income tax on corporations with gross
receipts over six million, at a rate of 3%.
NOTE 2 - PROPERTY AND EQUIPMENT
The cost of property and equipment and the estimated useful lives used for
computing depreciation at December 31, 1996 and 1995 are:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1996 1995
----------- ---- ----
<S> <C> <C> <C>
Office equipment 5-7 years $228,114 $131,971
Furniture and fixtures 7 years 300,389 95,725
Leasehold improvements 39 years 112,884 8,679
-------- --------
$641,387 $236,375
======== ========
</TABLE>
NOTE 3 - DEFERRED COMPENSATION
The Company has a deferred compensation agreement with the chief executive
officer that provides for continued payments over a ten year period commencing
with his retirement, disability or death. The payments are determined by formula
and subject to escalation clauses.
The estimated present value of the obligation is $1,466,410 at December 31,
1996 and has been charged to operations ratably over his employment term. The
1996 charge amounted to $193,000.
-6-
<PAGE> 21
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company is a general and limited partner and the Company's chief
executive officer and spouse are limited partners in the Westfield Performance
Fund Limited Partnership. As general partner, the Company receives a quarterly
maintenance fee at rate of .25% of the net asset value of the Partnership which
amounted to $390,854 and $261,225 in 1996 and 1995, respectively.
The Company is also entitled to an allocation of net income at the end of
each performance period (generally a calendar year) equal to 15% of the excess
over the performance base (defined as net income less any performance loss
carryforward). This allocation, if any, becomes vested as a partnership interest
at year end. The net allocation amounted to $1,087,211 and $1,226,280 for the
years ended December 31, 1996 and 1995, respectively.
In 1996, the Company agreed to invest $87,000 for a general partnership
position in the Westfield Technology Fund Limited Partnership. As general
partner, the Company receives a quarterly maintenance fee at a rate of .25% of
the net asset value of the partnership which amounted to $37,661 in 1996. The
general partner is also entitled to share in 20% of the partnership's realized
and unrealized profits at the end of each performance period (defined as "profit
share" less any losses carried over from a previous performance period). The
general partner shall also share 1% in all profits and losses of the partnership
after the maintenance fee and the "profit share".
NOTE 5 - COMMITMENTS
The Company leases its office facilities under an operating lease which
expires August 2001 and is renewable for an additional five years. Minimum lease
payments under the noncancellable term are as follows:
<TABLE>
<S> <C>
1997 $365,070
1998 365,070
1999 365,070
2000 365,070
2001 243,380
</TABLE>
Rent expense amounted to $230,550 for the year ended December 31, 1996.
The Company also subleases approximately 13% of the office space to a
tenant under a noncancellable lease which expires August 2001. The minimum
future rental revenues are as follows:
<TABLE>
<S> <C>
1997 $47,250
1998 47,250
1999 47,250
2000 47,250
2001 31,500
</TABLE>
Rental income amounted to $38,669 for the year ended December 31, 1996.
-7-
<PAGE> 22
NOTE 6 - PROFIT-SHARING PLAN
The Company has a defined contribution employee profit-sharing plan which
covers all of its eligible employees. The annual contribution to the plan is
determined by the Board of Directors of the Company. The Company has contributed
$257,512 and $234,644 for the years ended December 31, 1996 and 1995,
respectively.
NOTE 7 - STOCKHOLDER'S EQUITY
The Company has issued 185 shares of Class B common stock in 1995 and 1996
under subscription agreements for a total consideration of $872,000. Payment is
over a five year period with interest at the prevailing treasury rates at the
time of issuance.
Under a stock transfer agreement, the Company and its stockholders have the
right of first refusal before the purchase of any and all shares by an outside
party from a selling shareholder. The agreement also provides for the purchase
of shares by the Company in the case of death, incapacitation or termination of
employment. The agreement provides a formula for determining the value of the
shares to be purchased based on specific circumstances.
NOTE 8 - EARLY EXTINGUISHMENT OF DEBT
On March 15, 1995, the Company entered into an agreement with a former
shareholder to retire debt related to a 1994 stock redemption for a lump sum
payment of $600,000. A gain of $64,831 resulted from this transaction.
-8-
<PAGE> 23
(C) Exhibits
2.1 Agreement and Plan of Merger by and among Boston Private
Bancorp, Inc., Boston Private Investment Management, Inc.,
Westfield Capital Management Company, Inc. and the
individual stockholders of Westfield Capital Management
Company, Inc. dated as of August 13, 1997 contained in the
Company's Current Report on Form 8-K, filed with the
Securities and Exchange Commission on August 21, 1997.
2.2 Registration Rights Agreement by and among the Company and
the individual stockholders of Westfield Management, Inc.
dated as of August 13, 1997 contained in the Company's
Current Report on Form 8-K, filed with the Securities and
Exchange Commission on August 21, 1997.
23.1 Consent of Baril & Smith.
99.1 Press release.
3
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOSTON PRIVATE BANCORP, INC.
Date: November 14, 1997 By: /s/Walter M. Pressey
-------------------------------
Walter M. Pressey,
Senior Vice President
and Chief Financial Officer
<PAGE> 25
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
2.1 Agreement and Plan of Merger by and among Boston
Private Bancorp, Inc., Boston Private Investment
Management, Inc., Westfield Capital Management
Company, Inc. and the individual stockholders of
Westfield Capital Management Company, Inc. dated
as of August 13, 1997 contained in the Company's
Current Report on Form 8-K, filed with the
Securities and Exchange Commission on August 21,
1997.
2.2 Registration Rights Agreement by and among the
Company and the individual stockholders of
Westfield Management, Inc. dated as of August 13,
1997 contained in the Company's Current Report on
Form 8-K, filed with the Securities and Exchange
Commission on August 21, 1997.
23.1 Consent of Baril & Smith.
99.1 Press release.
<PAGE> 1
EXHIBIT 23.1
[Letterhead of Baril & Smith Certified Public Accountants, Inc.]
Accountant's Consent
We hereby consent to the use in the Current Report on Form 8-K of our
report dated March 11, 1997 relating to the balance sheets as of December 31,
1996 and 1995 and the related statements of income and retained earnings, and
cash flows for the years then ended of Westfield Capital Management, Inc., which
report appears in such Form 8-K, and use of our name and reference thereto as
independent certified public accounts as discussed in Rule 2-01 under Regulation
S-X. We further consent to the incorporation by reference in Registration
Statements (Nos. 333-30755, 33-93634, 33-2617, 33-26133 and 2-98875) on Forms
S-8 and in Registration Statement (No. 333-19823) on Form S-3 of Boston Private
Bancorp, Inc. of such report.
/s/ Baril & Smith
Baril & Smith Certified
Public Accountants, Inc.
November 13, 1997
<PAGE> 1
Exhibit 99.1
BOSTON PRIVATE BANCORP, INC.
COMPLETES ACQUISITION OF INVESTMENT MANAGEMENT FIRM
COMPANY NOW HAS OVER $2 BILLION IN CLIENT ASSETS UNDER MANAGEMENT
BOSTON, Oct. 31/PRNewswire/ -- BOSTON PRIVATE BANCORP, INC. (OTC:BPBC) today
reported the completion of the acquisition by its subsidiary, Boston Private
Investment Management, Inc., of the investment management firm of Westfield
Capital Management Company, Inc.
Pursuant to the terms of the transaction, which will be accounted for as a
pooling of interests, Westfield's shareholders received approximately 3.9
million shares of newly issued Boston Private Bancorp, Inc. common stock. This
represents the Company's second investment management acquisition since 1995.
The announcement of the acquisition was made by the Company's President and CEO,
Timothy L. Vaill. Said Vaill, "This purchase reinforces our position in the
marketplace as a leading provider of private banking services with investment
management as a primary focus. Immediately it takes us to over $2 billion in
client managed assets and broadens our product offering considerably. Most
importantly, however, this acquisition gives us an attractive balance between
our interest rate driven business and our fee income, which is expected to
account for more than 50% of total revenues in 1997. This means we can pursue
our strategic growth goals with solid prospects for revenue diversification,
while striving to satisfy the expectations of our clients and shareholders."
Westfield Capital Management Company, Inc., established in 1989 by C. Michael
Hazard, and located in Boston, specializes in separately managed, growth equity
portfolios. High net worth individuals account for over half of Westfield's
approximately $1.4 billion in assets under management. The remainder of its
client base consists of corporate pension funds, endowments and foundations.
Westfield has distinguished itself in the marketplace by providing a high level
of client service in addition to its excellent historic investment performance.
Boston Private Bancorp, Inc. is also the parent company of Boston Private Bank &
Trust Company, a private bank serving clients with banking and investment
products. Boston Private Bank has approximately $900 million of client assets
under management.
Mr. Hazard commented, "We are extremely pleased to join Boston Private in this
marketplace. I believe, at this point in time, the route to steady growth in our
business is through a full service firm which has size and can offer a full
range of services and products to high net worth individuals and institutions."
The Company will maintain the Westfield Capital name and its offices at One
Financial Center in Boston. Said Mr. Vaill, "Our intention is to have Westfield
maintain its own identity as it continues to provide clients with the high
caliber of service that has been the basis of its substantial past successes."
<PAGE> 2
Boston Private Bancorp, Inc. offers a full range of banking and investment
management and trust services to its domestic and international clientele. The
Company also offers a First Time Homebuyers Program within the Boston Urban
Community and is an active participant in the SBA Lending Program for small
business owners.
2
