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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 24, 1997
(April 23, 1997)
FIRST USA, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-11-3030 75-2291060
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
1601 ELM STREET, 47TH FLOOR, DALLAS, TEXAS 75201
(Address of Principal Executive Offices) (Zip Code)
214-849-2000
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On April 24, 1997, First USA, Inc., a Delaware
corporation ("First USA"), issued a press release
announcing its earnings and results of operations for the
quarter ended March 31, 1997 and the restatement of its
financial statements. A copy of such press release is
attached as an exhibit hereto and is incorporated by
reference herein.
In addition, First USA and Banc One Corporation, an
Ohio corporation ("Banc One"), entered into an amendment
(the "Amendment"), dated as of April 23, 1997, to the
Agreement and Plan of Merger (the "Merger Agreement"),
dated as of January 19, 1997, between First USA and Banc
One. Pursuant to the Amendment, Banc One acknowledged
that the earnings restatement reported on April 24, 1997
by First USA and related accounting policy changes and
amendments to First USA's public filings were being made
with Banc One's knowledge and that such matters will not
serve as a basis on which Banc One may terminate the
Merger Agreement or the basis on which First USA may be
deemed to be in breach of the Merger Agreement. The
Amendment also deletes from the Merger Agreement First
USA's right to terminate the Merger Agreement if the
average trading price of Banc One's common stock in a
specified period prior to the scheduled closing date of
the merger is less than $38.60. The exchange ratio of
1.1659 shares of Banc One common stock for each share of
First USA common stock and all other terms of the Merger
Agreement remain unchanged.
Consummation of the transactions contemplated by the
Merger Agreement is subject to the terms and conditions
contained in the Merger Agreement, including, among other
things, the receipt of approval of the merger by the
respective shareholders of First USA and Banc One and the
receipt of certain regulatory approvals. The merger and
the transactions contemplated by the Merger Agreement
will be submitted for approval at meetings of the
shareholders of First USA and Banc One that are expected
to take place in the second quarter of 1997.
A copy of the Amendment is incorporated by reference
as an exhibit hereto and is incorporated by reference
herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(c) Exhibits
Exhibit 2.1 Amendment, dated as of April 23, 1997, to
Agreement and Plan of Merger, dated as of
January 19, 1997, between Banc One
Corporation and First USA, Inc.
(Incorporated by reference from Exhibit
2.2 to the Banc One Corporation Current
Report on Form 8-K filed April 24, 1997
(File No. 1-8552))
Exhibit 99.1 Press Release, dated April 24, 1997,
issued by First USA, Inc.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: April 24, 1997
FIRST USA, INC.
(Registrant)
By: /s/ Philip E. Taken
Name: Philip E. Taken
Title: Senior Vice President and
General Counsel
EXHIBIT INDEX
Exhibit
Exhibit 2.1 Amendment, dated as of April 23, 1997, to
Agreement and Plan of Merger, dated as of
January 19, 1997, between Banc One
Corporation and First USA, Inc.
(Incorporated by reference from Exhibit
2.2 to the Banc One Corporation Current
Report on Form 8-K filed April 24, 1997
(File No. 1-8552))
Exhibit 99.1 Press Release, dated April 24, 1997,
issued by First USA, Inc.
First USA, Inc.
1601 Elm Street
Dallas, TX 75201
[logo]
Contacts:
Investor/George A. McCane (214) 849-3737
Investor/Jeffrey L. Unkle (214) 849-3754
Media/David C. Webster (214) 849-3755
NEWS RELEASE
FOR IMMEDIATE RELEASE
FIRST USA REPORTS EARNINGS
DALLAS -- April 24, 1997 -- First USA, Inc. (NYSE:FUS) one of the
nation's largest providers of Visa and MasterCard services, today reported
net income was $24.1 million, or $0.17 per share, for the third quarter
ended March 31, 1997, compared with restated net income of $85.0 million,
or $0.63 per share, for the same quarter a year ago. Prior to certain
accounting adjustments described below, reported net income for the third
quarter would have been $82.9 million, or $0.60 per share, compared with
$64.1 million, or $0.48 per share, for the year ago quarter.
John C. Tolleson, chairman and chief executive officer, said,
"First USA's operating performance remained strong during the March 1997
quarter. Asset quality trends were favorable as the managed delinquency
rate declined to 4.96% at March 31, 1997, from 5.19% at December 31, 1996.
The net credit loss rate was 5.01% for the quarter ended March 31, 1997,
compared with 4.76% for the December 1996 quarter and was better than the
industry. Managed loans have increased $4.9 billion during the year,
bringing total managed loans to $23.2 billion at quarter end. Marketing
programs generated 877,000 new accounts during the quarter, increasing the
company's total customer base to 16.3 million Cardmembers."
First USA continued to refine and expand its marketing
segmentation efforts directed toward new and existing customers, and the
company continued to be one of the leading mailers of affinity card
solicitations. First USA successfully expanded its platinum program to
include many partners, such as America Online, and added a significant
number of premier partnership programs, including the PGA TOUR card and
four Major League Baseball teams. In addition, new products of the First
USA Direct unit, such as installment, auto and home equity loans, are
being well received by Cardmembers.
In connection with the preparation for the pending merger with
BANC ONE, First USA has restated its financial statements with respect to
two accounting policies to more appropriately reflect gains on
securitizations and marketing expense.
The adjustments and related restatement did not affect net income
for fiscal years 1996 and 1995, and did not affect net income for the
September and December quarters of 1996 or the company's net cash flows,
liquidity or regulatory capital compliance. However, this restatement
increased income in fiscal year 1994 before extraordinary item to $150.9
million, or $1.23 per share, compared with $103.5 million, or $0.84 per
share, previously reported, and resulted in revisions of previously
reported quarterly results in fiscal years 1995 and 1996.
As a result of a more detailed analysis of gains on all
securitizations of credit card receivable balances in connection with the
preparation for the adoption of Statement of Financial Accounting Standards
No. 125 (FAS 125), which was effective January 1, 1997, First USA has
restated its financial statements to recognize gains in those prior periods
where the gains were significant. Making this change lowered the previously
expected one-time effect of adopting FAS 125 by reducing expected earnings
by approximately $53 million, or $0.38 per share, for the three months
ended March 31, 1997, and will reduce previously expected earnings by
approximately $176 million, or $1.28 per share, for the twelve months
ending December 31, 1997. This non-cash earnings reduction is limited to
calendar 1997 and should not have an adverse effect on subsequent periods.
With respect to marketing costs, BANC ONE expenses such costs as
incurred while First USA has capitalized and amortized marketing costs over
a period of twelve months. Changing its policy to expense and more
appropriately reflect certain marketing costs reduced First USA's net
income for the three and nine months ended March 31, 1997, by $6.2 million,
or $0.05 per share, and $8.1 million, or $0.06 per share, respectively.
These adjustments should not have any adverse effect on First
USA's operations or growth plans for 1997 or 1998.
Richard W. Vague, president, said "We are extremely excited about
the First USA and BANC ONE merger and have reaffirmed the merger agreement.
First USA and BANC ONE are totally committed to this merger, which we
believe is in the best interest of shareholders, customers and employees.
The fundamentals of the business look extremely good." The merger is
expected to be completed in June 1997.
First USA (www.firstusa.com) is a financial services company
specializing in the credit card business and is among the largest providers
of Visa and MasterCard services in the nation. First USA had approximately
16.3 million credit cards issued and $23.2 billion in total loans
outstanding at March 31, 1997. First USA participates in the payment
processing business through its 57% interest in First USA Paymentech, Inc.
On January 20, 1997, First USA and BANC ONE CORPORATION jointly announced
that an agreement had been reached for First USA to merge with BANC ONE,
subject to satisfaction of certain conditions, including approval by First
USA and BANC ONE shareholders and regulatory approval.
###
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FIRST USA, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
March 31,
-----------------------------------------------
1997 1996
-------------------- ---------------------
For the Quarter (As reported)
Earnings
<S> <C> <C>
Net income $24,124 $64,145
Net income per share $0.17 $0.48
Financial statistics
First USA, Inc.
Net interest margin (managed) 6.41% 6.06%
Return on assets 0.93% 3.12%
Return on stockholders' equity 7.45% 29.71%
First USA Bank
Net interest margin (managed) 6.41% 6.07%
Return on assets 1.25% 3.47%
Return on stockholder's equity 9.87% 37.11%
Operating expenses/average managed loans 3.81% 3.32%
Average loans (managed) $22,883,064 $18,014,094
Credit card charge volume (managed) $5,780,185 $4,201,712
New accounts 876,621 956,791
Net credit loss rate (managed) 5.01% 3.36%
At Quarter End
Managed loans $23,242,476 $18,335,813
Securitized loans $18,248,055 $14,893,690
Net loans on-balance-sheet $4,994,421 $3,442,123
Delinquency rate (managed) 4.96% 4.04%
Allowance for possible credit losses $124,435 $72,073
Market value of First USA, Inc.'s investment in First USA Paymentech $521,953 (a) $860,491
Stock Data
Weighted average common and common
equivalent shares 139,103,428 134,130,350
Common Stock
Closing price per share $42.375 $28.313
Dividends declared $0.06 $0.03
Mandatory Convertible Preferred Stock
Closing price per share $72.00 $49.50
Dividends declared $0.498 $0.498
March 31, % %
---------------------
1996 Change Change
---------------------- ---------------- ------------
For the Quarter (Restated) (As reported) (Restated)
Earnings
<S> <C> <C> <C>
Net income $84,999 (62.4) (71.6)
Net income per share $0.63 (64.6) (73.0)
Financial statistics
First USA, Inc.
Net interest margin (managed)
Return on assets 4.09%
Return on stockholders' equity 36.90%
First USA Bank
Net interest margin (managed)
Return on assets 4.46%
Return on stockholder's equity 44.84%
Operating expenses/average managed loans 3.09%
Average loans (managed) 27.0
Credit card charge volume (managed) 37.6
New accounts (8.4)
Net credit loss rate (managed)
At Quarter End
Managed loans 26.8
Securitized loans 22.5
Net loans on-balance-sheet 45.1
Delinquency rate (managed)
Allowance for possible credit losses 72.7
Market value of First USA, Inc.'s investment in First USA Paymentech (39.3)
Stock Data
Weighted average common and common
equivalent shares 3.7
Common Stock
Closing price per share 49.7
Dividends declared
Mandatory Convertible Preferred Stock
Closing price per share 45.5
Dividends declared
Prior periods have been restated to recognize gains on securitizations in those periods where the gains were significant.
In addition, these periods were restated to expense costs to solicit new accounts in the periods in which they were incurred.
Previously these costs were deferred and amortized over a twelve-month period.
(a) In connection with a First USA Paymentech primary offering, First USA, Inc. sold 4.4 million shares of First USA Paymentech
common stock for $34 per share.
FIRST USA, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
NINE MONTHS ENDED MARCH 31, 1997 AND 1996
March 31,
-----------------------------------------------
1997 1996
--------------------- ---------------------
(As reported)
Earnings
<S> <C> <C>
Net income $167,312 $177,969
Net income per share $1.22 $1.33
Earnings excluding one-time charge
Income $174,761 (a) $177,969
Income per share $1.28 (a) $1.33
Financial statistics
First USA, Inc.
Net interest margin (managed) 6.62% 5.75%
Return on assets 2.49% (a) 3.12%
Return on stockholders' equity 19.18% (a) 29.71%
First USA Bank
Net interest margin (managed) 6.63% 5.75%
Return on assets 2.20% 3.53%
Return on stockholder's equity 18.24% 38.94%
Operating expenses/average managed loans 3.74% 3.25%
Average loans (managed) $20,898,711 $16,053,678
Credit card charge volume (managed) $17,034,984 $13,206,273
New accounts 2,955,164 3,009,604
Net credit loss rate (managed) 4.77% 3.13%
At Quarter End
Managed loans $23,242,476 $18,335,813
Securitized loans $18,248,055 $14,893,690
Net loans on-balance-sheet $4,994,421 $3,442,123
Delinquency rate (managed) 4.96% 4.04%
Allowance for possible credit losses $124,435 $72,073
Market value of First USA, Inc.'s investment in First USA Paymentech $521,953 (b) $860,491
Stock Data
Weighted average common and common
equivalent shares 137,450,101 133,388,746
Common Stock
Closing price per share $42.375 $28.313
Dividends declared $0.165 $0.09
Mandatory Convertible Preferred Stock
Closing price per share $72.000 $49.500
Dividends declared $1.494 $1.494
March 31, % %
------------------
1996 Change Change
------------------ --------------- ---------
(Restated) (As reported) (Restated)
Earnings
<S> <C> <C> <C>
Net income $198,961 (6.0) (15.9)
Net income per share $1.49 (8.3) (18.1)
Earnings excluding one-time charge
Income $198,961 (1.8) (12.2)
Income per share $1.49 (3.8) (14.1)
Financial statistics
First USA, Inc.
Net interest margin (managed)
Return on assets 3.45%
Return on stockholders' equity 31.31%
First USA Bank
Net interest margin (managed)
Return on assets 3.87%
Return on stockholder's equity 40.21%
Operating expenses/average managed loans 3.76%
Average loans (managed) 30.2
Credit card charge volume (managed) 29.0
New accounts (1.8)
Net credit loss rate (managed)
At Quarter End
Managed loans 26.8
Securitized loans 22.5
Net loans on-balance-sheet 45.1
Delinquency rate (managed)
Allowance for possible credit losses 72.7
Market value of First USA, Inc.'s investment in First USA Paymentech (39.3)
Stock Data
Weighted average common and common
equivalent shares 3.0
Common Stock
Closing price per share 49.7
Dividends declared
Mandatory Convertible Preferred Stock
Closing price per share 45.5
Dividends declared
Prior periods have been restated to recognize gains on securitizations in those periods where the gains were significant.
In addition, these periods were restated to expense costs to solicit new accounts in the periods in which they were incurred.
Previously these costs were deferred and amortized over a twelve-month period.
(a) Results exclude First USA Paymentech's one-time charge of $15.5 million, which reduced First USA, Inc.'s net income by
$7.4 million, or $0.06 per share. Return on assets and return on stockholders' equity are calculated before the one-time
charge.
(b) In connection with a First USA Paymentech primary offering, First USA, Inc. sold 4.4 million shares of First USA Paymentech
common stock for $34 per share.
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