<PAGE>
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 21, 2000
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
AXA
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
THE REPUBLIC OF FRANCE 6311 NONE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------------
25, AVENUE MATIGNON
75008 PARIS, FRANCE
(011 33 1) 40 75 57 00
(Address, including zip code, and telephone number, including area code of
registrant's principal executive offices)
------------------------------
ROBERT E. GARBER, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
AXA FINANCIAL, INC.
1290 AVENUE OF THE AMERICAS
NEW YORK, NY 10104
TEL. NO.: (212) 554-1234
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
CHRISTIANNE BUTTE, ESQ. PETER S. WILSON, ESQ. ROBERT E. SPATT, ESQ.
AXA CRAVATH, SWAINE & MOORE SIMPSON THACHER & BARTLETT
21, AVENUE MATIGNON WORLDWIDE PLAZA, 825 EIGHTH AVENUE 425 LEXINGTON AVENUE
75008 PARIS, FRANCE NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10017
(011 33 1) 40 75 57 00 (212) 474-1000 (212) 455-2000
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AGGREGATE OFFERING REGISTRATION
REGISTERED(1) PRICE(2) FEE(3)
<S> <C> <C>
Ordinary Shares............................................. 3,937,951,600 $1,039,620
</TABLE>
(1) These shares may be represented by the Registrant's American Depositary
Shares, each of which represents one-half of one ordinary share. American
Depositary Shares issuable upon deposit of the securities registered hereby
have been registered under a separate registration statement on Form F-6.
(2) The proposed maximum aggregate offering price (estimated solely for the
purpose of computing the amount of the registration fee pursuant to
Rule 457(o) and Rule 457(f) under the Securities Act) was calculated based
on the average of the high and low prices of the shares of common stock of
AXA Financial, Inc. as reported on the New York Stock Exchange on
November 17, 2000 and the maximum number of such shares, including shares
issuable upon the exercise of options, (198,135,929) that may be exchanged
for the securities being registered minus the cash consideration to be paid
for such shares.
(3) Calculated by multiplying the proposed maximum offering price for all
securities by .000264.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
[LOGO]
OFFER TO EXCHANGE
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AXA FINANCIAL, INC.
FOR 0.295 OF AN AMERICAN DEPOSITARY SHARE OF AXA
AND $35.75 IN CASH PER SHARE
BY
AXA
AND
AXA MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF AXA
This exchange offer and withdrawal rights will expire at 12:00 midnight,
New York City time, on December 22, 2000, unless extended. Shares tendered
pursuant to this offer may be withdrawn at any time prior to the expiration
of the initial period of the offer, as extended, but not during the
subsequent offering period, if any.
This is a joint exchange offer by AXA and AXA Merger Corp., a Delaware
corporation and a wholly-owned subsidiary of AXA. In this exchange offer, AXA
and AXA Merger Corp. are offering to exchange 0.295 of an American Depositary
Share of AXA and $35.75 in cash for each outstanding share of common stock, par
value $0.01, of AXA Financial, Inc., a Delaware corporation and majority-owned
subsidiary of AXA. Shares of common stock of AXA Financial owned by AXA and its
subsidiaries and held in a voting trust and shares held in treasury by AXA
Financial will not be exchanged pursuant to this offer.
AXA and AXA Merger Corp. are making this exchange offer in order to allow
AXA to acquire the entire common equity interest in AXA Financial. Promptly
after this offer, AXA intends to cause AXA Merger Corp. to merge with and into
AXA Financial. In the merger, each outstanding share of common stock of AXA
Financial (except for shares owned, directly or indirectly, by AXA, shares held
in treasury by AXA Financial and shares purchased in the exchange offer) would
be converted into the right to receive the same consideration per AXA Financial
share as is paid in the offer, subject to appraisal rights available under
Delaware law.
Based on the closing price of the AXA ADSs on November 20, 2000, the offer
has a value of $55.96 per share of AXA Financial common stock. You should be
aware that because the number of AXA ADSs you receive per share of AXA Financial
common stock in the offer is fixed, the value of the offer will fluctuate as the
market price of the AXA ADSs changes.
------------------------------
The AXA ADSs are listed on the New York Stock Exchange under the symbol
"AXA," and the common stock of AXA Financial is listed on the New York Stock
Exchange under the symbol "AXF."
FOR A DISCUSSION OF RISK FACTORS WHICH YOU SHOULD CONSIDER IN EVALUATING
THIS EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 27.
AXA IS NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED THESE SECURITIES OR THIS EXCHANGE OFFER,
PASSED ON THE MERITS OR FAIRNESS OF THIS TRANSACTION, OR DETERMINED IF THE
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS HAS NOT RECEIVED THE VISA OF THE FRENCH COMMISSION DES
OPERATIONS DE BOURSE. ACCORDINGLY, THIS PROSPECTUS MAY NOT BE USED TO MAKE
OFFERS OR SALES TO THE PUBLIC IN FRANCE IN CONNECTION WITH THE EXCHANGE
OFFER.
------------------------
The Dealer Manager for the offer is:
GOLDMAN, SACHS & CO.
------------------
THIS PROSPECTUS IS DATED NOVEMBER 21, 2000 AND IS FIRST BEING MAILED TO AXA
FINANCIAL STOCKHOLDERS ON NOVEMBER 27, 2000.
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT AXA AND AXA FINANCIAL FROM OTHER DOCUMENTS THAT ARE NOT INCLUDED IN OR
DELIVERED WITH THIS PROSPECTUS. YOU MAY OBTAIN DOCUMENTS INCORPORATED BY
REFERENCE WITHOUT CHARGE BY REQUESTING THEM IN WRITING OR BY TELEPHONE FROM THE
INFORMATION AGENT:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 STATE STREET, 10TH FLOOR
NEW YORK, NEW YORK 10004
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL FREE: (866) 678-2293
TO OBTAIN TIMELY DELIVERY OF THESE DOCUMENTS, YOU MUST REQUEST THEM NO LATER
THAN DECEMBER 15, 2000. IF YOU REQUEST ANY INCORPORATED DOCUMENTS FROM THE
INFORMATION AGENT, THE INFORMATION AGENT WILL MAIL THEM TO YOU BY FIRST CLASS
MAIL, OR ANOTHER EQUALLY PROMPT MEANS, WITHIN ONE BUSINESS DAY AFTER IT RECEIVES
YOUR REQUEST. FOR A LIST OF THE DOCUMENTS THAT ARE INCORPORATED BY REFERENCE
INTO THIS PROSPECTUS, SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 218.
A tender of shares by a stockholder that is an employee benefit plan covered
by the United States Employee Retirement Income Security Act of 1974, as amended
("ERISA"), might, under certain limited circumstances, raise issues under ERISA
rules that prohibit (among other things) sale and exchange transactions between
plans and "parties in interest", including service providers. In this regard,
AXA and certain of its affiliates are in the business of providing services to
ERISA-covered plans. Persons acting for an ERISA-covered plan in connection with
this offer should consider consulting with counsel on these matters.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Questions and Answers about the
Proposed Acquisition............... 1
Summary.............................. 7
Selected Historical Financial
Information........................ 13
Selected Unaudited Pro Forma
Financial Information.............. 21
Comparative Historical and Pro Forma
per Share Data..................... 24
Market Information................... 26
Risk Factors......................... 27
Special Note Regarding Forward-
Looking Statements................. 36
Special Factors...................... 38
Background of the Offer; Contacts
with AXA Financial............... 38
Reasons for the Offer and the
Merger; Purpose and Structure of
the Offer and the Merger......... 43
Recommendation of the Special
Committee and the Board of
Directors of AXA Financial....... 44
Fairness of the Offer and the
Merger........................... 45
Opinion of the Financial Advisor of
the Special Committee............ 49
Position of AXA and AXA Merger
Corp. Regarding Fairness of the
Offer and the Merger............. 57
Summary of Financial Analysis of
Goldman, Sachs & Co.............. 58
Projections........................ 61
Plans for AXA Financial After the
Offer and the Merger............. 63
Accounting Treatment............... 63
Letter of BNP Paribas and Lazard
Freres to the Supervisory Board
of AXA........................... 63
Interests of Certain Persons in the
Offer and the Merger............. 64
Certain Effects of the Offer....... 67
Federal Securities Law
Consequences..................... 69
Stock Exchange Listing............. 69
The Exchange Offer................... 70
Terms of the Offer; Expiration
Date............................. 70
Exchange of AXA Financial Shares;
Delivery of AXA ADSs and Cash.... 72
Cash Instead of Fractional AXA
ADSs............................. 74
Procedure for Tendering............ 74
Withdrawal Rights.................. 78
Sources and Amount of Funds........ 79
Fees and Expenses.................. 81
Certain Conditions to the Offer.... 81
</TABLE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Transactions and Arrangements
Concerning Shares of AXA
Financial Common Stock........... 83
Beneficial Ownership of Common
Stock of AXA Financial by
Directors and Officers of AXA
Financial........................ 86
Certain Legal Matters.............. 87
Miscellaneous...................... 88
The Merger Agreement................. 89
The Offer.......................... 89
The Merger......................... 89
Preparation of Registration
Statement on Form F-4 and Proxy
Statement or Information
Statement; Stockholders' Meeting
or Action By Stockholder
Consent.......................... 90
Interim Operations................. 92
Indemnification.................... 94
Representations and Warranties..... 95
Conditions to the Merger........... 95
Termination........................ 96
Amendments; Waivers................ 97
Appraisal Rights................... 97
Taxation............................. 102
The Offer and Merger - French
Taxation......................... 103
The Offer and Merger - U.S. Federal
Income Taxation.................. 104
Ownership of AXA Ordinary Shares
and ADRs - French Taxation....... 104
Ownership of AXA Ordinary Shares
and ADRs - Material U.S. Federal
Income Tax Considerations for
U.S. Shareholders................ 104
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 112
Unaudited Pro Forma Financial
Information........................ 150
The Companies........................ 175
AXA................................ 175
AXA Merger Corp.................... 176
AXA Financial...................... 177
Recent Developments................ 178
Related Party Transactions......... 183
Markets, Market Prices and Dividends
for AXA Securities................. 184
Markets, Market Prices and Dividends
for AXA Financial Common Stock..... 188
Exchange Rates....................... 189
Description of Capital Stock of
AXA................................ 191
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
General............................ 191
Changes in Share Capital........... 191
Repurchase and Redemption of
Ordinary Shares.................. 192
Dividends.......................... 194
Form, Holding and Transfer of
Securities....................... 194
Requirements for Holdings Exceeding
Specified Percentages............ 195
Liquidation Rights................. 197
Convertible/Exchangeable Bonds..... 197
Description of AXA's American
Depositary Shares.................. 198
American Depositary Receipts....... 198
Deposit and Withdrawal of AXA
Ordinary Shares.................. 198
Dividends, Other Distributions and
Rights........................... 200
Record Dates....................... 202
Voting of the Underlying Ordinary
Shares........................... 203
Reports and Other Communications... 204
Changes Affecting Deposited
Securities....................... 204
Amendment and Termination of the
Deposit Agreement................ 205
Charges of Depositary.............. 205
Liability of Holders of ADRs
for Taxes........................ 206
Transfer of American Depositary
Receipts......................... 206
Governing Law...................... 207
General............................ 207
Exchange Controls and Other
Limitations Affecting Security
Holders............................ 208
Comparison of Certain Rights of AXA
Shareholders and AXA Financial
Stockholders....................... 209
Voting Rights...................... 209
Amendment of Organizational
Documents........................ 209
Appraisal Rights................... 209
Preemptive or Preferential
Subscription Rights.............. 210
</TABLE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Action by Written Consent of
Shareholders..................... 210
Annual and Special Stockholders'
Meetings......................... 211
Election of Members of the
Boards........................... 212
Removal of Members of the Boards... 213
Filling of Vacancies............... 214
Powers and Duties of the Boards.... 214
Shareholder Nominations and
Proposals........................ 216
Dividends.......................... 217
Repurchase and Redemption of
Ordinary Shares.................. 217
Anti-Takeover Statutes............. 218
Liability of Members of the
Boards........................... 218
Limitation of
Liability/Indemnification of
Officers and Members of the
Boards........................... 219
Qualifications of Members of the
Boards........................... 220
Shareholder Votes on Certain
Reorganizations.................. 221
Rights of Inspection............... 221
Shareholder Suits.................. 222
Conflict-of-Interest
Transactions..................... 222
Financial Information Available to
Shareholders..................... 223
Experts.............................. 223
Legal Matters........................ 223
Where You Can Find More
Information........................ 223
Incorporation of Certain Documents by
Reference.......................... 224
Limitation on Enforcement of Civil
Liabilities Under U.S. Securities
Laws Against AXA, Its Management
and Others......................... 226
Index to AXA's Unaudited Interim
Consolidated Financial
Statements......................... F-1
Schedule 1: Information Concerning
the Members of the Boards,
Directors and Executive Officers of
AXA, AXA Financial, Inc., and AXA
Merger Corp........................ S-1
</TABLE>
<TABLE>
<S> <C>
Annex A: Agreement and Plan of Merger dated as of October 17, 2000,
among AXA, AXA Merger Corp. and AXA Financial, Inc.
Annex B: Opinion of Wasserstein Perella & Co., Inc.
Annex C: Section 262 of Delaware General Corporation Law
</TABLE>
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION
THE FOLLOWING ARE SOME QUESTIONS THAT YOU, AS A STOCKHOLDER OF AXA
FINANCIAL, MAY HAVE AND ANSWERS TO THOSE QUESTIONS. THESE QUESTIONS AND ANSWERS
MAY NOT ADDRESS ALL QUESTIONS THAT MAY BE IMPORTANT TO YOU AS A HOLDER OF A
SHARE OF AXA FINANCIAL COMMON STOCK. WE URGE YOU TO CAREFULLY READ THE REMAINDER
OF THIS PROSPECTUS, AND THE ACCOMPANYING LETTER OF TRANSMITTAL, BECAUSE THE
INFORMATION IN THIS SUMMARY IS NOT COMPLETE AND ADDITIONAL IMPORTANT INFORMATION
IS CONTAINED IN THE REMAINDER OF THIS PROSPECTUS, THE ANNEXES TO THIS
PROSPECTUS, THE DOCUMENTS REFERRED TO OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL.
Q: WHAT IS AXA PROPOSING?
A: AXA is proposing to acquire the entire common equity interest in AXA
Financial by offering, together with AXA Merger Corp., a Delaware
corporation and a wholly-owned subsidiary of AXA, to exchange all the
outstanding shares of AXA Financial common stock (other than shares already
owned, directly or indirectly, by AXA and shares of AXA Financial common
stock held in treasury by AXA Financial) for AXA ADSs and cash. Promptly
after completion of this offer, AXA intends to cause AXA Merger Corp. to
merge with and into AXA Financial. On October 17, 2000, AXA, AXA Merger
Corp. and AXA Financial entered into an agreement and plan of merger
relating to the exchange offer and the subsequent merger. As of October 25,
2000, AXA owned, directly or indirectly, 261,236,342 shares of AXA Financial
common stock, which represented approximately 60.1% of the outstanding
shares of AXA Financial common stock.
Q: WHY IS AXA PROPOSING THIS EXCHANGE OFFER?
A: As one of the world's largest markets for financial protection and wealth
accumulation products and services, the United States is one of AXA's
principal markets and a market of strategic importance to AXA. AXA believes
that the proposed acquisition of the publicly held shares of AXA Financial
common stock would:
- Strengthen its position in its core businesses of insurance and asset
management.
- Enhance AXA's presence in the U.S. market and increase its investment in
U.S. life insurance and asset management activities.
- Enable AXA to develop more fully the potential synergies between AXA
Financial and other companies within the AXA group and achieve a more
consistent business organization among AXA's various businesses worldwide.
- Facilitate future acquisitions by AXA in the United States by increasing
the liquidity of the trading market in AXA ADSs listed on the New York
Stock Exchange and making the AXA ADSs a more effective acquisition
currency.
Q: WHO IS OFFERING TO EXCHANGE MY SECURITIES?
A: AXA and AXA Merger Corp. are making a joint offer to exchange your
securities. However, you will only tender your shares of AXA Financial
common stock to one exchange agent, First Chicago Trust Company of New York,
which will arrange for the exchange and delivery to you of the cash payment
and AXA ADSs to be held in book-entry form. AXA will issue the ordinary
shares underlying the AXA ADSs and provide a portion of the cash
consideration (estimated at up to approximately $3.0 billion) to be paid in
the exchange offer, and AXA Merger Corp. will provide the balance of the
cash consideration (estimated at up to approximately $3.2 billion) to be
paid in the exchange offer. Each share of AXA Financial common stock
exchanged in the offer will be beneficially owned by AXA and AXA Merger
Corp. Following the consummation of the offer and prior to the
1
<PAGE>
effective time of the merger, the shares of AXA Financial common stock
acquired by AXA and AXA Merger Corp. in the offer will be divided and
allocated to each of AXA and AXA Merger Corp. based on the relative values
of the consideration provided by each of them for the exchange of tendered
shares.
Q: WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
A: AXA and AXA Merger Corp. are seeking to purchase all the outstanding shares
of AXA Financial common stock, par value $0.01 per share, other than shares
of AXA Financial common stock (i) held directly or indirectly by AXA or
(ii) held in treasury by AXA Financial.
Q: WHAT WILL I RECEIVE IN EXCHANGE FOR MY SHARES OF AXA FINANCIAL COMMON STOCK?
A: If you are a holder of shares of AXA Financial common stock, you will receive
0.295 of an AXA ADS and $35.75 in cash for each share of AXA Financial
common stock validly tendered and not properly withdrawn. You will not
receive any fractional AXA ADSs. Instead you will receive cash in an amount
equal to the product obtained by multiplying (x) the fractional interest
that you would otherwise be entitled to receive pursuant to the offer or
merger by (y) the average of the closing prices of an AXA ADS as reported on
the New York Stock Exchange Composite Transaction Tape for the five
consecutive trading days ending on the trading day immediately prior to the
date on which AXA and AXA Merger Corp. accept tendered shares for exchange
or the closing date of the merger, as applicable.
Q: WHAT ARE AMERICAN DEPOSITARY SHARES AND AMERICAN DEPOSITARY RECEIPTS?
A: An American Depositary Share is an ownership interest in the securities of a
non-U.S. company deposited at a custodian bank in the home country of the
company. Each AXA ADS represents the right to receive one-half of an AXA
ordinary share. ADSs are represented by American Depositary Receipts
("ADRs"). ADRs are issued in book-entry form or in the form of physical
certificates. It is expected that, if you tender your shares of AXA
Financial common stock in the offer, you will receive AXA ADSs evidenced by
ADSs held in book-entry form through the Direct Registration System operated
by The Bank of New York or through The Direct Purchase & Sale Plan for AXA
ADSs operated by First Chicago Trust Company of New York. You will not
receive a physical certificate evidencing your AXA ADSs unless you
specifically request one after you receive your Direct Registration System
statement. For a description of the AXA ADSs see "Description of AXA's
American Depositary Shares" on page 193.
Q: WILL I BE TAXED ON THE AXA ADSS AND CASH THAT I RECEIVE?
A: The receipt of AXA ADSs and cash in exchange for your shares of AXA Financial
common stock will be a taxable transaction for U.S. Federal income tax
purposes and may also be a taxable transaction under applicable state, local
or foreign income or other tax laws. For more information concerning the
U.S. Federal income tax consequences to U.S. Holders resulting from the
offer and merger, please see the discussion under "Taxation--The Offer and
Merger--Material U.S. Federal Income Tax Consequences to U.S. Holders" on
page 106.
Q: WILL I BE ENTITLED TO THE FOURTH QUARTER DIVIDEND WITH RESPECT TO THE SHARES
OF AXA FINANCIAL COMMON STOCK THAT I TENDER IN THE OFFER?
A: If you are a stockholder of record at the close of business on December 4,
2000, you will be entitled to receive a dividend of $0.025 per share of AXA
Financial common stock, payable on December 12, 2000. Stockholders who
tender their shares prior to December 4, 2000 will be considered holders of
record at the close
2
<PAGE>
of business on that date and will be entitled to receive the dividend.
Q: WILL THE AXA ADSS THAT I RECEIVE IN THE OFFER BE ENTITLED TO THE DIVIDEND
WITH RESPECT TO FISCAL YEAR 2000?
A: The AXA ADSs that you will acquire in the offer and merger will entitle you
to any dividend paid by AXA with respect to year 2000.
Q: DO AXA AND AXA MERGER CORP. HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
A: AXA and AXA Merger Corp. have sufficient funds to exchange all shares of AXA
Financial common stock validly tendered in the offer and not properly
withdrawn and to finance the merger which will follow the offer. These funds
include funds obtained through debt financings and internally generated
funds of the AXA group. AXA Financial will provide AXA Merger Corp. with the
funds necessary to effect payment of the portion of the cash consideration
that will be paid by AXA Merger Corp. in the exchange offer. The offer is
not conditioned upon any financing arrangements.
Q: IS AXA'S FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
A: AXA's financial condition is relevant to your decision whether to tender in
the offer because the form of payment consists in part of AXA ADSs whose
market value depends in part on AXA's financial condition.
Q: HOW LONG DO I HAVE TO TENDER IN THE OFFER?
A: You will have at least until 12:00 midnight, New York City time, on
December 22, 2000, to tender your shares of AXA Financial common stock in
the offer. If you cannot deliver everything that is required in order to
make a valid tender by that time, you may be able to use a guaranteed
delivery procedure, which is described later in this prospectus. See "The
Exchange Offer--Procedure for Tendering--Guaranteed Delivery."
Q: CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
A: Subject to the terms of the Merger Agreement, AXA and AXA Merger Corp. can
extend the offer without the consent of AXA Financial. For example, the
Merger Agreement provides that, if at the scheduled expiration date of the
offer any conditions to the offer have not been satisfied, AXA and AXA
Merger Corp. may extend the offer until all conditions have been satisfied.
In addition, the Merger Agreement provides that in the event that AXA and
AXA Merger Corp. are unable to consummate the offer on the initial scheduled
expiration date due to the failure of conditions to the offer to be
satisfied or waived, AXA and AXA Merger Corp. will have to extend the offer
for a specified period of time as described under "The Exchange Offer--Terms
of the Offer; Expiration Date".
Q: HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
A: If AXA and AXA Merger Corp. extend the offer, AXA and AXA Merger Corp. will
inform the exchange agent for the offer of that fact and will make a public
announcement of the extension not later than 9:00 a.m., New York City time,
on the next business day after the day on which the offer was scheduled to
expire. See "The Exchange Offer--Terms of the Offer; Expiration Date."
Q: HOW DO I TENDER MY SHARES OF AXA FINANCIAL COMMON STOCK?
A: To tender your shares of AXA Financial common stock, you must deliver the
certificates evidencing your shares of AXA Financial common stock, together
with a completed Letter of Transmittal, to the exchange agent for the offer,
not later than the time the offer expires. If your shares of AXA Financial
common stock are held in street name, that is, through a broker, dealer or
other nominee, you can direct your nominee to tender your shares of AXA
Financial common stock through The
3
<PAGE>
Depository Trust Company. If your stock certificates are not immediately
available and you cannot deliver your certificates and all other required
documents to the exchange agent or if you cannot comply with the DTC
book-entry transfer procedure by the expiration of the offer, you may obtain
extra time to do so by having a broker, bank or other fiduciary who is a
member of the Securities Transfer Agent Medallion Program or other eligible
institution guarantee that the missing items will be received by the
exchange agent within three New York Stock Exchange trading days. However,
the exchange agent must receive the missing items within that three trading
day period or your shares of AXA Financial common stock will not be validly
tendered. For additional information on how to tender your shares of AXA
Financial common stock see "The Exchange Offer--Procedure For Tendering."
Q: UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES OF AXA FINANCIAL
COMMON STOCK?
A: You can withdraw previously tendered shares of AXA Financial common stock at
any time until the offer has expired and, if AXA has not by January 25, 2001
agreed to accept your shares of AXA Financial common stock for exchange, you
can withdraw them at any time after such time until AXA accepts shares of
AXA Financial common stock for exchange. This right to withdraw does not
apply to any shares of AXA Financial common stock tendered during the
subsequent offering period. See "The Exchange Offer--Terms of the Offer;
Expiration Date" and "--Withdrawal Rights."
Q: HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES OF AXA FINANCIAL COMMON STOCK?
A: To withdraw shares of AXA Financial common stock you must deliver a written
notice of withdrawal, or a facsimile of one, with the required information
to the exchange agent while you still have the right to withdraw your shares
of AXA Financial common stock. See "The Exchange Offer--Withdrawal Rights."
Q: WHAT ARE THE CONDITIONS TO THE OFFER OF AXA AND AXA MERGER CORP.?
A: The offer is subject to the specified conditions described under "The
Exchange Offer--Certain Conditions to the Offer." The offer is not
conditioned on any minimum number of shares being tendered or on any
financing arrangements.
Q: WHAT DO THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF AXA FINANCIAL
THINK OF THE OFFER?
A: A special committee (which we refer to in this prospectus as the "Special
Committee") of the Board of Directors of AXA Financial comprised entirely of
directors who are not officers or members of the Supervisory or Management
Boards of AXA and who are not officers or employees of AXA Financial was
formed to negotiate with AXA the terms of the offer and merger. The Special
Committee believes that the offer and subsequent merger is advisable and in
the best interests of AXA Financial's shareholders. The Board of Directors
of AXA Financial, based upon the unanimous recommendation of the Special
Committee:
- unanimously determined that the terms of the offer and the merger are fair
to and in the best interests of AXA Financial and AXA Financial's
stockholders other than AXA and its affiliates,
- unanimously approved the Merger Agreement, the offer, the merger and the
other transactions contemplated by the Merger Agreement,
- declared the advisability of the Merger Agreement,
4
<PAGE>
- unanimously recommended that you accept the offer and tender your shares
pursuant to the offer, and
- unanimously recommended that you adopt the Merger Agreement, if such
adoption is necessary for the consummation of the merger.
For a detailed discussion of the factors that were taken into account by the
Special Committee and the Board of Directors of AXA Financial in assessing
the fairness of the offer, see "Special Factors--Recommendation of the
Special Committee and the Board of Directors of AXA Financial" and
"--Fairness of the Offer and the Merger."
Q: WILL THE OFFER BE FOLLOWED BY A MERGER IF NOT ALL OF THE PUBLICLY TRADED
SHARES OF AXA FINANCIAL ARE TENDERED IN THE OFFER?
A: Yes. As contemplated in the Merger Agreement, following the offer, AXA Merger
Corp. will be merged with and into AXA Financial. As a result of the merger,
AXA Financial will become a wholly-owned subsidiary of AXA and all of the
remaining stockholders of AXA Financial, other than AXA and its affiliates,
are expected to receive the same number of AXA ADSs and the same amount of
cash per share of AXA Financial common stock as is paid in the offer,
subject to appraisal rights that may be available under Delaware law. See
"The Merger Agreement--The Merger."
Q: FOLLOWING THE OFFER, WILL AXA FINANCIAL CONTINUE AS A PUBLIC COMPANY?
A: No. After the merger takes place, AXA Financial will no longer be publicly
owned. Even if for some reason the merger does not take place, if AXA and
AXA Merger Corp. purchase all the tendered shares of AXA Financial common
stock, there may be so few remaining stockholders and publicly held shares
of AXA Financial common stock that the shares of AXA Financial common stock
will no longer be eligible to be traded on the New York Stock Exchange or
other securities markets, there may not be a public trading market for the
shares of AXA Financial common stock and AXA Financial may cease to be
required to comply with SEC rules governing publicly held companies in the
way it currently must comply with these rules. AXA Financial will continue
to provide periodic reports to the SEC for so long as it has public debt
outstanding and is required to provide such reports under the Exchange Act.
See "Special Factors--Certain Effects of the Offer."
Q: IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES OF AXA
FINANCIAL COMMON STOCK?
A: In the merger described above, stockholders not tendering in the offer will
receive the same consideration as paid in the offer. Therefore, assuming the
merger takes place, the difference to you between tendering your shares of
AXA Financial common stock and not tendering your shares of AXA Financial
common stock is that you will receive AXA ADSs and the cash portion of the
consideration earlier if you tender your shares of AXA Financial common
stock in the offer.
Notwithstanding the foregoing, if in the merger you are entitled to demand,
and properly demand, appraisal of your shares of AXA Financial common stock
pursuant to Section 262 of the General Corporation Law of the State of
Delaware, you will not receive AXA ADSs and cash in the merger, but rather
you will be entitled to payment of the fair value of such shares in
accordance with Section 262. See "The Merger Agreement--Appraisal Rights."
However, as described above, even if for some reason the merger does not
take place, the number of stockholders and of shares which are still in the
hands of the public may be so small that there will no longer be an active
public trading market (or, possibly, any trading market) for the shares of
AXA Financial common stock. In addition, AXA Financial may cease to be
required to comply with the SEC rules relating to publicly held companies in
the way it currently must comply with these
5
<PAGE>
rules. AXA Financial will continue to provide periodic reports to the SEC
for so long as it has public debt outstanding, and is required to provide
such reports under the Exchange Act. See "Special Factors--Certain Effects
of the Offer."
Q: WHAT IS THE MARKET VALUE OF MY SHARES OF AXA FINANCIAL COMMON STOCK AS OF A
RECENT DATE?
A: On August 29, 2000 the last trading day before the announcement of AXA's
initial offer, the last sale price of the shares of AXA Financial common
stock reported on the New York Stock Exchange was $52.25 per share. On
October 17, 2000, the last trading day before we announced the companies'
agreement on the offer and the merger, the closing price of the shares of
AXA Financial common stock reported on the New York Stock Exchange was
$50.63 per share. On November 20, 2000, the last full trading day before the
printing of this prospectus, the last sale price of the shares of AXA
Financial common stock reported on the New York Stock Exchange was $55.38
per share. The average market price of the shares of AXA Financial common
stock during the 30 and 90 trading days immediately preceding the
announcement of AXA's initial offer were $43.92 and $39.48 per share,
respectively. We advise you to obtain a recent quotation for the shares
before deciding whether to tender your shares of AXA Financial common stock.
Q: HOW MANY ORDINARY SHARES IS AXA GOING TO ISSUE IN CONNECTION WITH THE OFFER?
A: AXA will issue up to 25.62 million ordinary shares, represented by
51.24 million ADSs, to AXA Financial stockholders, in the offer and the
subsequent merger. The AXA ordinary shares to be issued in connection with
the offer and the merger will represent up to approximately 6.1% of the
outstanding ordinary shares. This information is based on the number of AXA
ordinary shares and shares of AXA Financial common stock outstanding on
November 6, 2000 and does not take into account stock options or other
equity-based awards vesting and becoming exercisable in connection with the
offer and the merger.
Q: WHERE CAN I FIND MORE INFORMATION ABOUT AXA AND AXA FINANCIAL?
A: You can find information about AXA and AXA Financial from various sources
described under "Where You Can Find More Information" on page 218.
Q: WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE EXCHANGE OFFER?
A: Georgeson Shareholder Communications Inc. is acting as the information agent
for the offer, and Goldman, Sachs & Co. is acting as the dealer manager for
the offer. You can call Georgeson Shareholder Communications Inc. at
(212) 440-9800 (banks and brokers call collect) or (866) 678-2293 (call toll
free) or Goldman, Sachs & Co. at (212) 902-1000 (call collect) or
(800) 323-5678 (call toll free).
6
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS AND MAY
NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND THE
OFFER FULLY AND FOR A DESCRIPTION OF THE LEGAL TERMS OF THE OFFER AND THE
SUBSEQUENT MERGER, YOU SHOULD READ CAREFULLY THIS ENTIRE PROSPECTUS AND THE
OTHER DOCUMENTS TO WHICH WE HAVE REFERRED YOU. SEE "WHERE YOU CAN FIND MORE
INFORMATION" ON PAGE 218. WE HAVE INCLUDED PAGE REFERENCES PARENTHETICALLY TO
DIRECT YOU TO A MORE COMPLETE DESCRIPTION OF THE TOPICS PRESENTED IN THIS
SUMMARY.
GENERAL
THE COMPANIES (PAGE 169)
AXA
25, avenue Matignon
75008 Paris
France
Tel.: (011-33-1) 40 75 57 00
AXA is the holding company for an international group of financial services
companies focusing on insurance and asset management. With gross premiums and
financial services revenues of E66.5 billion for the year ended December 31,
1999 and E41.0 billion for the six months ended June 30, 2000, AXA is one of the
largest insurance groups in the world and the largest French insurance group.
AXA's insurance operations include activities in life insurance, property
and casualty insurance and international insurance, including reinsurance. The
insurance operations are diverse geographically, with activities principally in
Western Europe, North America and the Asia/Pacific region and, to a lesser
extent, in Africa and South America.
AXA is actively engaged in the asset management business. As of June 30,
2000 and based on the market values of assets at that date, AXA had funds under
management of E882 billion, including assets managed on behalf of third party
clients of E429 billion. AXA's two principal asset management companies are
Alliance Capital Management and AXA Investment Managers.
In addition to insurance and asset management, AXA is engaged in certain
other financial services activities principally in Western Europe. Previously,
AXA had been engaged in investment banking, primarily in the United States,
through Donaldson, Lufkin & Jenrette. On November 3, 2000, AXA, AXA Financial,
The Equitable Life Assurance Society of the United States and AXA Participations
Belgium sold their 71% interest in Donaldson, Lufkin & Jenrette to Credit Suisse
Group. For a description of the basic terms of that transaction, see "The
Companies--Recent Developments".
AXA holds its interest in its U.S. life insurance and asset management
operations through AXA Financial.
AXA is a SOCIETE ANONYME A DIRECTOIRE ET CONSEIL DE SURVEILLANCE, a form of
limited liability company with a Management Board and a Supervisory Board,
organized under the laws of The Republic of France.
7
<PAGE>
AXA MERGER CORP.
The Corporation Trust Center
1209 Orange Street
Wilmington, DE 1981
Tel.: (302) 658-7581
AXA Merger Corp. is a Delaware corporation and wholly owned subsidiary of
AXA. AXA Merger Corp. was formed in connection with the offer and the merger and
has not carried on any activities other than in connection with the offer and
the merger.
AXA FINANCIAL, INC.
1290 Avenue of the Americas
New York, NY 10104
Tel.: (212) 554-1234
AXA Financial and its subsidiaries constitute a diversified financial
services organization offering a broad spectrum of financial advisory, insurance
and asset management services.
The financial advisory and insurance operations of AXA Financial are
conducted principally by its wholly-owned subsidiaries, AXA Advisors, LLC and
AXA Network, LLC and by The Equitable Life Assurance Society of the United
States and its subsidiaries, including Equitable Distributors, Inc. and The
Equitable of Colorado, Inc.
AXA Financial is also actively involved in the asset management business and
as of September 30, 2000 had total assets under management (based on the market
value of assets at that date) of approximately $417.4 billion, excluding assets
managed by Donaldson, Lufkin & Jenrette. Alliance Capital, one of the two
principal asset management companies of AXA, is a subsidiary of AXA Financial.
As of October 25, 2000, AXA Financial owned an approximate 53% economic interest
in Alliance Capital's operations. AXA Financial no longer conducts investment
banking and brokerage operations. These operations were previously conducted by
Donaldson, Lufkin & Jenrette. See "Recent Developments" for information on the
sale of Donaldson, Lufkin & Jenrette.
AXA is the largest shareholder of AXA Financial. As of October 25, 2000, AXA
and its subsidiaries beneficially owned approximately 60.1% of the outstanding
common stock of AXA Financial. AXA Financial is incorporated in the state of
Delaware.
RECENT DEVELOPMENTS (PAGE 172)
AXA and its subsidiaries were recently involved in the following material
transactions:
- In June 2000, AXA notified Banco Bilbao Vizcaya Argentaria, SA that AXA
intends to exercise its right to acquire the 30% interest of Banco Bilbao
Vizcaya Argentaria in AXA Aurora, their Spanish insurance joint venture.
Pursuant to the terms of that right, AXA has offered to acquire the
interest of Banco Bilbao Vizcaya Argentaria for E161 million. AXA and
Banco Bilbao Vizcaya Argentaria are currently negotiating the final terms
and conditions of this transaction and AXA expects that the acquisition
will be completed prior to December 31, 2000.
- In July 2000, AXA completed the acquisition of the outstanding minority
interests in Sun Life & Provincial Holdings, a subsidiary in the United
Kingdom, for approximately L2.3 billion (E3.7 billion based on the
exchange rate as of July 12, 2000, the date on which the acquisition was
declared fully unconditional). This acquisition was financed primarily
with the net cash proceeds of approximately E3.7 billion from an offering
of 30.2 million newly issued AXA ordinary shares. You should read AXA's
unaudited pro forma financial information
8
<PAGE>
included elsewhere in this prospectus which gives pro forma effect, among
others, to the acquisition of the outstanding minority interests in Sun
Life & Provincial Holdings.
- On July 25, 2000, AXA proposed a financial reorganization of AXA Equity &
Law, one of its life insurance subsidiaries in the United Kingdom,
pursuant to which a portion of the assets of AXA Equity & Law that have
accumulated over the years (which we refer to in this prospectus as the
"Inherited Estate") will be attributed to AXA as the shareholder and a
portion will be allocated to policyholders in the form of policy bonuses
and cash distributions. The amount to be distributed to the shareholder
will be subject to a series of stringent safeguards and in any case may
not be distributed before 2006.
- On October 2, 2000, Alliance Capital Management L.P. and Alliance Capital
Management Holding L.P., both affiliates of AXA Financial, acquired
substantially all the assets and assumed substantially all the liabilities
of Sanford C. Bernstein & Co. Inc., an asset management company based in
New York, for a total consideration of approximately $3.5 billion,
consisting of approximately $1.4 billion in cash and 40.8 million units of
limited partnership interest of Alliance Capital Management L.P. In
connection with this transaction, AXA Financial has agreed to provide
liquidity to the former shareholders of Sanford C. Bernstein after a
two-year lock out period to allow the 40.8 million private units of
limited partnership interest to be sold to AXA Financial over the
subsequent eight years. Generally not more than 20% of such units may be
sold to AXA Financial in any one annual period. To fund the cash portion
of the acquisition consideration, in June 2000 AXA Financial purchased
32.6 million units of limited partnership interest of Alliance Capital
Management L.P. for an aggregate purchase price of $1.6 billion.
- On October 24, 2000, AXA and Deutsche Bank executed a non-binding letter
of intent relating to the sale of Banque Worms to Deutsche Bank. In
connection with this transaction, it is anticipated that a subsidiary of
AXA (the obligations of which will be guaranteed by AXA) will (i) make
representations and warranties customary for a transaction of this nature,
(ii) retain certain of Banque Worms' assets, including those relating to
discontinued business activities with respect to shipping finance,
commodity financing and the closure of foreign branches as well as the
majority of Banque Worms' investment securities, and (iii) provide a
guaranty to Deutsche Bank covering certain losses incurred by Banque Worms
as a result of payment defaults with respect to loans transferred with
Banque Worms in the transaction.
- On November 3, 2000, AXA Financial and certain of its affiliates sold
their 71% interest in Donaldson, Lufkin & Jenrette to Credit Suisse Group.
Total proceeds from the sale were $7,342 million (E8,528 million) and
included cash of $3,577 million (E4,155 million) and Credit Suisse Group
shares with a market value as of November 3, 2000 of $3,765 million
(E4,373 million). In this paragraph, U.S. dollar amounts have been
translated to euro using the Euro Noon Buying Rate on November 3, 2000 of
E1.00=$0.861. You should read AXA's unaudited pro forma financial
information included elsewhere in this prospectus which gives pro forma
effect, among others, to the sale of Donaldson, Lufkin & Jenrette.
- On November 17, 2000, AXA filed a registration statement on Form F-3
(Registration No. 333-12872) with the SEC registering $3.0 billion of debt
securities which may be issued from time to time. AXA is considering
increasing the principal amount of debt securities registered under that
registration statement to $5.0 billion.
FINANCIAL INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (PAGE 174).
On November 14, 2000, AXA announced unaudited revenue figures for the nine
months ended September 30, 2000.
9
<PAGE>
AXA's gross premiums and financial services revenues for the nine months
ended September 30, 2000 were E 61.8 billion, an increase of E 13.9 million, or
28.9%, as compared to the nine months ended September 30, 1999. Excluding
Donaldson, Lufkin & Jenrette, AXA gross premiums and financial services revenues
for the nine months ended September 30, 2000 would have been E 51.1 billion, an
increase of 24%, as compared to the nine months ended September 30, 1999 after
excluding Donaldson, Lufkin & Jenrette.
On November 14, 2000, AXA Financial published its financial statements for
the nine months ended September 30, 2000. Consolidated assets under management
of AXA Financial at September 30, 2000, excluding amounts held by Donaldson,
Lufkin & Jenrette, increased to approximately $417 billion, an increase of 22.4%
from September 30, 1999.
Total sales of life insurance, annuity and mutual fund products by the
Financial Advisory/ Insurance Segment increased to approximately $11 billion for
the nine months ended September 30, 2000, an increase of 10.9%, as compared to
approximately $10 billion in the corresponding prior period. Mutual fund sales
by Alliance Capital Management for the nine months ended September 30, 2000
increased to approximately $59 billion, an increase of 56.4%, as compared to the
corresponding prior period. Sales in the institutional business increased to
nearly $10 billion, an increase of 62.6%, as compared to the corresponding prior
period.
For the nine months ended September 30, 2000, AXA Financial's net income was
$483 million, after a $407 million charge for taxes required as a result of
management's decision to dispose of Donaldson, Lufkin & Jenrette, compared with
$834 million in the nine months ended September 30, 1999. The results for the
nine months ended September 30, 1999, included an after-tax gain of $212 million
relating to the sale of DLJDIRECT tracking stock. The gain on the sale of
Donaldson, Lufkin & Jenrette, as well as the remaining taxes on that gain, will
be reported in the fourth quarter of 2000.
For the nine months ended September 30, 2000, AXA Financial incurred
investment losses of $232.7 million due to $136.3 million of writedowns
primarily on high yield and emerging market securities and $96.4 million of
losses on sales.
OPINION OF THE SPECIAL COMMITTEE'S FINANCIAL ADVISOR (PAGE 47)
On October 17, 2000, the Special Committee of the Board of Directors of AXA
Financial received the written opinion of its financial advisor, Wasserstein
Perella & Co., Inc., to the effect that, as of the date of such opinion, the
receipt by the holders of shares of AXA Financial common stock (other than
shares held directly or indirectly by AXA) of 0.295 of an AXA ADS and $35.75 net
in cash per share of AXA Financial common stock pursuant to the offer and the
merger was fair from a financial point of view to such holders.
The full text of the written opinion of Wasserstein Perella which describes
assumptions made, matters considered and limitations on the review undertaken in
connection with the opinion, is attached as Annex B to this prospectus. Holders
are urged to read the Wasserstein Perella opinion in its entirety. The opinion
of Wasserstein Perella does not constitute a recommendation as to whether any
holder of shares of AXA Financial common stock should tender their shares or how
to vote with respect to the merger.
MARKET PRICE INFORMATION FOR AXA AND AXA FINANCIAL (PAGE 179)
AXA ADSs and shares of AXA Financial common stock trade on the NYSE under
the symbols "AXA" and "AXF", respectively.
The following table lists the closing prices of AXA ADSs and shares of AXA
Financial common stock, on August 29, 2000, the last full trading day before the
announcement of the initial offer of
10
<PAGE>
AXA, October 17, 2000, the last full trading day before the announcement of the
execution of the Merger Agreement and on November 20, 2000, the last full
trading day before the printing of this prospectus. The value of the offer per
share of AXA Financial common stock at the specified dates represents the
closing price of an AXA ADS on that date multiplied by the exchange ratio of
0.295, plus cash of $35.75 per share.
<TABLE>
<CAPTION>
AXA ADSS AXA FINANCIAL VALUE OF AXA OFFER
COMMON PER SHARE OF AXA
STOCK FINANCIAL COMMON STOCK
---------- -------------- ------------------------
<S> <C> <C> <C>
August 29, 2000...................... $79.00 $52.25 $59.05
October 17, 2000..................... $64.00 $50.62 $54.63
November 20, 2000.................... $68.50 $55.38 $55.96
</TABLE>
The value of the AXA offer per share of AXA Financial common stock as of
October 17, 2000 constituted a 5.16% premium over the closing price of the
shares of AXA Financial common stock on August 29, 2000, a 24.3% premium over
the average market price of the shares of AXA Financial common stock during the
30 trading days immediately preceding the announcement of the offer on
August 30, 2000 and a 38.3% premium over their average market price during the
90 trading days immediately preceding the announcement of the offer.
The value of the offer will fluctuate because the market price of the AXA
ADSs will change prior to completion of the offer, while the 0.295 exchange
ratio is fixed. You should obtain current stock price quotations for AXA ADSs
and shares of AXA Financial common stock. You can get these quotations from a
newspaper, on the Internet or by calling your broker.
AXA'S DIVIDEND POLICY (PAGE 181)
AXA generally pays an annual dividend in cash each year in respect of the
prior year after the annual ordinary general meeting of AXA shareholders, (which
is customarily held in May or June), and before September of that year. At the
annual ordinary general meeting of shareholders of AXA held on May 3, 2000, the
shareholders, upon recommendation of the Management Board, declared a dividend
in respect of 1999 of E2.00 per ordinary share. Dividends per ordinary share and
per ADS do not include any French AVOIR FISCAL which may be receivable from the
French Treasury. For a general description of the tax treatment of dividends
paid by AXA, see "Taxation--Ownership of AXA Ordinary Shares or ADRs--French
Taxation--Taxation of Dividends--Withholding Tax", "--Taxation of
Dividends--Avoir Fiscal", "--Taxation of Dividends--Procedures to Obtain Treaty
Benefits" and "--Material U.S. Federal Income Tax Considerations for U.S.
Shareholders--Taxation of Dividends."
Following completion of the offer and the merger, AXA expects to continue
paying annual cash dividends on a basis consistent with its past practice.
However, the declaration of dividends will depend upon business conditions,
operating results, capital and reserve requirements and AXA Management Board's
consideration of other relevant factors. No assurance can be given that AXA will
continue to pay dividends on its ordinary shares and ADSs in the future.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO U.S. HOLDERS (PAGE 99)
The receipt of AXA ADSs and cash in exchange for your shares of AXA
Financial common stock will be a taxable transaction for U.S. Federal income tax
purposes and may also be a taxable transaction under applicable state, local or
foreign income or other tax laws. For more information concerning the U.S.
Federal income tax consequences to U.S. Holders resulting from the offer and the
merger, please see the discussion under "Taxation--The Offer and
Merger--Material U.S. Federal Income Tax Consequences to U.S. Holders."
11
<PAGE>
TAX MATTERS ARE VERY COMPLICATED. THE TAX CONSEQUENCES OF THE OFFER AND
SUBSEQUENT MERGER TO YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU
SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE TAX
CONSEQUENCES OF THE OFFER AND SUBSEQUENT MERGER TO YOU.
COMPARISON OF RIGHTS OF AXA'S SHAREHOLDERS AND AXA FINANCIAL'S STOCKHOLDERS
(PAGE 204)
As a result of the exchange offer or subsequent merger, your shares of AXA
Financial common stock will be converted, in part, into the right to receive AXA
ADSs. Because AXA Financial is a corporation organized under the laws of
Delaware and AXA is a SOCIETE ANONYME A DIRECTOIRE ET CONSEIL DE SURVEILLANCE
organized under the laws of The Republic of France, there are differences
between the rights of AXA Financial stockholders and the rights of holders of
AXA ADSs and ordinary shares. For a discussion of certain of these differences,
see "Comparison of Certain Rights of AXA Shareholders and AXA Financial
Stockholders", "Description of AXA's American Depositary Shares" and
"Description of Capital Stock of AXA."
ACCOUNTING TREATMENT (PAGE 61)
Under both French GAAP and U.S. GAAP, the offer and subsequent merger will
be accounted for using the purchase method of accounting in respect of the
acquisition of minority interests in the offer and subsequent merger. For
additional information see "Unaudited Pro Forma Financial Information."
12
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
SELECTED HISTORICAL FINANCIAL DATA OF AXA
The selected historical consolidated financial data presented below have
been derived from AXA's audited consolidated financial statements and related
notes for the years ended December 31, 1999, 1998, 1997, 1996 and 1995, which
have been audited by Befec--Price Waterhouse, independent accountants, and the
unaudited interim consolidated financial statements for the six months ended
June 30, 2000. The historical data set out below is only a summary. You should
read it in conjunction with the financial statements and related notes for the
years ended December 31, 1999, 1998 and 1997 and as of December 31, 1999 and
1998 and "Item 9--Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in the Annual Report on Form 20-F of AXA for
the year ended December 31, 1999, as amended by Amendment No. 1 on Form 20-F/A
filed with the SEC on October 12, 2000, which is incorporated by reference in
this prospectus. The Annual Report on Form 20-F of AXA for the year ended
December 31, 1999, as so amended, is referred to in this prospectus as the "1999
AXA Form 20-F". The data for the six months ended June 30, 2000 and June 30,
1999 should be read in conjunction with the unaudited interim consolidated
financial statements of AXA for the six months ended June 30, 2000 included
elsewhere in this prospectus. In the opinion of management, the unaudited
interim consolidated financial statements include all adjustments, consisting of
normal recurring adjustments, necessary for a fair statement of the results for
the unaudited interim periods. Interim results are not necessarily indicative of
results which may be expected for any other period or for the full year. It is
also important that you read the unaudited pro forma financial information
included elsewhere in this prospectus.
AXA's consolidated financial statements for periods ending prior to
January 1, 1999 have been prepared in French francs and translated into euro at
the legal conversion rate of E1.00 = FF6.55957.
AXA's consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in France, which we refer to in
this prospectus as "French GAAP". French GAAP is based on requirements set forth
in French law and European regulations. Please refer to Note 1 to AXA's audited
consolidated financial statements included in the 1999 AXA Form 20-F for further
information about the accounting principles used in preparing AXA's consolidated
financial statements. French GAAP differs in certain material respects from
generally accepted accounting principles in the United States, which we refer to
in this prospectus as "U.S. GAAP". For a description of the material differences
between French GAAP and U.S. GAAP relevant to AXA, please see "Item
9--Management's Discussion and Analysis of Financial Condition and Results of
Operations--Reconciliation of French GAAP to U.S. GAAP" and Note 28 to the
consolidated financial statements included in the 1999 AXA Form 20-F. For the
six months ended June 30, 2000, there were no material changes in accounting
principles from those described in Note 28.
AS A RESULT OF THE SALE OF DONALDSON, LUFKIN & JENRETTE, REVENUES AND NET
INCOME GENERATED BY THE OTHER FINANCIAL SERVICES SEGMENT WILL DECREASE
SIGNIFICANTLY IN FUTURE PERIODS. For U.S. GAAP purposes, AXA's consolidated net
income and net income per ordinary share (on a basic and diluted basis) will be
restated for the year ending December 31, 2000 and for the prior reporting years
ended December 31, 1999 and 1998 to reflect Donaldson, Lufkin & Jenrette as a
discontinued operation. For information regarding the impact of the sale of
Donaldson, Lufkin & Jenrette on AXA's consolidated net income and consolidated
net income per share (on a basic and diluted basis) in accordance with U.S.
GAAP, see Note 13 to the unaudited pro forma financial information included
elsewhere in this prospectus.
For additional information on significant events affecting the comparability
of financial results, please see "Item 9--Management's Discussion and Analysis
of Financial Condition and Results of
13
<PAGE>
Operations" included in the 1999 AXA Form 20-F which is incorporated by
reference in this prospectus and the section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" relating to the
six-month period ended June 30, 2000 included elsewhere in this prospectus.
Various amounts set out in this prospectus have been rounded to millions,
and accordingly may not total. Rounding differences also exist for percentages.
14
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
-------------------------------------------------
2000(I) 2000 1999
--------------- -------------- --------------
(UNAUDITED)
(IN $ MILLIONS (IN EURO MILLIONS EXCEPT PER
EXCEPT PER ORDINARY SHARE AND ADS
ORDINARY AMOUNTS)
SHARE AND
ADS AMOUNTS)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
IN ACCORDANCE WITH FRENCH GAAP:
Gross premiums and financial
services revenues............ 35,198 41,009 31,825
Net investment results (a)..... 7,477 8,711 8,596
Total revenues................. 41,240 48,049 39,195
Income before income tax
expense...................... 2,159 2,515 2,486
Income tax expense............. (642) (748) (626)
Minority interests in income of
consolidated subsidiaries.... (481) (560) (410)
Equity in income (loss) of
unconsolidated entities...... (1) (1) 19
Net income..................... 1,034 1,205 1,469
Net income per ordinary
share: (b)
--basic...................... 2.85 3.32 4.17
--diluted.................... 2.67 3.11 3.90
Net income per ADS: (d)
--basic...................... 1.42 1.66 2.09
--diluted.................... 1.34 1.56 1.95
Dividends per ordinary share
(e).......................... n/a n/a n/a
Dividends per ADS (d)(e)....... n/a n/a n/a
----------------------------------------------------------------------------------
IN ACCORDANCE WITH U.S. GAAP:
Gross premiums (c)............. n/a n/a n/a
Total revenues................. n/a n/a n/a
Income before income tax
expense...................... n/a n/a n/a
Net income..................... 1,016 1,184 919
Net income per ordinary
share: (b)
--basic...................... 2.83 3.30 2.68
--diluted.................... 2.69 3.13 2.50
Net income per ADS: (d)
--basic...................... 1.42 1.65 1.34
--diluted.................... 1.34 1.56 1.25
----------------------------------------------------------------------------------
IN ACCORDANCE WITH U.S. GAAP
EXCEPT FOR ADJUSTMENT FOR
UNREALIZED INVESTMENT GAINS
OR LOSSES ON ASSETS ALLOCATED
TO U.K. WITH-PROFIT CONTRACTS
(F)
Net income..................... 829 966 1,515
Net income per ordinary
share: (b)
--basic...................... 2.31 2.69 4.41
--diluted.................... 2.20 2.56 4.11
Net income per ADS: (d)
--basic...................... 1.16 1.35 2.21
--diluted.................... 1.10 1.28 2.06
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------
1999 1998 1997(K) 1996 1995(J)
-------- -------- -------- -------- --------
(AUDITED)
(IN EURO MILLIONS EXCEPT PER ORDINARY
SHARE AND ADS AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
IN ACCORDANCE WITH FRENCH GAAP:
Gross premiums and financial
services revenues............ 66,528 56,698 55,587 25,490 19,907
Net investment results (a)..... 15,639 14,069 12,812 5,398 4,263
Total revenues................. 82,167 70,798 68,395 30,852 24,110
Income before income tax
expense...................... 4,182 3,717 3,153 1,352 893
Income tax expense............. (1,292) (1,222) (1,189) (422) (307)
Minority interests in income of
consolidated subsidiaries.... (858) (974) (802) (320) (155)
Equity in income (loss) of
unconsolidated entities...... (10) 11 45 (9) (14)
Net income..................... 2,021 1,531 1,207 581 416
Net income per ordinary
share: (b)
--basic...................... 5.73 4.52 3.71 3.10 2.57
--diluted.................... 5.39 4.24 3.48 2.79 2.36
Net income per ADS: (d)
--basic...................... 2.86 2.26 1.86 1.55 1.29
--diluted.................... 2.70 2.12 1.74 1.40 1.18
Dividends per ordinary share
(e).......................... 2.00 1.70 1.37 1.14 0.99
Dividends per ADS (d)(e)....... 1.00 0.85 0.69 0.57 0.50
----------------------------------------------------------------------------------
IN ACCORDANCE WITH U.S. GAAP:
Gross premiums (c)............. 31,649 29,203 26,276 8,155 8,384
Total revenues................. 56,343 44,657 39,719 15,140 14,161
Income before income tax
expense...................... 2,012 1,748 1,559 678 529
Net income..................... 1,209 749 1,310 328 49
Net income per ordinary
share: (b)
--basic...................... 3.46 2.24 0.98 1.83 0.30
--diluted.................... 3.32 2.11 0.90 1.73 0.26
Net income per ADS: (d)
--basic...................... 1.73 1.12 0.49 0.91 0.15
--diluted.................... 1.66 1.05 0.45 0.86 0.13
----------------------------------------------------------------------------------
IN ACCORDANCE WITH U.S. GAAP
EXCEPT FOR ADJUSTMENT FOR
UNREALIZED INVESTMENT GAINS
OR LOSSES ON ASSETS ALLOCATED
TO U.K. WITH-PROFIT CONTRACTS
(F)
Net income..................... 2,239 1,457 1,263 493 378
Net income per ordinary
share: (b)
--basic...................... 6.41 4.36 3.99 2.75 2.28
--diluted.................... 6.08 4.09 3.74 2.50 2.22
Net income per ADS: (d)
--basic...................... 3.21 2.18 2.00 1.37 1.14
--diluted.................... 3.04 2.04 1.87 1.25 1.11
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
AS AT JUNE 30 AS AT DECEMBER 31
-------------------------- ----------------------------------------------------
2000(I) 2000 1999 1998 1997(K) 1996 1995(J)
------------ ------------ -------- -------- -------- -------- --------
(UNAUDITED) (AUDITED)
(IN (IN EURO (IN EURO MILLIONS EXCEPT PER ORDINARY SHARE AND
$ MILLIONS MILLIONS ADS AMOUNTS)
EXCEPT PER EXCEPT PER
ORDINARY ORDINARY
SHARE AND SHARE AND
ADS ADS
AMOUNTS) AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
IN ACCORDANCE WITH FRENCH GAAP:
Total investments (l)............. 274,833 320,206 293,069 235,158 231,598 105,147 86,257
Total assets...................... 506,017 589,557 507,480 384,835 368,064 171,857 143,841
Insurance liabilities (g)......... 218,227 254,255 214,946 185,295 170,634 71,669 63,061
Long-term debt:
Financing debt (h).............. n/a n/a 3,290 2,842 3,607 3,365 3,969
Operating debt (h).............. n/a n/a 4,821 3,299 2,292 1,170 928
Mandatorily convertible bonds and 165 192
notes (h)....................... 474 474 474 192 320
Subordinated debt (h)............. 5,815 6,775 4,832 2,706 2,315 1,294 708
Shareholders' equity.............. 18,355 21,385 16,357 13,537 11,993 6,835 5,090
Shareholders' equity per ordinary 46.69 54.40
share (b)....................... 45.90 38.65 36.19 35.39 30.96
Shareholders' equity per ADS 23.35 27.20
(d)............................. 22.95 19.32 18.10 17.70 15.48
--------------------------------------------------------------------------------------------------------------------
IN ACCORDANCE WITH U.S. GAAP:
Total investments (l)............. n/a n/a 299,123 242,245 229,030 91,988 74,601
Total assets...................... n/a n/a 533,052 407,702 380,913 160,582 133,810
Insurance liabilities............. n/a n/a 218,598 189,485 179,652 57,609 49,554
Long-term debt:
Financing debt (h).............. n/a n/a 8,596 6,023 6,396 4,444 4,652
Operating debt (h).............. n/a n/a 4,821 3,299 2,292 1,170 928
Shareholders' equity.............. 23,444 27,315 22,672 20,355 16,747 6,933 5,449
Shareholders' equity per ordinary 60.35 70.31
share (b)....................... 64.29 58.72 51.54 38.67 33.14
Shareholders' equity per ADS 30.17 35.15
(d)............................. 32.15 29.36 25.77 19.34 16.57
--------------------------------------------------------------------------------------------------------------------
IN ACCORDANCE WITH U.S. GAAP
EXCEPT FOR ADJUSTMENT FOR
UNREALIZED INVESTMENT GAINS ON
REAL ESTATE ALLOCATED TO U.K.
WITH-PROFIT CONTRACTS (F)
Shareholders' equity.............. 23,621 27,521 22,886 20,545 16,922 7,105 5,598
Shareholders' equity per ordinary 60.80 70.84
share (b)....................... 64.89 59.27 52.08 39.63 34.04
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes investment income net of investment expenses and interest expense
on short-term and long-term debt (other than interest expense on short-term
trading instruments that is included in operating costs and expenses) and
net realized investment gains or losses.
(b) All per share amounts calculated in accordance with French GAAP and U.S.
GAAP are based on the weighted average number of ordinary shares outstanding
for each period presented. Shareholders' equity per ordinary share is
calculated based on the number of ordinary shares outstanding at each
period-end presented. The U.S. GAAP calculations deduct ordinary shares held
by AXA (that is, treasury shares) in the calculation of ordinary shares
outstanding. The calculation of basic and diluted net income per ordinary
share for each of the three years ended December 31, 1999 is presented in
Note 16 to the AXA consolidated financial statements included in the 1999
AXA Form 20-F incorporated by reference in this prospectus. The calculation
of basic and diluted net income per share for the six months ended June 30,
2000 is presented in Note 10 to the unaudited interim consolidated financial
statements included elsewhere in this prospectus.
(c) Gross premiums received from policyholders in respect of life insurance
products which are classified as "investment contracts" (such as, separate
account products), in accordance with U.S. GAAP, are recorded as revenue
under French GAAP. Under U.S. GAAP, such amounts received are recorded as
deposits, and only the policy-related fees charged to the policyholders, for
cost of insurance, administration, investment management, etc, are recorded
as revenue.
16
<PAGE>
(d) Prior to June 25, 1996, no ADSs representing the ordinary shares were
outstanding. Solely for convenience, the historical per share amounts for
periods prior to such date have been divided by two, the number of ADSs
representing one ordinary share. This same calculation has also been
performed for periods after such date.
(e) An annual dividend generally is paid each year in respect of the prior year
after the annual ordinary general meeting of shareholders (customarily held
in May or June) and before September of that year. Dividends are presented
above in the year to which they relate not the year in which they are
declared and paid. At the annual ordinary general meeting of shareholders of
AXA held on May 3, 2000, the shareholders declared a dividend in respect of
1999 of E2.00 per ordinary share. Dividends per ordinary share and per ADS
do not include any French AVOIR FISCAL which may be receivable from the
French Treasury. Dividends per ordinary share are based on the number of
ordinary shares outstanding at the end of the year for each year presented.
(f) Under French GAAP, in accounting for U.K. with-profit contracts, revenue
and expense are matched in net income by including both changes in the
estimated fair values of assets allocated to U.K. with-profit contracts and
corresponding increases or reductions in the liability for U.K. with-profit
policyholder benefits. U.S. GAAP which has developed in an environment that
differs from the one in which the U.K. with-profit contract was developed
requires that the change in unrealized investment gains or assets allocated
to U.K. with-profit contracts be excluded from net income while requiring
recognition of the corresponding change in the liability for with-profit
policyholder benefits in net income. Accordingly, AXA believes this
exclusion results in amounts that do not fully reflect the economic effect
of the U.K. with-profit contracts. A rise in the estimated fair value of
these assets results in an increase in the liability for policyholder
benefits and a reduction in AXA's consolidated U.S. GAAP net income or
shareholders' equity and, conversely, a decline in the estimated fair value
of these assets results in a decrease in the liability for policyholder
benefits and an increase in AXA's consolidated U.S. GAAP net income. Set
forth below is AXA's consolidated net income and shareholders' equity in
accordance with U.S. GAAP except for adjustment for the change in unrealized
investment gains or losses on assets allocated to U.K. with-profit
contracts. AXA believes that this presentation is more meaningful under the
circumstances. See Notes 28 and 29 to the consolidated financial statements
and see "Item 1--Description of Business--Life Insurance Segment--U.K. Life
Insurance Group--Products" for a description of U.K. with-profit contracts,
each in the 1999 AXA Form 20-F incorporated by reference in this prospectus.
(g) Includes future policy benefits and other policy liabilities, insurance
claims and claims expenses, U.K. with-profit contract liabilities and
unearned premium reserve and excludes separate account (unit linked)
liabilities.
(h) Operating debt includes debt, principally of AXA's financial services
subsidiaries, to provide working capital. Financing debt includes debt of
AXA other than operating debt. Subordinated debt and mandatorily convertible
bonds and notes are considered mezzanine capital for French GAAP purposes.
(i) The financial data have been translated from euro to U.S. dollars using the
euro/$ rate at November 7, 2000 of E1.00=$0.8583. These translations are
solely for the convenience of the reader and should not be construed as
representations that the converted amounts actually represent such U.S.
dollar amounts or could have been (at the relevant date) converted into U.S.
dollars at the rate indicated or at any other rate.
(j) AXA Asia Pacific Holdings (formerly National Mutual Holdings) and its
subsidiaries have been consolidated in AXA's consolidated financial
statements since September 1, 1995, the date of acquisition. Since AXA Asia
Pacific Holdings and its subsidiaries use a fiscal year ending September 30
and are consolidated as of that date in AXA's consolidated financial
statements only one month of AXA Asia Pacific Holdings consolidated
operating results were included in AXA's consolidated operating results for
the year ended December 31, 1995.
(k) Compagnie UAP and its subsidiaries were acquired in a public offer of
exchange on January 1, 1997 and, accordingly, UAP's operating results have
been included for the full year ended December 1997.
(l) Excluding separate account (unit linked) assets.
17
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF AXA FINANCIAL
The selected historical consolidated financial data presented below have
been derived from AXA Financial's consolidated financial statements and related
notes for the years ended December 31, 1999, 1998, 1997, 1996 and 1995 and the
unaudited consolidated financial statements for the nine months ended
September 30, 2000. The historical data set out below are only a summary. You
should read them in conjunction with the financial statements and related notes
for the fiscal years ended December 31, 1999, 1998 and 1997 and as of
December 31, 1999 and 1998 and the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" which are contained
in AXA Financial's Current Report on Form 8-K filed with the SEC on
November 14, 2000, and the unaudited consolidated financial statements for the
nine months ended September 30, 2000 and the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in AXA Financial's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2000, both of which are incorporated by reference in
this prospectus. The historical data presented below have been restated to
reflect the accounting treatment of Donaldson, Lufkin & Jenrette as a
discontinued operation, following the sale of Donaldson, Lufkin & Jenrette to
the Credit Suisse Group on November 3, 2000. The restated consolidated financial
statements of AXA Financial for the years ended December 31, 1999, 1998 and 1997
and as of December 31, 1999 and 1998 have been audited. Restated financial
statements for prior years have not been audited. In the opinion of management,
the unaudited consolidated financial statements for the nine months ended
September 30, 2000 include all adjustments, consisting of normal recurring
adjustments, necessary for a fair statement of the results of the unaudited
interim periods. Please note that interim results are not necessarily indicative
of results which may be expected for any other period or for the full year.
It is also important that you read the unaudited pro forma condensed
consolidated financial statements included elsewhere in this prospectus.
AXA Financial's consolidated financial statements are prepared in accordance
with U.S. GAAP.
<TABLE>
AT OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEARS ENDED DECEMBER 31,
---------------------- -----------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- --------- ---------- --------- --------- ---------- ---------
(IN $ MILLIONS, EXCEPT (IN $ MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE AMOUNTS)
CONSOLIDATED STATEMENTS OF EARNINGS DATA
Revenues
Universal life and investment-type product
policy fee income....................... 1,048 919 $ 1,258 $ 1,056 $ 951 $ 874 $ 788
Premiums.................................. 468 406 558 588 602 598 607
Net investment income(a).................. 1,762 1,700 2,263 2,256 2,306 2,229 2,106
Investment (losses) gains, net(b)......... (262) (84) (202) 82 (47) (2) (7)
Commissions, fees and other income........ 1,912 1,399 2,019 1,390 1,095 988 835
Contribution from the Closed Block(c)..... 74 66 86 87 103 125 143
---------- --------- ---------- --------- --------- ---------- ---------
Total revenues.............................. 5,001 4,404 5,982 5,459 5,009 4,812 4,472
Total benefits and other
deductions(d)(e)(f)....................... 3,963 3,687 5,006 4,444 4,510 4,729 4,110
---------- --------- ---------- --------- --------- ---------- ---------
Earnings from continuing operations before
Federal income taxes and minority
interest.................................. 1,038 718 976 1,015 499 83 361
Federal income tax expense (benefit) (g).... 307 239 309 338 91 (6) 95
Minority interest in net income of
consolidated subsidiaries................. 211 128 199 125 55 82 63
---------- --------- ---------- --------- --------- ---------- ---------
Earnings from continuing operations before
cumulative effect of accounting change.... 521 351 468 552 353 6 204
Earnings (loss) from discontinued
operations, net:
of Federal income taxes:
Investment Banking and Brokerage
segment(h).............................. 376 493 630 279 295 200 162
Other discontinued
operations(a)(i)(j)(k).................. (6) (10) 28 3 (87) (84) --
Tax provision related to planned disposal of
Investment Banking and Brokerage
segment................................... (407) -- -- -- -- -- --
Cumulative effect of accounting changes, net
of Federal income taxes................... -- -- -- -- -- (23) --
</TABLE>
18
<PAGE>
<TABLE>
AT OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEARS ENDED DECEMBER 31,
---------------------- -----------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- --------- ---------- --------- --------- ---------- ---------
(IN $ MILLIONS, EXCEPT (IN $ MILLIONS, EXCEPT PER SHARE AMOUNTS)
PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net earnings................................ 483 834 1,126 833 561 99 365
Dividends on preferred stocks............... -- -- -- -- 16 27 27
---------- --------- ---------- --------- --------- ---------- ---------
Net Earnings Applicable to Common Shares.... 483 834 $ 1,126 $ 833 $ 545 $ 72 $ 339
========== ========= ========== ========= ========= ========== =========
PER COMMON SHARE:
Basic:
Earnings (loss) from Continuing Operations
before Cumulative Effect of Accounting
Change.................................. $ 1.20 $ 0.80 $ 1.07 $ 1.24 $ 0.84 $ (0.06) $ 0.48
========== ========= ========== ========= ========= ========== =========
Net Earnings.............................. $ 1.12 $ 1.90 $ 2.58 $ 1.88 $ 1.35 $ 0.20 $ 0.92
========== ========= ========== ========= ========= ========== =========
Diluted:
Earnings (loss) from Continuing Operations
before Cumulative Effect of Accounting
Change.................................. 1.17 0.79 1.04 1.22 0.81 (0.06) 0.48
========== ========= ========== ========= ========= ========== =========
Net Earnings.............................. $ 1.00 $ 1.82 $ 2.45 $ 1.81 $ 1.24 $ 0.18 $ 0.87
========== ========= ========== ========= ========= ========== =========
Cash Dividends Per Common Share............. $ 0.075 $ 0.075 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10
========== ========= ========== ========= ========= ========== =========
CONSOLIDATED BALANCE SHEETS DATA
Total assets(e)(k).......................... $ 105,862 $ 93,675 $ 101,594 $ 89,517 $ 81,942 $ 74,629 $ 70,089
Long-term debt.............................. 2,403 1,991 1,927 2,113 1,839 2,501 2,893
Total liabilities(e)(k)..................... 99,475 87,951 95,755 83,824 76,669 70,641 65,980
Shareholders' equity........................ 6,387 5,724 5,839 5,693 5,274 3,988 4,109
</TABLE>
------------------------------
(a) Net investment income and Other discontinued operations included
$27 million, $53 million, $114 million and $155 million for 1998, 1997, 1996
and 1995 respectively, recognized as investment income by continuing
operations and as interest expense by discontinued operations relating to
intersegment loans.
(b) Investment gains, net, included additions to asset valuation allowances and
writedowns of fixed maturities and, in 1997 and 1996 equity real estate, for
continuing operations totaling $172 million, $169 million, $291 million,
$188 million, $484 million, $179 million and $198 million for the nine
months ended September 30, 2000 and 1999 and for the years ended 1999, 1998,
1997, 1996 and 1995, respectively. In 1997, additions to valuation
allowances of $228 million were recorded related to the accelerated equity
real estate sales program and $132 million of writedowns on real estate held
for production of income were recorded. As a result of the implementation of
SFAS No. 121, 1996 results include the release of valuation allowances of
$152 million on equity real estate and the recognition of impairment losses
of $144 million on real estate held for production of income.
(c) The results of the Closed Block are reported on one line in the consolidated
statements of earnings. Total assets and total liabilities, respectively,
include the assets and liabilities of the Closed Block. See Note 7 to the
consolidated financial statements attached as exhibit 99.1 to the Current
Report on Form 8-K of AXA Financial filed with the SEC on November 14, 2000,
which is incorporated by reference in this prospectus.
(d) In 1999, revisions to estimated future gross profits used to determine the
amortization of DAC for universal life and investment-type products resulted
in a writedown of DAC of $132 million. In 1996, AXA Financial wrote off
$145 million of unamortized DAC on disability income ("DI") products and
strengthened reserves by $248 million for the DI and Pension Par lines of
business. As a result, earnings from continuing operations decreased by
$256 million ($393 million pre-tax). See Note 2 to the consolidated
financial statements attached as exhibit 99.1 to AXA Financial's Current
Report on Form 8-K filed with the SEC on November 14, 2000, which is
incorporated by reference in this prospectus.
(e) Total benefits and other deductions included Corporate interest expense of
$91 million, $77 million, $102 million, $104 million, $111 million,
$123 million and $85 million for the nine months ended September 30, 2000
and 1999 and for the years ended 1999, 1998, 1997, 1996 and 1995,
respectively.
(f) Total benefits and other deductions included provisions associated with
exit and termination costs of $42 million, $24 million and $32 million for
1997, 1996 and 1995, respectively.
(g) In 1997, AXA Financial released $98 million of tax reserves related to years
prior to 1989.
(h) Operating results for the Investment Banking and Brokerage segment are
included in discontinued operations for 1999, 1998, 1997, 1996 and 1995,
respectively. See Note 8 of Notes to Consolidated Financial Statements
attached as exhibit 99.1 to AXA Financial's Current Report on Form 8-K filed
with the SEC on November 14, 2000, which is incorporated by reference in
this prospectus.
(i) Other Discontinued Operations, net of Federal income taxes included
additions to asset valuation allowances and writedowns of fixed maturities
and, in 1997 and 1996, equity real estate, which totaled $6 million,
$32 million, $51 million, $33 million, $213 million, $36 million and
$38 million for the nine months ended September 30, 2000 and 1999 and for
the years ended
19
<PAGE>
1999, 1998, 1997, 1996 and 1995, respectively. In 1997, additions to
valuation allowances of $80 million were recognized related to the
accelerated equity real estate sales program and $93 million of writedowns
on real estate held for production of income were recognized. The
implementation of SFAS No. 121 in 1996 resulted in the release of existing
valuation allowances of $72 million on equity real estate and recognition of
impairment losses of $70 million on real estate held for production of
income.
(j) During the nine months ended September 30, 2000 and 1999 and the years
ended 1999, 1998, 1997 and 1996 reviews of the allowance for future losses
for other discontinued operations, management released the allowance in 1999
and 1998 and increased the allowance in the nine months ended September 30,
2000 and 1999 and for the years ended 1997 and 1996. As a result, net
earnings decreased by $6 million and $10 million for the nine months ended
September 30, 2000 and 1999 and net earnings increased by $28 million and
$3 million and decreased by $87 million and $84 million for 1999, 1998, 1997
and 1996, respectively. Incurred gains (losses) of $4 million, $(2) million,
$(19) million, $50 million, ($154) million, ($24) million and ($25) million
for the nine months ended September 30, 2000 and 1999 and years ended
December 31, 1999, 1998, 1997, 1996 and 1995, respectively, were credited
(charged) to other discontinued operations allowance for future losses. See
Note 8 to the consolidated financial statements attached as exhibit 99.1 to
AXA Financial's Current Report on Form 8-K filed with the SEC on
November 14, 2000, which is incorporated by reference in this prospectus.
(k) Assets and liabilities relating to other discontinued operations are not
reflected on the consolidated balance sheets of AXA Financial, except that
the net amount due to continuing operations for intersegment loans made to
other discontinued operations in excess of continuing operations'
obligations to fund other discontinued operations' accumulated deficit is
reflected as "Amounts due from discontinued operations" in 1998, 1997, 1996
and 1995.
20
<PAGE>
SELECTED UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following selected unaudited pro forma condensed consolidated financial
information gives pro forma effect to the following transactions:
- the buyout of the minority interests in Sun Life & Provincial Holdings,
which was completed on July 26, 2000;
- the sale of the 71% interest in Donaldson, Lufkin & Jenrette held by
AXA Financial and certain of its affiliates, which was completed on
November 3, 2000; and
- the buyout of the minority interests in AXA Financial in connection
with the exchange offer and merger described in this prospectus.
The unaudited pro forma financial information gives effect to each of the
three transactions described above as if each of the transactions had occurred
on June 30, 2000, for the pro forma balance sheet, and on January 1, 1999, for
the pro forma income statements, subject to the assumptions and adjustments
described in the notes to the unaudited pro forma financial information. The
details of each transaction and the notes explaining the assumptions and
adjustments relating to the unaudited pro forma financial information have not
been presented in this summary. See "Unaudited Pro Forma Financial Information"
for a description of these transactions and the related pro forma assumptions
and adjustments.
THE UNAUDITED PRO FORMA FINANCIAL INFORMATION IS PROVIDED FOR ILLUSTRATIVE
PURPOSES ONLY AND DOES NOT PURPORT TO BE INDICATIVE OF WHAT THE ACTUAL RESULTS
OF OPERATIONS OR FINANCIAL CONDITION OF AXA AND ITS SUBSIDIARIES WOULD HAVE BEEN
HAD THESE TRANSACTIONS BEEN CONSUMMATED ON OR AS OF THE DATES INDICATED, NOR
DOES IT PURPORT TO BE INDICATIVE OF THE RESULTS OF OPERATIONS OR FINANCIAL
CONDITION THAT MAY BE ACHIEVED IN THE FUTURE.
Prior to the three transactions reflected in the unaudited pro forma
information, the results of operations and financial condition of Sun Life &
Provincial Holdings, AXA Financial and Donaldson, Lufkin & Jenrette, all of
which were subsidiaries of AXA, were consolidated and included in AXA's
unaudited interim consolidated financial statements as of and for the six months
ended June 30, 2000, included elsewhere in this prospectus, and in AXA's
historical audited consolidated financial statements included in the 1999 AXA
Form 20-F, which is incorporated by reference in this prospectus. The net assets
and net income attributable to the minority shareholdings in Sun Life &
Provincial Holdings and in AXA Financial, which included a minority interest in
Donaldson, Lufkin & Jenrette, were excluded from AXA's consolidated
shareholders' equity and net income and included in the balance sheet and income
statement as a separate line item entitled "Minority Interests".
The unaudited pro forma financial information has been prepared in
accordance with French GAAP. As French GAAP differs in certain significant
respects from U.S. GAAP, AXA's consolidated net income and shareholders' equity
on a pro forma basis under French GAAP have been reconciled to (i) U.S. GAAP,
and (ii) U.S. GAAP, except for the adjustment for the change in unrealized
investment gains and losses on assets allocated to the U.K. with-profit
contracts in Sun Life & Provincial Holdings' life insurance operations, net of
deferred tax. See "Unaudited Pro Forma Financial Information" for the
reconciliation from French GAAP to U.S. GAAP.
The unaudited pro forma financial information is presented in euro. For your
convenience, we have translated the euro amounts to U.S. dollars using the Euro
Noon Buying Rate as of November 7, 2000 of E1.00 = $0.8583.
21
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AXA
PRO FORMA
FRENCH GAAP
AT JUNE 30, 2000
---------------------
(UNAUDITED)
---------------------
(EM) ($M)
-------- ---------
<S> <C> <C>
Goodwill.................................................... 12,237 10,503
Investments including separate account assets............... 383,816 329,429
Cash and cash equivalents................................... 25,921 22,248
Deferred acquisition costs and value of purchased business
in force.................................................. 12,705 10,904
Broker-dealer receivables................................... 2,715 2,330
Other assets................................................ 39,976 34,311
-------- --------
TOTAL ASSETS................................................ 477,368 409,725
======== ========
Future policy benefits, other policy liabilities, insurance
claims and claims expenses (including separate account
liabilities).............................................. 372,939 320,094
Total short and long term debt (excluding subordinated debt
and mandatorily convertible notes)........................ 15,252 13,090
Securities sold under repurchase agreements................. 4 3
Broker-dealer related payables.............................. 541 464
Accrued expenses and other liabilities...................... 52,705 45,237
-------- --------
TOTAL LIABILITIES, EXCLUDING SUBORDINATED DEBT AND
MANDATORILY CONVERTIBLE NOTES............................. 441,441 378,889
======== ========
Minority interests.......................................... 3,615 3,103
Subordinated debt and mandatorily convertible notes......... 7,877 6,761
Shareholders' equity:
Ordinary shares and share premium........................... 16,935 14,535
Retained earnings........................................... 7,503 6,440
-------- --------
TOTAL SHAREHOLDERS' EQUITY (NET ASSETS)..................... 24,438 20,975
-------- --------
TOTAL LIABILITIES, MINORITY INTERESTS, SUBORDINATED DEBT,
MANDATORILY CONVERTIBLE NOTES AND SHAREHOLDERS' EQUITY.... 477,368 409,725
======== ========
</TABLE>
22
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
AXA
PRO FORMA
FRENCH GAAP
-----------------------------------------------
(UNAUDITED)
-----------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
--------------------- -----------------------
(EM) ($M) (EM) ($M)
<S> <C> <C> <C> <C>
Gross premiums and financial services revenues,
including change in unearned premium
reserve.......................................... 32,276 27,702 56,866 48,808
Net investment result.............................. 8,384 7,196 15,186 13,034
------- ------- ------- -------
TOTAL REVENUES..................................... 40,660 34,899 72,052 61,842
------- ------- ------- -------
Insurance benefits and claims...................... (32,129) (27,576) (56,681) (48,649)
Reinsurance ceded, net............................. 53 45 808 694
Acquisition expenses............................... (2,987) (2,564) (5,616) (4,820)
Administrative expenses............................ (3,805) (3,266) (6,919) (5,939)
Amortization of goodwill, net...................... (197) (169) (859) (737)
------- ------- ------- -------
TOTAL BENEFITS, CLAIMS AND OTHER DEDUCTIONS........ (39,065) (33,530) (69,267) (59,452)
------- ------- ------- -------
Income before income tax expense................... 1,597 1,371 2,785 2,391
Income tax expense................................. (463) (397) (887) (761)
Minority interests................................. (171) (147) (95) (82)
Equity in income from unconsolidated entities...... (1) (1) (10) (9)
------- ------- ------- -------
NET INCOME......................................... 961 825 1,793 1,539
======= ======= ======= =======
</TABLE>
------------------------
AXA'S UNAUDITED PRO FORMA FINANCIAL INFORMATION UNDER U.S. GAAP
<TABLE>
<CAPTION>
U.S. GAAP, EXCEPT FOR
ADJUSTMENT FOR UNREALIZED
INVESTMENT GAINS OR LOSSES
ON ASSETS ALLOCATED TO
THE U.K. WITH-PROFIT CONTRACTS,
U.S. GAAP NET OF DEFERRED TAX
PRO FORMA PRO FORMA
(UNAUDITED) (UNAUDITED)
------------------- -------------------------------
(EM) ($M) (EM) ($M)
-------- -------- -------------- --------------
<S> <C> <C> <C> <C>
AXA shareholders' equity at June 30,
2000..................................... 32,210 27,646 32,416 27,823
AXA net income:
Six months ended June 30, 2000........... 1,002 860 614 527
Year ended December 31, 1999............. 32 27 1,897 1,627
</TABLE>
23
<PAGE>
COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA
The following table presents historical and pro forma per share data for AXA
and AXA Financial and pro forma equivalent data based on the number of AXA
ordinary shares represented by ADSs to be issued in the offer and subsequent
merger of AXA Financial. You should read the data presented below in conjunction
with (i) the audited consolidated financial statements of AXA included in the
1999 AXA Form 20-F which is incorporated by reference in this prospectus,
(ii) the unaudited interim consolidated financial statements of AXA for the six
months ended June 30, 2000 included elsewhere in this prospectus, (iii) the
audited consolidated financial statements of AXA Financial contained in its
Current Report on Form 8-K filed with the SEC on November 14, 2000 and the
unaudited consolidated financial statements included in AXA Financial's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, both of which
are incorporated by reference in this prospectus. You should also read the
unaudited pro forma financial information included elsewhere in this prospectus.
The data set forth in the following table are provided for the year ended
December 31, 1999 and for the six months ended June 30, 2000. AXA Financial's
per share data in respect of income from continuing operations for the year
ended December 31, 1999 and the six months ended June 30, 2000 have been
restated to reflect the treatment of Donaldson, Lufkin & Jenrette as a
discontinued operation, following the sale of Donaldson, Lufkin & Jenrette to
the Credit Suisse Group. Historical data for AXA have not been restated as a
result of that transaction. Pro forma data for AXA reflect the effect of the
acquisition of the minority interests in Sun Life & Provincial Holdings, the
sale of Donaldson, Lufkin & Jenrette and the offer and subsequent merger
described in this prospectus as if these transactions had occurred at the
beginning of the periods indicated or at a specified date. The pro forma data
are not necessarily indicative of actual or future operating results or of the
financial condition that would have occurred or will occur upon consummation of
these transactions.
The basis on which the pro forma per share data are calculated are set out
in "Unaudited Pro Forma Financial Information" included elsewhere in this
prospectus.
24
<PAGE>
<TABLE>
<CAPTION>
AXA
AXA FINANCIAL AXA
(REPORTED IN (REPORTED IN AXA PRO FORMA
EURO) $) PRO FORMA EQUIVALENT
HISTORICAL (1) HISTORICAL (2) (3) (4)
------------------- ------------------- ------------------- -------------------
E ($)(5) E ($)(5) E ($)(5) E ($)(5)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FRENCH GAAP:
FOR THE YEAR ENDED DECEMBER 31, 1999
Income from continuing operations
--Basic................................... 5.73 4.92 -- -- 4.39 3.76 0.65 0.56
--Diluted................................. 5.39 4.63 -- -- 4.21 3.61 0.62 0.53
Cash dividends per share.................. 2.00 1.72 -- -- 2.00 1.72 0.30 0.25
Net assets per share...................... 45.90 39.40 -- -- -- -- -- --
FOR THE SIX MONTHS ENDED JUNE 30, 2000
Income from continuing operations
--Basic................................... 3.32 2.85 -- -- 2.29 1.97 0.34 0.29
--Diluted................................. 3.11 2.67 -- -- 2.21 1.90 0.33 0.28
Cash dividends per share.................. -- -- -- -- -- -- -- --
Net assets per share...................... 54.40 46.70 -- -- 58.36 50.09 8.61 7.39
U.S. GAAP:
FOR THE YEAR ENDED DECEMBER 31, 1999
Income from continuing operations
--Basic................................... 3.46 2.97 1.25 1.07 0.08 0.07 0.01 0.01
--Diluted................................. 3.32 2.85 1.21 1.04 0.18 0.15 0.03 0.03
Cash dividends per share.................. 2.00 1.72 0.12 0.10 2.00 1.72 0.30 0.25
Net assets per share...................... 64.29 55.18 15.69 13.47 -- -- --
FOR THE SIX MONTHS ENDED JUNE 30, 2000
Income from continuing operations
--Basic................................... 3.30 2.83 0.89 0.76 2.41 2.07 0.36 0.31
--Diluted................................. 3.13 2.69 0.86 0.74 2.34 2.00 0.35 0.30
Cash dividends per share.................. -- -- 0.06 0.05 -- -- -- --
Net assets per share...................... 70.31 60.34 17.02 14.61 77.78 66.76 11.47 9.84
</TABLE>
------------------------------
(1) As at June 30, 2000 and December 31, 1999, AXA had an economic interest in
Sun Life & Provincial Holdings of 56.2% and 56.3%, respectively, and in AXA
Financial of 58.5% and 58.4%, respectively; AXA Financial had an ownership
interest in Donaldson, Lufkin & Jenrette of 70.7% and 71.4%, respectively.
Sun Life & Provincial Holdings and AXA Financial, including Donaldson,
Lufkin & Jenrette, were consolidated and included in AXA's historical
consolidated financial statements for the six months ended June 30, 2000 and
for the year ended December 31, 1999. AXA's group share in each of these
entities was included in AXA's consolidated shareholders' equity and
consolidated net income.
(2) AXA Financial is a U.S. company which publishes financial statements in
accordance with U.S. GAAP. Per share information relating to AXA Financial
in accordance with French GAAP is meaningless for the purposes of this
prospectus as the transaction described in this prospectus is not a merger
of two separate companies but the acquisition of the minority interests in
AXA Financial which has been structured as an exchange offer followed by a
merger.
(3) The AXA pro forma per share data reflects the effects of the minority buyout
of Sun Life & Provincial Holdings, the sale of Donaldson, Lufkin & Jenrette
and the buyout of the minority interests in AXA Financial in connection with
the offer and subsequent merger described in this prospectus. The pro forma
per share information includes the additional shares to be issued in the
form of ADSs by AXA in the acquisition of the minority interests of AXA
Financial. See Notes 10 and 12 to Unaudited Pro Forma Financial Information.
(4) The pro forma equivalent data is calculated by dividing the AXA Pro Forma
per ordinary share by two, the number of AXA ADSs representing one ordinary
share of AXA, and by multiplying by the exchange ratio of 0.295.
(5) AXA's per ordinary share data in euro have been translated to U.S. dollars
and AXA Financial's per share data in U.S. dollars have been translated to
euro using the Euro Noon Buying Rate as of November 7, 2000 of
E1.00=$0.8583.
25
<PAGE>
MARKET INFORMATION
The following table presents trading information on the New York Stock
Exchange Composite Tape for AXA ADSs and shares of AXA Financial common stock
for the calendar periods indicated.
<TABLE>
<CAPTION>
AXA ADSS AXA FINANCIAL SHARES
------------------- -----------------------------------------
(HISTORICAL) (EQUIVALENT)
------------------- -------------------
(IN $) HIGH LOW HIGH LOW HIGH LOW
------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
June 2000....................................... 80.62 74.37 43.56 34.00 59.53 57.69
July 2000....................................... 79.62 71.75 40.87 35.00 59.24 56.92
August 2000..................................... 79.00 70.31 52.31 38.44 59.06 56.49
September 2000.................................. 73.69 63.88 52.50 49.00 57.49 54.59
October 2000.................................... 67.94 59.69 54.06 49.69 55.80 53.36
November 2000 (through November 20)............. 70.69 67.50 55.81 54.81 56.60 55.66
</TABLE>
On August 29, 2000, the last full trading day prior to the announcement of
AXA's initial offer, the closing price on the NYSE of the ADSs and the shares of
AXA Financial common stock was $79.00 and $52.25, respectively. On October 17,
2000, the last full trading day before the announcement of the execution of the
Merger Agreement, the closing price on the NYSE of the ADSs and the shares of
AXA Financial common stock was $64.00 and $50.63, respectively. Based on the
closing price of the AXA ADSs on that date and the exchange ratio, the offer
valued each share of AXA Financial common stock at $54.63. This constituted a
5.16% premium over the closing price of the shares of AXA Financial common stock
on August 29, 2000, a 24.3% premium over the average market price of the shares
of AXA Financial common stock during the 30 trading days preceding the
announcement of the offer and a 38.3% premium over their average market price
during the 90 trading days period preceding the announcement of the offer. On
November 20, 2000, the last full trading day before the printing of this
prospectus, the closing price on the NYSE of the AXA ADSs and the shares of AXA
Financial common stock was 68.50 and 55.38, respectively. As of that date, the
offer valued each share of AXA Financial common stock at 55.96.
26
<PAGE>
RISK FACTORS
BY EXCHANGING YOUR SHARES OF AXA FINANCIAL COMMON STOCK IN THE OFFER, YOU
WILL BE CHOOSING TO INVEST IN AXA ADSS. AN INVESTMENT IN AXA ADSS INVOLVES
RISKS. IN ADDITION TO THE OTHER INFORMATION INCLUDED AND INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, YOU SHOULD CONSIDER CAREFULLY THE MATTERS
DESCRIBED BELOW IN DETERMINING WHETHER TO TENDER YOUR SHARES.
RISKS RELATED TO THE EXCHANGE OFFER
YOU ARE BEING OFFERED A FIXED PORTION OF AN AXA ADS FOR EACH SHARE OF AXA
FINANCIAL COMMON STOCK WHICH EXPOSES YOU TO THE RISK OF MARKET FLUCTUATIONS.
You are being offered a fixed portion of an AXA ADS in this exchange offer,
rather than a number of AXA ADSs with a fixed market value. Consequently, the
market value of the AXA ADSs at the time of the completion of this exchange
offer, during the subsequent offering period and thereafter may fluctuate
significantly from the values indicated in this prospectus. On November 20,
2000, the closing price on the NYSE for AXA ADSs was $68.50. As of that date,
AXA's offer valued each AXA Financial share at $55.96.
RISKS RELATING TO OPERATIONS
THE RECENT CONSOLIDATION IN THE GLOBAL FINANCIAL SERVICES INDUSTRY HAS INCREASED
COMPETITION IN ALL OUR BUSINESS LINES.
We face strong and increasing competition in all our business lines. Our
competitors include mutual funds companies, asset management firms, commercial
banks and other insurance companies, many of which are regulated differently
than we are and offer alternative products or more competitive pricing than we
do. The recent consolidation in the global financial services industry has also
enhanced the competitive position of some of our competitors by broadening the
range of their products and services and increasing their access to capital. In
addition, development of alternative distribution channels for certain types of
insurance and securities products, including through the internet, may result in
increasing competition as well as pressure on margins for certain types of
products. These competitive pressures could result in increased pricing
pressures on a number of our products and services, particularly as competitors
seek to win market share, and may harm our ability to maintain or increase our
profitability.
The growth of our asset management business depends to a significant extent
on factors such as investment returns and risk management. We will not be able
to accumulate and retain assets under management if our investment results
underperform the market or the competition. Such underperformance would likely
result in asset withdrawals and reduced sales.
SIGNIFICANT SHAREHOLDERS OF AXA MAY HAVE INTERESTS CONFLICTING WITH YOUR
INTERESTS.
Upon completion of the offer and the merger and after giving effect to the
issuance of AXA ordinary shares in the form of ADSs in connection with these
transactions, the Mutuelles AXA, four French mutual insurance companies, acting
as a group, will own, directly and indirectly through Finaxa, a holding company
they control, approximately 21.2% of the issued ordinary shares of AXA
representing approximately 33.5% of the voting power. Most of the shares owned
by the Mutuelles AXA have double voting rights pursuant to the provisions of
AXA's STATUTS described under "Comparison of Certain Rights of AXA Shareholders
and AXA Financial Stockholders--Voting Rights--AXA". The Mutuelles AXA are
parties to agreements pursuant to which they have stated their intention to
collectively exercise majority control over Finaxa. Given the long-term nature
of their relationship with AXA, we cannot assure you that the interests of the
Mutuelles AXA will not, from time to time, conflict with your interests as a
shareholder. For example, even though the
27
<PAGE>
Mutuelles do not hold a majority of the total voting power in AXA, a decision by
the Mutuelles AXA to decline or deter a future offer to acquire control of AXA,
which other shareholders may find attractive, may prevent other shareholders
from realizing a control premium for their AXA ordinary shares. In addition,
Finaxa has the right to terminate, under certain circumstances, or limit AXA's
rights to use the AXA trademark, as described under "--Finaxa may terminate the
licensing to AXA of the AXA trademark which we consider to be important to the
marketing of our products and services". The existence of this right of Finaxa
may also deter potential acquirors from making an offer to acquire control of
AXA. We cannot assure you that the Mutuelles AXA will not decide to increase
their interest in AXA, or to sell all or a portion of the ordinary shares they
own, at some future date.
The life insurance and property and casualty insurance businesses of the
Mutuelles AXA and the life insurance and property and casualty insurance
businesses of our French insurance subsidiaries use similar distribution
channels but are managed in such a way as to maintain the legal distinctions
between their respective businesses. There are no agreements between the
Mutuelles AXA and AXA's insurance subsidiaries that restrict in any way their
ability to compete with one another. The Mutuelles AXA, which have no employees,
use employees of our French insurance subsidiaries. Most of the costs and
expenses of operating the life insurance and property and casualty insurance
businesses of our French insurance subsidiaries (other than commissions) are
shared by the relevant members of the AXA group and the Mutuelles AXA and
allocated among them through GROUPEMENTS D'INTERET ECONOMIQUE or GIEs. GIEs are
partnerships between various companies of the AXA group and the Mutuelles AXA
that perform various common services for their members and allocate associated
costs and expenses. These costs and expenses currently are allocated on the
basis of actual use of the specific service, to the extent practicable. The
manner of managing these insurance businesses or allocating these costs and
expenses may change in the future in a way that may increase AXA's operating
costs and adversely affect its results of operations.
THE SALE OF DONALDSON, LUFKIN & JENRETTE MAY ADVERSELY AFFECT AXA'S FUTURE
OPERATING RESULTS.
On November 3, 2000, AXA Financial, AXA, The Equitable Life Assurance
Society of the United States and AXA Participations Belgium completed the sale
of their 71% equity interest in Donaldson, Lufkin & Jenrette to the Credit
Suisse Group. Over the last several years, the results of Donaldson, Lufkin &
Jenrette have been at historically high levels. For the year ended December 31,
1999 and the six-months ended June 30, 2000, Donaldson, Lufkin & Jenrette
contributed 15% and 17%, respectively, of AXA's gross premiums and financial
services revenues and 11% and 14%, respectively, of AXA's consolidated net
income and was a major contributor to AXA's growth. Following the disposition of
Donaldson, Lufkin & Jenrette, we will no longer be active in investment banking.
The loss of Donaldson, Lufkin & Jenrette's contribution to our revenues and net
income may adversely affect our future operating results as revenues and net
income from the Other Financial Services Segment will decrease significantly in
future periods.
FLUCTUATIONS IN CURRENCY EXCHANGE RATES MAY AFFECT OUR EARNINGS.
AXA's obligations are denominated either in euro or other currencies, the
value of which is subject to exchange rate fluctuations. AXA's interest
obligations on its outstanding debt, however, are generally matched to cash
dividends to be received by AXA in the same currencies. Approximately
E264 million of the cash dividends received by AXA in 1999 were paid in
currencies other than the euro. Approximately E94 million of interest payments
were made by AXA in 1999 in currencies other than the euro.
AXA publishes its consolidated financial statements in euro. For the six
months ended June 30, 2000, approximately 57% of AXA's gross premiums and
financial services revenues and 55% of
28
<PAGE>
AXA's benefits, claims and other deductions were denominated in currencies other
than the euro, primarily U.S. dollars, Pounds sterling and Australian dollars.
Consequently, fluctuations in the exchange rates used to translate these
currencies, and the Japanese Yen following AXA's acquisition of Nippon Dantai in
March 2000, into euro may have a significant impact on AXA's reported results of
operations from year to year.
A DECLINE OR INCREASED VOLATILITY IN THE SECURITIES MARKETS, AND OTHER
ECONOMIC FACTORS, MAY ADVERSELY AFFECT OUR BUSINESS, PARTICULARLY IN RESPECT OF
CERTAIN OF OUR INSURANCE PRODUCTS, MUTUAL FUNDS AND ASSET MANAGEMENT BUSINESSES.
Fluctuations in the securities markets and other economic factors may
adversely affect sales of our separate account unit linked products,
participating life insurance and pension products, variable annuities, mutual
funds, and asset management services. In particular, a protracted or steep
decline in the stock or bond markets would likely reduce the popularity of these
products.
The level of volatility in the markets in which we invest and the overall
investment returns earned in those markets also affect our profitability. In
particular, our assets, earnings and our ability to generate new sales in recent
years have increased due to significant growth in the retirement-oriented
investment market and very strong stock market appreciation, coupled with solid
bond market appreciation spurred by declining interest rates. We cannot
guarantee that these economic and market trends will continue, and if they do
not, our net income, revenues and assets will likely decline significantly. For
example, in the first nine months of 2000, AXA Financial realized investment
losses of $232.7 million due to $136.3 million of writedowns primarily on high
yield and emerging market securities held in its fixed maturity portfolio and
$96.4 million of losses on sales. We may realize additional losses on holdings
of such securities in the future.
INTEREST RATE VOLATILITY MAY ADVERSELY AFFECT OUR PROFITABILITY.
Changes in interest rates affect many aspects of our business and can
significantly affect our profitability. In periods of increasing interest rates,
withdrawals of life insurance policies and fixed annuity contracts may increase
as policyholders choose to forego insurance protection and seek higher
investment returns. Obtaining cash to satisfy these obligations may require us
to liquidate fixed income investment assets at a time when the market prices for
those assets are depressed because interest rates have increased. This may
result in realized investment losses. Regardless of whether we realize an
investment loss, these cash payments would result in a decrease in total
invested assets, and a decrease in net income. Premature withdrawals may also
cause us to accelerate amortization of policy acquisition costs, which would
also reduce our net income.
Conversely, during periods of declining interest rates, life insurance and
annuity products may be relatively more attractive to consumers, resulting in
increased premium payments on products with flexible premium features, and a
higher percentage of insurance policies remaining in force from year to year.
During such a period, our investment earnings may be lower because the interest
earnings on our fixed income investments likely will have declined in parallel
with market interest rates. In addition, mortgages and bonds in our investment
portfolio will be more likely to be prepaid or redeemed as borrowers seek to
borrow at lower interest rates, and we may be required to reinvest the proceeds
in securities bearing lower interest rates. Accordingly, during periods of
declining interest rates, our profitability may suffer as the result of a
decrease in the spread between interest rates credited to policyholders and
returns on our investment portfolio.
The profitability of our spread-based businesses depends in large part upon
our ability to manage interest rate spreads, and the credit and other risks
inherent in our investment portfolio. We cannot guarantee, however, that we will
successfully manage our interest rate spreads or the potential negative impact
of those risks.
29
<PAGE>
ELIMINATION OF TAX BENEFITS FOR OUR PRODUCTS AND OTHER CHANGES IN LAWS AND
REGULATIONS MAY ADVERSELY AFFECT SALES OF OUR INSURANCE AND INVESTMENT ADVISORY
PRODUCTS.
Changes to tax laws may affect the attractiveness of certain of our products
which currently have favorable tax treatment. For example, an unfavorable change
in the tax treatment of life insurance products in France in 1998 had an adverse
impact on the market for these products. From time to time, governments in the
jurisdictions in which we do business, including the United States government,
have considered proposals for tax law changes that could adversely affect our
products. These proposals have included, for example, proposals to tax the
undistributed increase in value of life insurance policies. The enactment of any
such tax legislation would likely result in a significant reduction in sales of
our currently tax-favored products.
We are subject to detailed and comprehensive regulation and supervision in
all the jurisdictions in which we transact business. Our insurance operations
are subject to insurance laws and regulations which are generally intended to
protect policyholders, not our shareholders. Changes in existing insurance laws
and regulations may materially affect the way in which we conduct our business
and the products we may offer. In addition, changes in pension and employee
benefit regulation, social security regulation, financial services regulation,
taxation and the regulation of securities products and transactions may also
adversely affect our ability to sell new policies or our claims exposure on
existing policies.
Our asset management operations are subject to securities laws which are
primarily intended to protect investors in the securities markets or investment
advisory clients and generally grant supervisory authorities broad
administrative powers. Changes to these laws and regulations could have a
material adverse effect on our asset management operations and on the company as
a whole.
In 2000, the U.K. government adopted new legislation relating to employee
pension schemes, which will be introduced in April 2001. The new legislation
imposes a limit on the fee that insurance companies are allowed to charge for
administering stakeholders' pensions, the simplified individual pensions
promoted by the new legislation. Insurance companies in the United Kingdom have
already begun offering regulated stakeholders' pensions for low fees in line
with the new legislation. In addition, certain of our competitors have begun
charging the same low fees for unregulated pension products, thus increasing the
pricing pressure on our U.K. life insurance business. As a result of this
legislative change and the ensuing pricing and competitive pressure, the
profitability of operating in the U.K. life insurance market may decrease
significantly.
IF OUR ESTABLISHED CLAIMS RESERVES ARE INSUFFICIENT TO COVER CLAIMS UNDER OUR
PROPERTY AND CASUALTY INSURANCE AND REINSURANCE POLICIES OUR EARNINGS WILL BE
ADVERSELY AFFECTED.
In accordance with industry practice and accounting and regulatory
requirements, we establish reserves for claims and claims expenses related to
our property and casualty insurance and reinsurance businesses. We do not
discount our insurance reserves for claims and claims-handling expenses for
which final settlement has been agreed and the payments are generally fixed over
a period of time.
The process of estimating the insurance claims reserve is based on
information available at the time the reserve is originally established.
However, claims reserves are subject to change due to the number of variables
which affect the ultimate cost of claims, such as:
- development in claims (frequency, severity and pattern of claims) between
the amount estimated and actual experience,
- changes arising from the time lag between the occurrence of the insured
event, notification of the claim (from the insured party, a third party or
a ceding company) and the final
30
<PAGE>
settlement (payment) of the claim, primarily attributable to long tail
casualty claims which may take several years to settle due to size and
nature of claim, and the occurrence of large natural catastrophes late in
the financial year for which limited information may be available at year
end,
- judicial trends,
- regulatory changes, and
- inflation.
As a result, actual losses may deviate from the original gross reserves
established. Consequently, the reserve may be re-estimated reflecting those
changes resulting in loss reserve redundancies (in cases where the original
gross claims reserve was overstated) or deficiencies (in cases where the
original gross claims reserve was understated).
In addition, certain of our property and casualty insurance operations are
required by local regulations in the countries in which they operate to
establish catastrophe and equalization reserves. You can find a description of
these regulations in the section entitled "Item 1--Business
Description--Additional Factors Which May Affect AXA's Business--Regulation" in
the 1999 AXA Form 20-F.
We continually review the adequacy of the established claims reserves,
including emerging claims development, and actual claims compared to the
original assumptions used to estimate initial gross claims reserves. Based on
current information available, we consider that these provisions are sufficient.
Insurance claims provisions are subject to audit on an annual basis by our
auditors. However, because the establishment of claims reserves is an inherently
uncertain process, we cannot assure you that ultimate losses will not materially
exceed our claims reserves and have a material adverse effect on our earnings.
As with other property and casualty insurers and reinsurers, our operating
results and financial condition can be adversely affected by volatile and
unpredictable natural and man-made disasters, such as hurricanes, windstorms,
earthquakes, fires and explosions. We generally seek to reduce our exposure to
these events through individual risk selection and the purchase of reinsurance.
We have experienced in the past, and could experience in the future, material
losses from such catastrophic events.
OUR ACQUISITIONS MAY DIVERT MANAGEMENT AND MAY INVOLVE RISK OF UNDISCLOSED
LIABILITIES.
In recent years we have effected a number of acquisitions around the world
and we may make further acquisitions in the future. Growth by acquisition
involves risks that could adversely affect our operating results, including the
substantial amount of management time that may be diverted from operations to
pursue and complete acquisitions, difficulties in managing and integrating the
additional operations and personnel of acquired companies, significant delays in
completing the integration of acquired companies and the potential loss of key
employees or customers of these companies. Our acquisitions could result in the
incurrence of additional indebtedness, costs, contingent liabilities and
amortization expenses related to goodwill and other intangible assets, all of
which could materially adversely affect our businesses, financial condition and
results of operations. Future acquisitions may also have a dilutive effect on
the ownership and voting percentages of existing shareholders.
The businesses we have acquired include life insurance, property and
casualty insurance and investment management operations. There could be
unforeseen liabilities that arise out of the businesses we have acquired and may
acquire in the future which may not be covered by, or exceed the amount of, the
indemnification obligations of sellers.
31
<PAGE>
AS A GLOBAL BUSINESS, WE ARE EXPOSED TO DIFFERENT LOCAL POLITICAL, REGULATORY
AND BUSINESS RISKS AND CHALLENGES WHICH MAY AFFECT THE DEMAND FOR OUR PRODUCTS
AND SERVICES, THE VALUE OF OUR INVESTMENTS PORTFOLIO AND THE CREDIT QUALITY OF
LOCAL COUNTERPARTIES.
We offer our products and services in approximately 60 countries in Europe,
North and South America, the Far East and Africa through wholly-owned and
majority-owned subsidiaries, joint ventures, companies in which we hold a
non-controlling equity stake, agents and independent contractors. Our
international operations expose us to different local political, regulatory,
business and financial risks and challenges which may affect the demand for our
products and services, the value of our investment portfolio, the required
levels of our capital and surplus, and the credit quality of local
counterparties. These risks include, for example, political, social or economic
instability in countries in which we operate, fluctuations in foreign currency
exchange rates, credit risks of our local borrowers and counterparties, lack of
local business experience in certain markets, risks associated with the exposure
to insurance industry insolvencies through policyholder guarantee funds or
similar mechanisms set up in foreign markets and, in certain cases, risks
associated with the potential incompatibility with foreign partners, especially
in countries in which we are conducting business through entities we do not
control.
Our expansion in emerging markets requires us to respond to rapid changes in
market conditions in these countries. Our overall success as a global business
depends, in part, upon our ability to succeed in differing economic, social and
political conditions. We may not continue to succeed in developing and
implementing policies and strategies that are effective in each location where
we do business.
WE MAY BE UNABLE TO RETAIN PERSONNEL WHO ARE KEY TO OUR BUSINESS.
As a global financial services enterprise with a decentralized management
structure, we rely to a considerable extent on the quality of local management
in the various countries in which we operate. The success of our operations is
dependent, among other things, on our ability to attract and retain highly
qualified professional personnel. Competition for key personnel in the various
countries in which we operate is intense. Our ability to attract and retain key
personnel, in particular senior officers, experienced portfolio managers, mutual
fund managers and sales executives, is dependent on a number of factors,
including prevailing market conditions and compensation packages offered by
companies competing for the same talent, which, may offer compensation packages
that include considerable equity based incentives through stock option or
similar programs.
FINAXA MAY TERMINATE THE LICENSING TO AXA OF THE AXA TRADEMARK WHICH WE CONSIDER
TO BE IMPORTANT TO THE MARKETING OF OUR PRODUCTS AND SERVICES.
The name "AXA" and the AXA trademark are owned by Finaxa. On May 22, 1996,
our company and Finaxa entered into a licensing agreement pursuant to which
Finaxa
- granted us a non-exclusive license to use the AXA trademark in the
jurisdictions in which we currently have operations and in any additional
jurisdictions in which the AXA trademark is registered, and
- agreed not to grant licenses to use the AXA trademark to any other company
or partnership unless that company or partnership (i) holds an ownership
interest in Finaxa or (ii) is, directly or indirectly, controlled by us.
The non-exclusive license grants us the right, subject to the prior written
approval of Finaxa, to grant sublicenses to companies controlled, directly or
indirectly, by us. Finaxa has no obligation to grant any such approval. Over the
past several years, a number of our principal subsidiaries around
32
<PAGE>
the world have begun to use the AXA name pursuant to sublicenses granted by us.
We are obligated to pay Finaxa pursuant to the licensing agreement an annual fee
of FF5,000,000 (E762,245) as well as 50% of any net royalties we receive from
sublicensees. The non-exclusive license to us may be terminated at any time by
either party three months after delivery to the other party of a written notice
of termination. Finaxa has, however, agreed not to exercise its right to
terminate the license to us so long as Finaxa is our largest shareholder. Upon
termination, we and our subsidiaries are required to cease utilization of the
AXA trademark and any sublicenses will immediately terminate. In the event that
Finaxa ceases to be our single largest shareholder, Finaxa may decide at a
future date to terminate the non-exclusive license of the AXA trademark to us or
to seek to alter the terms upon which the license is granted in a way
unfavorable to us. Our inability to use the AXA trademark or any adverse change
to the terms of the license could have a negative impact on the marketing of our
products and services and on our profitability.
AS A HOLDING COMPANY, WE ARE DEPENDENT UPON OUR SUBSIDIARIES TO COVER OUR
OPERATING EXPENSES AND DIVIDEND PAYMENTS.
Our insurance and other financial services operations are generally
conducted through direct and indirect subsidiaries. As a holding company, our
principal sources of funds are dividends from subsidiaries and funds that may be
raised from time to time through the issuance of debt or equity securities or
through bank or other borrowings. As of June 30, 2000, AXA, the holding company,
had short term and long term financing debt outstanding of $1,503 million and
subordinated debt and mandatorily convertible notes outstanding of
$4,617 million. As of June 30, 2000, AXA's consolidated short term and long term
financing and operating debt outstanding was $20,317 million. In addition, as of
that date, AXA had consolidated subordinated debt and mandatorily convertible
notes outstanding of $6,967 million. For the impact of the sale of Donaldson,
Lufkin & Jenrette on the level of AXA's consolidated debt, see Unaudited Pro
Forma Financial Information included elsewhere in this prospectus.
We expect that dividends received from subsidiaries will continue to cover
our operating expenses, including interest payments on our outstanding debt
which includes our subordinated debt and mandatorily convertible bonds, and
dividend payments with respect to our ordinary shares during each of the next
three years. We expect that future acquisitions and strategic investments will
be funded from available cash flow remaining after payment of dividends and
operating expenses, cash on hand from previous securities offerings, proceeds of
future offerings of securities, and proceeds from the sale of non-core assets.
Certain of our significant subsidiaries, including AXA Financial, AXA Asia
Pacific Holdings, Sun Life & Provincial Holdings are also holding companies and
are dependent on dividends from their own subsidiaries for funds to meet their
obligations. In addition, certain of our principal insurance subsidiaries are
subject to restrictions on the amount of dividends and debt repayments that can
be paid to us and our affiliates. While we do not believe that these
restrictions constitute a material limitation on our ability to meet our
obligations or pay dividends on our shares, these restrictions may constitute a
material limitation in the future.
RISKS RELATED TO OWNERSHIP OF AXA ADSS
THE PRICE OF AXA ADSS MAY BE AFFECTED BY FACTORS DIFFERENT FROM THOSE AFFECTING
THE PRICE OF AXA FINANCIAL COMMON STOCK.
Upon completion of the offer and subsequent merger, holders of AXA Financial
common stock will become holders of AXA ADSs, subject to appraisal rights
available in connection with the merger under Delaware law. AXA's business is
broader in scope than AXA Financial's business and its geographic reach is more
expansive than that of AXA Financial. As a result, AXA's results of
33
<PAGE>
operations, as well as the price of AXA ADSs, may be affected by factors
different than those affecting AXA Financial's results of operations and the
price of AXA Financial common stock.
THE RIGHTS OF AXA'S SHAREHOLDERS ARE GOVERNED BY FRENCH LAW AND DIFFER FROM THE
RIGHTS OF STOCKHOLDERS IN TYPICAL DELAWARE CORPORATIONS.
The rights of holders of AXA ADSs and ordinary shares are governed by the
laws of France, and by AXA's STATUTS. These rights differ in certain respects
from the rights of stockholders in typical Delaware corporations. AXA Financial
stockholders may have difficulty understanding and assessing their rights as AXA
shareholders due to their unfamiliarity with corporate law and procedure in
France. Similarly, AXA Financial stockholders may have difficulty locating
attorneys or other advisors in the United States who are familiar with the
rights of a shareholder in a French company. For a description of certain
differences in the rights of AXA shareholders and AXA Financial stockholders,
see "Comparison of Certain Rights of AXA Shareholders and AXA Financial
Stockholders".
THE TRADING PRICE OF AXA ADSS AND DIVIDENDS PAID ON AXA ADSS MAY BE MATERIALLY
ADVERSELY AFFECTED BY FLUCTUATIONS IN THE EXCHANGE RATE FOR CONVERTING EURO INTO
U.S. DOLLARS.
Fluctuations in the exchange rate for converting euro into U.S. dollars may
affect the value of AXA ADSs. Specifically, as the relative value of the euro
against the U.S. dollar declines, each of the following values will also
decline:
- the U.S. dollar equivalent of the euro trading price of AXA ordinary
shares on the Paris Bourse, which may consequently cause the trading price
of AXA ADSs in the United States to also decline;
- the U.S. dollar equivalent of the proceeds that a holder of AXA ADSs would
receive upon the sale in France of any AXA ordinary shares withdrawn from
the depositary; and
- the U.S. dollar equivalent of cash dividends paid in euro on the AXA
ordinary shares represented by the AXA ADSs.
THE HOLDERS OF AXA ADSS MAY NOT BE ABLE TO EXERCISE THEIR VOTING RIGHTS DUE TO
DELAYS IN NOTIFICATION TO AND BY THE DEPOSITARY.
The depositary for the AXA ADSs may not receive voting materials for AXA
ordinary shares represented by AXA ADSs in time to ensure that holders of AXA
ADSs can instruct the depositary to vote their shares. In addition, the
depositary's liability to holders of AXA ADSs for failing to carry out voting
instructions or for the manner of carrying out voting instructions is limited by
the deposit agreement governing the AXA American Depositary Receipt facility. As
a result, holders of AXA ADSs may not be able to exercise their right to vote
and may not have any recourse against the depositary or AXA if their shares are
not voted as they have requested.
HOLDERS OF AXA ADSS WILL HAVE LIMITED RECOURSE IF AXA OR THE DEPOSITARY FAILS TO
MEET THEIR OBLIGATIONS UNDER THE DEPOSIT AGREEMENT OR IF THEY WISH TO INVOLVE
AXA OR THE DEPOSITARY IN A LEGAL PROCEEDING.
The deposit agreement expressly limits the obligations and liability of AXA
and the depositary. Neither AXA nor the depositary will be liable if they:
- are prevented, delayed or forbidden from performing any obligation by
circumstances beyond their control,
- exercise or fail to exercise discretion under the deposit agreement, or
34
<PAGE>
- take any action based upon the advice of, or information from, legal
counsel, accountants, any person presenting ordinary shares for deposit,
any holder or owner of an AXA ADR or any other person believed by it in
good faith to be competent to give such advice or information.
In addition, the depositary and AXA only have the obligation to participate in
any action, suit or other proceeding with respect to the AXA ADSs which may
involve them in expense or liability only if they are indemnified. These
provisions of the deposit agreement will limit the ability of holders of AXA
ADSs to obtain recourse if AXA or the depositary fail to meet their obligations
under the deposit agreement or if they wish to involve AXA or the depositary in
a legal proceeding.
AXA IS SUBJECT TO DIFFERENT CORPORATE DISCLOSURE STANDARDS THAN AXA FINANCIAL,
WHICH MAY LIMIT THE INFORMATION AVAILABLE TO HOLDERS OF AXA ADSS.
As a foreign private issuer, AXA is not required to comply with the notice
and disclosure requirements under the Exchange Act relating to the solicitation
of proxies for shareholder meetings. Although AXA is subject to the periodic
reporting requirements of the Exchange Act, the periodic disclosure requirements
for non-U.S. issuers under the Exchange Act are more limited than the periodic
disclosure requirements for U.S. issuers. Therefore, there may be less publicly
available information about AXA than is regularly available about other public
companies based in the United States.
JUDGMENTS OF U.S. COURTS MAY NOT BE ENFORCEABLE AGAINST US.
Judgments of U.S. courts, including those predicated on the civil liability
provisions of the Federal securities laws of the United States, may not be
enforceable in French courts. As a result, our shareholders who obtain a
judgment against us in the United States may not be able to require us to pay
the amount of the judgment. See "Limitation on Enforcement of Civil Liabilities
Under U.S. Securities Laws Against AXA, Its Management and Others" on page .
35
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain both historical and forward-looking statements concerning the
financial condition, results of operations and business of AXA. All statements
other than statements of historical fact are, or may be deemed to be,
forward-looking statements. Forward-looking statements are statements of future
expectations that are based on management's current expectations and assumptions
and involve known and unknown risks and uncertainties that could cause actual
results, performance or events to differ materially from those expressed or
implied in these statements, including those discussed elsewhere in this
prospectus and in other public filings, press releases, oral presentations and
discussions by AXA. Forward-looking statements include, among other things,
discussions concerning the potential exposure of AXA to market risks, as well as
statements expressing management's expectations, beliefs, estimates, forecasts,
projections and assumptions.
Forward-looking statements in this prospectus and the documents incorporated
by reference in this prospectus are identified by use of the following words and
other similar expressions, among others:
<TABLE>
<S> <C>
- "anticipate" - "objectives"
- "believe" - "outlook"
- "could" - "probably"
- "estimate" - "project"
- "expect" - "risks"
- "goals" - "seek"
- "intend" - "should"
- "may" - "target"
</TABLE>
The following factors could affect the future results of operations of AXA
and could cause those results to differ materially from those expressed in the
forward-looking statements included in this prospectus or incorporated by
reference in this prospectus:
- the intensity of competition from other financial institutions;
- AXA's experience with regard to mortality and morbidity trends, lapse
rates and policy renewal levels relating to its life operations which also
include health products;
- the frequency, severity and development of property and casualty claims
including catastrophic events which are uncertain in nature, and policy
renewal rates relating to AXA's property and casualty insurance business;
- market risks related to (a) fluctuations in interest rates, equity market
prices and foreign currency exchange, (b) the use of derivatives and AXA's
ability to hedge such exposures effectively, and (c) counterparty credit
risk;
- AXA's ability to develop, distribute and administer competitive products
and services in a timely, cost-effective manner and its ability to develop
information technology and management information systems to support
strategic goals while continuing to control costs and expenses;
- AXA's visibility in the market place and the financial and claims paying
ratings of its insurance subsidiaries, as well as AXA's access to adequate
financing to support its future business;
- the effect of changes in laws and regulations affecting AXA's businesses,
including changes in tax laws affecting insurance and annuity products as
well as operating income and changes in accounting and reporting
practices;
36
<PAGE>
- the costs of defending litigation and the risk of unanticipated material
adverse outcomes in such litigation;
- adverse political developments around the world, particularly in the
principal markets in which the AXA and its subsidiaries operate;
- the performance of others on whom AXA relies for distribution, investment
management, reinsurance and other services; and
- the effect of any future acquisitions.
The above factors are in addition to those factors discussed:
- In this prospectus under "Risk Factors", the "--Reasons for the Offer and
the Merger; Purpose and Structure of the Offer and the Merger" subsection
of "The Special Factors" section and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and elsewhere; and
- In the documents that AXA incorporates by reference in this prospectus,
including "Item 1--Description of Business--Additional Factors which may
Affect Business"; "Item 9--Management's Discussion and Analysis of
Financial Condition and Results of Operation" and "Item 9A--Quantitative
and Qualitative Disclosures about Market Risk" sections of the 1999 AXA
Form 20-F.
You should also read the sections entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Forward-Looking
Statements" and "Quantitative and Qualitative Disclosures About Market Risk"
included in AXA Financial's Current Report on Form 8-K filed with the SEC on
November 14, 2000 and its Quarterly Reports on Form 10-Q for the periods ended
March 31, 2000, June 30, 2000 and September 30, 2000 for a discussion of factors
that may cause the actual results of AXA Financial to differ materially from
forward-looking statements related to AXA Financial.
You should not place undue reliance on forward-looking statements. Each
forward-looking statement speaks only as of the date of the particular
statement. AXA undertakes no obligation to publicly update or revise any
forward-looking statement as a result of new information, future events or
otherwise. In light of these risks, AXA's results could differ materially from
the forward-looking statements contained in this prospectus.
37
<PAGE>
SPECIAL FACTORS
BACKGROUND OF THE OFFER; CONTACTS WITH AXA FINANCIAL
AXA regularly reviews the operations of its various subsidiaries around the
world, the markets in which they operate, and the ownership structure of those
businesses. These reviews are undertaken with a view to efficiently allocating
the AXA group's capital resources, identifying potential synergies between the
group's various existing operations, identifying potential new business
opportunities and, more generally, maximizing value.
In the spring of 2000, after AXA made an offer to acquire the public
minority in Sun Life and Provincial Holdings, its principal U.K. insurance
subsidiary, AXA began to study seriously the same objective in the United States
and retained its longtime U.S. financial advisor, Goldman Sachs & Co., for
assistance. Henri de Castries, Chairman of the Management Board of AXA raised
the possibility of such a transaction with Edward D. Miller, President and Chief
Executive Officer of AXA Financial.
On June 28, 2000, Mr. Miller asked the Board of Directors of AXA Financial
to establish a Special Committee of independent directors to be available in
connection with a possible offer by AXA to acquire the publicly held common
stock of AXA Financial. Joseph L. Dionne, John T. Hartley (Chairman), Nina
Henderson, George J. Sella, Jr. and Peter J. Tobin, none of whom are employed by
or affiliated with AXA Financial or AXA or any of its affiliates (except in
their capacity as directors of AXA Financial and Equitable Life) were appointed
to the Special Committee. The members of the Special Committee constitute a
majority of the independent directors of AXA Financial. The Special Committee
was authorized by the Board of Directors to take any and all actions necessary
or advisable in connection with the receipt, evaluation, negotiation, response,
rejection and, if appropriate and permitted by law, effectuation, or
recommendation to the Board of Directors of AXA Financial regarding the
effectuation, of any offer or proposal submitted by AXA or any other person with
respect to the publicly held common stock of AXA Financial, including the
retention of financial, legal and other advisors and any appropriate actions in
connection with the foregoing to evaluate, design, establish, implement, adopt
or amend the compensation programs for AXA Financial's employees.
On June 28, 2000, at a meeting held by telephone conference call, the
Special Committee retained Simpson Thacher & Bartlett as its legal advisor and
discussed the process of retaining a financial advisor.
On June 29, 2000, at a Special Committee meeting held by telephone
conference call, Simpson Thacher & Bartlett reviewed with the Special Committee
its role and duties under applicable law in connection with any proposal by AXA
to acquire the publicly held common stock of AXA Financial. Simpson Thacher &
Bartlett also reviewed the resolutions of the Board of Directors of AXA
Financial establishing the Special Committee, the powers of the Special
Committee and the indemnity arrangements which were to be established for the
benefit of the members of the Special Committee. At this meeting, the Special
Committee further discussed the process of retaining a financial advisor and
requested that Stanley Tulin, the Vice Chairman and Chief Financial Officer of
AXA Financial, compile background information to assist the Special Committee in
making an informed decision. The Special Committee also discussed the potential
strategic rationale of AXA for the possible transaction as well as management
and compensation issues that AXA Financial could face if it were to become a
wholly-owned subsidiary of AXA without publicly traded capital stock.
At its regular meeting on July 5, 2000, a potential transaction was
presented to AXA's Supervisory Board which considered the transaction untimely
and, therefore, did not authorize the making of an offer. AXA management in
France and its advisors continued to work on the concept
38
<PAGE>
in order to work out various problems that had been identified but not resolved
during its earlier study and to be prepared to present the transaction to AXA's
Supervisory Board at a future date.
On July 6, 2000, at a meeting of the Special Committee and representatives
of Simpson Thacher & Bartlett held by telephone conference call, the Special
Committee was informed that the Supervisory Board of AXA had not authorized the
making of an offer. In order to be better prepared to evaluate an offer should
AXA make an offer at a later time, the Special Committee continued its
discussion of possible investment banks to be retained to act as financial
advisor and decided to invite Wasserstein Perella & Co., Inc. to make a
presentation to the Special Committee at its next meeting.
At its July 6 meeting, the Special Committee also discussed the process of
reviewing the compensation and employment arrangements of AXA Financial in
connection with any proposal AXA may present. The Special Committee was
concerned that such arrangements should result in appropriate protection of, and
incentives to, AXA Financial's senior management and other appropriate employees
and should promote the stability of management and its focus on the ongoing
business of AXA Financial and thereby enhance the ability of the Special
Committee to achieve the best possible result in the negotiation of any
potential transaction. The Special Committee directed Simpson Thacher & Bartlett
to undertake a review of compensation and employment arrangements.
On July 20, 2000, Wasserstein Perella made a presentation to the Special
Committee as to its experience and qualifications in acting as a financial
advisor and reviewed various issues it believed would be important in assessing
any proposal by AXA. Following further discussion of the retention of a
financial advisor and the fee requested by Wasserstein Perella, the Special
Committee determined to retain Wasserstein Perella as financial advisor. At the
July 20 meeting, the Special Committee also continued its review of compensation
and employment arrangements.
In order to be able to assess any future proposal from AXA, Wasserstein
Perella commenced during the week of July 24, 2000 its review of the businesses,
financial condition, results of operations, prospects, business strategy and
competitive position of each of AXA and AXA Financial, as well as a general
review of the industries in which they operate.
The sale of Donaldson, Lufkin & Jenrette to Credit Suisse Group, which
became the subject of serious negotiations in August 2000 and which was
recommended by management of both Donaldson, Lufkin & Jenrette and AXA
Financial, was the critical factor in the timing of AXA's decision as to whether
it should pursue the acquisition of AXA Financial's public minority or abandon
the project. The obvious use of proceeds from the sale of such a significant
unit of AXA Financial's business would be to fund a significant acquisition in
the United States or to significantly reduce AXA Financial's capital, probably
through a stock buyback program. Given these circumstances, AXA management
decided that it should pursue the minority buyout transaction principally
because there were no immediate plans for a major U.S. acquisition and a partial
reduction of AXA Financial's capital, on a pro rata basis, was not consistent
with AXA's long term strategic objectives for the U.S. market, which include
increasing the proportion of the AXA group's earnings from U.S. life insurance
and asset management activities and, more generally, enhancing AXA's presence in
the U.S. market. AXA management was also concerned that AXA not participating in
a significant but partial reduction in AXA Financial's capital may potentially
have a negative effect on the liquidity of the trading market for shares of AXA
Financial common stock and adversely affect minority shareholders.
After further discussion with Goldman Sachs and separately with senior
management of AXA Financial, on August 30, 2000, management of AXA again
presented the minority buyback transaction to AXA's Supervisory Board (at the
same time the sale of Donaldson, Lufkin & Jenrette
39
<PAGE>
was presented). At that meeting, AXA's Supervisory Board authorized the making
of an offer by AXA to acquire all the shares of AXA Financial common stock not
owned by AXA or its subsidiaries. Following that authorization, the Management
Board of AXA initiated various actions necessary or desirable to carry out that
transaction.
On the same date, Mr. de Castries delivered an initial offer to the Board of
Directors of AXA Financial. Under the terms of the initial offer, AXA proposed
to exchange all shares of AXA Financial common stock not owned by AXA and its
affiliates for $32.10 net in cash and 0.271 of an AXA ADS per share of AXA
Financial common stock. Based on the closing price of the AXA ADSs on the NYSE
on August 29, 2000, that offer valued each share of AXA Financial common stock
at $53.50. AXA also stated its intention to make an appropriate proposal with
respect to stock options held by employees and agents of AXA Financial. The
initial offer was made subject to:
- the consummation of the sale to the Credit Suisse Group of the 71%
interest in Donaldson, Lufkin & Jenrette held by AXA Financial and its
affiliates;
- the approval of the offer by the Special Committee of independent,
unaffiliated directors of AXA Financial;
- the prompt negotiation and execution of a definitive merger agreement
containing customary terms and conditions for a transaction of this
nature; and
- the receipt of appropriate regulatory approvals.
In addition, AXA stated in its initial offer that it did not wish to
consider or participate in any possible alternative transactions relating to the
sale of the shares of AXA Financial common stock it directly or indirectly owns.
On August 30, 2000, the Special Committee and representatives of Simpson
Thacher & Bartlett and Wasserstein Perella met after receiving AXA's proposal.
At this meeting, Simpson Thacher & Bartlett reviewed with the Special Committee
its role and duties under applicable law relating to its consideration of AXA's
proposal and Wasserstein Perella provided its preliminary reaction to AXA's
proposal. The Special Committee discussed the appropriate process for the review
of AXA's proposal and determined to send a letter to AXA acknowledging receipt
of the proposal and indicating that the proposal had been referred to the
Special Committee for examination on behalf of AXA Financial. At this meeting,
the Special Committee also continued its discussions with respect to AXA
Financial's compensation and employment arrangements in light of AXA's proposal
and determined to retain William M. Mercer, Incorporated to assist the Special
Committee in its review of such arrangements.
On August 30, 2000, seven lawsuits seeking class action status were filed in
the Delaware Court of Chancery by purported stockholders of AXA Financial
against AXA, AXA Financial, and the directors of AXA Financial in connection
with the exchange offer. On August 31, 2000, three additional lawsuits seeking
class action status were filed in the Delaware Court of Chancery against the
same defendants. On September 1, 2000, an additional lawsuit seeking class
action status was filed in the Supreme Court of the State of New York, County of
New York against the same defendants. On the same date, two additional lawsuits
seeking class action were filed in the Delaware Court of Chancery against the
same defendants. On September 8, 2000 and September 18, 2000, two additional
lawsuits seeking class action status were filed in the Delaware Court of
Chancery against AXA, AXA Financial and the directors of AXA Financial in
connection with the exchange offer. See "The Exchange Offer--Certain Legal
Matters--Litigation."
In a letter dated August 31, 2000, the Board of Directors of AXA Financial
acknowledged receipt of the offer and noted that the offer had been referred to
the Special Committee of the
40
<PAGE>
Board of Directors of AXA Financial for examination on behalf of AXA Financial
and that the Special Committee would respond once it had completed its
assessment of the offer.
During the period from September 5 through September 21, 2000, as part of
its ongoing due diligence process, Wasserstein Perella met with certain members
of AXA Financial's senior management team and conducted additional due diligence
telephone conference calls with senior management of AXA Financial and AXA,
including with the Chief Financial Officer of AXA. During this period,
Wasserstein Perella also met and held numerous telephone conference calls with
Goldman Sachs to discuss the valuations and methodologies reflected in AXA's
proposal.
On September 13 and 14, 2000, the Special Committee met to review the status
of the assessment of AXA's proposal, including its review of AXA Financial's
compensation and employment arrangements and the treatment of such arrangements
in connection with AXA's proposal. Wasserstein Perella advised the Special
Committee on the status of its ongoing review, including its discussions with
Goldman Sachs. The Special Committee determined that since Wasserstein Perella
had not completed its review of the proposal, the Special Committee should not
engage in any substantive negotiations with AXA with respect to its proposal at
such time and directed Wasserstein Perella to continue its review of AXA's
proposal.
On September 21, 2000, the Special Committee, together with representatives
of Simpson Thacher & Bartlett, Wasserstein Perella and Sullivan & Cromwell,
legal counsel to Wasserstein Perella, met to consider AXA's proposal. At this
meeting, Wasserstein Perella made a detailed presentation as to: (1) the various
steps involved in Wasserstein Perella's review of AXA's proposal, including a
review of the discussions held between Wasserstein Perella and Goldman Sachs and
the extensive due diligence of AXA and AXA Financial undertaken by Wasserstein
Perella; (2) the preliminary results of this review; and (3) various
alternatives for the Special Committee to consider in determining the next steps
to be taken in connection with AXA's proposal. The Special Committee authorized
Wasserstein Perella to inform Goldman Sachs that the Special Committee was not
supportive of the initial AXA proposal and further authorized Wasserstein
Perella to enter into negotiations with Goldman Sachs with a view to achieving
an increase in the overall value of AXA's proposal and an improvement in the
certainty of the consideration included in AXA's proposal.
During the period from September 22 to October 6, 2000, Wasserstein Perella
held numerous discussions with Goldman Sachs regarding AXA's proposal. In
addition, during the week of September 25, 2000, Wasserstein Perella continued
its ongoing due diligence review of AXA Financial.
On September 25, 2000, as part of its ongoing due diligence of AXA
Financial, Goldman Sachs met with AXA Financial's management and Wasserstein
Perella.
On September 29, 2000, the Special Committee, together with representatives
of Simpson Thacher & Bartlett and Mercer, met to consider proposals with respect
to the treatment of the compensation and employment arrangements of AXA
Financial's employees in connection with AXA's proposal. The Special Committee
unanimously approved the adoption of the proposals. See "Special
Factors--Interests of Certain Persons in the Offer and Merger".
On October 6 and 9, 2000, Mr. de Castries, and Mr. Hartley spoke by
telephone to discuss AXA's proposal. During the later call, Mr. de Castries
indicated that AXA was prepared to consider revising its offer in two
alternative ways to increase the consideration to be paid by AXA in the proposed
transaction. One alternative provided for consideration of $36.00 in cash and
0.2848 of an AXA ADS per share of AXA Financial common stock, while the second
proposal provided for consideration of $35.50 in cash and 0.2943 of an AXA ADS
per share of AXA Financial common
41
<PAGE>
stock. Mr. de Castries reiterated that AXA was not willing to include any share
price collars or other non-cash price protections as part of its offer.
On October 10, 2000, at a meeting of the Special Committee with
representatives of Simpson Thacher & Bartlett and Wasserstein Perella,
Mr. Hartley advised the Special Committee of his discussions with Mr. de
Castries and, together with Wasserstein Perella, reviewed the revised proposals
of AXA, including the impact on AXA's proposals of recent downturns in stock
market prices for financial institutions, including significant price declines
for AXA and companies comparable to AXA and AXA Financial, including Credit
Suisse Group. AXA Financial anticipated receiving a significant amount of stock
of Credit Suisse Group following the consummation of the sale of Donaldson,
Lufkin & Jenrette to Credit Suisse Group. Mr. Tulin then reviewed with the
Special Committee the current status of the proposed sale of Donaldson, Lufkin &
Jenrette to Credit Suisse Group and AXA Financial's preliminary results of
operation for the fiscal quarter ended September 30, 2000 and its future
outlook. Although the Special Committee was encouraged by the improvements made
by AXA in its revised proposals, including the increase in the cash being
offered on an aggregate basis and as a percentage of the total per share
consideration being offered, it was the consensus of the Special Committee that
its members were not prepared to support either of the revised AXA proposals and
that Mr. Hartley should contact Mr. de Castries to negotiate for a further
increase in AXA's offer.
Following the Special Committee's October 10th meeting, Mr. de Castries and
Mr. Hartley held additional telephone conferences to discuss further the price
to be offered by AXA in its proposal.
On October 13, 2000, AXA's Supervisory Board convened to review the current
status of the negotiations with AXA Financial's Special Committee. After being
briefed by Mr. de Castries on developments since AXA's initial offer on
August 30 and the current state of negotiations including his recent discussions
with the Chairman of the Special Committee, the Supervisory Board authorized
Mr. de Castries to continue those negotiations with a view to reaching an
agreement substantially on the terms presented to the meeting. The Supervisory
Board delegated authority to the Chairman of the Supervisory Board in order to,
after consultation with and approval by the Finance Committee of the Supervisory
Board, authorize Mr. de Castries to present AXA's offer, provided that those
terms were substantially similar to those presented to the Supervisory Board. On
the same date, Mr. de Castries informed Mr. Hartley that AXA was prepared to
consider revising its proposal and offer $35.75 in cash and 0.295 of an AXA ADS
per share of AXA Financial's common stock and that such a revised proposal would
be AXA's final and best offer.
On October 16, 2000 a meeting of the Finance Committee of the Supervisory
Board was convened. After being briefed by Mr. de Castries on the developments
since the Supervisory Board meeting on October 13, the Finance Committee
approved the definitive terms of AXA's offer of $35.75 in cash and 0.295 of an
AXA ADS per share of AXA Financial common stock, subject to negotiation of an
acceptable merger agreement. On the basis of that approval, the Chairman of
AXA's Supervisory Board authorized Mr. de Castries to present AXA's offer
consisting of $35.75 in cash and 0.295 of an AXA ADS per share of AXA Financial
common stock, subject to negotiation of an acceptable merger agreement. He also
authorized Mr. de Castries to execute the merger agreement and all related
documents and to take all steps necessary or desirable to implement that
transaction. Mr. de Castries presented the revised offer of AXA to Mr. Hartley.
On the same date, the Special Committee met with representatives of
Wasserstein Perella, Simpson Thacher & Bartlett and Sullivan & Cromwell to
discuss AXA's revised proposal and to review the form and issues in respect of
the proposed merger agreement. Mr. Hartley advised the Special Committee that
Mr. de Castries confirmed a revised offer by AXA of $35.75 in cash and 0.295 of
an AXA ADS per share of AXA Financial common stock, and that said proposal was
AXA's final and best offer. Simpson Thacher & Bartlett reviewed the duties of
the Special Committee under
42
<PAGE>
applicable law in respect of AXA's proposal as well as the status of the various
lawsuits which had been filed to date. At this meeting, Wasserstein Perella made
a lengthy presentation of its analysis of AXA's revised proposal and reviewed
stock market events that had occurred since the Special Committee's prior
meeting, including the significant price declines incurred by a number of
financial institutions (including AXA) that were followed by strong, but not as
large, increases in their stock prices. Wasserstein Perella then orally advised
the Special Committee that the revised consideration being offered was fair from
a financial point of view to AXA Financial's public stockholders. Mr. Tulin also
reviewed AXA Financial's preliminary results of operation for the fiscal quarter
ended September 30, 2000 and its future outlook. It was the consensus of the
Special Committee that the revised proposal represented an appropriate and fair
price for AXA Financial public stockholders, subject to the negotiation of an
acceptable agreement. The Special Committee directed Simpson Thacher & Bartlett
to finalize the negotiations of the Merger Agreement with AXA's legal advisors.
Following the Special Committee's October 16th meeting, the respective legal
advisors of AXA and AXA Financial met and negotiated the form of the definitive
Merger Agreement.
On October 17, 2000, the Special Committee met again with its advisors and
at this meeting, Wasserstein Perella made another presentation regarding the
revised AXA proposal and delivered its written opinion to the Special Committee
stating that the offer was fair to the holders of AXA Financial common stock
(other than AXA and its affiliates) from a financial point of view. Simpson
Thacher & Bartlett advised the Special Committee that, consistent with its
instructions, the substantive issues with respect to the Merger Agreement had
been resolved, including limiting the scope of certain conditions, covenants and
representations and warranties included in the Merger Agreement for the benefit
of AXA, and reviewed with the Special Committee the principal terms of the
transaction, including those with respect to employee benefits. Following
further discussion, the Special Committee unanimously (i) approved the Merger
Agreement, the offer and the merger and the other transactions contemplated by
the Merger Agreement; (ii) determined that the terms of the offer and the merger
were fair to and in the best interests of AXA Financial's public stockholders;
(iii) declared the advisability of the Merger Agreement; and (iv) recommended
acceptance of the offer and, to the extent applicable, the adoption of the
Merger Agreement by the public stockholders of AXA Financial. The Special
Committee also recommended to the Board of Directors of AXA Financial that it
adopt the same approvals, determinations, declarations and recommendations.
On October 17, 2000, following the meeting of the Special Committee, the
Board of Directors of AXA Financial met to consider the recommendations of the
Special Committee with respect to AXA's proposal. Following discussions and a
review of AXA's proposal and the terms of the Merger Agreement, the Board of
Directors of AXA Financial unanimously: (i) approved the Merger Agreement, the
offer and the merger and the other transactions contemplated by the Merger
Agreement; (ii) determined that the terms of the offer and the merger were fair
to and in the best interests of AXA Financial's public stockholders;
(iii) declared the advisability of the Merger Agreement; and (iv) recommended
acceptance of the offer and, to the extent applicable, the adoption of the
Merger Agreement by the public stockholders of AXA Financial.
Later on October 17, 2000 the Merger Agreement was executed and, on the
morning of October 18, 2000, the agreement of the parties was announced.
REASONS FOR THE OFFER AND THE MERGER; PURPOSE AND STRUCTURE OF THE OFFER AND THE
MERGER
As one of the world's largest markets for financial protection and wealth
accumulation products and services, the United States is one of AXA's principal
markets and a market of strategic importance to AXA. Since July 1992, when
Equitable Life successfully completed its demutualization, AXA and certain of
its subsidiaries have been AXA Financial's principal
43
<PAGE>
shareholders, collectively owning 60.1% of AXA Financial's common stock as of
October 25, 2000. AXA Financial and its principal subsidiaries are AXA's
principal companies in the U.S. market.
Over the last several years, AXA has examined a number of potential business
opportunities in the U.S. market, including possible acquisitions, as a means of
increasing AXA's investment in U.S. life insurance and asset management
activities, increasing public awareness of the AXA brand name in the United
States and, generally, increasing AXA's presence in the U.S. market. AXA decided
to proceed with the exchange offer and subsequent merger described in this
prospectus in order to increase its ownership of the outstanding common stock of
AXA Financial to 100%. Upon the consummation of the merger following the
exchange offer, AXA Financial will become a wholly-owned direct and indirect
subsidiary of AXA.
AXA believes that the proposed acquisition of the publicly held shares of
AXA Financial common stock would:
- Strengthen its position in its core businesses of insurance and asset
management.
- Enhance AXA's presence in the U.S. market, one of its principal markets,
and increase its investment in, and the proportion of its earnings from,
U.S. life insurance and asset management activities.
- Enable AXA to develop more fully the potential synergies between AXA
Financial and other companies in the AXA group and achieve a more
consistent business organization among AXA's various businesses worldwide.
- Facilitate future acquisitions by AXA in the U.S. market by increasing the
liquidity of the trading market in AXA ADSs listed on the New York Stock
Exchange and making them a more effective acquisition currency.
In addition, causing AXA Financial to be privately held would reduce
management's commitment of resources with respect to procedural and compliance
requirements of a public company.
The acquisition of shares of AXA Financial common stock not owned by AXA and
its subsidiaries or held by AXA Financial in treasury has been structured as an
exchange offer for 0.295 of an AXA ADS and $35.75 net in cash per share of AXA
Financial common stock followed by a merger in order to effect a prompt and
orderly transfer of ownership of AXA Financial from the public stockholders to
AXA. Based on the closing price of the AXA ADSs on the NYSE on November 20,
2000, the offer and the merger would also afford the AXA Financial stockholders
an opportunity to dispose of their shares at a significant premium over the
average closing price of their shares during the 30 trading days preceding the
announcement of the offer on August 30, 2000.
RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF AXA
FINANCIAL
On October 17, 2000, the Special Committee unanimously determined that the
terms of each of the offer and merger and the other transactions contemplated by
the Merger Agreement are fair to, and in the best interests of, AXA Financial
and its stockholders (other than AXA and its affiliates) and unanimously
determined to recommend that the Board of Directors of AXA Financial:
- approve the Merger Agreement, the offer and merger and the other
transactions contemplated thereby;
- determine that the terms of the offer and merger are fair to, and in the
best interests of, AXA Financial and its stockholders (other than AXA and
its affiliates);
44
<PAGE>
- declare that the Merger Agreement is advisable;
- recommend that AXA Financial's stockholders accept the offer and tender
their shares pursuant to the offer; and
- recommend that AXA Financial's stockholders adopt the Merger Agreement, if
such adoption is necessary for the consummation of the merger.
At a meeting held on October 17, 2000, the Board of Directors of AXA
Financial unanimously determined to accept the Special Committee's
recommendation and
- approved the Merger Agreement, the offer and the merger and the other
transactions contemplated thereby;
- determined that the terms of the offer and merger are fair to, and in the
best interests of, AXA Financial and its stockholders (other than AXA and
its affiliates);
- declared that the Merger Agreement is advisable;
- determined to recommend that AXA Financial's stockholders accept the offer
and tender their shares pursuant to the offer; and
- determined to recommend that AXA Financial's stockholders adopt the Merger
Agreement, if such adoption is necessary for the consummation of the
merger.
FAIRNESS OF THE OFFER AND THE MERGER
SPECIAL COMMITTEE. In reaching the conclusions described above, the Special
Committee considered a number of factors, including but not limited to, the
following:
- presentation from and the opinion delivered by Wasserstein Perella, dated
October 17, 2000, that based upon and subject to the assumptions and
limitations stated in the opinion, as of the date of the opinion, the
consideration to be received by holders of shares of AXA Financial common
stock (other than AXA and its affiliates) pursuant to the Merger Agreement
is fair from a financial point of view. The presentation of Wasserstein
Perella involved various valuation analyses of AXA Financial that are
described under "--Opinion of the Financial Advisor". The opinion of
Wasserstein Perella is attached as Annex B to this prospectus;
- the relationship of the consideration to be paid in the offer and
subsequent merger to recent and historical market prices of AXA Financial
common stock. Based on the closing price of AXA ADSs on October 16, 2000
(the last trading day prior to the approval of the Merger Agreement by the
Special Commitee), the per share consideration totaled $54.63 per share of
AXA Financial common stock, a premium of 5.16% over the share price on the
trading day prior to August 30, 2000 (the date on which AXA's initial
offer was publicly announced), a premium of 10.48% over the share price
five trading days prior to August 30, 2000 and a premium of 35.08% over
the share price 20 trading days prior to August 30, 2000;
- the fact that, prior to the receipt of AXA's offer on August 30, 2000, AXA
Financial common stock was trading at its 52-week high closing price,
representing a favorable time for the public stockholders to consider
selling their shares, particularly in light of the fact that during the
period following the initial offer, share values of diversified financial
companies comparable to AXA Financial declined by an average of 11.7%. The
Special Committee considered the possibility that AXA's abandonment of its
proposal might result in AXA Financial's share values incurring comparable
percentage declines;
45
<PAGE>
- the fact that the price of AXA ADSs had declined by approximately 18%
since the date of AXA's initial offer, while comparable diversified
financial institutions had significant but smaller price declines and the
euro had declined in value versus the U.S. dollar during this period.
Although the Special Committee was not successful in getting AXA to agree
to any stock price collar or other non-cash price protections as part of
its offer, the Special Committee considered the fact that its negotiations
with AXA resulted in an approximately 11% increase in the aggregate amount
of cash being offered by AXA and an approximately 9% increase in the
aggregate number of AXA ADSs being offered by AXA, despite the fact that
during the period of their negotiations stock market prices of diversified
financial companies comparable to AXA Financial had incurred declines of
over 10%. The Special Committee also considered that its negotiations with
AXA led to an increase in the amount of cash to be paid as a percentage of
the total per share consideration;
- the terms of the transaction were determined through arm's length
negotiations between AXA and the Special Committee and its financial and
legal advisors, all of whom were unaffiliated with AXA. Based on its
negotiations, the Special Committee believed that the final total per
share consideration offered by AXA was the highest per share consideration
that could be obtained from AXA and any further negotiations with AXA
could possibly cause AXA to abandon the transaction, or possibly to
commence a tender offer at a subsequent date when AXA Financial's shares
would be trading at levels well below their current price and thereby
enabling AXA to offer a price lower than the final price being offered.
The Special Committee was aware that all of the consideration to be
received by AXA Financial stockholders would be taxable for federal income
tax purposes;
- the fact that the offer and merger were conditioned upon the consummation
of Credit Suisse Group's acquisition of Donaldson, Lufkin & Jenrette for
cash and Credit Suisse Group stock. The Special Committee considered the
impact on AXA's offer of the approximately 20% decline in Credit Suisse
Group's stock price from the date of AXA's initial offer (representing a
pre-tax decline in value to AXA Financial of more than $1.2 billion, or
approximately $2.94 per share of AXA Financial common stock outstanding)
and that, despite such decline, the consideration being offered by AXA was
not reduced but was increased by the percentages noted above;
- the form of consideration to be paid to holders of shares of AXA Financial
common stock in the offer and the merger, considering the certainty of the
value of the cash component as compared to the stock component, as well as
the fact that the stock component will allow AXA Financial stockholders to
become holders of AXA ADSs and participate in the future prospects of the
combined businesses of AXA and AXA Financial;
- the relationship of the consideration to be paid in the offer and
subsequent merger to the per share book value of AXA Financial and to the
going concern value of AXA Financial, each as reflected in Wasserstein
Perella's presentation to the Special Committee and which the Special
Committee hereby adopts;
- information concerning the business, assets, financial condition, results
of operations and prospects of AXA and AXA Financial, the risks involved
in achieving those prospects and the general condition and outlook and
trends of the respective industries in which AXA and AXA Financial
operate. The Special Committee members reviewed these matters with
representatives of Wasserstein Perella who had conducted a due diligence
review of AXA and AXA Financial. Review of these matters provided the
Special Committee with a better understanding of the business and
prospects of AXA and AXA Financial and formed, in part, the basis upon
which the Special Committee considered the proposed terms of the offer and
merger and the various valuation analyses of AXA Financial;
46
<PAGE>
- AXA's beneficial ownership of approximately 60.1% of the currently
outstanding common stock of AXA Financial and the effects of such
ownership on the alternatives available to AXA Financial. The Special
Committee further considered that AXA had stated that it would not
consider selling its shares to a third party and that, as a practical
matter, no such alternatives potentially available to AXA Financial could
be effected without the support of AXA;
- the likelihood that the transaction would be consummated, including the
absence of unusual requirements or conditions to the offer and merger
(except for the condition relating to the sale of Donaldson, Lufkin &
Jenrette) and that the Merger Agreement ultimately contained only a
limited number of conditions to AXA's obligations to consummate the offer
and merger. The Special Committee further considered the fact that AXA has
the financial capacity to consummate the offer and merger expeditiously;
- the anticipated timing of consummation of the transactions and related
factors, including the structure of the transaction to include a
first-step exchange offer for all of the shares of AXA Financial common
stock in which stockholders who tender will be able to promptly receive
the consideration, followed by a merger in which stockholders will receive
the same consideration as received by stockholders who tendered their
shares in the offer;
- the impact on the offer and the merger of the following matters (which are
discussed in more detail above under the heading "Risk Factors"):
- the exchange ratio could work to the disadvantage of AXA Financial
stockholders, because a decline in the price of AXA ADSs would cause
the value of the consideration to be paid for the shares to decline,
but if the price of the AXA ADSs were to increase, the value of the
consideration to be paid for shares of AXA Financial common stock would
increase; and
- the business of AXA is broader in scope than AXA Financial's business
and, as a result, the trading price of AXA ADSs may be affected by
factors different from those which affect AXA Financial's result of
operations and the price of its shares;
- that stockholders who do not tender their shares pursuant to the offer
will have the right in connection with the merger to demand appraisal of
the fair value of their shares of AXA Financial common stock under the
General Corporation Law of the State of Delaware, whether or not a
stockholder vote is required, see "The Merger Agreement--Dissenters'
Rights of Appraisal"; and
- the potential conflicts of interest between certain directors and members
of management of both AXA Financial and AXA, all as described under
"Special Factors--Interests of Certain Persons in the Offer and the
Merger".
THE BOARD OF DIRECTORS OF AXA FINANCIAL. In reaching its determinations
referred to above, the Board of Directors of AXA Financial considered the
following factors, each of which, in the view of the Board of Directors of AXA
Financial, supported such determinations:
- the conclusions and recommendations of the Special Committee;
- the factors referred to above as having been taken into account by the
Special Committee, including the receipt by the Special Committee of the
opinion of Wasserstein Perella that, based upon and subject to the
assumptions and limitations stated in the opinion, as of the date of the
opinion, the total per share consideration to be received by the
stockholders of AXA Financial (other than AXA and its affiliates) in the
offer and the merger is fair from a financial point of view to such
holders, and the analyses presented by Wasserstein Perella to the Special
Committee;
47
<PAGE>
- the fact that the offer price and the terms and conditions of the Merger
Agreement were the result of arm's-length negotiations between the Special
Committee and AXA and their respective advisors; and
- the relationship of the consideration to be paid in the offer and
subsequent merger to the per share book value of AXA Financial and to the
going concern value of AXA Financial, each as reflected in Wasserstein
Perella's presentation to the Special Committee and which the Board of
Directors hereby adopts;
The members of the Board of Directors of AXA Financial, including the
members of the Special Committee, evaluated the offer and the merger in light of
their knowledge of the business, financial condition and prospects of AXA
Financial, and considered the advice of financial and legal advisors.
The Board of Directors of AXA Financial, including the members of the
Special Committee, believes that the offer and merger are procedurally fair
because, among other things:
- the Special Committee consisted of independent directors appointed to
represent the interests of AXA Financial stockholders (other than AXA and
its affiliates);
- the Special Committee retained and was advised by Simpson Thacher &
Bartlett, its own independent legal counsel;
- the Special Committee retained and was advised by Wasserstein Perella, as
its independent financial advisor, to assist it in evaluating a potential
transaction between AXA and AXA Financial;
- of the nature of the deliberations pursuant to which the Special Committee
evaluated the offer and the merger and alternatives thereto;
- the total per share price to be paid by AXA resulted from active
arm's-length bargaining between representatives of the Special Committee,
on the one hand, and representatives of AXA, on the other; and
- the Special Committee is a mechanism well established under Delaware law
to ensure fairness in transactions of this type.
The Board of Directors of AXA Financial and the Special Committee recognized
that the offer is not conditioned on the tender of a majority of the shares of
AXA Financial common stock other than those owned by AXA and its affiliates and
that the merger is not structured to require the approval of a majority of the
stockholders of AXA Financial other than AXA and its affiliates, and that AXA
currently has sufficient voting power to approve the merger without the
affirmative vote of any other stockholder of AXA Financial.
The Special Committee and the Board of Directors of AXA Financial also
recognized that the offer and the merger will result in all stockholders (other
than AXA and its affiliates) being entitled to receive (i) $35.75 in cash with
no interest and (ii) 0.295 of an AXA ADS for each of their shares, which will
permit AXA Financial's stockholders the opportunity to participate in the
benefit of increases, if any, in the value of AXA and AXA Financial's combined
businesses following the merger.
Neither the Special Committee nor the Board of Directors of AXA Financial
considered the liquidation of the assets of AXA Financial and neither considered
liquidation to be a viable course of action based on AXA's desire for AXA
Financial to continue to conduct its business as a subsidiary of AXA. Therefore,
no appraisal of liquidation values was sought for purposes of evaluating the
offer and the merger.
48
<PAGE>
In view of the wide variety of factors considered in connection with their
evaluation of the offer and the merger, neither the Special Committee nor the
Board of Directors of AXA Financial found it practicable to, and did not,
qualify or otherwise attempt to assign relative weights to the specific factors
they considered in reaching their determinations.
The foregoing discussion of the information and factors considered and given
weight by the Special Committee and the Board of Directors of AXA Financial is
not intended to be exhaustive but is believed to include all material factors
considered by the Special Committee and the Board of Directors of AXA Financial.
THE BOARD OF DIRECTORS OF AXA FINANCIAL, BASED UPON THE UNANIMOUS
RECOMMENDATION OF THE SPECIAL COMMITTEE, (A) UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY
THE MERGER AGREEMENT, (B) UNANIMOUSLY DETERMINED THAT THE TERMS OF THE OFFER AND
THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF AXA FINANCIAL STOCKHOLDERS
(OTHER THAN AXA AND ITS AFFILIATES), (C) DECLARED THE ADVISABILITY OF THE MERGER
AGREEMENT, (D) UNANIMOUSLY RECOMMENDS THAT AXA FINANCIAL'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER AND (E) UNANIMOUSLY
RECOMMENDS THAT AXA FINANCIAL'S STOCKHOLDERS ADOPT THE MERGER AGREEMENT IF SUCH
ADOPTION IS NECESSARY FOR THE CONSUMMATION OF THE MERGER.
OPINION OF THE FINANCIAL ADVISOR OF THE SPECIAL COMMITTEE
On October 17, 2000, Wasserstein Perella delivered its written opinion to
the Special Committee that as of the date of such opinion the consideration to
be received by the holders of AXA Financial common stock, other than AXA and its
affiliates, pursuant to the offer and the merger was fair to such holders from a
financial point of view.
THE FULL TEXT OF THE WRITTEN OPINION OF WASSERSTEIN PERELLA DATED
OCTOBER 17, 2000, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS
CONTAINED IN ANNEX B TO THIS PROSPECTUS. WASSERSTEIN PERELLA PROVIDED ITS
FINANCIAL ADVISORY SERVICES AND ITS OPINION FOR THE INFORMATION AND ASSISTANCE
OF THE SPECIAL COMMITTEE IN CONNECTION WITH ITS CONSIDERATION OF THE OFFER AND
THE MERGER. IT IS NOT A RECOMMENDATION TO ANY HOLDER OF AXA FINANCIAL COMMON
STOCK WITH RESPECT TO WHETHER SUCH HOLDER SHOULD TENDER SHARES PURSUANT TO THE
OFFER OR AS TO HOW SUCH HOLDER SHOULD VOTE WITH RESPECT TO THE MERGER.
STOCKHOLDERS OF AXA FINANCIAL ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY.
In connection with its opinion, Wasserstein Perella reviewed, among other
things:
- a draft of the Merger Agreement, which Wasserstein Perella assumed would
not differ in any material respect from the final form of the Merger
Agreement;
- certain publicly available business and financial information relating to
AXA Financial and AXA for recent years and interim periods to date; and
- certain internal financial and operating information relating to AXA
Financial prepared by or on behalf of AXA Financial.
Wasserstein Perella also met with members of the management of AXA Financial
and AXA to review and discuss such information and, among other things, each of
AXA Financial's and AXA's business, operations, assets, financial condition and
future prospects. Wasserstein Perella did not receive financial forecasts and
projections of AXA. In addition, Wasserstein Perella reviewed and considered
certain financial and stock market data relating to AXA Financial and AXA, and
compared that data with similar data for certain other companies, the securities
of which are publicly traded, that Wasserstein Perella believed may be relevant
or comparable in certain respects
49
<PAGE>
to AXA Financial and AXA or one or more of their respective businesses or
assets. Wasserstein Perella also reviewed and considered the financial terms of
certain recent acquisitions and business combination transactions in certain
industries that it believed to be reasonably comparable to the exchange offer
and the merger or otherwise relevant to its inquiry. Wasserstein Perella took
into consideration that AXA directly and indirectly through subsidiaries owns,
through a voting trust, approximately 60.3% of the outstanding shares of common
stock of AXA Financial, and reviewed and considered the financial terms of
certain recent transactions in which a majority shareholder of an entity has
purchased the interests held by minority shareholders. Wasserstein Perella also
performed such other studies and analyses that it considered appropriate.
Wasserstein Perella relied upon the accuracy and completeness of all of the
historical financial and other information provided to or discussed with it or
publicly available and assumed such accuracy and completeness for purposes of
rendering its opinion. Wasserstein Perella did not assume any responsibility for
independent verification of any such information. In addition, Wasserstein
Perella assumed and relied upon the reasonableness and accuracy of the financial
projections, forecasts and analyses provided to it, and assumed that such
projections, forecasts and analyses were reasonably prepared in good faith and
on bases reflecting the best currently available judgments and estimates of AXA
Financial's management. It expresses no opinion with respect to such
projections, forecasts and analyses or the assumptions upon which they are
based. Wasserstein Perella are not actuaries and its advisory services did not
include actuarial determinations or evaluations or an attempt to evaluate
actuarial assumptions. In addition, Wasserstein Perella did not review any of
the books and records of AXA Financial and AXA, or assume any responsibility for
conducting a physical inspection of the properties or facilities of AXA
Financial and AXA, or for making or obtaining an independent valuation or
appraisal of the assets or liabilities or adequacy of the reserves of AXA
Financial and AXA, and no such independent valuation or appraisal was provided
to it. Wasserstein Perella also (i) assumed that, in all respects material to
its analysis, the disposition by AXA, AXA Financial and their affiliates of
their respective interests in Donaldson, Lufkin & Jenrette will be consummated
substantially on the terms and conditions publicly announced by AXA Financial
and described to Wasserstein Perella and (ii) assumed that the transactions
described in the Merger Agreement will be consummated without waiver or
modification of any of the material terms or conditions contained therein by any
party thereto. Wasserstein Perella's opinion is necessarily based on economic
and market conditions and other circumstances as they existed and can be
evaluated by it as of the date of its opinion. Wasserstein Perella is not
expressing any opinion as to the prices at which any securities of AXA Financial
and AXA will actually trade at any time.
In the context of its engagement by the Special Committee, Wasserstein
Perella was not authorized to and did not solicit third party indications of
interest in acquiring all or any part of AXA Financial, or investigate any
alternative transactions that may be available to AXA Financial.
The following is a summary of the material financial analyses used by
Wasserstein Perella in connection with providing its October 17, 2000 written
opinion to the Special Committee. Some of the summaries of the financial
analyses include information presented in tabular format. In order to more fully
understand the financial analyses used by Wasserstein Perella, the tables must
be read together with the full text of each summary. The tables alone are not a
complete description of Wasserstein Perella's financial analyses. A copy of the
report presented by Wasserstein Perella to the Special Committee on October 17,
2000 has been filed as an exhibit to the registration statement on Form F-4
filed with the SEC, of which this prospectus constitutes a part.
(1) HISTORICAL STOCK TRADING AND PRECEDENT MINORITY PURCHASE PREMIUM
ANALYSIS. Wasserstein Perella reviewed the historical trading prices and
volumes for AXA Financial common stock. In addition, based on market data as of
October 16, 2000, Wasserstein Perella calculated per share consideration of
$54.96 pursuant to the Merger Agreement. Wasserstein Perella analyzed the $54.96
50
<PAGE>
consideration per share, as of October 16, 2000, in relation to the stock price
of AXA Financial common stock at various times. Such analysis indicated, that
the per share consideration based on market data as of October 16, 2000
represented:
- a premium of 10.48% over the share price five trading days prior to the
announcement of the transaction on August 30, 2000 of $49.75, and
- a premium of 35.08% over the share price twenty trading days prior to the
announcement of the transaction on August 30, 2000 of $40.69.
Wasserstein Perella also reviewed 79 acquisitions by majority shareholders
of publicly held minority interests in U.S. targets, 18 of which were financial
institution transactions, 20 of which were stock consideration transactions, and
5 of which were transactions with a value greater than $1 billion. Each
precedent minority purchase transaction reviewed by Wasserstein Perella had a
value of at least $50 million and was announced between January 1, 1992 and
July 21, 2000. Wasserstein Perella analyzed the consideration received in each
of the precedent minority purchase transactions to derive the premiums paid over
the public trading prices per share 5 trading days and 20 trading days prior to
the announcement of the transaction. The following table presents the results of
this analysis:
<TABLE>
<CAPTION>
5 TRADING DAYS 20 TRADING
PRIOR TO DAYS PRIOR TO
ANNOUNCEMENT ANNOUNCEMENT
------------------- -------------------
PRECEDENT MINORITY PURCHASE TRANSACTIONS MEAN MEDIAN MEAN MEDIAN
---------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
All Transactions....................................... 33.2% 25.3% 37.8% 31.9%
Financial Institutions Transactions.................... 24.1% 21.2% 28.1% 24.4%
Stock Consideration Transactions....................... 15.5% 14.3% 19.8% 18.3%
Transactions over $1 Billion........................... 22.1% 22.8% 28.8% 29.3%
</TABLE>
(2) COMPARABLE TRADED COMPANIES ANALYSIS. Wasserstein Perella reviewed and
compared financial information of AXA Financial to corresponding financial
information, ratios and public market multiples for selected diversified
financial services companies. Wasserstein Perella selected the following
companies for comparison because they are publicly traded companies with certain
operations that for purposes of analysis may be considered comparable to certain
operations of AXA Financial.
The selected publicly traded diversified financial services consisted of:
- American Express Company,
- Mellon Financial Corporation,
- Citigroup Inc., and
- Morgan Stanley Dean Witter & Co.
Wasserstein Perella calculated and compared various financial multiples and
ratios for the selected companies based on market data and IBES earnings
estimates as of October 16, 2000. With respect to the selected diversified
financial services companies, Wasserstein Perella considered price as a multiple
of:
- latest twelve months EPS,
- estimated 2000 EPS,
- estimated 2001 EPS, and
51
<PAGE>
- book value per share.
The data for AXA Financial used to analyze price as a multiple of latest
twelve months EPS excludes net realized investment gains and losses. The
information for Citigroup used to analyze price as a multiple of latest twelve
months EPS and price as a multiple of book value per share is pro forma for its
acquisition of Associates First Capital, which was announced on September 6,
2000.
The results of these analyses are summarized in the following chart.
<TABLE>
<CAPTION>
RANGES FOR THE MEDIAN MEAN
PRICE PER SHARE SELECTED (EXCLUDING AXA (EXCLUDING AXA
AS A MULTIPLE OF COMPANIES FINANCIAL) FINANCIAL) AXA FINANCIAL
------------------------------- ------------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
Latest Twelve Months EPS....... 15.1x-28.2x 20.7x 21.2x 17.8x
Estimated 2000 EPS............. 15.3x-27.1x 19.5x 20.4x 17.4x
Estimated 2001 EPS............. 14.0x-23.7x 17.5x 18.2x 15.9x
Book Value Per Share........... 4.26x-7.07x 5.04x 5.35x 3.54x
</TABLE>
Based on the selected comparable companies multiples, Wasserstein Perella
developed a valuation range to apply to AXA Financial. This analysis resulted in
an implied equity value range per AXA Financial share of $45.75 to $53.25 (the
base range). Wasserstein Perella also developed a valuation range to apply to
AXA Financial that added (for illustrative purposes only) a 20% premium to the
base range. This analysis resulted in an implied equity value range per AXA
Financial share of $54.90 to $63.90.
(3) DIVIDEND DISCOUNT ANALYSIS. Wasserstein Perella performed a dividend
discount analysis to determine the theoretical equity value per diluted share of
AXA Financial common stock under the following scenario:
- utilizing estimated 2000 and 2001 operating EPS estimates from IBES as of
October 16, 2000 and estimated 2002 through 2006 operating EPS estimates
derived by applying the IBES long term growth rate of 15.0%;
- calculating dividends paid based upon a 4.2% dividend payout ratio for AXA
Financial for fiscal year 1999;
- assuming reinvestment of the proceeds from the Donaldson, Lufkin &
Jenrette transaction to achieve analyst estimates of $3.25 per share in
2001 as of October 16, 2000;
- assuming that the present value per diluted share equaled the present
value at September 30, 2000 of both cash dividends and terminal value and
adjusting estimated 2000 financial data pro rata for fourth quarter
financial results; and
- calculating terminal values as a fiscal year forward multiple of estimated
2006 earnings.
52
<PAGE>
Wasserstein Perella applied discount rates ranging from 11.0% to 15.0% and
terminal value multiples of estimated 2006 Operating EPS ranging from 14.0x to
17.0x, to derive theoretical equity values per diluted share ranging from:
- $42.23 to $59.31.
Wasserstein Perella also applied percentages of estimated 2001 EPS ranging
from 95.0% to 105.0%, representing implied estimated 2001 Operating EPS ranging
from $3.09 to $3.41, and terminal value multiples of estimated 2006 Operating
EPS ranging from 14.0x to 17.0x, based upon a 13.0% discount rate, to derive
theoretical equity values per diluted share ranging from:
- $43.67 to $57.17.
Based on the dividend discount analysis, Wasserstein Perella developed a
valuation range to apply to AXA Financial. This analysis resulted in an implied
equity value range per AXA Financial share of $46.00 to $52.00 (the base range).
Wasserstein Perella also developed a valuation range to apply to AXA Financial
that added (for illustrative purposes only) a 20% premium to the base range.
This analysis resulted in an implied equity value range per AXA Financial share
of $55.20 to $62.40.
(4) COMPARABLE ACQUISITIONS ANALYSIS. This analysis was undertaken to
provide information regarding the fairness of the merger consideration based
upon a comparison of the financial terms of the exchange offer and the merger
with the financial terms of several other business combinations in the
diversified financial services industry. Wasserstein Perella analyzed certain
information relating to selected transactions since 1998 in the diversified
financial services industry. Wasserstein Perella compared the following
transactions:
- ING Groep N.V.'s transaction with Aetna Inc. announced in July 2000;
- UBS AG's transaction with PaineWebber Group, Inc. announced in July 2000;
- ING Groep N.V.'s transaction with ReliaStar Financial Corporation
announced in April 2000;
- HSBC Holdings plc's transaction with Republic Bank announced in May 1999;
- Fleet Financial Group, Inc.'s transaction with BankBoston Corporation
announced in March 1999;
- Aegon N.V.'s transaction with Transmerica Corporation announced in
February 1999;
- Deutsche Bank Group's transaction with Bankers Trust Corporation announced
in November 1998; and
- American International Group's transaction with Sun America Inc. announced
in August 1998.
Wasserstein Perella calculated and compared for each of the selected
transactions the price per share consideration as a multiple of:
- latest twelve months earnings per share, sometimes referred to as EPS,
prior to the announcement of the transaction;
- estimated current year EPS (based on Institutional Broker's Estimate
System, sometimes referred to as IBES, data as of the date of announcement
of the transaction);
- estimated next year EPS (based on IBES data as of the date of announcement
of the transaction); and
- book value per share as of the end of the latest twelve months prior to
the announcement of the transaction.
53
<PAGE>
The following table presents the results of this analysis, each as compared
to the corresponding values indicated for the exchange offer and the merger as
of October 16, 2000.
<TABLE>
<CAPTION>
MEAN
MEDIAN (EXCLUDING THE
RANGES FOR THE (EXCLUDING THE EXCHANGE
PRICE PER SHARE SELECTED EXCHANGE OFFER/ OFFER/ THE EXCHANGE
AS A MULTIPLE OF TRANSACTIONS MERGER) MERGER) OFFER/ MERGER
-------------------------------- -------------------- ----------------- -------------- -------------
<S> <C> <C> <C> <C>
Latest Twelve Months EPS........ 17.4x-35.1x 20.3x 24.4x 19.0x
Estimated Current Year EPS...... 15.4x-33.3x 18.5x 20.3x 18.6x
Estimated Next Year EPS......... 14.0x-28.1x 15.8x 17.6x 16.9x
Book Value Per Share............ 1.86x-6.19x 2.53x 3.17x 3.76x
</TABLE>
Based on the selected comparable transactions multiples, Wasserstein Perella
developed a valuation range to apply to AXA Financial. This analysis resulted in
an implied equity value range per AXA Financial share of $54.50 to $64.50.
However, as noted by Wasserstein Perella to the Special Committee, the selected
comparable transactions did not involve minority purchases but were control
premium transactions between unaffiliated parties. Wasserstein Perella and the
Special Committee had also been informed by AXA that it would not consider
selling its interest in AXA Financial as part of any transaction.
(5) COMPOSITE VALUE ANALYSIS. Wasserstein Perella reviewed financial
information of the composite units of AXA Financial which will remain after the
sale of Donaldson, Lufkin & Jenrette: the Financial Advisory/Insurance unit, and
Alliance Capital, the asset management unit. Wasserstein Perella compared such
information to corresponding financial information, ratios and public market
multiples for selected life insurance and financial advisory services companies
and asset management companies. Wasserstein Perella selected the following
companies for comparison because they are publicly traded companies with certain
operations that for purposes of analysis may be considered similar to certain
corresponding operations of AXA Financial.
The selected publicly traded life insurance and financial advisory services
companies consisted of:
- American General Corporation,
- Hartford Financial Services Group, Inc.,
- Lincoln National Corporation,
- Jefferson-Pilot Corporation,
- John Hancock Financial Services, Inc.,
- Metropolitan Life Insurance Company, and
- Nationwide Financial Services Inc.
The selected publicly traded asset management companies consisted of:
- Waddell & Reed Inc.,
- T. Rowe Price Investment Services, Inc.,
- Affiliated Managers Group,
- Neuberger Berman Management Inc.,
- Stilwell Financial Inc.,
- Federated Investors Inc.,
54
<PAGE>
- Franklin Resources Inc., and
- Eaton Vance Distributors, Inc.
Wasserstein Perella also analyzed certain information relating to selected
transactions involving companies in the life insurance and financial advisory
services industry and the asset management industry. Wasserstein Perella
compared the following transactions in the life insurance and financial advisory
services industry:
- ING Groep N.V.'s transaction with Aetna Inc. announced in July 2000;
- ING Groep N.V.'s transaction with Reliastar announced in April 2000;
- Allianz Versicherungs AG's transaction with Life Holding USA announced in
May 1999;
- Aegon N.V.'s transaction with Transamerica announced in February 1999;
- America International Group Inc.'s transaction with Sun America announced
in August 1998;
- ING Groep N.V.'s transaction with Equitable of Iowa Companies announced in
July 1997;
- Jefferson-Pilot Corp.'s transaction with Chubb Life Insurance Company of
America announced in February 1997; and
- American General Corporation's transaction with USLife Corporation
announced in February 1997.
Wasserstein Perella compared the following transactions in the retail asset
management industry:
- Liberty Financial Companies' transaction with Wanger Asset Management LP
announced in June 2000;
- UniCredito Italiano S.p.a.'s transaction with The Pioneer Group, Inc.
announced in May 2000;
- ReliaStar Financial Corporation's transaction with Pilgrim Capital
Corporation announced in July 1999;
- Credit Suisse's transaction with Warburg Pincus Asset Management announced
in February 1999;
- Phoenix Investment Partners' transaction with Zweig Fund Group announced
in December 1998; and
- Affiliated Managers Group's transaction with Rorer Asset Management
announced in November 1998.
In addition to the retail asset management transactions listed above,
Wasserstein Perella compared the following transactions in the institutional
asset management industry:
- Alliance Capital's transaction with Sanford C. Bernstein announced in
June 2000;
- Old Mutual Plc.'s transaction with United Asset Management announced in
June 2000;
- Caisse des Depots' transaction with Nvest LP and Nvest Cos. LP announced
in June 2000;
- Allianz AG's transaction with Pimco Advisors LP announced in
October 1999;
- AXA's transaction with Rosenberg Group announced in October 1998;
- Northwestern Mutual Life's transaction with Frank Russell announced in
August 1998;
- Mellon Bank's transaction with Newton Management Ltd. announced in
July 1998;
55
<PAGE>
- Liberty Financial's transaction with Crabbe Huson Group announced
June 1998;
- Robeco Groep N.V.'s transaction with Weiss, Peck & Greer LLC announced in
May 1998; and
- Affiliated Manager Group's transaction with Essex Investment Management
announced in January 1998.
Based on the multiples of the selected companies engaged in businesses
comparable to certain operations of the composite units of AXA Financial and the
multiples of the transactions involving companies engaged in businesses
comparable to certain operations of the composite units of AXA Financial,
Wasserstein Perella developed a valuation range to apply to each of the
composite units of AXA Financial. Wasserstein Perella also derived a value for
the cash and Credit Suisse Group stock to be received by AXA Financial from the
sale of Donaldson, Lufkin & Jenrette based upon publicly available information
and data provided by AXA Financial management. This calculation was made net of
holding company debt and investments not allocated to the Financial
Advisory/Insurance Segment of $1,110.6 million and net of the value of corporate
overhead allocated to Donaldson, Lufkin & Jenrette of $160.6 million. In
calculating the value of the corporate overhead allocated to Donaldson, Lufkin &
Jenrette, Wasserstein Perella assumed $24.7 million of declining pre-tax
corporate overhead, a 35% marginal tax rate and a multiple of 10.0x. Wasserstein
Perella also assumed 440.246 million diluted AXA Financial shares outstanding as
of October 16, 2000. This analysis resulted in an implied equity value ranges
per AXA Financial share as contained in the following chart:
<TABLE>
<CAPTION>
COMPARABLE COMPANY TRADING
AXA FINANCIAL COMPARABLE COMPANY RANGE PLUS ILLUSTRATIVE COMPARABLE
BUSINESS UNIT TRADING RANGE 20% PREMIUM TRANSACTION RANGE
------------------------------------- --------------------- -------------------------- ---------------------
<S> <C> <C> <C>
Insurance/Financial Advisory Unit.... $20.25-$24.75 $24.30-$29.70 $26.00-$31.00
Alliance Capital..................... $13.95-$16.65 $16.74-$19.98 $18.00-$21.00
Cash and Credit Suisse Group Stock... $9.92 $9.92 $9.92
Total................................ $44.12-$51.32 $50.96-$59.60 $53.92-$61.92
</TABLE>
GENERAL
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Wasserstein Perella's opinion. In arriving at its fairness
determination, Wasserstein Perella considered the results of each of these
analyses in their totality. No company or transaction used in the above analyses
as a comparison is directly comparable to AXA Financial or AXA or the exchange
offer and the merger. The analyses were prepared solely for purposes of
Wasserstein Perella's providing its opinion to the Special Committee as to the
fairness from a financial point of view of the consideration to be received by
the holders of AXA Financial common stock, other than AXA and its affiliates,
pursuant to the exchange offer and the merger, and do not purport to be
appraisals or necessarily reflect the prices at which businesses or securities
actually may be sold. Analyses based upon forecasts of future results are not
necessarily indicative of actual future results, which may be significantly more
or less favorable than suggested by those analyses. Because these analyses are
inherently subject to uncertainty, being based upon numerous factors or events
beyond the control of the parties or their advisors, none of AXA Financial,
Wasserstein Perella or any other person assumes responsibility if future results
are materially different from those forecast. As described above, Wasserstein
Perella's opinion to the Special Committee was one of the factors taken into
consideration by the Special Committee in making its determination to approve
the exchange offer and the merger. This summary is not a complete description of
the analysis performed by Wasserstein Perella and is qualified by reference to
the written opinion of Wasserstein Perella set forth in Annex B to this
prospectus and to Wasserstein Perella's report to
56
<PAGE>
the Special Committee included as an exhibit to the registration statement on
Form F-4, of which this prospectus constitutes a part.
Wasserstein Perella, as part of the ordinary course of its business, may
actively trade the debt and equity securities of AXA Financial and AXA for its
own account and for the accounts of its customers and, accordingly, may at any
time hold a long or short position in such securities. The Special Committee
selected Wasserstein Perella as its financial advisor because it is a nationally
recognized investment banking firm that has substantial experience in
transactions similar to the exchange offer and the merger. In connection with
the offer, Wasserstein Perella also provided certain investment banking services
to the Special Committee relating to the disposition of Donaldson, Lufkin &
Jenrette.
Pursuant to a letter agreement dated August 9, 2000, and amended on
August 29, 2000, the Special Committee engaged Wasserstein Perella to act as its
financial advisor with respect to a possible proposal from AXA or an affiliate
thereof to acquire all or substantially all of the outstanding shares of common
stock of AXA Financial held by persons other than AXA and its affiliates.
Pursuant to the terms of the letter agreement, AXA Financial has agreed to pay
Wasserstein Perella a fee of 0.17% of the aggregate consideration paid to the
holders of AXA Financial common stock, other than AXA and its affiliates, a
significant portion of which is contingent upon the consummation of the exchange
offer and the merger. AXA Financial has agreed to reimburse Wasserstein Perella
for its reasonable out-of-pocket expenses, including attorney's fees, and to
indemnify Wasserstein Perella against specific liabilities, including
liabilities under the U.S. federal securities laws.
Except in connection with the offer and merger as described in the previous
paragraph, Wasserstein Perella has not earned any fee amounts from AXA, AXA
Financial or their respective affiliates during the past two years.
POSITION OF AXA AND AXA MERGER CORP. REGARDING FAIRNESS OF THE OFFER AND THE
MERGER
AXA and AXA Merger Corp. believe that the consideration to be received by
AXA Financial stockholders (other than AXA and its subsidiaries) pursuant to the
offer and the merger is fair to and in the best interests of AXA Financial's
stockholders. AXA and AXA Merger Corp. base their belief on the following
factors:
- the conclusions and recommendations of the Special Committee that each of
the offer and the merger is fair to, and in the best interests of, AXA
Financial's stockholders (other than AXA and its affiliates);
- that the offer and the merger and the other terms and conditions of the
Merger Agreement were the result of arm's length, good faith, negotiations
between the Special Committee and AXA and their respective advisors;
- that the Special Committee was comprised of independent directors of AXA
Financial and that the Special Committee's legal and financial advisors
were independent;
- the factors referred to above as having been taken into account by the
Special Committee and the Board of Directors of AXA Financial, including
that the Special Committee received an opinion from Wasserstein, Perella
that, as of the date of that opinion and subject to the assumptions and
limitations discussed in the opinion, the consideration of 0.295 of an AXA
ADS and $35.75 net in cash per share of AXA Financial common stock to be
received by the holders of shares of AXA Financial common stock (other
than AXA and its affiliates) in the offer and the merger was fair from a
financial point of view to these stockholders;
57
<PAGE>
- that the consideration to be paid in the offer and merger exceeds the
going concern value of AXA Financial based on the historical and projected
financial performance of AXA Financial, as calculated by AXA taking into
account existing and potential future cash flows, marked-to-market asset
values and balance sheet risks, and AXA's view as to AXA Financial's
overall risk profile based on the nature and mix of its business;
- that the per share consideration to be paid in the offer and the merger
(based on the closing price of an AXA ADS on the NYSE on November 20,
2000) represents a premium of 27.4% over the average closing sale price of
the shares of AXA Financial common stock on the NYSE during the 30 trading
days preceding the announcement of the offer on August 30, 2000 and a
premium of 41.7% over the average closing sale price on the NYSE during
the 90 trading days preceding the announcement of the offer;
- that the per share consideration to be paid in the offer and the merger
(based on the closing price of the AXA ADSs on the NYSE on November 20,
2000) represents a 7.1% premium to the all time high closing price of the
share of the AXA Financial common stock on the NYSE prior to AXA's
announcement of the offer on August 30, 2000; and
- that the per share consideration to be paid in the offer and the merger
exceeds the net book value per share of AXA Financial common stock.
In view of the wide variety of factors considered in connection with their
respective evaluations of the offer and the merger, neither AXA nor AXA Merger
Corp. found it practicable to, and did not, quantify or otherwise attempt to
assign relative weights to the specific factors they each considered in reaching
their conclusions as to fairness. The liquidation of AXA Financial's assets was
not considered to be a viable course of action based on AXA's desire for AXA
Financial to continue to conduct its business as a subsidiary of AXA. Therefore,
no appraisal of liquidation value was sought for purposes of valuing the shares
of AXA Financial common stock. Although Goldman Sachs generally assisted AXA in
this transaction and, in particular, advised AXA on its strategies, participated
in negotiations with Wasserstein Perella, and reviewed certain projections of
AXA Financial and assumptions related thereto, Goldman Sachs did not deliver a
fairness opinion as to the consideration per share to be paid by AXA and AXA
Merger Corp. or to be received by the stockholders of AXA Financial in the offer
or subsequent merger.
The offer is not conditioned on the tender of a majority of the shares of
AXA Financial common stock other than those owned by AXA and its affiliates, and
the merger is not structured to require the approval of a majority of the
stockholders of AXA Financial other than AXA and its affiliates. Notwithstanding
this fact, AXA and AXA Merger Corp. believe that the offer and merger are
procedurally fair to the stockholders of AXA Financial (other than AXA and its
affiliates) because (i) a Special Committee comprising a majority of the
independent directors of AXA Financial was established to evaluate and negotiate
the offer, the merger and the Merger Agreement, (ii) the Special Committee was
assisted by its independent legal and financial advisors and (iii) AXA and its
financial advisor negotiated in good faith with the Special Committee and its
financial advisor.
This discussion of the information and factors considered and given weight
by AXA and AXA Merger Corp. is not intended to be exhaustive but is believed to
include all material factors considered by AXA and AXA Merger Corp.
SUMMARY OF FINANCIAL ANALYSIS OF GOLDMAN, SACHS & CO.
In connection with AXA's consideration and negotiation of the proposed
transaction, Goldman Sachs, from time to time, furnished certain financial
analyses to AXA. These analyses were discussed with members of the management of
AXA at various times and in response to changing circumstances and market prices
during the course of negotiations. None of the analyses
58
<PAGE>
summarized, alone or together, constitute an opinion of Goldman Sachs with
respect to the fairness of the consideration offered to the AXA Financial
stockholders or to be paid by AXA and AXA Merger Corp. The summary set forth
below does not purport to be a complete description of the analyses presented to
the management of AXA. The analyses summarized below have been filed, as
corrected, as an exhibit to the registration statement on Form F-4 filed with
the SEC, of which this prospectus constitutes a part. The description of the
analyses set forth below is qualified in its entirety by reference to the text
of such analyses.
PRO FORMA ANALYSIS. Goldman Sachs analyzed the pro forma impact on AXA's
EPS of AXA's initial offer of $32.10 net in cash and an exchange ratio of 0.271,
having a combined implied value of $53.50 based on the closing price of the AXA
ADS on August 29, 2000, and three hypothetical scenarios. Per AXA Financial
share, Scenario One contemplated $36.00 net in cash and an exchange ratio of
0.330; Scenario Two contemplated $33.00 net in cash and an exchange ratio of
0.327; and Scenario Three contemplated $36.00 net in cash and an exchange ratio
of 0.271. Based upon the $67.25 closing price of the AXA ADS on September 28,
2000, these hypothetical scenarios contemplated implied values of $58.20, $55.00
and $54.22, respectively. Based upon IBES estimates, adjusted for the
acquisition of Sanford C. Bernstein and the sale of Donaldson Lufkin & Jenrette,
and assuming a 7.5% pre-tax return on reinvestment of the proceeds from the
Donaldson Lufkin & Jenrette transaction, this analysis indicated that the merger
would be dilutive to projected pro forma AXA EPS by 1.9% in 2000 and 0.6% in
2001 if the merger were consummated at the initial offer and dilutive to
projected pro forma AXA EPS by 5.4% in 2000 and 3.6% in 2001 if the merger were
consummated on the terms contemplated by Scenario One. This analysis further
indicated that the two other hypothetical scenarios would be dilutive to
projected pro forma AXA EPS by 2.9% in 2000 and 1.5% and in 2001, for Scenario
Two, and 3.8% in 2000 and 2.0% in 2001 for Scenario Three. This analysis was
discussed with AXA management on September 29, 2000.
BLENDED MULTIPLE VALUATION. Goldman Sachs compared the implied prices per
AXA Financial share derived from a range of projected 2001 AXA Financial EPS and
a 2001 EPS multiple of 15.5x, to a range of potential prices per AXA Financial
share of $50.30 to $60.00. The projected 2001 EPS multiple of 15.5x represented
a 70% to 30% blend of the price to projected 2001 EPS multiple for one publicly
traded insurance company at high end of a range of comparables and the median
price to 2001 EPS multiple for several publicly traded asset management
companies, respectively.
Using a projected 2001 AXA Financial EPS based on median IBES estimates,
which did not take into account the Donaldson Lufkin & Jenrette transaction, and
the 15.5x multiple to projected 2001 EPS, Goldman Sachs derived an implied price
per AXA Financial share of $51.31. Potential prices per AXA Financial share of
$50.30, $53.50, $57.00 and $60.00 represented a discount of 2.0% and premiums of
4.3%, 11.1% and 16.9%, to the benchmark implied price of $51.31, respectively.
Using the same projected 2001 EPS estimate, Goldman derived 2001 EPS
multiples of 15.2x, 16.2x, 17.3x and 18.2x, from potential prices per AXA
Financial share of $50.30, $53.50, $57.00 and $60.00, respectively. This
analysis was discussed with AXA management on September 28, 2000.
PRO FORMA ANALYSIS--DONALDSON LUFKIN & JENRETTE TRANSACTION. Goldman Sachs
analyzed the pro forma impact of the Donaldson Lufkin & Jenrette transaction on
AXA Financial's projected 2000 and 2001 EPS. Based upon prices and transaction
assumptions as of August 25, 2000, earnings estimates derived from published
Goldman Sachs Research estimates, which in the case of 2001 were 1.52% higher
than the median IBES estimates for that period, and assuming a 7.5% pre-tax
return on the reinvestment of the proceeds from the Donaldson Lufkin & Jenrette
transaction, this analysis indicated that the Donaldson Lufkin & Jenrette
transaction would be earnings dilutive to holders of AXA Financial shares by
25.6% in 2000 and 23.7% in 2001. This analysis was discussed with AXA management
on August 25, 2000.
59
<PAGE>
SEGMENT ANALYSIS. Goldman Sachs calculated a range of implied prices per
AXA Financial share by applying a range of price to earnings multiples based on
comparable companies (or, in the case of corporate overhead, a weighted average
of the ranges of price to earnings multiples for the other segments) to the
projected 2000 earnings, based on Goldman Sachs Research estimates, for each of
the following segments of AXA Financial: Alliance Capital, Donaldson Lufkin &
Jenrette, Equitable Life and corporate overhead. This analysis resulted in a
range of implied prices per AXA Financial share of $31.16 to $42.32. By applying
the same analysis but using the public equity market valuations for Alliance
Capital and Donaldson Lufkin & Jenrette, adjusted to reflect AXA Financial's
percentage ownership, Goldman Sachs derived a range of implied prices per AXA
Financial share of $34.77 to $39.19. This analysis was discussed with AXA
management on June 26, 2000.
SELECTED BUYOUTS ANALYSIS. Goldman Sachs analyzed eighteen selected buyout
transactions since 1995 where the parent held 40-50% of the target's stock prior
to the transaction.
The following table presents the medians and means indicated for the
selected transactions:
<TABLE>
<CAPTION>
MEDIAN MEDIAN
-------- --------
<S> <C> <C>
Premium to initial bid...................................... 13.5% 13.2%
Premium to market price one day prior to announcement....... 22.9% 27.3%
Premium to the average market price for the month prior to
announcement of the transaction........................... 24.8% 27.6%
Premium to the average market price for the year prior to
the announcement of the transaction....................... 32.9% 31.7%
Final price as a percentage of 52 week high market price.... 98.5% 95.7%
</TABLE>
Goldman Sachs also reviewed the median data for certain minority buyout
transactions during the past five years where the parent held 50%-90% of the
target's stock prior to the transaction and the transaction value was greater
than $500 million. The results of the review are set forth below.
<TABLE>
<CAPTION>
PREMIUM TO THE
PREMIUM TO AVERAGE MARKET PRICE PREMIUM TO THE
MARKET FOR THE MONTH AVERAGE MARKET PRICE PRICE AS A
PRICE ONE DAY PRIOR TO THE FOR THE YEAR PERCENTAGE OF
PRIOR TO ANNOUNCEMENT PRIOR TO THE 52 WEEK
TYPE OF TRANSACTION ANNOUNCEMENT OF THE TRANSACTION ANNOUNCEMENT HIGH MARKET PRICE
------------------- -------------- -------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Financial
institutions
(13 transactions).... 18.6% 27.1% 21.9% 98.8%
Non-Financial
institutions (65
transactions)...... 20.9% 23.8% 28.6% 99.8%
All Institutions (82
transactions)...... 20.4% 23.8% 26.1% 99.8%
Cash (63
transactions)...... 24.9% 28.8% 32.0% 100.4%
Stock (22
transactions)...... 11.9% 16.0% 25.3% 97.3%
Domestic Acquiror (62
transactions)...... 19.6% 23.7% 25.5% 100.0%
Foreign Acquiror (16
transactions)...... 22.1% 29.0% 38.7% 98.7%
Transactions greater
than $1 billion (9
transactions)...... 18.6% 23.8% 30.9% 100.2%
</TABLE>
This analysis was discussed with AXA management on August 25, 2000.
Analyses based upon forecasts of future results are not necessarily
indicative of future results, which may be more or less favorable than suggested
by such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control
60
<PAGE>
of the parties or their respective advisors, none of AXA, AXA Financial, Goldman
Sachs or any other person assumes responsibility if future results or actual
values are materially different from these forecasts or assumptions.
For financial advisory services in connection with the merger, AXA has
agreed to pay Goldman Sachs a fee of $5,000,000 in cash, which was payable upon
commencement of the exchange offer, and an additional fee of $18,000,000 in cash
upon consummation of the merger. In addition, AXA has agreed to reimburse
Goldman Sachs for its reasonable out-of-pocket expenses incurred in connection
with the services provided by it and to indemnify and hold harmless Goldman
Sachs and certain related parties from and against certain liabilities and
expenses, including certain liabilities under the U.S. federal securities laws,
incurred in connection with its engagement.
Goldman Sachs is familiar with AXA, having acted as its financial advisor in
connection with, and having participated in certain of the negotiations leading
to, the agreement. Goldman Sachs has also provided certain investment banking
services to AXA from time to time, for which it received customary fees,
including having acted as: financial advisor in connection with its merger with
UAP Group in January 1997; financial advisor in connection with its sale of AXA
Equity and Law and AEL Investments in September 1997; financial advisor in
connection with its acquisition of Guardian Royal Exchange in November 1999; and
financial advisor in connection with its acquisition of a minority interest in
Sun Life & Provincial PLC in May 2000. Goldman Sachs has also provided financial
advisory services to AXA in connection with AXA Financial's sale of Donaldson
Lufkin & Jenrette in October 2000. Goldman Sachs has also provided certain
investment banking services to AXA Financial and its affiliates from time to
time, for which it received customary fees, including having acted as financial
advisor to AXA Financial in connection with the sale of its disability business
in August 2000 and as financial advisor to AXA Financial in connection with
Alliance Capital's acquisition of Sanford C. Bernstein. Goldman Sachs has also
from time to time provided certain investment banking services to BNP Paribas,
an affiliate of AXA, for which it has received customary fees, including having
acted as financial advisor to BNP in connection with its acquisition of Paribas.
Goldman Sachs, as part of its investment banking businesses, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. In selecting Goldman
Sachs as its financial advisor and as Dealer Manager, AXA considered primarily
the reputation of Goldman Sachs and its affiliates as an internationally
recognized investment banking firm that has substantial experience in
transactions similar to the merger.
Goldman Sachs provides a full range of financial advisory and securities
services and has advised AXA that, in the course of its normal trading
activities, it may from time to time effect transactions and hold positions in
the securities, including derivative securities, of AXA Financial and/or AXA for
its own account and for the account of customers.
PROJECTIONS
In October 2000 and subsequent to the execution of the Merger Agreement,
management of AXA Financial presented to AXA certain projected financial
information for the 2000-2004 period relating to the Financial
Advisory/Insurance Segment and the Investment Management Segment. In view of the
then pending sale of Donaldson, Lufkin & Jenrette to the Credit Suisse Group,
the projected financial information did not include data for the Investment
Banking and Brokerage Segment. The projected financial information is consistent
with the projections that were provided to the Special Committee and Wasserstein
Perella and Goldman Sachs in connection with their review and evaluation of AXA
Financial. The projected financial information provided in October
61
<PAGE>
supersedes projected information previously provided to AXA. This projected
financial information is included in this prospectus solely because it was made
available to AXA. AXA Financial has advised AXA that it does not, as a matter of
course, publicly disclose projections and future revenues or earnings and that
the projected financial information was prepared for internal purposes and not
with a view to dissemination to the public. The projected financial information
does not reflect (i) the actual performance of AXA Financial, (ii) changes in
the business of AXA Financial, in the financial markets or in the economy in
general, or (iii) prospective changes in the business of AXA Financial, in the
financial markets or in the economy in general resulting from events which have
occurred, in each case, since the projected financial information was prepared.
The projected financial information was not prepared with a view towards
complying with the published guidelines of the SEC regarding projections or with
the AICPA Guide for Prospective Financial Statements. The independent public
accountants of AXA Financial have neither examined nor compiled the projected
financial information and, accordingly, do not express an opinion or any other
form of assurance with respect to that information. The projected financial
information was submitted to AXA in preparation of AXA's strategic plan and is
not supported by the same level of detail as that prepared in connection with
the preparation of AXA's annual budget.
Key inputs to the projected financial information include, among others,
assumptions pertaining to financial market conditions, business mix and volume,
investment philosophy and results, AXA Financial's capitalization, targeted
expense levels, synergies between Alliance Capital and Sanford C. Bernstein,
results of financial planning and other strategic initiatives and, solely for
internal planning purposes, the reinvestment of proceeds from the sale of
Donaldson, Lufkin & Jenrette.
The projected financial information as presented in this prospectus is
prepared on a pre-tax operating earnings basis, consistent with presentations in
AXA Financial's Exchange Act reports. Pre-tax operating earnings is a non-GAAP
measure. Operating earnings adjust U.S. GAAP amounts to exclude investment
gains/losses, net of related DAC and other charges, amortization of goodwill and
the effect of unusual or non-recurring events and transactions, such as the sale
of Donaldson, Lufkin & Jenrette. On a combined Financial Advisory/Insurance
Segment and Investment Management Segment basis, the projected financial
information anticipates pre-tax operating earnings of $1,391.4 million for 2000,
$1,529.2 million for 2001, $1,793.0 million for 2002, $2,109.1 million for 2003
and $2,475.3 million for 2004. The projected financial information that was
provided to AXA was further adjusted in accordance with French GAAP and the
requirements of AXA's accounting system.
AXA Financial does not intend to update or otherwise revise the projected
financial information to reflect circumstances existing or events occurring
after the date the information was prepared or to reflect the occurrence of
unanticipated events.
The projected financial information set forth above constitutes
forward-looking information. It is not possible to predict whether the
assumptions made in preparing the projected financial information will be valid,
and AXA and AXA Financial caution investors that any such forward-looking
statements are not guarantees of future performance. Actual results may differ
materially from anticipated results. Investors should consider the risks and
uncertainties in AXA Financial's business that may affect future performance and
that are discussed in the documents of AXA Financial mentioned under "Special
Note Regarding Forward-Looking Statements" and incorporated by reference in this
prospectus. These uncertainties include the potential effects of the offer and
the merger, the possibility of general economic, business and legislative
conditions that are less favorable than anticipated, changes in interest rates
or the stock markets and stronger than anticipated competitive activity. The
inclusion of this information should not be regarded as an indication that AXA,
AXA Financial or anyone else who received this information considered it a
reliable predictor of future events, and this information should not be relied
on as such. Neither AXA
62
<PAGE>
nor AXA Financial assumes any responsibility for the validity, reasonableness,
or completeness of the projected financial information.
PLANS FOR AXA FINANCIAL AFTER THE OFFER AND THE MERGER
Pursuant to the Merger Agreement, upon completion of the offer, AXA and AXA
Merger Corp. intend to effect the merger in accordance with the Merger
Agreement. See "The Merger Agreement." Except as otherwise described in this
prospectus, AXA has no current plans or proposals or negotiations which relate
to or would result in:
- other than the merger pursuant to the Merger Agreement, an extraordinary
corporate transaction, such as a merger, reorganization or liquidation
involving AXA Financial;
- any purchase, sale or transfer of a material amount of assets of AXA
Financial;
- any change in the management of AXA Financial or any change in any
material term of the employment contract of any executive officer; or
- any other material change in the corporate structure or business of AXA
Financial.
Nevertheless, AXA may initiate from time to time reviews of AXA Financial
and its assets, corporate structure, capitalization, operations, properties,
management and personnel to determine what changes, if any, would be desirable
following the merger in order best to organize and integrate the activities of
AXA and AXA Financial. AXA expressly reserves the right to make any changes that
it deems necessary or appropriate in light of its review or in light of future
developments.
In addition, AXA considers the shares of Credit Suisse Group received as
consideration in the sale of Donaldson, Lufkin & Jenrette and held by AXA
Financial and its affiliates as an investment asset which will be managed
accordingly and may be liquidated over time as market conditions seem
appropriate. As part of the intragroup financing arrangements relating to the
offer and the merger, AXA Financial will provide funds (up to approximately
$3.2 billion) to AXA Merger Corp. which AXA Merger Corp. will use in the offer.
Some or all of the shares of Credit Suisse Group acquired by AXA Financial in
connection with the sale of Donaldson, Lufkin & Jenrette may be sold to AXA at a
price per share based on prevailing market prices at the time of the sale.
ACCOUNTING TREATMENT
The merger will be accounted for by AXA using the purchase method of
accounting in accordance with French GAAP and U.S. GAAP.
LETTER OF BNP PARIBAS AND LAZARD FRERES TO THE SUPERVISORY BOARD OF AXA
On October 16, 2000, in connection with the deliberations of the Finance
Committee of the Supervisory Board of AXA, BNP Paribas and Lazard Freres
delivered a letter to the Supervisory Board of AXA stating that the offer and
the merger will have a slight dilutive effect on the earnings per ordinary share
of AXA in 2001.
Two of the members of the Supervisory Board of AXA are affiliated with BNP
Paribas. In addition, as of September 30, 2000, BNP Paribas beneficially owned
approximately 22.3% of the outstanding shares of Finaxa representing
approximately 13.3% of the voting rights in Finaxa. As of that date, Finaxa
beneficially owned 15.4% of the outstanding shares of AXA representing 24.7% of
the voting rights in AXA. BNP Paribas is regularly providing corporate finance
and commercial banking services to AXA. For the last two years BNP Paribas has
received compensation of approximately E39.0 million for these services.
A member of the Supervisory Board of AXA is affiliated with Lazard Freres.
In addition, two of the members of the Supervisory Board of AXA were formerly
affiliated with Lazard Freres. Lazard
63
<PAGE>
regularly provides investment banking services to AXA. For the last two years,
Lazard Freres has received compensation of approximately E6.2 million for these
services.
INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER
TREATMENT OF STOCK OPTIONS.
The Merger Agreement provides that at the effective time of the merger the
terms of each outstanding option to acquire shares of AXA Financial common stock
granted under The Equitable Companies Incorporated 1997 Stock Incentive Plan and
The Equitable Companies Incorporated 1991 Stock Incentive Plan, whether vested
or unvested, will (unless, with respect to non-qualified options, the holder of
that option elects otherwise) be amended and converted into an option to
acquire, on the same terms and conditions, a number of AXA ordinary shares in
the form of ADSs in an amount determined by multiplying:
(x) the number of shares of AXA Financial common stock subject to the
stock option that is being converted
by
(y) the number of AXA ADSs equal to the sum of
(A) the number of AXA ADSs per share of AXA Financial common stock
offered to holders of AXA Financial common stock in the offer and the
merger
and
(B) the number of AXA ADSs obtained by dividing
(i) the cash consideration per share of AXA Financial common
stock offered to holders of AXA Financial common stock in the offer
and the merger
by
(ii) the closing price for an AXA ADS as reported on the NYSE
Composite Transaction Tape at the effective time of the merger.
The exercise price for these options to acquire AXA ADSs will equal (x) the
aggregate exercise price for the shares of AXA Financial common stock that were
otherwise purchasable under the existing stock incentive plans mentioned above,
divided by (y) the aggregate number of AXA ADSs that may be purchased under the
converted options (as calculated based on the formula described above).
In addition, generally all outstanding options to purchase shares of AXA
Financial common stock awarded under The Equitable Companies Incorporated 1997
Stock Incentive Plan and The Equitable Companies Incorporated 1991 Stock
Incentive Plan will become immediately and fully exercisable pursuant to their
terms upon the payment by AXA and AXA Merger Corp. for shares of AXA Financial
common stock, validly tendered and not withdrawn, upon expiration of the initial
period of the offer. All stock options under The Equitable Companies
Incorporated 1997 Stock Incentive Plan and The Equitable Companies Incorporated
1991 Stock Incentive Plan which are "incentive stock options" (referred to in
this prospectus as ISOs) will be assumed by AXA and converted into options to
acquire AXA ordinary shares in the form of ADSs, as described above, subject to
any changes required by Section 424 of the Code.
If, and to the extent that, a holder of non-qualified options (i.e., options
that are not ISOs) to acquire shares of AXA Financial common stock granted under
The Equitable Companies Incorporated 1997 Stock Incentive Plan and The Equitable
Companies Incorporated 1991 Stock Incentive Plan does not elect to convert these
options into options to acquire ordinary shares of AXA in the form of ADSs, each
of his or her options will, immediately prior to the effective time of
64
<PAGE>
the merger, be cancelled in exchange for a cash payment by AXA Financial, as the
surviving corporation in the merger, equal in value to the product of:
(x) the total number of shares of AXA Financial common stock subject to that
holder's non-qualified options
and
(y) the excess of
(A) the sum of (i) the value of the AXA ADSs paid per share of AXA
Financial common stock in the offer and merger, in accordance with the terms
of the Merger Agreement, based on the closing price of the AXA ADSs on the
NYSE on the effective date of the merger as reported on the NYSE Composite
Transaction Tape and (ii) the cash consideration paid in the offer and
merger per share of AXA Financial common stock
over
(B) the exercise price per share of AXA Financial common stock subject
to that holder's non-qualified option.
Holders of options to acquire shares of AXA Financial common stock who are
currently eligible to defer their annual compensation for 2001 into AXA
Financial's Variable Deferred Compensation Plan for Executives and who elect to
receive the foregoing cash payment may, pursuant to the terms of that deferred
compensation plan, elect to defer receipt of the foregoing cash payment into
that plan.
Any outstanding stock options held by any non-employee directors or former
directors will be treated the same as options to acquire shares of AXA Financial
common stock that are not ISOs. Each deferred stock unit credited to a
participant's account under AXA Financial's Stock Plan for Directors will be
converted at the effective time of the merger into the cash and stock
consideration (AXA ADSs) per share of AXA Financial common stock paid in the
merger. In that case, the cash consideration paid in the merger per share of AXA
Financial common stock will be deferred into AXA Financial's Variable Deferred
Compensation Plan for Directors. The stock consideration (AXA ADSs) paid in the
merger for AXA Financial common stock, as provided by the Merger Agreement, will
otherwise be distributed in accordance with the terms of AXA Financial's Stock
Plan for Directors and the Variable Deferred Compensation Plan for Directors, as
applicable, pursuant to the distribution elections previously made by the
participants with respect to their respective accounts.
CONTINUITY AGREEMENTS WITH CERTAIN EXECUTIVES. AXA Financial has entered
into continuity agreements with forty three (43) executives of AXA Financial in
connection with the offer and the merger. The continuity agreements were
approved by the Special Committee to promote the stability of AXA Financial's
management and its focus on the ongoing business of AXA Financial. The
continuity agreements cover three "tiers" of executives: Tier I, Tier II and
Tier III. Messrs. Miller, Hegarty and Tulin are the only executives categorized
as Tier I executives. The continuity agreements are substantially identical
among the Tiers, except in certain respects, as generally described below.
The continuity agreements generally provide cash severance payments and
other benefits if an executive's employment is terminated by the surviving
corporation, at any time within two (2) years after the expiration of the
initial period of the offer for any reason other than the executive's death,
disability, retirement or for cause (all as defined in the agreements), or if
the executive resigns for good reason. Generally, the agreements define "good
reason" to include a reduction in the executive's base salary, the material and
adverse diminution of the executive's duties and responsibilities the assignment
of duties materially inconsistent with the level of duties performed by the
executive prior to the expiration of the initial offer, in either this case or
the immediately preceding case, as a direct result of the offer and the merger,
or the attempted relocation of the
65
<PAGE>
executive's employment more than 50 miles from its current location. Tier I
executives are also provided with a special voluntary termination right, in that
they can claim a "good reason" resignation with or without any reason given by
the executive during the fifteenth (15th) month following the month in which the
offer is consummated, by providing their employer with prior written notice
regarding their decision to terminate during the ninth (9th) month following the
month in which the offer is consummated. For Tier I executives, no diminution or
assignment, as described above, will be deemed to exist so long as a Tier I
executive retains his title with the surviving corporation and has duties
customarily performed by an executive with the same title in a privately held,
wholly owned subsidiary of a public company. For Tier II and Tier III
executives, no diminution or assignment, as described above, will be deemed to
exist solely as a consequence of AXA Financial ceasing to be a publicly traded
company or as a result of any changes in the Tier II or Tier III executive's
respective reporting responsibilities that are directly related to the offer and
the merger.
In the event of such termination of employment, the relevant executive would
be entitled to certain payments, generally as follows:
- in the case of Tier I executives, the severance amount would be equal to
three (3) times the sum of (i) the executive's annual rate of base salary,
plus (ii) the highest annual bonus paid or payable in, or in respect of,
the three full fiscal years preceding the year in which such termination
occurred;
- in the case of Tier II executives, the severance amount would be equal to
two (2) times such sum;
- in the case of Tier III executives, the severance amount would be equal to
1.5 times such sum.
The executives would not be required to mitigate the amount of any payment
provided for under the agreements. In addition to other benefits provided,
medical, dental, vision and life insurance coverage would also be continued for
the relevant executives for a period ending (i) three years after the relevant
termination date for Tier I executives, (ii) two years after that date for
Tier II executives, and (iii) one and one half years after that date for
Tier III executives.
INDEMNIFICATION. Under the Merger Agreement, the current or former
directors and officers of AXA Financial or any of its subsidiaries (other than
Donaldson, Lufkin & Jenrette, which at the time was a subsidiary of AXA
Financial, and its subsidiaries) are entitled to certain rights of
indemnification and to be insured by the surviving corporation in the merger or
AXA with respect to certain matters from and after the completion of the merger.
See "The Merger Agreement--Indemnification and Insurance."
INTERLOCKING DIRECTORS, OFFICERS AND MEMBERS OF THE MANAGEMENT BOARD AND THE
SUPERVISORY BOARD. In considering the recommendation of the Board of Directors
of AXA Financial and the Special Committee with respect to the offer and the
merger, stockholders should be aware that certain officers and members of the
Management and Supervisory Boards of AXA and directors of AXA Financial have
interests in the offer and the merger which may present them with certain
potential conflicts of interest. In particular, of the 19 directors of AXA
Financial, three currently are also members of the Management Board of AXA and
executive officers of AXA and two others currently are executive officers of
AXA. Four of the directors of AXA Financial are also members of the Supervisory
Board of AXA. However, the Special Committee was comprised of five independent
outside directors of AXA Financial.
OWNERSHIP INTEREST OF AXA. Stockholders also should be aware that, as a
result of the current ownership by AXA and certain of its subsidiaries of
approximately 60.1% of the issued and outstanding shares of AXA Financial common
stock, AXA controls AXA Financial. The following
66
<PAGE>
subsidiaries of AXA hold shares of AXA Financial common stock: Lor Finance, S.A.
(28,000,000 shares or 6.44% of shares outstanding); Financiere 45 (13, 937,298
shares or 3.2% of shares outstanding); AXA Equity & Law Life Assurance Society
plc (17,861,234 shares or 4.11% of shares outstanding); AXA Corporate Solutions
(12,876,266 shares or 2.96% of shares outstanding); AXA Corporate Solutions
Reinsurance Co. (146,100 or 0.03% of shares outstanding); and Societe Beaujon
(1,920,000 shares or 0.44% of shares outstanding). Neither AXA nor AXA Financial
are aware of any other entities that are the beneficial owner of 5% or more of
AXA Financial common stock.
FEES AND OTHER RIGHTS OF THE SPECIAL COMMITTEE. Pursuant to resolutions of
the Board of Directors of AXA Financial adopted on June 28, 2000, each member of
the Special Committee will be entitled to payment by AXA Financial of a fee of
$40,000, in addition to meeting fees, as compensation for services performed as
a member of the Special Committee. This fee is payable whether or not AXA
consummates the acquisition of AXA Financial's publicly held common stock. In
addition, AXA Financial has agreed to reimburse each member for all
out-of-pocket expenses incurred in connection with his or her service on the
Special Committee.
Pursuant to indemnification agreements dated as of June 28, 2000, each
member of the Special Committee is entitled to certain rights of indemnification
and to be insured by AXA Financial with respect to specified matters in
connection with the offer, the merger and any related transactions.
The Special Committee and the Board of Directors of AXA Financial were aware
of these actual and potential conflicts of interest and considered them along
with the other matters described under "--Recommendation of the Special
Committee and the Board of Directors of AXA Financial."
CERTAIN EFFECTS OF THE OFFER
As a result of the offer, the direct and indirect interest of AXA in the net
book value and net earnings of AXA Financial will increase to the extent of the
number of shares of AXA Financial common stock acquired under the offer.
Following consummation of the merger, AXA's direct and indirect interest in
these items will increase to 100% and AXA and its subsidiaries will be entitled
to all benefits resulting from that interest, including all income generated by
AXA Financial's operations and any future increase in AXA Financial's value and
the right to elect all members of the Board of Directors of AXA Financial.
Similarly AXA will also bear the risk of losses generated by AXA Financial's
operations and any decrease in the value of AXA Financial after the merger.
REDUCED LIQUIDITY; POSSIBLE DELISTING. Following the consummation of the
merger, the shares of AXA Financial common stock will no longer be quoted on the
NYSE. In addition, the registration of the shares of AXA Financial common stock
under the Exchange Act is expected to be terminated upon application by AXA
Financial to the SEC if the shares of AXA Financial common stock are not listed
on a national securities exchange and there are fewer than 300 record holders.
Accordingly, following the merger there will be no publicly traded shares of AXA
Financial common stock.
Even if the merger does not occur, the exchange of shares of AXA Financial
common stock pursuant to the offer will reduce the number of shares of AXA
Financial common stock that might otherwise trade publicly and will reduce the
number of holders of shares of AXA Financial common stock, which could adversely
affect the liquidity and market value of the remaining shares of AXA Financial
common stock held by the public. In addition, depending upon the number of
shares of AXA Financial common stock acquired pursuant to the offer, the shares
of AXA Financial common stock may no longer meet the standards for continued
inclusion in the NYSE and may be delisted from that exchange.
If the shares of AXA Financial common stock no longer meet the requirements
of the NYSE for continued listing, including after the exchange of shares in the
offer but prior to the merger, the
67
<PAGE>
listing of such shares might be discontinued, but quotations might still be
available from another source. In such event, the market for the shares of AXA
Financial common stock could be adversely affected. The extent of the public
market for the shares of AXA Financial common stock and the availability of such
quotations would, however, depend upon the number of holders of these shares
remaining at such time, the interest in maintaining a market in the shares of
AXA Financial common stock on the part of securities firms, the possible
termination of registration of such shares of AXA Financial common stock under
the Exchange Act as described above and other factors.
STATUS AS "MARGIN SECURITIES". The shares of AXA Financial common stock are
currently "margin securities" as such term is defined under the rules of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of these securities. Depending upon factors similar to those
described above regarding listing and market quotations, following consummation
of the offer, it is possible that the shares of AXA Financial common stock may
no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board, in which event these shares could no
longer be used as collateral for loans made by brokers.
REPORTING REQUIREMENTS. The content and timing of reports and notices that
AXA files with the SEC differs in several respects from the reports and notices
that AXA Financial currently files. AXA is, and will be subsequent to the offer,
a foreign private issuer for the purposes of the reporting rules under the
Exchange Act.
As a U.S. reporting company AXA Financial must file with the SEC, among
other reports and notices:
- an annual report on Form 10-K within 90 days after the end of each fiscal
year;
- quarterly reports on Form 10-Q within 45 days after the end of each of the
first three quarters of the fiscal year, and
- reports on Form 8-K upon the occurrence of specified events.
AXA Financial will continue to provide periodic reports to the SEC for so long
as it has public debt outstanding and is required to provide such reports under
the Exchange Act.
As a foreign private issuer, pursuant to the requirements of the Exchange
Act, AXA is, and will be, required to:
- file with the SEC an annual report on Form 20-F within six months after
the end of each fiscal year, and
- furnish reports on Form 6-K relating to information material to AXA which
is required to be publicly disclosed in France or filed with the
ParisBourse, or relating to information distributed or required to be
distributed by AXA to its shareholders.
AXA is not required under the Exchange Act to file quarterly reports on
Form 10-Q after the end of each fiscal quarter.
In addition, the content and timing of reports and notices that holders of
AXA ADSs will receive will differ from the reports and notices that are
currently received by AXA Financial stockholders. As a U.S. reporting company,
AXA Financial must mail to its stockholders in advance of each annual meeting of
stockholders:
- an annual report containing audited financial statements, and
- a proxy statement that complies with the requirements of the Exchange Act.
As a foreign private issuer, AXA is exempt from the rules under the Exchange
Act prescribing the furnishing and content of annual reports and proxy
statements to its shareholders. However,
68
<PAGE>
AXA will furnish shareholders with an annual report on Form 20-F which contains
audited financial statements prepared in conformity with French GAAP, including
reconciliations to U.S. GAAP and a discussion of AXA's financial results that is
comparable to the management's discussion and analysis that is contained in AXA
Financial's annual reports on Form 10-K. AXA will also furnish shareholders with
semi-annual interim reports which include unaudited interim financial
information prepared in conformity with French GAAP and notices of meetings of
shareholders and related documents in accordance with French law and the rules
of the New York Stock Exchange. After each of those reports is made available to
shareholders in France, AXA will furnish The Bank of New York, as depositary,
with sufficient copies of these reports as well as English translations of other
communications and notices that AXA generally makes available to its
shareholders. The depositary will then arrange for the mailing to holders of AXA
ADRs of the annual and semi-annual reports and notices of shareholders' meetings
and, at the request of AXA, copies or summaries of other communications and
notices made available to shareholders. The depositary has also agreed to make
these documents available for inspection at the depositary's office. See
"Description of AXA's American Depositary Shares". In addition, as a foreign
private issuer, AXA is exempt from the rules under the Exchange Act which
require officers, directors and 10% shareholders to:
(1) file reports with the SEC on transactions in ADSs; and
(2) disgorge profits realized from any purchase and sale of ADSs within
six months.
FEDERAL SECURITIES LAW CONSEQUENCES
Recipients of AXA ADSs issued in the offer or the merger can freely transfer
their AXA ADSs under the Securities Act, except that persons who are deemed to
be "affiliates", as that term is defined under the Securities Act, of AXA
Financial prior to the offer or merger, as applicable, may only sell their AXA
ADSs:
- in transactions permitted by the resale provisions of Rule 145 under the
Securities Act, or Rule 144 under the Securities Act in the case of
persons who become affiliates of AXA,
- through a transaction not required to be registered under the Securities
Act, or
- pursuant to an effective registration statement under the Securities Act.
Persons who may be affiliates of AXA Financial for those purposes generally
include individuals or entities that control, are controlled by, or are under
common control with, AXA Financial, and would not include stockholders who are
not officers, directors or principal stockholders of AXA Financial.
STOCK EXCHANGE LISTING
The AXA ADSs are listed on the New York Stock Exchange, and the principal
trading market for AXA's ordinary shares is Euronext Paris SA (which we refer to
in this prospectus as the "ParisBourse"). AXA's ordinary shares are also quoted
on the Stock Exchange Automatic Quotations International System. It is a
condition to the offer that the AXA ADSs to be issued in the offer be approved
for listing on the New York Stock Exchange.
Following the merger, the AXA Financial common stock will no longer be
listed on the New York Stock Exchange.
69
<PAGE>
THE EXCHANGE OFFER
TERMS OF THE OFFER; EXPIRATION DATE
Upon the terms and subject to the conditions of the offer (including, if the
offer is extended or amended, the terms and conditions of such extension or
amendment), AXA and AXA Merger Corp. will accept for exchange and exchange all
shares of AXA Financial common stock (other than shares of AXA Financial common
stock owned directly or indirectly by AXA or held in treasury by AXA Financial)
validly tendered prior to the expiration date of the initial offering period and
not withdrawn in the manner described under "--Withdrawal Rights" below. The
term "expiration date" means, with respect to the initial offering period, 12:00
midnight, New York City time, on December 22, 2000, unless and until AXA and AXA
Merger Corp. shall have extended the period during which the offer is open
pursuant to the terms of the Merger Agreement, in which event the term
"expiration date" will mean the latest time and date at which the offer, as so
extended by AXA and AXA Merger Corp., will expire.
Subject to the provisions of the Merger Agreement, AXA and AXA Merger Corp.
may waive any or all of the conditions to their obligation to exchange shares of
AXA Financial common stock pursuant to the offer. If by the expiration date of
the initial offering period (as it may be extended), any or all of the
conditions to the offer have not been satisfied or waived, subject to the
provisions of the Merger Agreement, AXA and AXA Merger Corp. may elect to:
- waive all of the unsatisfied conditions and subject to any required
extension, purchase all shares of AXA Financial common stock validly
tendered by the expiration date and not properly withdrawn; or
- extend the offer and, subject to the right of stockholders to withdraw
shares of AXA Financial common stock until the new expiration date, retain
the shares of AXA Financial common stock that have been tendered until the
expiration of the offer as extended.
The Merger Agreement provides that, in the event that AXA and AXA Merger
Corp. are unable to consummate the offer on the expiration date of the initial
offering period due to the fact that all the conditions to the offer have not
been satisfied or waived by that date, except to the extent that these
conditions are incapable of being satisfied, AXA and AXA Merger Corp. will not
terminate the offer but will extend the offer (for no more than 10 business days
without the consent of the Special Committee) and set a new expiration date and
will continue to extend the offer under these circumstances and set new
expiration dates until the earlier of (x) the date that all the conditions to
the offer are satisfied or waived and (y) June 30, 2001.
The Merger Agreement provides that, without the consent of AXA Financial
(expressed in a resolution adopted by both the Special Committee and the Board
of Directors of AXA Financial), AXA and AXA Merger Corp. will not:
- reduce the amount of the consideration per share of AXA Financial common
stock or change the form of consideration to be paid pursuant to the offer
or reduce the percentage of shares of AXA Financial common stock offered
to be acquired in the offer;
- add to the conditions to the offer or modify such conditions in any manner
adverse to the holders of shares of AXA Financial common stock, other than
AXA and its subsidiaries that own shares of AXA Financial common stock
deposited in the voting trust; and
- otherwise amend the offer in any manner adverse to the holders of shares
of AXA Financial common stock, other than AXA and its subsidiaries that
own shares of AXA Financial common stock deposited in the voting trust.
70
<PAGE>
The Merger Agreement also provides that AXA and AXA Merger Corp. may,
without the consent of AXA Financial but otherwise subject to the terms of the
Merger Agreement:
- extend the offer if, at the scheduled expiration date, any of the
conditions to the offer are not satisfied, until such time as such
conditions have been satisfied or waived;
- extend the offer for any period required by any rule, regulation,
interpretation or position of the SEC or the staff of the SEC applicable
to the offer; and
- extend the offer for any reason for a period of not more than five
business days beyond the latest expiration date that would otherwise be
permitted under the two preceding clauses but in no event ending later
than June 30, 2001 and only so long as AXA and AXA Merger Corp. have
waived each of the conditions to the offer.
In addition, subject to the terms of the Merger Agreement, AXA and AXA
Merger Corp. have undertaken to provide a subsequent offering period in
accordance with Rule 14d-11 under the Exchange Act immediately following the
expiration of the initial offering period or any extension of that period.
According to the terms of the Merger Agreement, the subsequent offering
period will expire on the earliest to occur of:
- 20 business days following commencement of the subsequent offering period;
- the business day prior to the closing date of the Merger; and
- December 31, 2000, if extending the subsequent offering period beyond that
date would reasonably be expected to adversely affect AXA.
During the subsequent offering period, stockholders may tender but not
withdraw their shares of AXA Financial common stock and will receive 0.295 of an
AXA ADS and $35.75 in cash per AXA Financial share. The subsequent offering
period is not an extension of the offer, but is an additional period of time,
following the expiration of the initial offering period and any extension
thereof and the acceptance for exchange of shares already tendered, in which
stockholders may tender shares not tendered in the offer.
Rule 14d-11 under the Exchange Act provides that a subsequent offering
period must have a duration of at least 3 and up to 20 business days. It is
expected that the subsequent offering period will terminate on December 31,
2000. If the initial offering period is extended up to a date which is less than
3 business days prior to the end of 2000 or if the merger is consummated within
less than 3 business days from the consummation of the offer, no subsequent
period will be provided.
Any extension, delay or termination of the offer and any waiver or amendment
of its terms will be followed as promptly as practicable by a corresponding
public announcement. In the case of an extension of the initial offering period,
the public announcement will be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled expiration date.
Subject to applicable law (including Rules 12e-3(e), 14d-4(d), 14d-6(c) and
14e-1 under the Exchange Act, which require that material changes be promptly
disseminated to stockholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which AXA and AXA Merger Corp.
may choose to make any public announcement, AXA and AXA Merger Corp. will have
no obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service.
The Merger Agreement requires AXA and AXA Merger Corp. to:
- accept for payment all shares of AXA Financial common stock validly
tendered and not withdrawn pursuant to the offer if all conditions to the
offer have been satisfied or waived by AXA and AXA Merger Corp. and the
offer has expired;
71
<PAGE>
- deliver payment for all shares of AXA Financial common stock validly
tendered and not withdrawn pursuant to the offer that AXA and AXA Merger
Corp. have become obligated to acquire upon expiration of the initial
period of the offer or any extension thereof as soon as practicable after
that expiration; and
- deliver payment for any shares of AXA Financial common stock validly
tendered pursuant to the offer during the subsequent offering period that
AXA and AXA Merger Corp. are obligated to acquire promptly upon such
tender.
If AXA and AXA Merger Corp. are delayed in exchanging shares of AXA
Financial common stock or are unable to deliver payment for shares of AXA
Financial common stock pursuant to the offer for any reason, then, without
prejudice to the rights of AXA and AXA Merger Corp. under the offer, the
exchange agent may retain tendered shares of AXA Financial common stock on
behalf of AXA and AXA Merger Corp., and these shares of AXA Financial common
stock may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described under "--Withdrawal Rights". However,
the ability of AXA and AXA Merger Corp. to delay delivery of payment for shares
of AXA Financial common stock which AXA has accepted for exchange is limited by
the terms of the Merger Agreement described above and Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by, or on behalf of, holders of securities
promptly after the termination or withdrawal of the offer. If AXA and AXA Merger
Corp. make a material change in the terms of the offer or the information
concerning the offer, or if they waive a material condition of the offer in
accordance with the Merger Agreement, AXA and AXA Merger Corp. will extend the
offer to the extent required by Rules 13e-3(4), 14d-4(d), 14d-6(c) and 14e-1
under the Exchange Act. The minimum period during which the offer must remain
open following material changes in the terms of the offer or information
concerning the offer, other than a change in price or change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. For
purposes of the offer, a "business day" means any day other than a Saturday,
Sunday or United States federal holiday and consists of the time period from
12:01 a.m., through 12:00 midnight, New York City time. The requirement to
extend the offer will not apply to the extent that the number of business days
remaining between the occurrence of the change and the then-scheduled expiration
date equals or exceeds the minimum extension period that would be required
because of such amendment. If, prior to the expiration date, AXA and AXA Merger
Corp. increase the consideration offered to holders of shares of AXA Financial
common stock pursuant to the offer, the increased consideration will be paid to
all holders whose shares of AXA Financial common stock are purchased in the
offer whether or not such shares of AXA Financial common stock were tendered
prior to that increase.
AXA Financial has provided AXA and AXA Merger Corp. with AXA Financial's
stockholder list and security position listings for the purpose of disseminating
this prospectus to holders of shares of AXA Financial common stock. This
prospectus and the related Letter of Transmittal will be mailed to record
holders of shares of AXA Financial common stock whose names appear on AXA
Financial's stockholder list and will be furnished, for subsequent transmittal
to beneficial owners of shares of AXA Financial common stock, to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the stockholder list or, if applicable,
who are listed as participants in a clearing agency's security position listing.
EXCHANGE OF AXA FINANCIAL SHARES; DELIVERY OF AXA ADSS AND CASH
Upon the terms and subject to the conditions of the offer (including, if the
offer is extended or amended, the terms and conditions of any such extension or
amendment), AXA and AXA Merger Corp. will accept for exchange and exchange all
shares of AXA Financial common stock validly tendered prior to the expiration
date and not properly withdrawn, as promptly as practicable after
72
<PAGE>
the expiration date. In addition, subject to applicable rules of the SEC and the
terms of the Merger Agreement, AXA and AXA Merger Corp. expressly reserve the
right to delay acceptance for exchange of, or the exchange for, shares of AXA
Financial common stock in order to comply with any other applicable law.
In all cases, exchange of shares of AXA Financial common stock tendered and
accepted for exchange pursuant to the offer will be made only after timely
receipt pursuant to the procedures described under "--Procedure for Tendering"
below by the exchange agent of certificates for those shares of AXA Financial
common stock (or a confirmation of a book-entry transfer of those shares of AXA
Financial common stock in the exchange agent's account at The Depository Trust
Company (which we refer to as "DTC")), a properly completed and duly executed
Letter of Transmittal in the form provided by AXA and AXA Merger Corp. or, in
the case of a book-entry transfer, an agent's message, and any other required
documents.
For purposes of the offer, AXA and AXA Merger Corp. will be deemed to have
accepted for exchange, and thereby exchanged, shares of AXA Financial common
stock validly tendered and not properly withdrawn as, if and when AXA and AXA
Merger Corp. give oral followed by written notice to the exchange agent, as
agent for the tendering stockholders, of AXA's and AXA Merger Corp.'s acceptance
for exchange of those shares of AXA Financial common stock pursuant to the
offer. As soon as practicable after receipt of such notice, the exchange agent
will arrange for delivery of the AXA ADS account statement and cash payment,
including any cash instead of fractional ADSs, to tendering stockholders . The
exchange agent will act as agent for tendering stockholders for the purpose of
receiving the consideration and transmitting such consideration to you. You will
not receive any interest on any cash that AXA and AXA Merger Corp. pays you,
even if there is a delay in making the exchange.
If AXA and AXA Merger Corp. do not accept any tendered shares of AXA
Financial common stock for exchange pursuant to the terms and conditions of the
offer for any reason, or if certificates are submitted for more shares of AXA
Financial common stock than are tendered, AXA and AXA Merger Corp. will return
certificates for such unexchanged shares of AXA Financial common stock without
expense to the exchanging stockholder, or in the case of shares of AXA Financial
common stock tendered by book-entry transfer of such shares into the exchange
agent's account at DTC pursuant to the procedures set forth below under the
discussion entitled "--Procedure for Tendering--Book-Entry Transfer", those
shares of AXA Financial common stock will be recredited to the account
maintained at DTC from which such shares were delivered in accordance with DTC
policies and procedures, as promptly as practicable following expiration or
termination of the offer.
BECAUSE THE NUMBER OF AXA ADSS YOU WILL RECEIVE IN THE OFFER IS FIXED AND
BECAUSE THE MARKET PRICE OF AXA ADSS MAY FLUCTUATE PRIOR THE COMPLETION OF THE
OFFER, THE VALUE OF THE AXA ADSS THAT YOU WILL RECEIVE IN THE OFFER MAY INCREASE
OR DECREASE PRIOR TO AND FOLLOWING THE OFFER.
AXA reserves the right to transfer or assign, in whole or in part, to AXA
Merger Corp. or to any other direct or indirect wholly owned subsidiary of AXA,
and AXA Merger Corp. reserves the right to transfer or assign, in whole or in
part, to AXA or to any direct or indirect wholly owned subsidiary of AXA their
respective rights and obligations to accept for exchange and acquire the shares
of AXA Financial common stock tendered in the offer, but any such transaction or
assignment will not relieve AXA or AXA Merger Corp., as applicable, of their
respective obligations under the offer and will in no way prejudice the rights
of exchanging stockholders to receive AXA ADSs and cash for shares of AXA
Financial common stock validly tendered and accepted for exchange pursuant to
the offer.
73
<PAGE>
CASH INSTEAD OF FRACTIONAL AXA ADSS
You will not receive any fractional AXA ADSs pursuant to the offer. Instead,
each tendering stockholder who would otherwise be entitled to a fractional AXA
ADS will receive cash in an amount equal to the product obtained by multiplying
(x) the fractional interest to which that stockholder would otherwise be
entitled to by (y) the average of the closing prices for AXA ADSs as reported on
the NYSE Composite Transaction Tape for the five consecutive trading days ending
on the trading date immediately prior to the date on which AXA and AXA Merger
Corp. pay for tendered shares of AXA Financial common stock.
PROCEDURE FOR TENDERING
For you to validly tender shares of AXA Financial common stock pursuant to
the offer:
(a) (i) a properly completed and duly executed Letter of Transmittal in the
form provided with this prospectus, along with any required
signature guarantees, or in connection with a book-entry transfer,
an agent's message instead of the Letter of Transmittal, and any
other required documents, must be received by the exchange agent at
one of its addresses set forth on the back cover of this
prospectus, and
(ii) certificates for tendered shares of AXA Financial common stock must
be received by the exchange agent at such address or those shares
of AXA Financial common stock must be tendered pursuant to the
procedures for book-entry tender set forth below (and a
confirmation of receipt of such tender received (we refer to this
confirmation as a "book-entry confirmation")) in each case before
the expiration date of the offer, or
(b) you must comply with the guaranteed delivery procedures set forth below
under "--Guaranteed Delivery".
No alternative, conditional or contingent tenders will be accepted.
The term "agent's message" means a message, transmitted by electronic means
by DTC to, and received by, the exchange agent and forming a part of a
book-entry confirmation, which states that DTC has received an express
acknowledgment from the participant in DTC tendering the shares of AXA Financial
common stock, which are the subject of that book-entry confirmation, that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that AXA may enforce that agreement against that participant.
BENEFIT PLANS. Participants in the AXA Client Solutions Stock Purchase Plan
for Employees and Financial Professionals (which we refer to in this prospectus
as the "AXA Client Solutions Plan") who wish to tender shares of AXA Financial
common stock held on their behalf under the AXA Client Solutions Plan, and
participants in the AXA Financial Stock Fund in the Equitable Investment Plan
for Employees, Managers and Agents (which we refer to in this prospectus as the
"Equitable Investment Plan") who wish to have the trustees of the Equitable
Investment Plan tender their interests in shares of AXA Financial common stock
held under the Equitable Investment Plan, should so indicate by completing,
executing and returning to First Chicago Trust Company of New York the
confidential direction form included in the notice sent to such participants.
Participants in the AXA Client Solutions Plan and the AXA Financial Stock Fund
under the Equitable Investment Plan may not use the Letter of Transmittal to
tender their interests in shares held under the benefit plans on their behalf,
but must use the separate direction form sent to them. Under the terms of the
AXA Client Solutions Plan, participants who fail to timely instruct First
Chicago Trust Company of New York to tender the shares of AXA Financial common
stock held under the AXA Client Solutions Plan on their behalf will be deemed to
have chosen not to tender their shares. Under the terms of the Equitable
Investment Plan, however, participants who fail to timely instruct the trustees
not to tender their interests in AXA Financial common stock held in the AXA
Financial Stock Fund under
74
<PAGE>
the Investment Plan will be deemed to have instructed the trustees to tender
their interests in such shares. It should be noted, however, in the case of
shares held on behalf of participants in the Equitable Investment Plan, that
under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
the fiduciaries of the plan may be obligated to take action and make an
independent decision irrespective of directions given by participants.
Accordingly, although instructions from participants in the Equitable Investment
Plan are being solicited for the trustees' information and will be given due
consideration by the trustees, the fiduciaries of the plan are not bound under
ERISA by such instructions and accordingly may tender shares of AXA Financial
common stock or may not tender shares of AXA Financial common stock, as the case
may be, contrary to such designations. The subsequent reinvestment of the
proceeds from the tendered shares of AXA Financial common stock held on behalf
of participants under the benefit plans will be effected by the trustees or
administrators of each benefit plan in accordance with the terms of the
applicable plan.
Participants in the benefit plans should forward instructions to First
Chicago Trust Company of New York as promptly as possible (and in any event such
instructions must be received by First Chicago Trust Company of New York by 5:00
p.m., New York City time, on December 22, 2000). As noted in this prospectus,
the offer and withdrawal rights expire at 12:00 midnight, New York City time, on
December 22, unless the offer is extended.
Participants in the benefit plans are urged to read the separate direction
forms carefully.
DIVIDEND REINVESTMENT AND DIRECT PURCHASE PLANS. Participants in the AXA
Financial Dividend Reinvestment and Stock Purchase Plan and the AXA Financial
Direct Purchase Plan who do not also hold shares of AXA Financial common stock
in certificated form can tender their interests in the AXA Financial common
stock held under these plans by completing, executing and returning to First
Chicago Trust Company of New York the confidential direction form included in
the notice sent to such participants. Such participants, unless they also hold
shares of AXA Financial common stock in certificated form, cannot use the Letter
of Transmittal to direct First Chicago Trust Company of New York to tender their
interests in the shares of AXA Financial common stock held under these plans,
but must use the separate direction form sent to them. Participants in these
plans should forward instructions to First Chicago Trust Company of New York as
promptly as possible (and in any event such instructions must be received by
First Chicago Trust Company no later than 5:00 p.m., New York City time, on
December 22, 2000, unless the offer is extended). Participants in these plans
are urged to read the separate direction forms carefully.
BOOK-ENTRY TRANSFER. The exchange agent will establish accounts with
respect to the shares of AXA Financial common stock at DTC for purposes of the
offer. Any financial institution that is a participant in DTC may make
book-entry delivery of shares of AXA Financial common stock by causing DTC to
transfer these shares of AXA Financial common stock into the exchange agent's
account in accordance with DTC's procedure for such transfer. However, although
delivery of shares of AXA Financial common stock may be effected through
book-entry at DTC, an agent's message in connection with a book-entry transfer,
and any other required documents, must, in any case, be received by the exchange
agent at one or more of its addresses set forth on the back cover of this
prospectus prior to the expiration date, or the guaranteed delivery procedures
described below must be followed. DELIVERY OF DOCUMENTS TO DTC DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by an eligible institution (i.e. an institution that is a member of
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Guarantee Program or the Stock Exchange Medallion Program), except in
cases in which shares of AXA Financial common stock are tendered either:
75
<PAGE>
- by a registered holder of shares of AXA Financial common stock who has not
completed the box entitled "Special Issuance Instructions" on the Letter
of Transmittal; or
- for the account of an eligible institution.
If the certificates for shares of AXA Financial common stock are registered
in the name of a person other than the person who signs the Letter of
Transmittal or if the cash payment and the AXA ADSs, or certificates for shares
of AXA Financial common stock not accepted for exchange or not tendered, are to
be issued to a person other than the registered holder(s), then the certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holder(s) appear on the
certificates, with the signature(s) on the certificates or stock powers
guaranteed by an eligible institution. If the Letter of Transmittal or stock
powers are signed or any certificate is endorsed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, these persons should so
indicate when signing, and unless AXA and AXA Merger Corp. waive that
requirement, they should submit proper evidence satisfactory to AXA and AXA
Merger Corp. of their authority to so act.
GUARANTEED DELIVERY. If you wish to tender shares of AXA Financial common
stock pursuant to the offer and the certificates evidencing your shares of AXA
Financial common stock are not immediately available or you cannot deliver the
certificates and all other required documents to the exchange agent prior to the
expiration date or cannot complete the procedure for delivery by book-entry
transfer on a timely basis, your shares of AXA Financial common stock may
nevertheless be tendered, so long as all of the following conditions are
satisfied:
- you make your tender by or through an eligible institution;
- a properly completed and duly executed notice of guaranteed delivery,
substantially in the form provided by AXA and AXA Merger Corp., is
received by the exchange agent as provided below on or prior to the
expiration date; and
- the certificates for all tendered shares of AXA Financial common stock, or
a confirmation of a book-entry transfer of those securities into the
exchange agent's account at DTC as described under "Book-Entry Transfer"
above, in proper form for transfer, together with a properly completed and
duly executed Letter of Transmittal with any required signature
guarantees, or in the case of a book-entry transfer, an agent's message,
and all other documents required by the Letter of Transmittal are received
by the exchange agent within three NYSE trading days after the date of
execution of such notice of guaranteed delivery. A "trading day" is any
day on which the NYSE is open for business.
You may deliver the notice of guaranteed delivery by hand or transmit it by
facsimile transmission or mail it to the exchange agent, and you must include a
guarantee by an eligible institution in the form set forth in that notice made
available by AXA and AXA Merger Corp.
In all cases, delivery of payment for shares of AXA Financial common stock
tendered and accepted for exchange pursuant to the offer will be made only after
timely receipt by the exchange agent of the certificates evidencing these shares
of AXA Financial common stock (or timely confirmation of a book-entry transfer
of such securities into the exchange agent's account at DTC as described above),
properly completed and duly executed Letter(s) of Transmittal, or an agent's
message in connection with a book-entry transfer, and any other required
documents.
OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth
above, you irrevocably appoint designees of AXA and AXA Merger Corp. as your
attorneys-in-fact and proxies, each with full power of substitution, in the
manner described in the Letter of Transmittal provided to you by AXA and AXA
Merger Corp. to the full extent of your rights with respect to your shares of
AXA Financial common stock tendered and accepted for exchange by AXA and AXA
Merger Corp. and
76
<PAGE>
with respect to any and all other shares of AXA Financial common stock and other
securities issued or issuable in respect of your shares of AXA Financial common
stock tendered and accepted for exchange in the offer. These proxies will be
considered coupled with an interest in the tendered shares of AXA Financial
common stock and therefore will not be revocable. That appointment is effective,
and voting rights will be affected, when and only to the extent that AXA and AXA
Merger Corp. accept these shares for exchange. Upon the acceptance of the shares
of AXA Financial common stock for exchange, all prior proxies that you have
given will be revoked, and you may not give any subsequent proxies or execute
any subsequent written consent with respect to these shares. Any such subsequent
proxy or consent given or executed will not be deemed to be effective. The
designees of AXA and AXA Merger Corp. will, with respect to the shares of AXA
Financial common stock for which the appointment is effective, be empowered to
exercise all of your voting and other rights as they, in their sole discretion,
may deem proper at any annual, special or adjourned meeting of AXA's
shareholders or otherwise. AXA and AXA Merger Corp. reserve the right to require
that, in order for shares of AXA Financial common stock to be deemed validly
tendered, immediately upon the exchange of those shares of AXA Financial common
stock, AXA and AXA Merger Corp. must be able to exercise full voting rights with
respect to these shares of AXA Financial common stock.
AXA and AXA Merger Corp. will determine all questions as to the validity,
form, eligibility (including time of receipt) and acceptance for exchange of any
tender of shares of AXA Financial common stock, and its determination will be
final and binding on all parties. AXA and AXA Merger Corp. reserve the absolute
right to reject any and all tenders of shares of AXA Financial common stock that
they determine are not in proper form or the acceptance of or exchange for which
may, in the opinion of counsel for or AXA or AXA Merger Corp., be unlawful. AXA
and AXA Merger Corp. also reserve the absolute right to waive any of the
conditions of the offer (other than the conditions relating to the absence of an
injunction and the effectiveness of the registration statement for AXA ordinary
shares and ADSs to be issued in connection with the offer), or any defect or
irregularity in the tender of any particular shares of AXA Financial common
stock of any particular stockholders, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of shares
of AXA Financial common stock will be deemed to have been validly made until all
defects and irregularities in tenders of shares of AXA Financial common stock
have been cured or waived to the satisfaction of AXA and AXA Merger Corp. None
of AXA, AXA Merger Corp., the exchange agent, the information agent, the dealer
manager nor any other person will be under any duty to give notification of any
defects or irregularities in the tender of any shares of AXA Financial common
stock or will incur any liability for failure to give any such notification.
AXA's and AXA Merger Corp.'s interpretation of the terms and conditions of the
offer, including the Letter of Transmittal and instructions, will be final and
binding.
The acceptance for exchange by AXA and AXA Merger Corp. of shares of AXA
Financial common stock pursuant to any of the procedures described above will
constitute a binding agreement between the tendering stockholder, AXA and AXA
Merger Corp. upon the terms and subject to the conditions of the offer.
THE METHOD OF DELIVERY OF AXA FINANCIAL SHARE CERTIFICATES AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT YOUR OPTION AND RISK,
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, AXA AND AXA MERGER CORP. RECOMMEND REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED. IN ALL CASES, YOU SHOULD
ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH
RECEIVED PURSUANT TO THE OFFER, YOU MUST PROVIDE THE EXCHANGE AGENT WITH YOUR
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY WHETHER YOU ARE SUBJECT TO
BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. SOME STOCKHOLDERS,
77
<PAGE>
INCLUDING, AMONG OTHERS, ALL CORPORATIONS AND SOME FOREIGN INDIVIDUALS, ARE NOT
SUBJECT TO THESE BACKUP WITHHOLDING AND REPORTING REQUIREMENTS. IF BACK-UP
WITHHOLDING APPLIES WITH RESPECT TO A STOCKHOLDER, THE EXCHANGE AGENT IS
REQUIRED TO WITHHOLD 31% OF ANY CASH PAYMENTS TO THAT STOCKHOLDER. IN ORDER FOR
A FOREIGN INDIVIDUAL TO QUALIFY AS AN EXEMPT RECIPIENT, THE STOCKHOLDER MUST
SUBMIT A FORM W-8 OR FORM W-8BEN, SIGNED UNDER PENALTIES OF PERJURY, ATTESTING
TO THAT INDIVIDUAL'S EXEMPT STATUS.
WITHDRAWAL RIGHTS
Your tender of shares of AXA Financial common stock pursuant to the offer is
irrevocable, except that shares of AXA Financial common stock tendered pursuant
to the offer may be withdrawn at any time prior to the expiration date of the
initial offering period or any extension thereof and, unless accepted for
exchange by AXA and AXA Merger Corp. pursuant to the offer, may also be
withdrawn at any time after January 25, 2001. If AXA and AXA Merger Corp. extend
the offer, are delayed in their acceptance for exchange of the shares of AXA
Financial common stock or are unable to accept shares of AXA Financial common
stock for exchange pursuant to the offer for any reason, then, without prejudice
to AXA's and AXA Merger Corp.'s rights under the offer, the exchange agent may,
nevertheless, on behalf of AXA and AXA Merger Corp., retain tendered shares of
AXA Financial common stock, and these shares may not be withdrawn except to the
extent that tendering stockholders are entitled to withdrawal rights as
described in this section.
For your withdrawal to be effective, the exchange agent must timely receive
from you a written or facsimile transmission notice of withdrawal at one of its
addresses or numbers set forth on the back cover of this prospectus. Your notice
must include your name, address, social security number, the certificate
number(s) and the number of shares of AXA Financial common stock to be withdrawn
as well as the name of the registered holder if it is different from that of the
person who tendered those shares of AXA Financial common stock.
A financial institution must guarantee all signatures on the notice of
withdrawal. Most banks, savings and loan associations and brokerage houses are
able to effect these Medallion signature guarantees for you. The financial
institution must be an eligible institution, unless those shares of AXA
Financial common stock have been tendered for the account of an eligible
institution.
If certificates evidencing the shares of AXA Financial common stock have
been delivered or otherwise identified to the exchange agent, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the shares of AXA Financial common stock withdrawn must also be
furnished to the exchange agent, as stated above, prior to the physical release
of such certificates. If shares of AXA Financial common stock have been tendered
pursuant to the procedures for book-entry tender discussed under the caption
entitled "--Procedure for Tendering--Book-Entry Transfer", any notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawn shares of AXA Financial common stock and must otherwise
comply with DTC's procedures.
AXA and AXA Merger Corp. will decide all questions as to the form and
validity (including time of receipt) of any notice of withdrawal in their sole
discretion, and their decision will be final and binding. None of AXA, AXA
Merger Corp., the exchange agent, the information agent, the dealer manager nor
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for
failure to give any such notification.
No withdrawal rights will apply to shares of AXA Financial common stock
tendered during the subsequent offering period under Rule 14d-11 under the
Exchange Act, and no withdrawal rights will apply during the subsequent offering
period under Rule 14d-11 under the Exchange Act with respect to shares
previously tendered and accepted for exchange in the initial offering period.
78
<PAGE>
Any shares of AXA Financial common stock properly withdrawn will be deemed
not to have been validly tendered for purposes of the offer. However, you may
retender withdrawn shares of AXA Financial common stock by following one of the
procedures discussed under the caption entitled "--Procedure for Tendering" at
any time prior to the expiration date or during the subsequent offering period
under Rule 14d-11 under the Exchange Act.
SOURCES AND AMOUNT OF FUNDS
In addition to the issuance of the AXA ordinary shares in the form of ADSs
to be exchanged in connection with the offer and the merger, the total amount of
cash funds required by AXA and AXA Merger Corp. to consummate the offer and the
subsequent merger and to pay related fees and expenses is estimated to be
approximately $6.2 billion. The estimated fees and expenses to be incurred in
connection with the offer and the merger and paid by AXA (excluding fees and
expenses associated with the financing related to the offer and merger) are as
follows:
<TABLE>
<S> <C>
Financial Advisor's Fees.................................... $23,000,000
Legal, Accounting and Other Professional Fees............... 10,000,000
Printing, Tender Solicitation and Mailing Costs............. 4,000,000
SEC Filing Fees............................................. 2,177,018
Listing Fees................................................ 300,000
Miscellaneous............................................... 522,982
-----------
Total..................................................... $40,000,000
===========
</TABLE>
AXA Merger Corp. will obtain from AXA Financial the funds necessary to pay
its portion of the consideration (up to approximately $3.2 billion) to be paid
for the shares of AXA Financial common stock tendered in the offer. AXA will
guarantee the obligation of AXA Merger Corp. to repay that amount.
Pursuant to a letter dated October 18, 2000, Bank of America International
Limited, Chase Manhattan plc, SG Investment Banking and UBS Warburg Ltd., as
lead arrangers, have committed, subject to specified conditions, to provide AXA
with a $5.0 billion multi-currency dual tranche credit facility, which will be
fully underwritten by affiliates of the lead arrangers. AXA intends to borrow an
aggregate of $2.75 billion of unsecured term loans under this credit facility.
These term loans will mature in three years, but in no event later than
December 31, 2003, and will accrue interest at a rate equal to LIBOR or EURIBOR,
as applicable, plus a margin of 0.275% per year during the first year (plus a
utilization fee of 0.025% payable in that year), a margin of 0.325% per year
during the second year, and a margin of 0.35% per year during the third and
final year. In addition, AXA plans to borrow an aggregate of approximately
$753 million of unsecured indebtedness under the 364-day revolving facility also
provided by this credit facility. The interest rate on such drawn short-term
indebtedness will be LIBOR or EURIBOR, as applicable, plus a margin of 0.275%
per year. The actual amount drawn under the revolving facility will depend on
the size of the other components of the financing.
AXA has also agreed to pay certain other fees in connection with the credit
facility, including commitment fees and utilization fees. The default interest
rate is 1% plus the interest rate that would otherwise be applicable.
The availability of the credit facility will be subject to the satisfaction
of various conditions precedent, including the following:
(i) all conditions precedent to the offer have been satisfied;
(ii) all conditions precedent to the merger as set out in the Merger
Agreement have been satisfied;
79
<PAGE>
(iii) the accuracy and fairness of the 1999 audited consolidated financial
statements and subsequent audited consolidated financial statements;
(iv) no material adverse change in financial condition since the 1999
audited consolidated financial statements;
(v) no material litigation that would have a material adverse effect; and
(vi) no impermissible encumbrances.
Other than a requirement to reimburse lenders for any funding losses caused
by the prepayment of a drawdown on a day other than the last day of the term for
which an amount is drawn, amounts borrowed under the credit facility can be
repaid at any time without cost, premium or penalty. Specified circumstances
involving a change in control will lead to a requirement for mandatory
prepayment and/or the cancellation of future availability of funds. Early
termination may also be triggered from the insolvency or cross acceleration of
indebtedness of a material subsidiary.
The credit facility will be subject to covenants typical for such type of
facility, including, but not limited to the following: (i) restrictions on liens
and other encumbrances, (ii) compliance with financial covenants, (iii)
financial reporting requirements, (iv) maintenance of consents, authorizations
and qualifications to do business in applicable jurisdictions and (v)
maintenance of a specified percentage of consolidated revenues derived from
insurance business, asset management and other financial services.
The credit facility will also contain events of default typical for these
types of facilities (subject to mutually agreeable grace periods and materiality
thresholds), including, without limitation, (i) non-payment of amounts due and
payable under the credit facility, (ii) breach of specified undertakings,
(iii) breach of any undertaking or other obligation of AXA under the credit
facility in the event such breach is not remedied within 30 days of the agent
giving notice to AXA, (iv) default in payment (after expiry of any applicable
grace period) of indebtedness of AXA exceeding in aggregate E115,000,000, unless
such default is contested in good faith by AXA (v) insolvency, and (vi) the
occurrence of an event that, in the reasonable opinion of the agent, acting on
instruction of the majority lenders under the credit facility, irremediably
compromises the ability of AXA to perform in a timely manner any of its payment
obligations under the credit facility.
AXA also currently intends to partially finance the offer and the subsequent
merger from the net proceeds of an offering of approximately $1.5 billion in
aggregate principal amount of subordinated notes. AXA expects to issue the
subordinated notes under a registration statement on Form F-3, allowing for the
issuance from time to time of up to $3.0 billion principal amount of debt
securities, which was filed with the SEC on November 17, 2000 (Registration
No. 333-12872). AXA is considering increasing the principal amount of debt
securities that may be issued under that registration statement to
$5.0 billion. The exact size and terms of this offering will depend on a number
of factors, including market conditions at the time of the offering. For
information on the interest expense of these subordinated notes, see Notes 6 and
9 to the unaudited pro forma financial information included elsewhere in this
prospectus.
AXA may also use funds from its working capital and/or its subsidiaries'
working capital, or from existing undrawn credit facilities. The decision as to
the allocation of funding among existing or anticipated credit facilities and
working capital will be made based on AXA's review from time to time of the
advisability of particular actions, as well as on prevailing interest rates and
financial and other economic conditions and such other factors as AXA may deem
appropriate.
AXA anticipates that any indebtedness incurred through borrowings under the
credit facility described above will be repaid from a variety of sources, which
may include, but may not be limited to, funds generated internally by AXA and
its subsidiaries (including funds generated by AXA Financial), bank refinancing,
and the public or private sale of debt or equity securities. The source
80
<PAGE>
and allocation of various methods of repayment will be determined and may be
modified by AXA based on market conditions and such other factors as AXA may
deem appropriate.
FEES AND EXPENSES
Except as set forth below, AXA will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of shares of AXA Financial
common stock pursuant to the offer.
Goldman, Sachs & Co. is acting as Dealer Manager in connection with the
offer and has provided certain financial advisory services to AXA in connection
with the offer and the merger. AXA and AXA Merger Corp. have agreed to reimburse
Goldman Sachs for all reasonable out-of-pocket expenses incurred by Goldman
Sachs, including the reasonable fees and expenses of its outside legal counsel,
and to indemnify Goldman Sachs against certain liabilities and expenses in
connection with its engagement as Dealer Manager, including certain liabilities
under the U.S. federal securities laws.
AXA has retained Georgeson Shareholder Communications Inc. as the
information agent, and First Chicago Trust Company of New York as the exchange
agent, in connection with the offer. The information agent may contact holders
of shares of AXA Financial common stock by mail, telephone, facsimile, telegraph
and personal interview and may request banks, brokers, dealers and other nominee
shareholders to forward materials relating to the offer to beneficial owners.
As compensation for acting as information agent in connection with the
offer, Georgeson Shareholder Communications Inc. will receive reasonable and
customary compensation for its services and will also be reimbursed for certain
out-of-pocket expenses and may be indemnified against certain liabilities and
expenses in connection with the offer, including certain liabilities under U.S.
federal securities laws. AXA and AXA Merger Corp. will pay the exchange agent
reasonable and customary compensation for its services in connection with the
offer, plus reimbursement for out-of-pocket expenses and may indemnify the
exchange agent against certain liabilities and expenses, including certain
liabilities under U.S. federal securities laws. Brokers, dealers, commercial
banks and trust companies will be reimbursed by AXA for customary handling and
mailing expenses incurred by them in forwarding material to their customers.
CERTAIN CONDITIONS TO THE OFFER
Notwithstanding any other term of the offer or the Merger Agreement, AXA and
AXA Merger Corp. will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to the obligation of AXA and AXA Merger Corp. to deliver
payment for or return tendered shares of AXA Financial common stock promptly
after the termination or withdrawal of the offer), to deliver any payment for
any shares of AXA Financial common stock tendered pursuant to the offer unless
the AXA ADSs issuable pursuant to the offer have been approved for listing on
the New York Stock Exchange, subject to official notice of issuance.
Furthermore, notwithstanding any other term of the offer or the Merger
Agreement, AXA and AXA Merger Corp. will not be required to commence the offer,
accept for payment or, subject as aforesaid, deliver any payment for any shares
of AXA Financial common stock not theretofore accepted for payment or paid for,
and may terminate or amend the offer, with the consent of the Special Committee
on behalf of AXA Financial or if, at any time on or after the date of the Merger
Agreement and before the expiration of the offer or, with respect to conditions
dependent upon the receipt of necessary government approvals, before the
acceptance for payment of shares of AXA Financial common stock or the payment
therefor, any of the following conditions exist:
(a) the Form F-4 registration statement, of which this prospectus is a part,
has not been declared effective under the Securities Act by the SEC or is
the subject of a stop order or
81
<PAGE>
proceedings seeking a stop order, and AXA has not received any material
state securities or "blue sky" authorizations necessary to issue AXA ADSs
pursuant to the offer;
(b) any statute, rule, regulation, legislation, judgment, order or
injunction has been enacted, entered, enforced, promulgated, amended or
issued with respect to, or deemed applicable to, or any consent or
approval withheld with respect to, (x) AXA, AXA Financial or any of their
respective subsidiaries or (y) the offer, the merger or any other
transaction contemplated by the Merger Agreement, in each of the cases of
clause (x) and (y), by any governmental entity, other than any statute,
rule, regulation, legislation, judgment, order or injunction of a
governmental entity not in the United States, France or the European
Union which does not have a material adverse effect on AXA or any of its
material subsidiaries, that results, directly or indirectly, in:
(i) a restraint or prohibition on the making or consummation of the
offer or the merger or any other transaction contemplated by the
Merger Agreement, or any damages in relation to these transactions
that are material in relation to AXA Financial and its subsidiaries
taken as whole,
(ii) a prohibition or limitation on the ownership or operation by AXA
Financial, AXA or any of their respective subsidiaries of any
material portion of the business or assets of AXA Financial and its
subsidiaries or AXA and its subsidiaries, in each case taken as a
whole, or the requirement that AXA Financial, AXA or any of their
respective subsidiaries dispose of or hold separate any material
portion of the business or assets of AXA Financial and its
subsidiaries or AXA and its subsidiaries, in each case taken as a
whole, as a result of the offer, the merger or any other
transaction contemplated by the Merger Agreement,
(iii) the imposition of material limitations on the ability of AXA or
AXA Merger Corp. to acquire or hold, or exercise full rights of
ownership of, any shares of AXA Financial common stock, including
the right to vote shares of AXA Financial common stock acquired by
it on all matters properly presented to the stockholders of AXA
Financial, other than pursuant to the terms of the Voting Trust
Agreement described under "Transactions and Arrangement Concerning
the AXA Financial Shares",
(iv) a prohibition preventing AXA or any of its subsidiaries, from
effectively controlling in any material respect the business or
operations of AXA Financial and its subsidiaries;
(c) the Special Committee has withdrawn or modified, or proposed to withdraw
or modify, in a manner adverse to AXA or AXA Merger Corp., its approval
or recommendation of the Merger Agreement, the offer or the merger or
failed to recommend to the holders of shares of AXA Financial common
stock that they accept the offer and, to the extent applicable, give the
requisite vote to approve and adopt the merger;
(d) any representation and warranty of AXA Financial in the Merger Agreement
that is qualified as to material adverse effect on AXA Financial is not
true and correct and any representation and warranty of AXA Financial
that is not so qualified is not true and correct other than for failures
to be true and correct that, individually or in the aggregate, have not
had and would not reasonably be expected to have a material adverse
effect on AXA Financial, on the ability of AXA Financial to perform its
obligations under the Merger Agreement or to consummate the merger and
the other transactions contemplated by the Merger Agreement in each case
as of such time, except to the extent any representations or warranties
expressly relate to an earlier date, in which case as of that earlier
date. Any breach of representations and warranties by AXA Financial and
its subsidiaries in the Merger Agreement that relate to Donaldson, Lufkin
& Jenrette will not be deemed a breach of these representations and
warranties if, after giving effect to the consummation of the
82
<PAGE>
transactions contemplated in the stock purchase agreement dated as of
August 30, 2000 among Credit Suisse Group and members of the AXA group of
companies, including AXA Financial, the relevant breach has not had and
would not reasonably be expected to have a material adverse effect on AXA
Financial of the nature described in the previous sentence;
(f) AXA Financial failed to perform in any material respect any obligation
or to comply in any material respect with any agreement or covenant,
required to be performed or complied with by it under the Merger
Agreement; or
(g) the Merger Agreement shall have been terminated in accordance with its
terms;
which, in the sole and reasonable judgment of AXA and AXA Merger Corp., makes it
inadvisable to proceed with such commencement, acceptance for payment or
delivery of payment.
The conditions mentioned in this subsection are for the sole benefit of AXA
and AXA Merger Corp. and may be asserted by AXA and AXA Merger Corp. or may be
waived by AXA and AXA Merger Corp. in their sole discretion in whole or in part
at any time prior to the expiration of the offer or, with respect to conditions
dependent upon the receipt of necessary government approvals, prior to the
acceptance for payment of shares of AXA Financial common stock, or the payment
therefor. The failure by AXA or AXA Merger Corp. at any time to exercise any of
their rights pursuant to these conditions shall not be deemed a waiver of these
rights and the waiver of any of these rights with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances. The rights of AXA and AXA Merger Corp. relating to these
conditions are deemed ongoing rights that may be asserted as provided above.
TRANSACTIONS AND ARRANGEMENTS CONCERNING SHARES OF AXA FINANCIAL COMMON STOCK
In order to ensure, for insurance regulatory purposes, that certain indirect
minority shareholders of AXA are not able to exercise control over AXA Financial
and certain of its insurance subsidiaries, AXA has agreed pursuant to a Voting
Trust Agreement dated as of May 12, 1992, as amended, (as so amended, the
"Voting Trust Agreement") among AXA and Claude Bebear, Patrice Garnier and Henri
de Clermont-Tonnerre, all members of the Supervisory Board of AXA, as Trustees
to deposit in a voting trust any shares of AXA Financial common stock
beneficially owned by AXA and certain of its affiliates. AXA or any of its
affiliates depositing capital stock in the voting trust will remain the
beneficial owner of all capital stock deposited by it in the voting trust, but
during the term of the voting trust the Trustees will exercise all voting rights
with respect to such capital stock. The Trustees have agreed to exercise these
voting rights with a view toward protecting the legitimate economic interests of
the beneficial owners of the capital stock deposited in the voting trust,
subject to ensuring that certain indirect minority shareholders of AXA do not
exercise control over AXA Financial or its relevant insurance subsidiaries. The
Trustees generally may act by a unanimous written consent or by the affirmative
vote of at least two Trustees at a meeting called by any Trustee upon two days'
notice. Shares of AXA Financial common stock held in the voting trust will not
be tendered in the offer. In connection with the Merger Agreement, two of the
three voting trustees entered into a voting agreement with AXA Financial. See
"The Merger Agreement--Preparation of Registration Statement on Form F-4 and
Proxy Statement or Information Statement, Stockholder's Meeting or Action by
Stockholder Consent."
Under a Standstill and Registration Rights Agreement, dated as of July 18,
1991, as amended, (as so amended, the "Standstill Agreement") between AXA and
AXA Financial, AXA has specified demand and piggyback registration rights with
respect to the shares of AXA Financial common stock owned by it and has
specified preemptive rights entitling it to participate in any sale by AXA
Financial of voting securities to the extent necessary to maintain the voting
power of AXA and its affiliates in AXA Financial. AXA's preemptive rights under
this agreement do not apply to, among
83
<PAGE>
other things, any issuance of voting securities or convertible securities
pursuant to certain AXA approved employee benefit plans. AXA's preemptive rights
will be in effect until the first date on which AXA, certain of its affiliates
and the Trustees under the voting trust agreement own less than 10% of the total
voting power (determined as though all convertible securities owned by any such
party had been converted into voting securities immediately prior to the time of
determination). The term "total voting power" is defined in the Standstill
Agreement and generally refers to the total number of votes that may be cast in
the election of directors of AXA Financial at a meeting of the holders of all
the voting securities of AXA Financial. If AXA Financial issues voting
securities or convertible securities, it is likely that AXA will exercise (or
designate certain of its affiliates or the Trustees to exercise) AXA's
preemptive rights, although, depending on the circumstances, it is possible that
such preemptive rights may not be exercised. However, all other contractual
restrictions in the Standstill Agreement, including restrictions on AXA and
certain of its affiliates to purchase voting securities, have expired and AXA
and such affiliates are currently free to acquire additional shares of AXA
Financial common stock.
Under Article XI of the by-laws of AXA Financial, AXA and AXA's affiliates
specified in that article are prohibited from acquiring any voting securities of
AXA Financial, if immediately after that acquisition, the percentage of the
total voting power represented by all such voting securities then owned by AXA
and its specified affiliates would exceed 90%, unless AXA or the relevant
affiliate offers to purchase all shares of AXA Financial common stock then
outstanding (other than shares of AXA Financial common stock owned by AXA and
the other specified affiliates) and a special committee of the Board of
Directors of AXA Financial, consisting of directors other than nominees of AXA
or officers of AXA Financial or any of its subsidiaries, is appointed to
evaluate the offer. The offer and merger described in this prospectus have been
structured so as to satisfy the requirements of Article XI.
In 1993, AXA Financial established a Stock Employee Compensation Trust
(which we refer to in this prospectus as "SECT") to fund a portion of its
obligations arising from its various employee compensation and benefits
programs. At that time, AXA Financial sold 60,000 shares of Series D Preferred
Stock, convertible into 23.8 million shares of AXA Financial common stock, to
the SECT in exchange for cash and a promissory note of $299.9 million, for a
total of $300.0 million. The SECT is required to periodically distribute an
amount of Series D Preferred Stock (or shares of AXA Financial common stock
issued on conversion of the preferred stock) based on a pre-determined formula.
The SECT will terminate on the date on which all assets of the SECT have been
distributed. In April 1996, AXA Financial filed a shelf registration statement
with the SEC to register approximately 23.8 million shares of AXA Financial's
common stock issuable upon conversion of shares of the Series D Preferred Stock
held by the SECT. In July 1997, the SECT released 8,040 shares of Series D
Preferred Stock which were converted into 3.2 million shares of common stock.
AXA purchased 1.92 million shares directly while the remaining shares were sold
through an agent to the public. The net proceeds of the sale totaled $54.8
million. In September 1999, the SECT released 4,020 shares of Series D Preferred
Stock which were converted into 1.6 million shares of common stock. AXA
Reassurance, a French subsidiary of AXA, purchased an aggregate of 146,100
shares directly at an average per share price of $30.28 (as adjusted following
AXA Financial's stock split), AXA Financial purchased 1,356,500 shares in
connection with its stock repurchase program at an average per share price of
$27.11 (as adjusted following AXA Financial's stock split), while the remaining
shares were sold through an agent to the public at an average per share price of
$30.02 (as adjusted for the stock split). The net proceeds of the sale after the
repurchase of treasury shares amounted to $7.4 million. In August 2000, the SECT
released 4,020 shares of Series D Preferred Stock which were converted into
1.6 million shares of common stock. AXA Financial purchased all 1.6 million
shares in connection with its stock repurchase program for $80 million.
In May 1998, the Board of Directors of AXA Financial authorized a stock
repurchase program pursuant to which AXA Financial may repurchase up to 16
million shares of its common stock from
84
<PAGE>
time to time in the open market or through privately negotiated transactions. In
September 1998, the Board of Directors of AXA Financial increased the number of
shares authorized under the stock repurchase program to 30 million. At
August 25, 2000, the date of the last of such repurchases, AXA Financial had
repurchased a total of 20,707,776 shares of common stock at a cost of
approximately $629 million.
Numerous officers, including executive officers, and employees of AXA
Financial's subsidiary Equitable Life participate in an Employee Stock Purchase
Plan pursuant to which they regularly purchase AXA Financial common stock
through payroll deduction. Purchases on behalf of plan participants are made on
the NYSE at prevailing market prices on the date of purchase and participants
receive a matching contribution from their employer after they hold the
purchased shares in their account for a 6 month period. From September 22, 2000
to November 20, 2000, an aggregate of 45,766 AXA Financial common shares have
been purchased on behalf of participants in the plan. In addition, numerous
officers, including executive officers, and employees of AXA Financial and its
subsidiary Equitable Life participate in the AXA Financial Stock Fund of
Equitable Life's qualified 401(k) investment plan. The fund regularly purchases
shares of AXA Financial common stock on the NYSE at prevailing market prices on
the date of purchase. Participants own units in the fund, substantially all the
assets of which are shares of AXA Financial common stock. During the last
60 days, an aggregate of 190,629 AXA Financial common shares have been purchased
by the fund on behalf of participants.
To AXA's and AXA Financial's knowledge, except for the transactions
described above, and except for the exercise of 150,000 options and the
simultaneous sale of shares by Dave H. Williams, Chairman of Alliance Capital
Management Corporation on November 14, 2000, no transactions in the shares of
AXA Financial common stock have been effected during the past 60 days by AXA
Financial or its executive officers, directors, affiliates and any associates or
majority owned subsidiaries and any executive officer or director of any
significant subsidiary, or by AXA or its executive officers, directors,
affiliates and any associates or majority owned subsidiaries and any executive
officer or director of any significant subsidiary.
Except for the voting agreement between AXA Financial and two of the three
voting trustees described under "The Merger Agreement--Preparation of
Registration Statement on Form F-4 and Proxy Statement or Information Statement,
Stockholders' Meeting or Action by Stockholder Consent", neither AXA Financial
nor, to AXA Financial's knowledge, any of its affiliates, directors or executive
officers or any person controlling AXA Financial is a party to any contract,
arrangement, understanding or relationship with any other person relating,
directly or indirectly, to, or in connection with, the offer with respect to any
securities of AXA Financial (including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or the giving or withholding
of proxies, consents or authorizations).
Except for the transactions relating to the SECT described above, since the
third full fiscal year preceding the date of this offer, AXA Financial has not
made any underwritten public offering of the shares of AXA Financial common
stock that was (i) registered under the Securities Act of 1933 or (ii) exempt
from registration under the Securities Act of 1933 pursuant to Regulation A
thereunder.
To the best of AXA Financial's knowledge, after making reasonable inquiry,
each executive officer, director and affiliate of AXA Financial who owns shares
of AXA Financial common stock currently intends to tender in the offer or sell
or vote in favor of the merger all shares of AXA Financial common stock that
each such person owns of record or beneficially as of the date of this
prospectus, other than tendering shares, if any, that (i) if tendered, would
cause any of such persons to incur liability under the short-swing profits
provisions of the U.S. federal securities laws,
85
<PAGE>
(ii) are restricted shares or (iii) any of these individuals may intend to use
for charitable contributions.
BENEFICIAL OWNERSHIP OF COMMON STOCK OF AXA FINANCIAL BY DIRECTORS AND EXECUTIVE
OFFICERS OF AXA FINANCIAL
DIRECTORS AND EXECUTIVE OFFICERS. The following table sets forth, as of
August 30, 2000, the number of shares of AXA Financial common stock beneficially
owned by the directors and executive officers of AXA Financial:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1)(2)
------------------------ ---------------------------
<S> <C>
Claude Bebear............................................... 93,332
John S. Chalsty............................................. 232,000
Francoise Colloc'h.......................................... 49,998
Henri de Castries........................................... 86,665
Claus-Michael Dill.......................................... 0
Joseph L. Dionne (3)........................................ 4,561
Jean-Rene Fourtou (3)....................................... 4,762
Robert E. Garber............................................ 240,577
Donald J. Greene (3)........................................ 4,946
Anthony J. Hamilton (3)..................................... 12,462
John T. Hartley (4)......................................... 4,497
John H.F. Haskell, Jr. (3).................................. 4,462
Michael Hegarty............................................. 296,918
Nina Henderson (3).......................................... 2,462
W. Edwin Jarmain (3)(5)..................................... 22,462
Edward D. Miller............................................ 1,159,379
Peter D. Noris.............................................. 263,577
Didier Pineau-Valencienne (3)............................... 2,462
George J. Sella, Jr. (3).................................... 2,462
Jose S. Suquet.............................................. 404,013
Peter J. Tobin (6).......................................... 7,153
Stanley B. Tulin............................................ 316,320
Dave H. Williams (7)........................................ 200,000
All directors and executive officers as a group 3,415,470
(23 persons)..............................................
</TABLE>
------------------------------
(1) The number of shares of AXA Financial common stock beneficially owned by
each person named above does not exceed one percent of the total number of
shares outstanding. The number of shares of AXA Financial common stock
beneficially owned by all directors and executive officers as a group
represents less than one percent of the total number of shares outstanding.
(2) All shares of AXA Financial common stock are owned directly except as
otherwise indicated below. Pursuant to regulations of the SEC, shares of AXA
Financial common stock (i) that may be acquired by directors and executive
officers upon exercise of stock options exercisable within sixty days, or
(ii) that are owned by a director's or executive officer's spouse or minor
child, are deemed to be beneficially owned by such directors and executive
officers as of such date and are included in the number of shares of AXA
Financial common stock listed in the table above.
Of the number of shares of AXA Financial common stock shown above, the
following is the number of shares that may be acquired upon exercise of
stock options that are exercisable within sixty days by the named executive
officer or director: Mr. Bebear, 93,332 shares; Mr. Chalsty, 200,000 shares;
Ms. Colloc'h, 49,998 shares; Mr. de Castries, 86,665 shares; Mr. Garber,
212,577 shares; Mr. Hegarty, 295,956 shares; Mr. Miller, 1,159,179 shares;
Mr. Noris, 263,577 shares; Mr. Suquet, 344,400 shares; Mr. Tulin, 305,780
shares; and Mr. Williams, 200,000 shares.
(3) Includes 2,456 shares issuable on a deferred basis as of August 30, 2000
under AXA Financial's Stock Plan for Directors and 6 additional deferred
shares representing dividends attributable to such shares.
(4) Represents 2,038 shares for which Mr. Hartley acts as Trustee for the John
T. Hartley Trust and 2,459 shares (including reinvested dividends) received
as of August 30, 2000 under AXA Financial's Stock Plan for Directors.
(5) Includes 20,000 shares owned by Jarmain Group, Inc., which is controlled by
Mr. Jarmain.
(6) Includes 1,151 shares issuable on a deferred basis as of August 30, 2000
under AXA Financial's Stock Plan for Directors and 2 additional deferred
shares representing dividends attributable to such shares.
(7) On November 14, 2000, Mr. Williams exercised options to acquire 150,000
shares of AXA Financial common stock and sold the shares acquired pursuant
to such exercise on the market.
86
<PAGE>
CERTAIN LEGAL MATTERS
GENERAL. Except as described in this section, based on a review of publicly
available filings by AXA Financial with the SEC and discussions by
representatives of AXA with representatives of AXA Financial, AXA is not aware
of any license or regulatory permit that appears to be material to the business
of AXA Financial and that might be adversely affected by AXA's acquisition of
shares of AXA Financial common stock pursuant to the offer, or of any approval
or other action by any governmental, administrative or regulatory agency or
authority, in the United States or abroad, that would be required for the
acquisition or ownership of shares of AXA Financial common stock by AXA pursuant
to the offer. AXA and AXA Financial currently contemplate that they would seek
any approval or action required, except as described below under "--State
Takeover Laws" and "--Federal Savings Bank Regulation."
STATE INSURANCE APPROVALS. State insurance regulatory approvals and filings
will be obtained and made, if necessary, prior to the consummation of the offer
and subsequent merger. AXA does not expect that this process will delay the
consummation of the offer and subsequent merger.
STATE TAKEOVER LAWS. AXA Financial and certain of its subsidiaries conduct
business in a number of states throughout the United States, some of which have
adopted laws and regulations applicable to offers to acquire shares of
corporations that are incorporated or have substantial assets, stockholders
and/or a principal place of business in these states.
AXA Financial is incorporated under the laws of the State of Delaware. In
general, Section 203 of the Delaware General Corporation Law prevents an
"interested stockholder", including a person who owns or has the right to
acquire 15% or more of the corporation's outstanding voting stock and certain
persons related to that person, from engaging in a "business combination" which
is defined to include mergers and certain other actions, with a Delaware
corporation for a period of three years following the date such person became an
interested stockholder. In connection with the merger, Section 203 would have
been applicable to AXA Merger Corp. As a result of approvals by the Board of
Directors of AXA Financial, the constraints of Section 203 with respect to the
merger do not apply to AXA Merger Corp.
AXA Financial's subsidiaries conduct business in a number of states
throughout the United States, some of which have enacted takeover laws. AXA has
not determined whether any of these state takeover laws and regulations will by
their terms apply to the offer or the merger, and, has not presently sought to
comply with any state takeover statute or regulation. AXA reserves the right to
challenge the applicability or validity of any state law or regulation
purporting to apply to the offer or the merger, and neither anything in this
offer nor any action taken in connection with this offer is intended as a waiver
of that right. In the event it is asserted that one or more state takeover
statutes is applicable to the offer or the merger and an appropriate court does
not determine that that statute is inapplicable or invalid as applied to the
offer or the merger, AXA might be required to file certain information with, or
to receive approval from, the relevant state authorities and might be unable to
accept for or pay for exchange shares of AXA Financial common stock tendered
pursuant to the offer, or be delayed in consummating the offer. In addition, if
enjoined, AXA might be unable to accept for exchange any shares of AXA Financial
common stock tendered pursuant to the offer, or be delayed in continuing or
consummating the offer and the merger. In that case, AXA may not be obligated to
accept for payment any shares tendered. See "--Certain Conditions to the Offer."
FEDERAL SAVING BANK REGULATION. AXA Financial owns 100% of the outstanding
common stock of Frontier Trust Company, a federally chartered savings bank. AXA
Financial and AXA acquired direct and indirect ownership of Frontier Trust's
common stock with the approval of the Office of Thrift Supervision, Frontier
Trust's primary regulator, pursuant to applications filed with the Office by AXA
Financial and AXA. The Office of Thrift Supervision has indicated that, in
connection with AXA's offer, AXA and AXA Financial are required to submit an
amendment to their prior applications. Such
87
<PAGE>
amendment will be subject to the approval of the Office of Thrift Supervision.
AXA does not presently expect that this process will delay the consummation of
the offer and the subsequent merger.
ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
and the rules that have been promulgated thereunder by the U.S. Federal Trade
Commission, certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice and the U.S. Federal Trade Commission and certain waiting
period requirements have been satisfied. The purchase of shares pursuant to the
offer is not subject to these requirements because AXA currently owns, directly
or indirectly, in excess of 50% of the issued and outstanding common stock of
AXA Financial.
LITIGATION. On August 30, 2000, seven lawsuits seeking class action status
were filed in the Delaware Court of Chancery by purported stockholders of AXA
Financial against AXA, AXA Financial and the directors of AXA Financial in
connection with the exchange offer. On August 31, 2000, three additional
lawsuits seeking class action status were filed in the Delaware Court of
Chancery against the same defendants. On September 1, 2000, an additional
lawsuit seeking class action status was filed in the Supreme Court of the State
of New York, County of New York, against the same defendants. On the same date
two additional lawsuits seeking class action status were filed in the Delaware
Court of Chancery against the same defendants. On September 8, 2000 and
September 18, 2000, two additional lawsuits seeking class action status were
filed in the Delaware Court of Chancery against the same defendants. The
lawsuits alleged, among other things, that AXA's initial offer of 0.271 of an
AXA ADS and $32.10 in cash per share of AXA Financial common stock was grossly
inadequate and unfair, that AXA was violating its duties as a majority
stockholder of AXA Financial and that the individual defendants had breached and
would continue to breach their fiduciary duties to the members of the purported
class. The complaints sought, among other things, an order preliminary and
permanently enjoining the defendants from proceeding with the proposed
transaction, an order rescinding and setting aside the transaction or awarding
rescissory damages in the event the proposed transaction is consummated, damages
and attorneys' fees and expenses. AXA Financial stockholders whose shares are
exchanged in the offer will not be entitled to join the purported class of
stockholders making claims in these lawsuits.
MISCELLANEOUS.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF AXA NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN
THE RELATED LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
AXA has filed with the SEC a combined Rule 13e-3 Transaction Statement on
Schedule 13E-3 and Tender Offer Statement on Schedule TO under cover of Schedule
TO, together with all exhibits to that Schedule, pursuant to Regulation M-A
under the Exchange Act. In addition, AXA Financial has filed a
Solicitation/Recommendation Statement on Schedule 14D-9, together with all
exhibits thereto, pursuant to Rule 14d-9 under the Exchange Act setting forth
its recommendation with respect to the offer and the reasons for that
recommendation and furnishing certain additional related information. These
Schedules and any amendments to them, including exhibits, may be inspected and
copies may be obtained from the offices of the SEC in the manner set forth under
"Where You Can Find More Information", except that they will not be available at
the regional offices of the SEC.
88
<PAGE>
THE MERGER AGREEMENT
THE DISCUSSION IN THIS PROSPECTUS OF THE OFFER, THE MERGER AND THE PRINCIPAL
TERMS OF THE MERGER AGREEMENT DATED OCTOBER 17, 2000, AMONG AXA, AXA FINANCIAL
AND AXA MERGER CORP., IS SUBJECT TO, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE MERGER AGREEMENT, A COPY OF WHICH IS ATTACHED AS ANNEX A TO
THIS PROSPECTUS AND IS INCORPORATED IN THIS PROSPECTUS BY REFERENCE. THE
FOLLOWING DESCRIPTION SUMMARIZES THE MATERIAL PROVISIONS OF THE MERGER
AGREEMENT. WE URGE YOU TO READ CAREFULLY THE MERGER AGREEMENT.
THE OFFER. Pursuant to the Merger Agreement, AXA and AXA Merger Corp. are
obligated to commence the offer as promptly as practicable after the date of the
Merger Agreement. On the terms and subject to the conditions of the offer and
the Merger Agreement, AXA and AXA Merger Corp. will accept for exchange and
exchange all shares of AXA Financial common stock validly tendered and not
withdrawn pursuant to the offer that AXA becomes obligated to exchange pursuant
to the offer as soon as practicable after the initial expiration of the offer.
The obligations of AXA to accept for payment, and pay for, any shares of AXA
Financial common stock tendered pursuant to the offer are subject to no
conditions other than the conditions specified in "The Exchange Offer--Certain
Conditions to the Offer". AXA and AXA Merger Corp. expressly reserve the right
to waive any condition to the offer or modify the terms of the offer, except
that, without the consent of AXA Financial (expressed in a resolution adopted by
both the Special Committee and the Board of Directors), AXA and AXA Merger Corp.
may not:
- reduce the amount of consideration per share of AXA Financial common stock
or change the form of consideration to be paid pursuant to the offer or
reduce the percentage of shares of AXA Financial common stock offered to
be acquired in the offer;
- add to the conditions specified in "The Exchange Offer--Certain Conditions
to the Offer" or modify any of these conditions in any manner adverse to
the holders of the shares of AXA Financial common stock (other than AXA
and its subsidiaries that own shares of AXA Financial common stock
deposited in the voting trust); or
- otherwise amend the offer in any manner adverse to the holders of the
shares of AXA Financial common stock (other than AXA and its subsidiaries
that own shares of AXA Financial common stock deposited in the voting
trust).
THE MERGER. The Merger Agreement provides that, on the terms and subject to
the conditions set forth in the Merger Agreement, AXA Merger Corp., a
wholly-owned subsidiary of AXA formed in order to consummate the merger, will be
merged with and into AXA Financial in accordance with the applicable provisions
of the Delaware General Corporate Law.
Following the merger, the separate corporate existence of AXA Merger Corp.
will cease and AXA Financial will continue as the surviving corporation. AXA may
substitute any direct or indirect wholly-owned subsidiary that is incorporated
in the State of Delaware for AXA Merger Corp. as the constituent corporation in
the merger. At the effective time of the merger, by virtue of the merger and
without any action on the part of the holder of any shares of AXA Financial
common stock, or any shares of capital stock of AXA Merger Corp.:
(i) each share of AXA Financial common stock owned by AXA and its
subsidiaries and deposited as of the effective date of the merger in
the AXA Financial voting trust (other than shares of AXA Financial
common stock acquired pursuant to the offer and deposited in the AXA
Financial voting trust) and each share of AXA Financial common stock
acquired in the offer and allocated to AXA will remain outstanding as
one fully paid and nonassessable share of common stock, par value $.01
per share, of AXA Financial;
89
<PAGE>
(ii) the issued and outstanding shares of capital stock of AXA Merger Corp.
will be converted into a number of fully paid and nonassessable shares
of common stock, par value $.01 per share, of AXA Financial, that
equals the total number of issued and outstanding shares of AXA
Financial common stock immediately prior to the effective date of the
merger minus the sum of
(x) the total number of shares of AXA Financial common stock then
outstanding owned by AXA and its subsidiaries and deposited in the
AXA Financial voting trust (including any shares acquired pursuant
to the offer and deposited or to be deposited in the voting trust),
and
(y) the total number of shares of AXA Financial common stock acquired in
the offer and allocated to AXA;
(iii) each issued and outstanding share of AXA Financial common stock, other
than the shares described under (i) and (ii) above, will be converted,
subject to any appraisal rights, into the right to receive:
(x) 0.295 of an AXA ADS and
(y) $35.75 in cash, without interest;
(iv) each share of AXA Financial common stock that is held in treasury by
AXA Financial will no longer be outstanding and will automatically be
cancelled and will cease to exist, and no consideration will be
delivered or deliverable in exchange for these shares,
(v) each share of AXA Financial common stock acquired in the offer and
allocated to AXA Merger Corp. will no longer be outstanding and will
automatically be cancelled and will cease to exist, and no consideration
will be delivered or deliverable in exchange for these shares;
(vi) each issued and outstanding share of Cumulative Convertible Preferred
Stock, Series D, par value $1.00 per share, of AXA Financial will,
subject to any appraisal rights, remain outstanding as Series D
Preferred Stock of the surviving corporation in the merger and will
have the same terms as the ones set forth in the Certificate of
Designations, dated as of December 8, 1993, as amended pursuant to
which the Series D Preferred Stock was issued. The Certificate of
Designation provides that in the event of a consolidation or merger of
AXA Financial as a result of which holders of outstanding shares of AXA
Financial common stock will be entitled to receive shares of stock or
other securities or other property, including cash, with respect to or
in exchange for their shares of AXA Financial common stock, the
Series D Preferred Stock will, after the consolidation or merger, be
convertible into the kind and amount of shares of stock or other
securities or property, including cash, which the holder of shares of
Series D Preferred Stock would have owned or been entitled to if he had
converted his Series D Preferred Stock immediately prior to that
consolidation or merger. As a result of the merger, the Series D
Preferred Stock will be convertible into AXA ADSs and cash.
The merger will become effective on the date on which the Certificate of
Merger is duly filed with the Secretary of the State of Delaware, or a later
date as agreed by AXA and AXA Financial in the Certificate of Merger.
PREPARATION OF REGISTRATION STATEMENT ON FORM F-4 AND PROXY STATEMENT OR
INFORMATION STATEMENT; STOCKHOLDERS' MEETING OR ACTION BY STOCKHOLDER CONSENT.
AXA Financial has agreed in the Merger Agreement that, if required by law in
order to consummate the merger, as soon as
90
<PAGE>
practicable following the expiration of the offer, AXA and AXA Financial will
prepare and file with the SEC:
- a post-effective amendment to the Registration Statement on Form F-4 for
the offer and sale of the AXA ADSs pursuant to the merger which will
include as a prospectus a proxy statement or an information statement
pursuant to Rule 14c-2 under the Exchange Act, as applicable, which will
contain the information required under Rule 13e-3 under the Exchange Act;
and
- together with AXA Merger Corp., a Rule 13e-3 Transaction Statement on
Schedule 13E-3 with respect to the merger.
Each of AXA Financial and AXA will use its reasonable best efforts to
respond as promptly as practicable to any comments of the SEC with respect to
documents submitted to it. AXA and AXA Financial have agreed to use their
reasonable best efforts to have the post-effective amendment to the Registration
Statement on Form F-4 declared effective under the Securities Act as promptly as
practicable after its filing. AXA Financial has also agreed to use its
reasonable best efforts to cause the proxy statement or the information
statement, as applicable, to be mailed to holders of AXA Financial's capital
stock as promptly as practicable after the Registration Statement on Form F-4 is
declared effective under the Securities Act.
If required by applicable law in order to consummate the merger, AXA
Financial has also agreed pursuant to the Merger Agreement to establish, prior
to or as soon as practicable following the date upon which the post-effective
amendment to the Registration Statement on Form F-4 has been declared effective,
a record date and either duly call, give notice of, convene and hold a meeting
of holders of the capital stock of AXA Financial if proxies are to be solicited
to consider and vote upon the adoption of the Merger Agreement or to follow all
required procedures in soliciting consents from the holders of AXA Financial
common stock. In that event, the proxy or information statement, as the case may
be, will include a description of the recommendations of the Board of Directors
of AXA Financial and the Special Committee that the holders of shares of AXA
Financial common stock adopt the Merger Agreement. AXA Financial has agreed that
neither the Board of Directors of AXA Financial nor any committee of the Board
of Directors will withdraw or modify, or propose to withdraw or modify, these
recommendations or related approval in each case unless the Special Committee
determines in good faith, after consultation with outside legal counsel, that
such recommendations would be inconsistent with its fiduciary duties to AXA
Financial's stockholders under applicable law. The Merger Agreement also
provides that the Board of Directors of AXA Financial or the Special Committee
may decide not to make such recommendations.
If a vote of the stockholders of AXA Financial is necessary to effect the
merger, AXA has agreed in the Merger Agreement to cause AXA Merger Corp. to vote
any shares of AXA Financial common stock owned by it and not held in the AXA
Financial voting trust in favor of the adoption of the Merger Agreement.
In addition, pursuant to a Voting Agreement dated as of October 17, 2000,
Claude Bebear and Patrice Garnier, two of the three voting trustees of the AXA
Financial voting trust, have agreed with AXA Financial to take all actions
required under the Voting Trust Agreement relating to the AXA Financial shares
in order to cause all shares of AXA Financial common stock held in the AXA
Financial voting trust as of the date of the relevant vote to be voted, in any
action by written consent of the stockholders of AXA Financial or in a
stockholders' meeting, in favor of the Merger Agreement.
The Merger Agreement provides that the Voting Agreement may not be amended
without the approval of the Special Committee.
91
<PAGE>
Under Delaware law, unless a short form merger is effected, a merger
agreement must be adopted by a majority of the shareholders entitled to vote
thereon. As of the date of this prospectus, AXA and its subsidiaries hold a
sufficient percentage of the total number of outstanding shares of AXA Financial
common stock to adopt the Merger Agreement under Delaware law. It is anticipated
that upon consummation of the offer, the voting trustees holding the requisite
number of votes will adopt the Merger Agreement by executing a written
shareholder consent.
In connection with such shareholder action by written consent, AXA and AXA
Financial are required under applicable federal securities laws to deliver to
holders of AXA Financial common stock not tendered and exchanged pursuant to the
offer an information statement containing, among other things, an explanation of
appraisal rights available to such holders.
AXA has requested that the SEC issue a "no action" position or, in the
alternative, an exemptive order if we provide the information required in the
information statement in this prospectus. If such relief is granted, holders of
AXA Financial common stock not tendered and exchanged pursuant to the offer will
not receive an information statement, other than this prospectus, prior to
consummation of the merger. Provided the SEC grants this relief, the written
shareholder consent adopting the Merger Agreement will be executed promptly
after consummation of the offer.
INTERIM OPERATIONS. Except for matters expressly permitted or contemplated
by the Merger Agreement and matters disclosed in the schedules to the Merger
Agreement, from the date of the Merger Agreement to the effective time of the
merger, AXA Financial has agreed to, and has agreed to cause each of its
subsidiaries, other than Alliance Capital Management Corporation, Alliance
Capital Management Holding, L.P. and Alliance Capital Management, L.P.
(collectively referred to in this prospectus as Alliance) and Donaldson, Lufkin
& Jenrette and their respective subsidiaries to:
- conduct its business in the usual, regular and ordinary course consistent
with past practice, including with respect to employee compensation and
benefits (including entering into employment agreements or similar
arrangements), severance and retirement benefits, issuance of debt
securities, loans to subsidiaries, material acquisitions, or sales of
material assets;
- use all reasonable efforts to preserve intact its current business
organization, keep available the services of its current officers and
employees and maintain its relationships and goodwill with agents,
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them to the end that its goodwill is unimpaired at
the effective time of the merger;
- continue to submit or report matters to its Board of Directors or similar
governance body or the appropriate committee of the Board of Directors or
such body for approval or review, as the case may be, in the usual,
regular and ordinary course consistent with past practice; and
- continue to consult AXA on all material matters in the usual, regular and
ordinary course consistent with past practice.
AXA Financial has also agreed not to authorize or cause Donaldson, Lufkin &
Jenrette, prior to its disposition, or Alliance Capital to take any action that
would violate the obligation to consult with AXA mentioned above.
In addition, except for matters expressly contemplated by the Merger
Agreement, from the date of the Merger Agreement to the effective time of the
merger, AXA Financial will not, and will not permit any of its subsidiaries to
do any of the following without the prior written consent of AXA:
- declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock or other equity
interests, other than regular cash dividends with respect to
92
<PAGE>
the AXA Financial common stock not in excess of $0.0250 per share and
regular cash dividends with respect to the Series D Preferred Stock in
accordance with the Series D Certificate of Designations as amended to the
date of the Merger Agreement, in each case, with usual declaration, record
and payment dates and in accordance with AXA Financial's past dividend
policy;
- split, combine or reclassify any of its capital stock or other equity
interests or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock
or other equity interests, other than the conversion of Series D Preferred
Stock of AXA Financial into shares of AXA Financial common stock in
accordance with the Series D Certificate of Designations, as amended to
the date of the Merger Agreement;
- except in connection with existing benefit plans of AXA Financial in
accordance with their respective terms as of the date of the Merger
Agreement and consistent with applicable law and past practice, purchase,
redeem or otherwise acquire any shares of capital stock of or any other
securities of AXA Financial or any of its subsidiaries or any rights,
warrants or options to acquire any such shares or other securities;
- except for (x) the issuance of shares of AXA Financial common stock upon
the exercise of outstanding options granted under the stock option plans
identified in the Merger Agreement in accordance with the terms of these
plans or pursuant to the 1998 stock plan for directors in accordance with
its terms as of the date of the Merger Agreement, (y) new grants or
options to acquire shares of AXA Financial common stock under the stock
option plans identified in the Merger Agreement to newly hired employees
in the ordinary course of business consistent with past practice and the
issuance of shares of AXA Financial common stock upon the exercise of
these new grants in accordance with their terms and (z) the issuance of
shares of AXA Financial common stock upon the conversion of the Series D
Preferred Stock of AXA Financial in accordance with the Series D
Certificate of Designations, as amended to the date of the Merger
Agreement, issue, deliver, sell or grant:
(i) any shares of its capital stock or other equity interests;
(ii) any bonds, debentures, notes or other indebtedness having the right
to vote, or convertible into, or exchangeable for, securities having
the right to vote, on matters on which the holders of shares of AXA
Financial common stock may vote or other voting securities;
(iii) any securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any of the securities
mentioned under (ii) above, voting securities or convertible or
exchangeable securities; or
(iv) any "phantom" stock, "phantom" stock rights, stock appreciation
rights or stock-based performance units;
- amend its certificate of incorporation or by-laws;
- authorize any of, or commit or agree to take any of, the actions described
above.
The Merger Agreement also prohibits AXA from:
- declaring or setting aside or paying any dividends on or making any
distributions with respect to the AXA ordinary shares, other than regular
dividends with respect to AXA ordinary shares with usual declaration,
record and payment dates;
93
<PAGE>
- splitting, reclassifying or combining AXA's ordinary shares or issuing or
authorizing the issuance of any other securities in respect of, in lieu of
or in substitution for the AXA ordinary shares; and
- authorize any of, or commit or agree to take any of, the foregoing
actions.
INDEMNIFICATION. Pursuant to the Merger Agreement, AXA has agreed, to the
fullest extent permitted by applicable law, to cause the surviving corporation
in the merger to honor all AXA Financial's obligations to indemnify, including
any obligations to advance funds for expenses to, the current or former
directors or officers of AXA Financial or any of its subsidiaries, other than
Donaldson, Lufkin & Jenrette and its subsidiaries, for acts or omissions by
these directors and officers occurring prior to the effective time of the merger
to the extent that these obligations of AXA Financial or any of its subsidiaries
existed on the date of the Merger Agreement, whether pursuant to AXA Financial's
restated certificate of incorporation, by-laws, the certificate or articles of
incorporation, by-laws or similar organizational documents of the relevant
subsidiaries, individual indemnity agreements or otherwise. These obligations
will survive the merger and will continue in full force and effect in accordance
with the terms of AXA Financial's restated certificate of incorporation,
by-laws, the certificate or articles of incorporation, by-laws or similar
organizational documents of the relevant subsidiaries, and these individual
indemnity agreements from the effective time of the merger until the expiration
of the applicable statute of limitations with respect to any claims against the
directors or officers arising out of these acts or omissions.
The Merger Agreement also provides that AXA or the surviving corporation in
the merger will cause to be maintained in effect for a period of six years from
and after the effective time of the merger, the current policies of directors'
and officers' liability insurance maintained by AXA Financial with respect to
claims arising from or related to facts or events which occurred at or before
the effective time of the merger. AXA may substitute the current policies with
policies with reputable and financially sound carriers of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous and so long as the substitution results in continuous coverage AXA
will not be obligated to make annual premium payments for such insurance to the
extent these premiums exceed 200% of the annual premiums paid as of the date of
the Merger Agreement by AXA Financial for that insurance. If that insurance
coverage cannot be obtained at all, or can only be obtained at an annual premium
in excess of the 200% threshold, AXA or the surviving corporation in the merger
will maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to that 200% threshold. The
obligation of AXA and the surviving corporation in the merger with respect to
director's and officer's liability insurance as described above will be deemed
to have been satisfied if prepaid policies reasonably approved in writing by AXA
are obtained by AXA Financial prior to the effective time of the merger. These
policies would have to provide the directors and officers with coverage for an
aggregate period of six years with respect to claims arising from facts or
events that occurred prior to the effective time of the merger, including with
respect of the transactions contemplated in the Merger Agreement.
From and after the effective time of the merger, to the fullest extent
permitted by applicable law, and without limitation on the obligations of AXA
and the surviving corporation in the merger described in the two preceding
paragraphs AXA has agreed to, and to cause the surviving corporation in the
merger to, indemnify defend and hold harmless the present and former officers
and directors of AXA Financial and its subsidiaries, and any employee of AXA
Financial or its subsidiaries who acts as a fiduciary under any employee benefit
plan providing benefits to any current or former employee, officer or director
of AXA Financial or any of its subsidiaries against all losses, claims, damages,
liabilities, fees and expenses, including attorneys' fees and disbursements,
judgments, fines and amounts paid in settlement, in the case of settlements,
with the approval of the indemnifying party, which approval shall not be
unreasonably withheld or
94
<PAGE>
delayed, as incurred, payable monthly upon written request, to the extent
arising from, relating to, or otherwise in respect of any actual or threatened
action, suit, proceeding or investigation, in respect of actions or omissions
occurring at or prior to the effective time of the merger in connection with the
indemnified party's duties as an officer or director or employee of AXA
Financial or any of its subsidiaries to the extent they are based on or arise
out of or pertain to the transactions contemplated by the Merger Agreement. This
indemnification obligation does not cover losses arising out of an intentional
breach of the Merger Agreement by the indemnified party or criminal conduct or
any violation of U.S. federal, state or foreign securities laws by that party.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of AXA Financial, including, among
others, representations as to:
- due organization and existence,
- capital structure,
- corporate authority,
- no violation of its restated certificate of incorporation or by-laws or
the comparable charter or organizational documents of any of AXA
Financial's subsidiaries, contracts of AXA Financial or any of its
subsidiaries or any judgment, order, law or regulation applicable to AXA
Financial and its subsidiaries resulting from the offer and the merger,
which in the case of contracts, judgments, orders, laws or regulations,
have not had and could not reasonably be expected to have a material
adverse effect on AXA Financial or its ability to consummate the merger,
- accuracy of AXA Financial's public filings, including financial
statements, and
- the accuracy of information included in certain materials prepared in
connection with the offer and the merger.
The Merger Agreement contains various customary representations and
warranties of AXA and AXA Merger Corp., including, among others, representations
as to:
- due organization and existence,
- capital structure,
- corporate authority,
- no violation of charter or other organizational documents of AXA or any of
its subsidiaries, contracts of AXA or any of its subsidiaries or judgments
or laws applicable to AXA or any of its subsidiaries resulting from the
offer and the merger, which, in the case of contracts, judgments or laws,
have not had and could not reasonably be expected to have a material
adverse effect on AXA or its ability to consummate AXA or any of its
subsidiaries of the merger,
- accuracy of AXA's public filings, including financial statements,
- sufficiency of funds for the offer, the merger and the other transactions
contemplated by the Merger Agreement, and
- the accuracy of information included in certain materials prepared in
connection with the offer and the merger.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the respective
obligation of each party to the agreement to effect the merger is subject to the
satisfaction or waiver on or prior to the closing date of each of the following
conditions:
95
<PAGE>
- If required by law in order to consummate the merger, the Merger Agreement
will have been adopted by the requisite vote of the stockholders of AXA
Financial.
- No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction preventing the
consummation of the merger or the other transactions contemplated by the
Merger Agreement will be in effect. Each of the parties to the Merger
Agreement has agreed to use its reasonable best efforts to prevent the
entry of any such injunction or other order and to appeal as promptly as
possible any such judgment that may be entered.
- AXA and AXA Merger Corp. will have accepted for exchange and exchanged all
the shares of AXA Financial common stock properly tendered and not
withdrawn pursuant to the offer.
- The registration statement on Form F-4, of which this prospectus is a
part, and the post-effective amendment to that registration statement, as
the case may be, will have become effective under the Securities Act and
will not be subject to any stop order or proceeding seeking a stop order,
and AXA will have received all U.S. state securities or "blue sky"
authorization necessary to issue AXA ADSs in the merger.
- The NYSE will have approved for listing, subject to official notice of
issuance, the AXA ADSs issuable pursuant to the merger.
AXA Financial may waive any of these conditions only following a
determination to that effect by the Special Committee.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the effective time of the merger, whether before or after receipt of the
approval of AXA Financial's stockholders or adoption of this agreement by AXA,
as stockholder of AXA Merger Corp.:
- by mutual written consent of AXA, AXA Merger Corp. and the Special
Committee on behalf of AXA Financial;
- by either AXA or the Special Committee on behalf of AXA Financial:
-- if the purchase of the shares of AXA Financial common stock pursuant
to the offer is not consummated on or before June 30, 2001 as a result
of any of the conditions described under "The Exchange Offer--Certain
Conditions to the Offer" not being satisfied on or prior to that date,
unless the failure to consummate the offer is the result of a breach
of the Merger Agreement by the party seeking to terminate the Merger
Agreement; or
-- if any governmental entity issues an order, decree or ruling or takes
any other action permanently enjoining, restraining or otherwise
prohibiting the offer or the merger and such order, decree, ruling or
other action shall have become final and nonappealable other than any
such order, decree, ruling or other action of a governmental entity
not in the United States, France or the European Union which does not
have a material adverse effect on AXA or any of its material
subsidiaries; or
- by AXA, if the Special Committee withdraws or modifies or proposes to
withdraw or modify, in each case, in a manner adverse to AXA or AXA Merger
Corp., its approval or recommendation of the Merger Agreement, the offer
or the merger or fails to recommend to AXA Financial's stockholders that
they accept the offer and vote for the adoption of the Merger Agreement;
- by the Special Committee on behalf of AXA Financial, if the Special
Committe determines that the terms of the offer and merger are not fair to
or in the best interests of AXA Financial and AXA Financial's
stockholders, other than AXA and its affiliates;
96
<PAGE>
- by the Special Committee on behalf of AXA Financial, if due to an
occurrence or circumstance, not involving a breach by AXA Financial of its
obligations under the Merger Agreement, which would result in a failure to
satisfy any of the conditions to the offer described in "The Exchange
Offer--Certain Conditions to the Offer" or otherwise, AXA or AXA Merger
Corp. have terminated the offer or permitted the offer to expire without
the exchange of shares of AXA Financial common stock tendered and not
withdrawn in the offer or not commenced the offer in accordance with the
Merger Agreement.
- by the Special Committee on behalf of AXA Financial if any representation
or warranty of AXA and AXA Merger Corp. in the Merger Agreement that is
qualified as to material adverse effect on AXA is not true and correct or
any such representation and warranty that is not so qualified is not true
and correct other than for failures to be true and correct that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a material adverse effect on AXA or its ability to
consummate the offer and the merger, or AXA or AXA Merger Corp. fail to
perform in any material respect any of their respective covenants
contained in the Merger Agreement provided that AXA Financial is not then
in breach of any representation, warranty or covenant contained in that
agreement.
The Merger Agreement also provides that in connection with its termination
in the event the offer is not consummated by June 30, 2001, the period up to
that day will be tolled during any time any party to the Merger Agreement is
subject to a nonfinal order, decree, ruling or action restraining, enjoining or
otherwise prohibiting the consummation of the offer or the merger.
In the event of termination, except as specifically provided in the Merger
Agreement, the Merger Agreement will become void and have no effect without any
liability or obligation on the part of AXA or AXA Merger Corp. or AXA Financial,
except to the extent that the termination results from the willful and material
breach by a party of any agreement set forth in the Merger Agreement.
AMENDMENTS; WAIVERS. The Merger Agreement may be amended by the parties,
but only with the approval of the Special Committee, at any time before or after
receipt of the approval of AXA Financial's stockholders or the adoption of the
Merger Agreement by AXA as stockholder of AXA Merger Corp.; provided that an
amendment may not be made after the approval of the Merger Agreement by the AXA
Financial stockholders or its adoption by AXA as stockholder of AXA Merger Corp.
without the further approval of the relevant stockholders, if such amendment
requires further stockholders' approval under applicable law.
At any time prior to the effective time of the merger, the parties to the
Merger Agreement may
- extend the time for the performance of any of the obligations or other
acts of the other parties,
- waive any inaccuracies in the representations and warranties contained in
the Merger Agreement or in any document delivered pursuant to the Merger
Agreement or
- subject to the requirements of applicable law and the provisions of the
preceding paragraph, waive compliance with any of the agreements or
conditions contained in the Merger Agreement.
Any extension or waiver that adversely affects the holders of shares of AXA
Financial common stock will require the approval of the Special Committee.
APPRAISAL RIGHTS
Under Section 262 of the General Corporation Law of the State of Delaware
(which we refer to in this prospectus as the "Delaware General Corporation
Law"), if you do not exchange shares of AXA Financial common stock in the offer
and do not wish to accept the merger consideration paid
97
<PAGE>
for your outstanding shares of AXA Financial capital stock pursuant to the
merger, you will have the right to seek an appraisal and be paid in cash the
"fair value" of your shares as of the effective time of the merger, exclusive of
any element of value arising from the accomplishment or expectation of the
merger, together with a fair rate of interest, if any, as judicially determined.
The following discussion is not a complete statement of the law pertaining
to appraisal rights under the Delaware General Corporation Law and is qualified
in its entirety by the full text of Section 262, a copy of which is provided as
Appendix C to this document. All references in Section 262, and in this summary,
to a "stockholder" are to the record holder of the shares of AXA Financial
capital stock as to which appraisal rights are asserted. If you have a
beneficial interest in shares of AXA Financial capital stock held of record in
the name of another person, such as a broker or nominee, you must act promptly
to cause the record holder to follow properly the steps summarized below and in
a timely manner to perfect your appraisal rights. We advise you to review
Section 262 carefully and consult legal counsel if you are considering demanding
appraisal, as failure to comply fully with the procedures of that Section will
result in the loss of appraisal rights. Appraisal rights will not be available
until the merger described in the Merger Agreement is consummated.
YOU CANNOT EXERCISE APPRAISAL RIGHTS AT THIS TIME. WE ARE PROVIDING YOU WITH
THE INFORMATION SET FORTH BELOW FOR INFORMATIONAL PURPOSES ONLY WITH RESPECT TO
ALTERNATIVES AVAILABLE TO YOU IF THE MERGER IS CONSUMMATED. STOCKHOLDERS WHO
WILL BE ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE MERGER WILL RECEIVE
ADDITIONAL INFORMATION CONCERNING APPRAISAL RIGHTS AND THE PROCEDURES TO BE
FOLLOWED IN CONNECTION WITH THESE RIGHTS BEFORE THEY HAVE TO TAKE ANY ACTION
RELATING TO THESE RIGHTS.
IF YOU EXCHANGE SHARES OF AXA FINANCIAL COMMON STOCK IN THE OFFER, YOU WILL
NOT BE ENTITLED TO EXERCISE APPRAISAL RIGHTS WITH RESPECT TO THESE SHARES BUT,
RATHER, WILL RECEIVE THE CONSIDERATION PAID IN THE OFFER.
If you desire to exercise your appraisal rights under Section 262, you will
be required to fully satisfy each of the following conditions:
In the case the merger is being consummated following a vote at a meeting of
AXA Financial stockholders (which we refer to in this summary as a "stockholder
meeting merger")
- You must deliver to the Secreatary of AXA Financial a written demand for
appraisal of your shares of AXA Financial capital stock before the vote on
the adoption of the Merger Agreement at the special meeting of AXA
Financial stockholders;
- You must not vote in favor of adoption of the Merger Agreement. In case
the Merger Agreement is adopted by the stockholders of AXA Financial
following a stockholders' meeting, the proxies distributed in connection
with that meeting will provide that proxies that do not contain voting
instructions will, unless revoked, be voted in favor of the merger
agreement. Therefore, in that case, if you vote by proxy and wish to
exercise appraisal rights, you must vote against adoption of the Merger
Agreement or abstain from voting on adoption of the Merger Agreement; and
- You must continuously hold the shares of AXA Financial common stock for
which you are seeking appraisal from the date of your written demand
through the effective time of the merger. If you are the record holder of
shares of AXA Financial common stock on the date the written demand for
appraisal is made but then transfer these shares prior to the effective
time of the merger, you will lose any right to appraisal in respect of the
shares. Neither voting in person or by proxy against, abstaining from
voting on or failing to vote on the proposal to adopt the merger agreement
will constitute a written demand for appraisal within the
98
<PAGE>
meaning of Section 262. You must deliver a written demand in addition to
and separate form any such proxy or vote.
IN THE CASE THE MERGER IS EFFECTED FOLLOWING ADOPTION OF THE MERGER
AGREEMENT BY AXA FINANCIAL'S STOCKHOLDERS BY WRITTEN CONSENT INSTEAD OF A
MEETING OR WITHOUT A VOTE OR MEETING OF AXA FINANCIAL'S STOCKHOLDERS (WHICH WE
REFER TO IN THIS SUMMARY AS A "SHORT-FORM MERGER"). YOU MUST DELIVER TO THE
SECRETARY OF AXA FINANCIAL A WRITTEN DEMAND FOR APPRAISAL OF YOUR SHARES OF AXA
FINANCIAL CAPITAL STOCK WITHIN TWENTY DAYS AFTER THE DATE THAT AXA FINANCIAL, AS
THE SURVIVING CORPORATION IN THE MERGER, MAILS TO YOU A NOTICE TO THE EFFECT
THAT THE MERGER IS EFFECTIVE AND THAT APPRAISAL RIGHTS ARE AVAILABLE. THIS
NOTICE MUST ALSO INCLUDE A COPY OF SECTION 262.
Only a holder of record of shares of AXA Financial capital stock issued and
outstanding immediately prior to the effective time of the merger is entitled to
assert appraisal rights for the shares of AXA Financial capital stock registered
in that holder's name. A demand for appraisal should be executed by or on behalf
of the stockholder of record, fully and correctly, as that stockholder's name
appears on the stock certificates and must reasonably inform AXA Financial that
such person intends thereby to demand appraisal of the holder's shares of AXA
Financial capital stock in connection with the merger.
If your shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, then the written demand must be executed in that
capacity. If your shares of AXA Financial capital stock are owned of record by
more than one person, as in a joint tenancy or tenancy in common, the demand
should be executed by, or on behalf of, all joint owners. An authorized agent,
including an agent for two or more joint owners, may execute a demand for
appraisal on behalf of a stockholder of record; however, the agent must identify
the record owner or owners and expressly disclose the fact that, in exercising
the demand, he is acting as agent for the record owner or owners.
A record owner, such as a broker, who holds shares of AXA Financial capital
stock as a nominee for several beneficial owners may exercise appraisal rights
with respect to the shares of AXA Financial capital stock held for one or more
beneficial owners while not exercising those rights with respect to the shares
of AXA Financial capital stock held for one or more other beneficial owners. In
that case, the written demand should set forth the number of shares of AXA
Financial capital stock as to which appraisal is sought. Where the number of
shares of AXA Financial capital stock is not expressly stated, the demand will
be presumed to cover all shares of AXA Financial capital stock held in the name
of the record owner. If you are a beneficial owner who is not a record owner and
intend to exercise appraisal rights, you should instruct the record owner to
comply strictly with the statutory requirements with respect to the exercise of
appraisal rights before the date of any meeting of stockholders of AXA Financial
called to approve the merger in the case of a stockholder approval within
20 days following the mailing of the notice of merger and notice of appraisal
rights in the case of a short-form merger.
If you elect to exercise appraisal rights under Section 262, you should mail
at the appropriate time or deliver your written demand to: AXA
Financial Inc.,1290 Avenue of the Americas, New York, NY 10104 Attention:
Corporate Secretary. The written demand for appraisal should specify your name
and mailing address, the number and type of shares of AXA Financial capital
stock covered by the demand and that you are demanding appraisal of your shares
of AXA Financial capital stock.
In the case of a stockholder meeting merger, AXA Financial must, within ten
days after the effective time of the merger provide notice as to the
effectiveness of the merger to each former stockholder who has made a written
demand for appraisal in compliance with Section 262 and has not voted for
adoption of the Merger Agreement. Delivering a proxy in connection with the
stockholder meeting called to adopt the Merger Agreement will constitute a
waiver of your right of
99
<PAGE>
appraisal and will nullify any written demand for appraisal submitted, unless
the proxy votes against, or expressly abstains from the vote on, the adoption of
the Merger Agreement.
Regardless of whether the merger is effected as a stockholder meeting merger
or a short-form merger, within 120 days after the effective time of the merger,
but not thereafter, either AXA Financial or any stockholder who has demanded
appraisal and complied with the requirements of Section 262 and who is otherwise
entitled to appraisal rights may file a petition in the Delaware Court of
Chancery demanding a determination of the fair value of the shares of AXA
Financial capital stock held by stockholders who have demanded appraisal of
their shares.
Within 120 days after the effective time of the merger, any stockholder who
has complied with the requirements for exercise of appraisal rights will be
entitled, upon written request, to receive from the surviving corporation a
statement setting forth the aggregate number of shares not voted in favor of the
adoption of the Merger Agreement and with respect to which demands for appraisal
have been received and the aggregate number of former holders of such shares.
Such statement must be mailed within ten days after a written request therefor
has been received by AXA Financial or within ten days after the expiration of
the period for delivery of demands for appraisal, whichever is later.
If a petition for an appraisal is timely filed by a stockholder and a copy
thereof is served upon AXA Financial, AXA Financial will then be obligated
within 20 days to file with the Delaware Register in Chancery a duly verified
list containing the names and addresses of all former stockholders who have
demanded an appraisal of their shares and with whom agreements as to the value
of their shares have not been reached. After notice to such stockholders as
required by the Court, the Delaware Court of Chancery is empowered to conduct a
hearing on such petition to determine those stockholders who have complied with
Section 262 and who have become entitled to appraisal rights thereunder. The
Delaware Court of Chancery may require the stockholders who demanded payment for
their shares to submit their stock certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceeding; and if any
stockholder fails to comply with such direction, the Court of Chancery may
dismiss the proceedings as to such stockholder.
After determining the stockholders entitled to an appraisal, the Delaware
Court of Chancery will appraise the "fair value" of the shares exclusive of any
element of value arising from the accomplishment or expectation of the merger,
together with a fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. The costs of the action may be determined by
the Delaware Court of Chancery and taxed upon the parties as the Delaware Court
of Chancery deems equitable. Upon application of a stockholder, the Delaware
Court of Chancery may also order that all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
reasonable attorneys' fees and the fees and expenses of experts, be charged pro
rata against the value of all of the shares of AXA Financial capital stock
entitled to appraisal. In the absence of such a determination or assessment,
each party bears its own expenses.
Although AXA and AXA Merger Corp. believe that the consideration to be paid
in the offer is fair, no representation is made as to the outcome of the
appraisal of fair value as determined by a Delaware court. Moreover, AXA and AXA
Merger Corp. do not anticipate offering more than 0.295 of an AXA ADS and $35.75
in cash to any stockholder exercising appraisal rights and reserve the right to
assert, in any appraisal proceeding, that, for purposes of Section 262, the
"fair value" of a share of AXA Financial common stock is less than such
consideration. In determining "fair value", the Delaware Court is required to
take into account all relevant factors. In WEINBERGER V. UOP, INC., the Delaware
Supreme Court discussed the factors that could be considered in determining fair
value in an appraisal proceeding, stating that "proof of value by any techniques
or methods which are
100
<PAGE>
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered and that "[f]air price obviously
requires consideration of all relevant factors involving the value of a
company." The Delaware Supreme Court has stated that in making this
determination of fair value the court must consider market value, asset value,
dividends, earnings prospects, the nature of the enterprise and any other facts
which could be ascertained as of the date of the merger which throw any light on
future prospects of the merged corporation. Section 262 provides that fair value
is to be "exclusive of any element of value arising from the accomplishment or
expectation of the merger." In CEDE & CO. V. TECHNICOLOR, INC., the Delaware
Supreme Court stated that such exclusion is a "narrow exclusion [that] does not
encompass known elements of value," but which rather applies only to the
speculative elements of value arising from such accomplishment or expectation.
In WEINBERGER, the Delaware Supreme Court construed Section 262 to mean that
"elements of future value, including the nature of the enterprise, which are
known or susceptible of proof as of the date of the merger and not the product
of speculation, may be considered."
IF YOU CONSIDER SEEKING APPRAISAL IN THE FUTURE, YOU SHOULD BE AWARE THAT
THE FAIR VALUE OF YOUR SHARES AS DETERMINED UNDER SECTION 262 COULD BE MORE
THAN, THE SAME AS OR LESS THAN THE 0.295 OF AN AXA ADS AND THE $35.75 CASH
PAYMENT YOU WOULD BE ENTITLED TO ELECT TO RECEIVE PURSUANT TO THE OFFER OR IN
THE SUBSEQUENT MERGER UNDER THE MERGER AGREEMENT IF YOU DO NOT SEEK APPRAISAL OF
YOUR SHARES. YOU SHOULD ALSO BE AWARE THAT OPINIONS OF INVESTMENT BANKING FIRMS
AS TO FAIRNESS FROM A FINANCIAL POINT OF VIEW ARE NOT NECESSARILY OPINIONS AS TO
FAIR VALUE UNDER SECTION 262.
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the effective time of the merger, be entitled to
vote the shares subject to this demand for any purpose or to receive payment of
dividends or other distributions on those shares, except for dividends or other
distributions payable to holders of record at a date prior to the completion of
the merger.
If any stockholder who demands appraisal of shares of AXA Financial capital
stock under Section 262 fails to perfect, or effectively withdraws or loses, the
right to appraisal, the stockholders' shares of AXA Financial capital stock will
be converted into the right to receive 0.295 of an AXA ADS and $35.75 in cash
per share of AXA Financial common stock in accordance with the Merger Agreement,
without interest. At any time within 60 days after the effective time of the
merger, a stockholder may withdraw a demand for appraisal and accept the
consideration paid for the shares pursuant to the Merger Agreement. After this
period, a stockholder may withdraw a demand for appraisal only with the consent
of AXA Financial as the surviving corporation. A stockholder will fail to
perfect, or effectively lose or withdraw, the right to appraisal if no petition
for appraisal is filed within 120 days after the effective time of the merger.
AXA Financial has no obligation to file a petition, and AXA has no present
intention to cause or permit the surviving corporation to do so. Accordingly, if
you desire to have your shares appraised, you should initiate any petition
necessary for the perfection of your appraisal rights within the time period,
and in the manner prescribed in Section 262. Once a petition for appraisal has
been filed, the appraisal proceeding may not be dismissed as to any stockholder
without the approval of the Delaware Court of Chancery, which may condition any
approval upon such terms as it deems just.
Failure to take any required step in connection with the exercise of
appraisal rights may result in the termination or waiver of those rights.
101
<PAGE>
TAXATION
The following generally summarizes the material U.S. Federal income tax and
French tax consequences to U.S. Holders of the offer and subsequent merger
contemplated by the Merger Agreement and the ownership and disposal of AXA
ordinary shares or ADRs representing ADSs received pursuant to the offer or
merger. This discussion represents the views of Cravath, Swaine & Moore, counsel
to AXA, insofar as it relates to the U.S. Federal income tax consequences to
U.S. Holders of the offer and merger and the ownership or disposal of the AXA
ordinary shares or ADRs representing the ADSs received pursuant to the offer or
merger. In addition, this discussion represents the views of Linklaters, counsel
to AXA, as to matters of French law.
For purposes of this discussion "U.S. Holder" is any one of the following:
- An individual who is a citizen or resident of the United States;
- A corporation, or other entity taxable as a corporation, created or
organized in or under the laws of the United States or of any political
subdivision of the United States, including the District of Columbia;
- An estate the income of which is subject to U.S. Federal income taxation
regardless of its source;
- A trust if a court within the United States is able to exercise primary
supervision over the trust and one or more U.S. persons have the authority
to control all substantial decisions of the trust; or
- A person otherwise subject to U.S. Federal Income tax on its worldwide
income.
If a partnership holds shares of AXA Financial common stock or AXA ordinary
shares or ADRs representing ADSs the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the
partnership. Partners of partnerships holding these shares or AXA ADRs should
consult their tax advisors as to the tax consequences of the offer and the
merger or of owning or disposing of AXA ordinary shares or ADRs representing
ADSs received in these transactions, as applicable.
A "Non-U.S. Holder" is a holder that is not a U.S. Holder. This discussion
does not address the U.S. Federal, local, state, foreign or other tax
consequences to Non-U.S. Holders as a result of the offer and the merger or the
ownership or disposal of AXA ordinary shares or ADRs. NON-U.S. HOLDERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL, LOCAL, STATE,
FOREIGN AND OTHER TAX CONSEQUENCES TO THEM AS A RESULT OF THE OFFER, THE MERGER
OR THE OWNERSHIP OR DISPOSAL OF AXA ORDINARY SHARES OR ADRS.
This summary is not a complete description of all of the tax consequences of
the offer and the merger contemplated by the Merger Agreement or of the
ownership or disposition of AXA ordinary shares or ADRs representing ADSs. It is
based on the current tax laws of France and the United States, including the
United States Internal Revenue Code of 1986, as amended (which we refer to in
this prospectus as the "Code"), its legislative history, temporary, existing and
proposed Treasury Regulations, Internal Revenue Service rulings and judicial
opinions as well as the Convention between the United States of America and The
Republic of France for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income and Capital dated August 31, 1994
(which we refer to in this prospectus as the "Treaty"), all as in effect on the
date of this prospectus and all subject to change, possibly with retroactive
effect. In particular, the following discussion does not take into account any
changes to the French tax law provisions relating to the PRECOMPTE and the AVOIR
FISCAL. The French Government has recently announced proposed amendments to the
rules relating to the AVOIR FISCAL in the Finance Bill for 2001. Under these
102
<PAGE>
proposals, the AVOIR FISCAL granted to shareholders who are not individuals will
be reduced from 40% to 25% in 2001 and 15% in 2002. The French Government has
also signaled that the rules relating to the PRECOMPTE will also change with
effect from 2002. For a discussion of the AVOIR FISCAL and the PRECOMPTE see
"--Ownership of AXA Ordinary Shares and ADRs--French Taxation--Taxation of
Dividends--"AVOIR FISCAL". No further details on these changes are available as
of the date of this prospectus. Your individual circumstances may affect the tax
consequences of the offer and merger to you, and your particular facts or
circumstances are not considered in the discussion below. No advance income tax
ruling has been sought or obtained from the United States Internal Revenue
Service regarding the tax consequences of the transactions described in this
prospectus.
For purposes of the Treaty, French tax law and the Code, U.S. owners of AXA
ADRs will be treated as owners of AXA ordinary shares underlying the ADSs
represented by those ADRs.
The summary is not intended to apply to holders of shares of AXA Financial
common stock or AXA ordinary shares or ADRs in particular circumstances, such
as:
- Dealers in securities;
- Traders in securities who elect to apply a mark-to-market method of
accounting;
- Financial institutions;
- Regulated investment companies;
- Tax-exempt organizations;
- Insurance companies;
- Persons holding shares of AXA Financial common stock, AXA ordinary shares
or ADRs representing ADSs as part of a hedging, straddle, conversion or
other integrated transaction;
- U.S. Holders who hold their shares of AXA Financial common stock, AXA
ordinary shares or ADRs representing ADSs other than as capital assets;
- Persons whose functional currency is not the U.S. dollar;
- Certain U.S. expatriates;
- Persons subject to the U.S. alternative minimum tax; and
- Holders of shares of AXA Financial common stock, AXA ordinary shares or
ADRs representing ADSs that will own directly or indirectly or will be
deemed to own, five percent or more of either the total voting power or
the total value of the stock of AXA immediately after the merger or that
carry on a trade or business in France through a permanent establishment
or fixed base for the purpose of which AXA ordinary shares or ADRs have
been acquired or held.
Furthermore, although this summary generally applies to relevant holders
whether or not they are employees of AXA Financial or its affiliates, this
summary does not describe all the tax considerations relevant to persons who
acquired shares of AXA Financial common stock, AXA ordinary shares or ADRs
representing ADSs pursuant to the exercise of an incentive stock option.
THE OFFER AND MERGER--FRENCH TAXATION
Generally there are no French tax consequences as a result of the offer and
merger described in this prospectus to persons who hold less than 25% of AXA
Financial's outstanding common stock if those persons are not resident of France
for French income tax purposes or otherwise subject to a limited tax liability
by virtue of maintaining a permanent establishment in France.
103
<PAGE>
THE OFFER AND MERGER--U.S. FEDERAL INCOME TAXATION
The receipt of AXA ADSs and cash in exchange for shares of AXA Financial
common stock pursuant to the offer, the merger or the exercise of dissenters'
rights will be a taxable transaction for U.S. Federal income tax purposes and
may also be taxable under applicable state or local tax laws. U.S. Holders of
shares of AXA Financial common stock will generally recognize gain or loss for
U.S. Federal income tax purposes in an amount equal to the difference between
the sum of (i) the fair market value of the ADSs received (determined as of the
date of the closing of the offer or subsequent merger) plus (ii) the amount of
cash received and the U.S. Holder's tax basis in the shares of AXA Financial
common stock exchanged for the AXA ADSs and cash in the offer or merger. Gain or
loss must be determined separately for each block of shares of AXA Financial
common stock exchanged pursuant to the offer, the merger or any exercise of
dissenters' rights (for example, shares of AXA Financial common stock acquired
at the same cost in a single transaction). That gain or loss will be capital
gain or loss (provided that the shares of AXA Financial common stock are held as
capital assets), and any such capital gain or loss will be long term if the
shares of AXA Financial common stock were held for more than one year at the
time of the closing of the offer or the closing of the merger, as the case may
be.
Any AXA ADSs received in the offer or subsequent merger will have a basis
for U.S. Federal income tax purposes equal to their fair market value
(determined as of the closing of the offer or the subsequent merger, as
applicable), and a holding period beginning on the day after the closing of the
offer or the subsequent merger, as applicable.
The receipt of cash by a U.S. Holder of shares of AXA Financial common stock
may be subject to backup withholding at the rate of 31% unless the U.S. Holder
(i) is a corporation or comes within certain other exempt categories or
(ii) provides a correct taxpayer identification number and otherwise
complies with the backup withholding rules.
Backup withholding is not an additional tax; any amounts so withheld may be
credited against the U.S. Federal income tax liability of the U.S. Holder
subject to the withholding.
OWNERSHIP OF AXA ORDINARY SHARES AND ADRS--FRENCH TAXATION
TAXATION OF DIVIDENDS--WITHHOLDING TAX
France generally imposes a 25% withholding tax on dividends distributed in
cash or in the form of ordinary shares by a French corporation (such as AXA) to
shareholders who are not residents of France for French tax purposes. However,
the Treaty generally reduces the withholding tax rate to 15% on dividends paid
in cash or in the form of shares to an "Eligible U.S. Holder".
Under the Treaty, an "Eligible U.S. Holder" is a U.S. Holder whose ownership
of AXA ordinary shares or ADRs representing ADSs is not attributable to a
permanent establishment or fixed base in France and who is
(i) an individual or other non-corporate holder, or
(ii) a corporation that does not own, directly or indirectly, 10% or more of
the capital of AXA,
provided in each case that that holder:
- is a resident of the United States under the Treaty,
- is entitled to Treaty benefits under the limitation on benefits provisions
in Article 30 of the Treaty, and
- complies with the procedural rules described below.
104
<PAGE>
If a U.S. Holder is a corporation that owns, directly or indirectly, 10% or more
of the capital of AXA, the withholding tax rate will be reduced to 5%, provided
that all other requirements set forth in the preceding paragraph are met.
Pursuant to an instruction published on June 7, 1994 (which we refer to in
this prospectus as the "Instruction"), dividends paid in cash or in the form of
AXA ordinary shares to an Eligible U.S. Holder who is entitled to the "AVOIR
FISCAL" (as discussed below) will no longer be subject to the French withholding
tax of 25% (with this tax reduced at a later date to 15%, subject to filing
formalities), but will be immediately subject to the reduced rate of 15%
provided that the Holder establishes before the date of payment that he is a
resident of the United States under the Treaty.
TAXATION OF DIVIDENDS--"AVOIR FISCAL"
Under French domestic tax law, a resident of France generally is entitled to
the AVOIR FISCAL, which is a form of tax credit, in respect of a dividend
received in cash or in the form of ordinary shares from a French corporation in
an amount equal to:
- 50% of the net dividend received if the beneficiary of the distribution is
an individual;
- 40% of the net dividend received if the beneficiary of the distribution is
not an individual, increased by an amount corresponding to 20% of the
PRECOMPTE per share actually paid in cash by AXA, if any, less the 15%
withholding tax.
The French Government has proposed that, in the case of dividend
distributions to beneficiaries who are not individuals, the amount of the AVOIR
FISCAL be decreased to 25% for distributions effected in 2001 and 15% for
distributions effected in 2002.
Under French domestic law, shareholders who are not resident in France are
not eligible for the AVOIR FISCAL. Under the Treaty, however, an Eligible U.S.
Holder is generally entitled to a payment from the French Treasury that is the
equivalent of the AVOIR FISCAL. That payment is made by the French Treasury not
earlier than the January 15th following the close of the calendar year in which
the related dividend is paid, and only after receipt by the French tax
administration of a claim for that payment in accordance with the procedures
described below. However, the following are certain limitations to the
availability of the AVOIR FISCAL under the Treaty:
- The AVOIR FISCAL is generally only granted if the Eligible U.S. Holder is
subject to U.S. Federal income tax on both the dividend and the AVOIR
FISCAL.
- Partnership or a trust (other than a pension trust, a real estate
investment trust or a real estate mortgage investment conduit) in its
capacity as an Eligible U.S. Holder is entitled to the AVOIR FISCAL only
to the extent that its partners, beneficiaries or grantors, as applicable,
are themselves Eligible U.S. Holders (other than a regulated investment
company) and are themselves subject to U.S. Federal income tax on their
respective shares of both the dividend and the AVOIR FISCAL.
- The Eligible U.S. Holder, where required by the French tax administration,
must show that he or she is the beneficial owner of the AXA ordinary
shares or ADRs and that the holding of those AXA ordinary shares or ADRs
does not have as one of its principal purposes the purpose of allowing
another person to take advantage of the grant of the AVOIR FISCAL under
the Treaty.
- If the Eligible U.S. Holder is a regulated investment company, it should
not own, directly or indirectly, 10% or more of the capital of AXA. This
rule only applies if less than 20% of the shares of the regulated
investment company should be beneficially owned by persons who are neither
citizens nor residents of the United States under the Treaty.
105
<PAGE>
Under the Treaty, any payment of the AVOIR FISCAL is subject to the 15%
dividend withholding tax. Thus, for example, if a dividend of E100 were payable
by AXA to:
- an Eligible U.S. Individual Holder and the requirements are satisfied,
that holder would initially receive E85, the E100 dividend less a E15
withholding tax). That holder would also receive an additional payment
from the French Treasury of E42.5, consisting of the AVOIR FISCAL of E50,
less the withholding tax on that amount. Thus, the total net payment to
the Eligible U.S. Individual Holder would be E127.5, although, as
discussed below, that holder would recognize E150 of income for U.S.
Federal income tax purposes.
- an Eligible U.S. non Individual Holder and the requirements are satisfied,
that holder would initially receive E85, (the E100 dividend less a E15
withholding tax). That holder also would receive an additional payment
from the French Treasury of E34.02, consisting of the AVOIR FISCAL of E40,
less the 15% withholding tax on that amount. Thus, the total net payment
to the Eligible U.S. non Individual Holder would be E119.02, although, as
discussed below, that holder would recognize E140 of income for U.S.
Federal income tax purposes.
If an Eligible U.S. Holder sells AXA ordinary shares in a trade executed on
the monthly settlement market during a month during which a dividend payment
date with respect to the AXA ordinary shares occurs, generally the seller,
rather than the purchaser, will be entitled to the AVOIR FISCAL with respect to
the dividend paid on that dividend payment date.
Any amounts distributed as a dividend by AXA out of profits which:
- have not been subject to French corporate income tax at the standard
corporate income tax rate,
- are distributed from the long-term capital gains reserve, or
- were earned and taxed more than five years before the distribution,
would be subject to the "PRECOMPTE" (a French equalization tax). The PRECOMPTE
is a tax paid by the corporation at the time of a dividend distribution that is
equal to 50% of the net dividend distributed, except that, when a dividend is
distributed from the long-term capital gains reserve, the PRECOMPTE is equal to
the difference between a tax based on the regular corporate tax rate applied to
the amount of the declared dividend and the taxes previously paid by the
corporation on the income being distributed. The amount of any PRECOMPTE would
be charged to shareholders' equity as part of the dividend distribution.
A U.S. Holder that is not entitled to the full AVOIR FISCAL generally may
obtain from the French tax authorities a refund of any PRECOMPTE paid by AXA
with respect to the dividends distributed. Pursuant to the Treaty, the amount of
the PRECOMPTE refunded to U.S. residents is reduced by the 15% French
withholding tax applicable to dividends and the partial AVOIR FISCAL, if any. A
U.S. Holder is only entitled to a refund of the PRECOMPTE actually paid in cash
by AXA and is not entitled to a refund of the PRECOMPTE paid by AXA by
offsetting French and/or foreign tax credits.
A U.S. Holder entitled to the refund of the PRECOMPTE must apply for the
refund by filing a French Treasury form RF 1 B EU-NO. 5053 before the end of the
calendar year following the year in which the dividend is paid. The form and its
instructions are available from the United States Internal Revenue Service or at
the CENTRE DES IMPOTS DES NON RESIDENTS (9, rue d'Uzes, 75094 Paris Cedex 02,
France).
106
<PAGE>
TAXATION OF DIVIDENDS--PROCEDURES TO OBTAIN TREATY BENEFITS
Eligible U.S. Holders must follow certain procedures in order to be eligible
for the 15% dividend withholding tax and to receive a refund of the AVOIR FISCAL
(less the 15% withholding tax on that amount) under the Treaty.
An Eligible U.S. Holder entitled to the AVOIR FISCAL who wishes to obtain a
reduced withholding rate at source must:
- complete,
- have certified by the U.S. financial institution that is in charge of the
administration of the AXA ordinary shares or ADRs of that Eligible U.S.
Holder, and
- file with AXA or the French person in charge of the payment of dividends
on the AXA ordinary shares, such as the French paying agent, in the case
of AXA ordinary shares, or with the depositary in the case of AXA ADRs,
a French form RF1 A EU n(o) 5052, entitled "Application for Refund", before the
date of payment of the relevant dividend. An Eligible U.S. Holder that is a
regulated investment company must also be identified as such on a list provided
annually by the U.S. Internal Revenue Service to the French tax administration.
However, if an Eligible U.S. Holder is not able to complete, have certified and
file the Application for Refund before the date of payment of the dividend, that
Eligible U.S. Holder may still benefit from the Treaty if the U.S. financial
institution that is in charge of the administration of that holder's AXA
ordinary shares or ADRs provides AXA or the French paying agent in the case of
AXA ordinary shares, or the depositary in the case of AXA ADRs, with certain
information with respect to that Eligible U.S. Holder and his or her holding of
AXA ordinary shares or ADRs before the date of payment of the relevant dividend.
Whichever procedure is followed, the AVOIR FISCAL is not paid by the French
Treasury earlier than the January 15th following the close of the calendar year
in which the relevant dividend is paid.
If either of the procedures described above has not been followed before a
dividend payment date or is not available to an Eligible U.S. Holder, AXA or the
French paying agent will withhold tax from the dividend at the normal French
rate of 25%, and the Eligible U.S. Holder will be entitled to claim a refund of
the excess withholding tax and the payment of the related AVOIR FISCAL by filing
the Application for Refund with the depositary or the French paying agent early
enough to enable them to forward that application to the French tax
administration before December 31st of the year following the calendar year in
which the related dividend was paid.
The Application for Refund and instructions for its completion is available
from the U.S. Internal Revenue Service. The depositary will provide to all U.S.
Holders of AXA ADRs the applications or certificates, together with
instructions, and will arrange for the filing with the French tax authorities of
all applications and certificates completed by U.S. Holders of AXA ADRs and
returned to the depositary in sufficient time to effect the filing. See
"Description of AXA's American Depositary Shares--Dividends, Other Distributions
and Rights".
SPECIAL RULES FOR CERTAIN TAX-EXEMPT SHAREHOLDERS
Under the Treaty, special rules apply to:
- any "Eligible Pension Fund", which is a tax-exempt entity established in,
and sponsored or established by a resident of, the United States, the
exclusive purpose of which is to provide retirement or employee benefits
and which does not own, directly or indirectly, 10% or more of the capital
of AXA,
107
<PAGE>
- any "Eligible Not-For-Profit Organization", which is a tax-exempt entity
organized in the United States, the use of whose assets is limited under
U.S. Federal or state laws, both currently and upon liquidation, to the
accomplishment of the purposes that serve as the basis of its exemption
from income taxation in the United States and which does not own, directly
or indirectly, 10% or more of the capital of AXA, and
- any "Individual Holding Shares in a Retirement Plan", meaning an
individual who is a resident of the United States under the Treaty and who
owns AXA ordinary shares or ADRs through an individual retirement account,
a Keogh plan or any similar arrangement. ("Eligible Pension Funds",
"Eligible Not-For-Profit Organizations" and "Individuals Holding Shares in
a Retirement Plan" are referred to collectively in this prospectus as
"Eligible Tax-Exempt Holders".)
Provided they are entitled to Treaty benefits under the limitation on
benefits provisions in Article 30 of the Treaty, Eligible Tax-Exempt Individual
Holders are entitled to receive from the French Treasury a payment equal to
30/85ths of the gross AVOIR FISCAL (the "partial AVOIR FISCAL"), less a 15%
dividend withholding tax on that amount, notwithstanding the general requirement
described above that the individual holder be subject to U.S. tax on both the
dividend and the AVOIR FISCAL. Thus, for example, if a dividend of E100 were
payable by AXA to an Eligible Tax-Exempt Individual Holder and the requirements
of the instruction are satisfied, that individual holder would initially receive
E85 (the E100 dividend less a E15 withholding tax). The Eligible Tax-Exempt
Individual Holder would be further entitled to an additional payment from the
French Treasury of E15, consisting of the partial AVOIR FISCAL of 30/85ths of
E50, less the 15% withholding tax on that amount. When the AVOIR FISCAL is equal
to 40% of the net dividend (for instance for "Eligible Pension Funds" and
"Eligible Not-for-Profit Organizations"), Eligible Tax-Exempt Holders are
entitled to receive from the French Treasury a payment equal to 30/85ths of the
AVOIR FISCAL, less a 15% withholding tax on that amount. Thus, the total net
payment to the Eligible Tax-Exempt Individual Holder would be E100. The Eligible
Tax-Exempt Individual Holder, where required by the French tax administration,
must show that it is the beneficial owner of the AXA ordinary shares or ADRs and
that the holding of those AXA ordinary shares or ADRs does not have as one of
its principal purposes the purpose of allowing another person to take advantage
of the grant of the partial AVOIR FISCAL under the Treaty.
Tax-exempt holders generally must follow the procedures set forth above
under "--Taxation of Dividends--Procedures to Obtain Treaty Benefits".
Nevertheless, the existing French forms do not take into account the special tax
treatment applicable to Eligible Tax-Exempt Holders with respect to the payment
of the partial AVOIR FISCAL and the refund of the PRECOMPTE. Certain Eligible
Tax-Exempt Holders may also be required to provide written evidence certified by
the U.S. Internal Revenue Service of their status under U.S. Federal income tax
law. As a consequence, Eligible Tax-Exempt Holders are urged to contact their
own tax advisors with respect to the procedures to be followed to obtain Treaty
benefits.
TAX ON SALE OR REDEMPTION OF AXA ORDINARY SHARES OR ADRS
Under the Treaty, no French tax is levied on any capital gain derived from
the sale of AXA ordinary shares or ADRs representing ADSs by a U.S. Holder who:
- is a resident of the United States under the Treaty,
- is entitled to Treaty benefits under the limitation on benefits provisions
of Article 30 of the Treaty, and
108
<PAGE>
- does not have a permanent establishment in France to which the AXA
ordinary shares or ADRs are attributable to or, in the case of an
individual, who does not maintain a fixed base in France to which the AXA
ordinary shares or ADRs are effectively connected.
Under French domestic tax law, any gain realized by a shareholder on a
redemption of AXA ordinary shares by AXA generally will be treated as a dividend
and will be subject to French dividend withholding tax as described above under
"--Taxation of Dividends--Withholding Tax", unless all AXA's accumulated
earnings and profits, as determined for French tax purposes, have been
distributed to shareholders of AXA before that redemption. Any such redemption
generally would entitle the shareholders to the AVOIR FISCAL and may trigger the
PRECOMPTE, provided it is pro rata among all the shareholders of AXA. An
Eligible U.S. Holder generally would be entitled to Treaty benefits with respect
to the AVOIR FISCAL and the PRECOMPTE related to his or her gain on a redemption
of AXA ordinary shares that is treated as a dividend for French tax purposes.
FRENCH TRANSFER AND STAMP TAXES
Transfers of AXA ordinary shares and ADRs representing ADSs will not be
subject to French transfer taxes unless the transfer is effected by means of a
written agreement that is executed or enforced within France. Should such
written agreement be executed or enforced in France, it would be subject to
transfer taxes at the rate of 1%, up to a maximum of FF20,000 per transaction.
In certain cases, a stock exchange stamp tax also may be payable.
FRENCH ESTATE, GIFT AND WEALTH TAXES
A transfer of AXA ordinary shares or ADRs representing ADSs by gift by, or
by reason of death of, a U.S. Holder that would be subject to French gift or
inheritance tax under French domestic tax law will not be subject to such French
tax by reason of the Convention between the United States of America and the
French Republic for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Estates, Inheritances and Gifts, dated
November 24, 1978 unless:
- the donor or decedent is domiciled in France within the meaning of that
Convention at the time of making the gift, or at the time of his or her
death, or
- the AXA ordinary shares or ADRs were used in, or held for use in, the
conduct of business through a permanent establishment or a fixed base in
France.
Under French tax law and the Treaty, the French wealth tax generally does
not apply to U.S. Holders that are not individuals or in the case of natural
persons, who own alone or with their parents, directly or indirectly, AXA
ordinary shares or ADRs representing the right to less than 25% of AXA's
profits.
OWNERSHIP OF AXA ORDINARY SHARES AND ADRS--MATERIAL U.S. FEDERAL INCOME TAX
CONSIDERATIONS FOR U.S. SHAREHOLDERS
TAXATION OF DIVIDENDS
For U.S. Federal income tax purposes, the gross amount of a distribution by
AXA to U.S. Holders, including any amounts of French tax withheld, will be
treated as dividend income to the extent paid out of AXA's current or
accumulated earnings and profits, as determined for U.S. Federal income tax
purposes. If a U.S. Holder has the option to receive a distribution either in
cash or in the form of AXA ordinary shares, and such U.S. Holder chooses to
receive AXA ordinary shares (a "Stock Distribution"), such U.S. Holder will be
treated for purposes of the preceding sentence as having received a distribution
to the extent of the fair market value of these AXA
109
<PAGE>
ordinary shares. The gross amount of any related AVOIR FISCAL or PRECOMPTE
payment also will be treated as dividend income. That dividend income will not
be eligible for the dividend received deduction generally allowed to
corporations under Section 243 of the Code. To the extent that an amount
received by a U.S. Holder exceeds the U.S. Holder's allocable share of AXA's
current and accumulated earnings and profits, the excess will be applied first
to reduce the Holder's basis in his or her AXA ordinary shares or ADRs, and
then, any remaining excess would constitute gain from the deemed sale or
exchange of his or her AXA ordinary shares or ADRs. See "--Tax on Sale or
Exchange of AXA Ordinary Shares or ADRs" below.
For U.S. Federal income tax purposes, dividends will be taxable to the U.S.
Holder of AXA ordinary shares or ADRs outstanding on the record date established
by French law, which in the case of an annual dividend will be fixed by the
shareholders at the shareholders' meeting approving the distribution of
dividends, and in the case of an interim dividend will be fixed by the
Management Board approving the distribution of interim dividends. Any payment of
the AVOIR FISCAL or the partial AVOIR FISCAL and PRECOMPTE, plus the withholding
tax relating to those payments, will generally be included in the dividend
income of a U.S. Holder in the year in which the payment or refund is received.
The amount recognized as dividend income by a U.S. Holder will be equal to the
U.S. dollar value of the distributed euro, or, in case of a Stock Distribution,
the AXA ordinary shares, on the date of the recognition of the dividend for U.S.
Federal income tax purposes, regardless of whether the payment is in fact
converted into U.S. dollars. The euro distributed will have a tax basis equal to
their U.S. dollar value at such time. Any gain or loss realized upon a
subsequent conversion or other disposition of the French francs will be treated
as ordinary income or loss from sources within the United States.
As discussed above, payments of dividends, the AVOIR FISCAL, the partial
AVOIR FISCAL and the refund of the PRECOMPTE to a U.S. Holder will be subject to
French withholding tax. For U.S. Federal income tax purposes, a U.S. Holder may
generally elect to treat these French withholding taxes as either a deduction
from gross income or a credit against the U.S. Federal income tax liability of
that U.S. Holder. The maximum foreign tax credit allowable generally is equal to
the U.S. Holder's U.S. Federal income tax liability for the taxable year
multiplied by a fraction, the numerator of which is the U.S. Holder's taxable
income from sources without the United States and the denominator of which is
the U.S. Holder's taxable income from all sources for the taxable year. That
foreign tax credit limitation is applied separately to different "baskets" of
income. For purposes of applying the foreign tax credit limitation, dividends
are generally included in the "passive income" basket or, if received by certain
holders and certain other conditions are met, the "financial services income"
basket.
In the case of an Eligible U.S. Holder, if the full withholding tax rate of
25% is applied because, for instance, the procedures described under "--French
Taxes--Taxation of Dividends--Procedures to Obtain Treaty Benefits" are not
complied with by the dividend payment date, the refundable portion of the tax
withheld by AXA or the French paying agent, which represents the difference
between the 25% and the 15% tax rates, would not be eligible for the foreign tax
credit.
TAX ON SALE OR EXCHANGE OF AXA ORDINARY SHARES OR ADRS
For U.S. Federal income tax purposes, a U.S. Holder generally will recognize
gain or loss on any sale, exchange or other disposition of AXA ordinary shares
or ADRs representing ADSs, unless a specific nonrecognition provision applies.
That gain or loss will be measured by the difference between the U.S. dollar
value of the amount of cash, and the fair market value of any other property,
received and the U.S. Holder's tax basis in the AXA ordinary shares or the ADRs,
determined in U.S. dollars. A U.S. Holder's tax basis in the AXA ordinary shares
or the ADRs will generally equal the amount paid by that U.S. Holder for the AXA
ordinary shares or the ADRs or, in the case of AXA ordinary shares acquired by
way of Stock Distribution, the amount included in
110
<PAGE>
income at the time of the Stock Distribution. Gain or loss arising from a sale
or exchange of AXA ordinary shares or ADRs will be capital gain or loss if these
AXA ordinary shares or ADRs are held as capital assets by the U.S. Holder, and
will be short term or long term depending whether the holding period of the U.S.
Holder for these AXA ordinary shares or ADRs exceeds one year. In general, gain
from a sale or exchange of AXA ordinary shares or ADRs by a U.S. Holder will be
treated as United States source income for foreign tax credit limitation
purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under certain circumstances, a U.S. Holder who is an individual may be
subject to information reporting requirements and backup withholding at a 31%
rate on dividends received on AXA ordinary shares or ADRs representing ADSs.
This withholding generally applies only if that individual holder:
- fails to furnish his or her taxpayer identification number to the U.S.
financial institution that is in charge of the administration of that
holder's AXA ordinary shares or ADRs or any other person responsible for
the payment of dividends on the AXA ordinary shares or ADRs,
- furnishes an incorrect taxpayer identification number,
- is notified by the U.S. Internal Revenue Service that he or she has failed
to properly report payments of interest and dividends and the U.S.
Internal Revenue Service has notified AXA that that individual holder is
subject to backup withholding, or
- fails, under specified circumstances, to comply with applicable
certification requirements.
Any amount withheld from a payment to a U.S. Holder under the backup
withholding rules will be allowable as a credit against such U.S. Holder's U.S.
Federal income tax liability, provided that the required information is
furnished to the U.S. Internal Revenue Service.
U.S. Holders should consult their own tax advisor as to the application of
the U.S. Federal information reporting and backup withholding requirements to
them and their qualification, if any, for an exemption under these rules.
This discussion, which does not address any aspects of U.S. taxation other
than Federal income taxation or any state or local law relevant to U.S. Holders
of AXA ordinary shares or ADRs, is of a general nature only and is not intended
to be, and should not be construed to be, legal or tax advice to any prospective
investor and no representation with respect to the tax consequences to any
particular investor is made. DUE TO THE INDIVIDUAL NATURE OF TAX CONSEQUENCES,
U.S. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER AND OF OWNING
AND DISPOSING OF AXA ORDINARY SHARES AND ADRS REPRESENTING ADSS RECEIVED IN
THESE TRANSACTIONS, INCLUDING THE EFFECTS OF U.S. FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX CONSEQUENCES.
111
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
YOU SHOULD READ THE FOLLOWING DISCUSSION TOGETHER WITH OUR UNAUDITED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES FOR THE SIX MONTH PERIOD
ENDED JUNE 30, 2000 AND THE UNAUDITED PRO FORMA FINANCIAL INFORMATION INCLUDED
ELSEWHERE IN THIS PROSPECTUS. THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH FRENCH GAAP, WHICH DIFFERS IN
CERTAIN MATERIAL RESPECTS FROM U.S. GAAP. A SUMMARY OF THE MATERIAL DIFFERENCES
BETWEEN FRENCH GAAP AND U.S. GAAP RELEVANT TO AXA IS INCLUDED IN NOTE 28 TO OUR
AUDITED CONSOLIDATED FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE 1999 AXA
FORM 20-F, WHICH IS INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THERE HAVE
BEEN NO MATERIAL CHANGES IN ACCOUNTING PRINCIPLES FROM THOSE DESCRIBED IN
NOTE 28. FOR A DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF AXA FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, YOU SHOULD SEE
"ITEM 9--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS" INCLUDED IN THE 1999 AXA FORM 20-F.
THE UNAUDITED CONSOLIDATED FINANCIAL DATA FOR THE SIX-MONTH PERIOD ENDED
JUNE 30, 2000 INCLUDES ALL ADJUSTMENTS, CONSISTING OF NORMAL RECURRING
ADJUSTMENTS, NECESSARY FOR A FAIR STATEMENT OF THE RESULTS FOR THE UNAUDITED
INTERIM PERIOD. THE INTERIM RESULTS ARE NOT NECESSARILY INDICATIVE OF THE
RESULTS WHICH MAY BE EXPECTED FOR ANY OTHER PERIOD OR FOR THE FULL YEAR.
CERTAIN INFORMATION CONTAINED IN THE REVIEW SET FORTH BELOW AND ELSEWHERE IN
THIS PROSPECTUS INCLUDES FORWARD-LOOKING STATEMENTS THAT INVOLVE RISK AND
UNCERTAINTIES. SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS" AND "RISK
FACTORS" FOR A DISCUSSION OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THE RESULTS DESCRIBED IN OR IMPLIED BY THE FORWARD-
LOOKING STATEMENTS CONTAINED IN THIS PROSPECTUS.
OPERATING HIGHLIGHTS
AUSTRALIA. In December 1999, AXA Asia Pacific Holdings purchased the
minority interests of AXA China Region for approximately E519 million
(HK$4.1 billion). AXA China Region is AXA's life insurance subsidiary based in
Hong Kong. Subsequent to this transaction, AXA China Region was delisted from
the Hong Kong Stock Exchange. This acquisition is part of AXA's long-term
strategy of becoming a significant player in the Asia Pacific financial services
market.
Following the completion of this transaction, AXA Asia Pacific Holdings, in
which AXA has a 47% equity interest, has a 100% interest in AXA China Region.
Because the fiscal year-end reporting date for AXA Asia Pacific Holdings and its
consolidated subsidiaries is September 30, AXA's unaudited interim consolidated
operating results for the six months ended June 30, 2000 include four months of
AXA China Region's operating results on a 100% basis. Goodwill recorded in
respect of this acquisition is E295 million and is being amortized over
20 years, consistent with the estimated useful life used in the accounting for
the acquisition of AXA Asia Pacific Holdings in 1995.
JAPAN. On March 7, 2000, AXA and the shareholders of Nippon Dantai
contributed their Japanese life insurance operations to a new holding company
called AXA Nichidan Holding. This transaction valued Nippon Dantai at
E107 million (Y10.5 billion). In March 2000, AXA contributed cash of
approximately E1 billion (Y105 billion) to increase AXA Nichidan Holding's
capital. AXA's interest in AXA Nichidan Holding is 92.3%.
This acquisition is consistent with AXA's global strategy of becoming a
significant player in the world's primary insurance markets and of seizing
opportunities in distressed markets. This acquisition strengthens AXA's presence
in the Asia Pacific region, and more specifically in Japan, the world's largest
life insurance market. The Asia Pacific region will now account for
approximately
112
<PAGE>
12% of AXA's consolidated total revenues (with Japan accounting for 7%). Nippon
Dantai is Japan's thirteenth largest life insurance company and its second
largest non-mutual company. Because of its strong positioning in terms of
distribution channels and operating performance that is above the industry
average, Nippon Dantai is a good partner in the region for AXA.
The goodwill in respect of this acquisition on a preliminary basis is
approximately E1.6 billion (Y162 billion), and will be amortized over 30 years.
The year-end reporting date for AXA Nichidan Holding is September 30 and,
therefore, the operating results for the six-month period ended March 31 would
be included in AXA's consolidated operating results for the six months ended
June 30, 2000. As the acquisition of AXA Nichidan Holding occurred in
March 2000 there was no post-acquisition operating result of AXA Nichidan
Holding included in AXA's consolidated results for the six months ended
June 30, 2000. However, AXA's consolidated balance sheet at June 30, 2000
includes the opening balance sheet of AXA Nichidan Holding at March 31, 2000.
SPAIN. In June, 2000, AXA notified Banco Bilbao Vizcaya Argentaria, SA that
AXA intends to exercise its right to acquire the 30% interest of Banco Bilbao
Vizcaya Argentaria in AXA Aurora, their Spanish insurance joint venture.
Pursuant to the terms of that right, AXA has offered to acquire the interest of
Banco Bilbao Vizcaya Argentaria for E161 million. AXA and Banco Bilbao Vizcaya
Argentaria are currently negotiating the final terms and conditions of this
transaction. AXA anticipates that the acquisition will be completed prior to
December 31, 2000.
CAPITAL AND FINANCING OPERATIONS
On January 3, 2000, the E282 million 6.0% mandatorily convertible notes
issued by AXA on January 22, 1997 matured and were converted into 4.1 million
ordinary shares of AXA. As a result, shareholders' equity increased by
E282 million.
In order to finance the acquisition of AXA Nichidan Holding and the buyout
of AXA China Region's minority interests, AXA issued:
- in February 2000, E1.1 billion in subordinated convertible notes due in
2017, and
- in March 2000, E500 million in undated subordinated notes.
In June 2000, AXA raised E3.7 billion through the issuance of 30.2 million
ordinary shares with preferential subscription rights, in preparation for the
funding of the buyout of the minority interests in Sun Life & Provincial
Holdings.
Since 1994, AXA has regularly offered shares to its employees. Eligible
employees may acquire shares of AXA stock at a 20% discount to the listed
reference price or benefit from attractive financing terms that include a
leverage effect on their investment. Nearly 26,000 employees (approximately
one-third of all employees in eligible companies) in 37 countries elected to
invest in the PLAN D'ACTIONNARIAT 2000. Investments of the employees in the 2000
employee stock ownership program totaled E237 million, an increase of 110%
compared to the corresponding prior period.
OTHER HIGHLIGHTS
Following the annual general meeting of the shareholders on May 3, 2000,
Claude Bebear was appointed Chairman of the Supervisory Board of AXA. Henri de
Castries was appointed to succeed him as President of the Management Board.
113
<PAGE>
EVENTS SUBSEQUENT TO JUNE 30, 2000
UNITED KINGDOM. In July 2000, AXA acquired the outstanding minority
interests (43.8%) in Sun Life & Provincial Holdings for approximately
L2.3 billion (E3.7 billion based on an exchange rate on the date of the
acquisition). The proposed buyout was approved by the voting minority
shareholders of Sun Life & Provincial Holdings during their extraordinary
general meeting on June 20, 2000, and subsequently approved by the High Court of
Justice in England and Wales on July 10, 2000. On July 12, 2000, the transaction
was declared fully unconditional, at which time Sun Life & Provincial Holdings
was delisted from the London Stock Exchange. The transaction was completed on
July 26, 2000.
This transaction will be recorded in AXA's consolidated financial statements
for the six-month period ending December 31, 2000. Goodwill of approximately
E2 billion will be recorded in respect of the transaction and will be amortized
over 30 years.
As a result of the transaction, AXA expects that it will be able to fully
integrate Sun Life & Provincial Holdings' business within the AXA group,
particularly its e-commerce and asset management activities, and to further
capitalize on the AXA brand in the United Kingdom and Ireland.
On July 25, 2000, AXA proposed a financial reorganization relating to the
Inherited Estate of AXA Equity & Law, one of its life insurance subsidiaries in
the United Kingdom. As a consequence of the financial reorganization, a portion
of the Inherited Estate will be attributed to AXA as the shareholder, and a
portion will be allocated to policyholders in the form of policy bonuses and
cash distributions. The amount to be distributed to the shareholder will be
subject to a series of stringent safeguards and in any case may not be
distributed before 2006.
Following a review by the Financial Services Authority, which supervises
life insurance operations in the United Kingdom, this proposal has been
submitted to the relevant policyholders for approval. The proposal is subject to
the approval of policyholders holding at least 35% of the value of with-profit
policies. As of November 7, 2000, policyholders holding approximately 78% of the
value of with-profit policies had elected to accept the proposal. The proposal
is also subject to final court approval. The transaction is not expected to be
completed before January 1, 2001, at the earliest.
At December 31, 1999, the fair value of the Inherited Estate, including the
value of the portfolio and before deducting the incentive payment to be made to
policyholders who accept the proposal, was estimated at L1.7 billion
(E2.7 billion).
Assuming that the required policyholder approval is obtained, the financial
impact of this reorganization in AXA's consolidated financial statements will be
determined by the percentage of policyholders electing in favor of the proposal
and the valuation of the Inherited Estate at December 31, 2000. This
reorganization will lead to a change in accounting principles relating to U.K.
with-profit contracts and the way income is calculated for AXA's life insurance
subsidiaries in the United Kingdom and will impact shareholders' equity under
French GAAP. The impact of the financial reorganization on AXA's consolidated
results of operations, liquidity and financial condition under both French GAAP
and U.S. GAAP for future periods is currently under review.
UNITED STATES. Alliance Capital Management L.P. and Alliance Capital
Management Holding L.P., both affiliates of AXA Financial, announced on
June 21, 2000 that they had agreed to acquire the asset management company
Sanford C. Bernstein. The transaction was completed on October 2, 2000.
The aggregate consideration for the transaction was $3.5 billion and was
paid partly in cash (approximately $1.4 billion) and partly in 40.8 million of
newly issued units of limited partnership
114
<PAGE>
interest of Alliance Capital Management L.P. In June 2000, AXA Financial
purchased 32.6 million of units of limited partnership interest of Alliance
Capital Management L.P. to provide Alliance Capital with the cash portion of the
consideration. Following the consummation of this acquisition, AXA Financial
owned an approximate 53% economic interest in Alliance Capital's operations. See
"The Companies--Recent Developments" for further information. The financial
impact of this transaction is currently under review.
On August 30, 2000, AXA announced that it was selling its 71% interest in
the investment bank Donaldson, Lufkin & Jenrette and offering to buy out the
minority interests in its U.S. subsidiary AXA Financial.
- AXA Financial reached an agreement with Credit Suisse Group whereby Credit
Suisse Group would acquire AXA Financial's interest in Donaldson,
Lufkin & Jenrette. The consideration consisted of $2.4 billion plus
25.7 million shares of Credit Suisse Group. The sale was completed on
November 3, 2000. See "The Companies--Recent Developments" for further
information on this transaction.
- On October 17, 2000, AXA, AXA Merger Corp. and AXA Financial entered into
an agreement and plan of merger relating to the buyout by AXA of the
minority interests in AXA Financial. The transaction is structured as an
exchange offer followed by a second-step merger. A portion of the goodwill
in respect of this transaction will be charged directly to consolidated
shareholders' equity under French GAAP as newly issued AXA ordinary shares
in the form of ADSs will be used to partly finance the acquisition. The
remaining goodwill will be recorded as an asset and amortized over an
estimated useful life of 30 years.
CONSOLIDATED OPERATING RESULTS
The principal changes in presentation of AXA's consolidated financial
statements for the six-month period ended June 30, 2000 compared to the
six-month period ended June 30, 1999 are set out below. Data for the six months
ended June 30, 1999 have been restated for comparative purposes.
- For segment reporting purposes, the amortization of goodwill on acquired
businesses is included as a charge against income of the acquired
businesses and not the acquiring company.
- The preparation of segment activities has been revised to reflect certain
changes. The International Insurance Segment includes reinsurance and
transnational business and was formed during the second half of 1999. The
transnational business activities were previously included in the Property
and Casualty Insurance Segment in the corresponding prior period.
- In order to improve the reporting of profitability measurements for AXA's
operating units, certain general expenses that were previously charged to
the intermediate holding companies have been reallocated to the operating
units.
As a result of the sale of Donaldson, Lufkin & Jenrette to the Credit Suisse
Group, which was completed on November 3, 2000, revenues and net income from the
Other Financial Services Segment will decrease significantly in future periods.
See "The Companies--Recent Developments" and "Risk Factors--The Sale of
Donaldson, Lufkin & Jenrette may adversely affect AXA's future operating
results" for further information.
115
<PAGE>
REVENUES
Gross revenues for the six months ended June 30, 2000 totaled E41 billion,
an increase of 28.9% compared to the six months ended June 30, 1999. On a
constant exchange rate, methodological and structural basis, which we refer to
as on a comparable basis(1) , gross revenues grew by 15.3%. The table below
presents AXA's consolidated revenues by segment for the periods indicated:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR THE SIX-MONTH FOR THE YEAR
PERIOD ENDED ENDED
-------------------
GROSS PREMIUMS JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
------------------------------------------------------------------------------------------------
Life Insurance........................................... 21,448 17,218 37,091
Property and Casualty Insurance.......................... 8,396 6,912 13,593
International Insurance.................................. 2,308 1,860 3,109
-------------------------------------
TOTAL INSURANCE.......................................... 32,152 25,990 53,793
------------------------------------------------------------------------------------------------
Asset Management......................................... 1,244 858 1,928
Other Financial Services................................. 7,612 4,976 10,806
-------------------------------------
TOTAL FINANCIAL SERVICES................................. 8,856 5,834 12,735
------------------------------------------------------------------------------------------------
Holding Companies........................................ 1 -- 1
------------------------------------------------------------------------------------------------
TOTAL.................................................... 41,009 31,825 66,528
------------------------------------------------------------------------------------------------
</TABLE>
For the six months ended June 30, 2000, insurance and reinsurance activities
accounted for 78.4% of gross revenues, compared to 81.7% for the six months
ended June 30, 1999. Asset management activities and Other financial services
activities represented 3.0% and 18.6% of AXA gross revenues, respectively, for
the six months ended June 30, 2000.
For the six months ended June 30, 2000, on a comparable basis, gross
insurance premiums grew by E3 billion, a 10.9% increase as compared to the
corresponding prior period.
- The LIFE INSURANCE SEGMENT revenues increased by 13.8%, due to higher
gross premiums written in France (33.7%), the United States (13.9%) and
Belgium (26.3%), partially offset by a 7.3% decrease in the United
Kingdom. Growth in France and the United States was due to higher sales of
individual retirement savings-type products, which increased by 53.1% in
France (compared to an estimated market growth of 38%) and by 14.6% in the
United States due to the development of non-proprietary (wholesale)
distribution channels. The growth was also stimulated by the strong
performance of the stock markets and the success of separate account (unit
linked) products in Belgium, Spain and Italy. The decline in gross
premiums in the United Kingdom for the six months ended June 30, 2000 can
be attributed to exceptionally high growth in the corresponding prior
period, when new business levels were supported by intensive promotional
campaigns, and a decline in the overall market.
- The PROPERTY AND CASUALTY INSURANCE SEGMENT revenues increased by 3.6%.
Gross premiums from the German Property and Casualty Group decreased by
1.1% (the decline at Albingia, a former subsidiary of Guardian Royal
Exchange, was 5.4%). There was a slight decrease in gross premiums from
the Belgian Property and Casualty Group (0.7%) due to a
------------------------
1 On a COMPARABLE BASIS, revenues for the six months ended June 30, 2000 are
restated using the prevailing foreign currency exchange rates for the
corresponding prior period, in this case for the six months ended June 30,
1999 (CONSTANT EXCHANGE RATE BASIS) and eliminate the results of
acquisitions, disposals, business transfers (CONSTANT STRUCTURAL BASIS) and
changes in accounting principles (CONSTANT METHODOLOGICAL BASIS), in one of
the two periods being compared. In particular, consolidated revenues for
the six months ended June 30, 1999 have been restated to reflect the
consolidation of Guardian Royal Exchange as of January 1999 (on a pro forma
basis) rather than from the date of acquisition in May 1999.
116
<PAGE>
continuing decline in business at Royale Belge Re, which was put into
run-off in 1997 (Royal Belge Re stopped underwriting business in 1999).
Excluding the impact of Royale Belge Re (in run-off), gross premiums in
Belgium increased by 0.5%, primarily due to an increase in the automobile
insurance portfolio. Growth was generated by the Other Property and
Casualty Group (13.8%), particularly Spain and Italy, where gross premiums
rose by 26.6% and 19.0%, respectively, attributable to the combined effect
of premium rate increases and portfolio growth. It is expected that the
growth in gross premiums in Italy will slow down in the second half of
2000 following a tariff freeze on automobile insurance enacted by the
Italian government in March 2000.
On a comparable basis, consolidated financial services revenues for the six
months ended June 30, 2000, increased by E2.1 billion, or 36.2% as compared to
the corresponding prior period.
- ASSET MANAGEMENT revenues increased by 33.7% representing a 33.3% increase
at Alliance Capital and a 37.3% increase at AXA Investment Managers as a
result of growth in assets under management, primarily in equity mutual
funds.
- OTHER FINANCIAL SERVICES revenues increased by 36.7%, primarily due to
revenue growth of 41.9% at Donaldson, Lufkin & Jenrette, which benefited
from strong financial markets which resulted in an increase in invested
assets and consequently higher realized gains.
NET INCOME
Excluding the one-off impact of the acquisition of Guardian Royal Exchange
in 1999, AXA's consolidated net income for the six months ended June 30, 2000
totaled E1,205 million, an increase of 3.3% compared to the six months ended
June 30, 1999.
The table below presents AXA's consolidated net income by segment for the
periods indicated:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
INCLUDING MINORITY INTERESTS GROUP SHARE
-----------------------------------------------------------------------
FOR THE SIX-MONTH FOR THE SIX-MONTH
NET INCOME PERIOD ENDED FOR THE YEAR PERIOD ENDED FOR THE YEAR
(IN EURO MILLIONS) ------------------- ENDED ------------------- ENDED
JUNE 30, JUNE 30, DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31,
2000 1999 1999 2000 1999 1999
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------
Life Insurance........................... 757 789 1,521 584 570 1,112
Property and Casualty Insurance.......... 287 401 640 324 362 571
International Insurance.................. 61 24 (47) 58 19 (51)
-----------------------------------------------------------------------
TOTAL Insurance.......................... 1,105 1,214 2,114 966 951 1,632
------------------------------------------------------------------------------------------------------------------
Asset Management......................... 286 132 338 81 33 84
Other Financial Services................. 451 295 543 208 144 221
-----------------------------------------------------------------------
TOTAL Financial services................. 737 427 882 289 177 305
------------------------------------------------------------------------------------------------------------------
Holding Companies........................ (77) 238 (117) (51) 341 84
------------------------------------------------------------------------------------------------------------------
TOTAL.................................... 1,765 1,879 2,879 1,205 1,469 2,021
Impact of Guardian Royal Exchange(a)..... -- (147) 53 -- (302) (156)
------------------------------------------------------------------------------------------------------------------
TOTAL excluding impact of Guardian Royal
Exchange............................... 1,765 1,732 2,932 1,205 1,167 1,865
------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Net income for the year ended December 31, 1999 and for the six months
ended June 30, 1999 includes a positive one-off impact in connection with the
acquisition of Guardian Royal Exchange in May 1999, which includes (i) a
dilution gain of E503 million, net group share, recorded by AXA due to the
decrease in its ownership interest in Sun Life & Provincial Holdings, which
issued ordinary shares to finance the acquisition of Guardian Royal Exchange,
(ii) the exceptional amortization of goodwill relating to inadequacies in the
property and casualty insurance claims reserves in respect of the Guardian Royal
Exchange operations in the United Kingdom, Ireland and its branch operations in
Portugal (E329 million, or E186 million, group share), and (iii) restructuring
provisions of E15 million, net group share.
117
<PAGE>
At constant exchange rates, the results for the six months ended June 30,
2000 would have been reduced by E43 million.
For the six months ended June 30, 1999, AXA's net income reflected certain
non-recurring material events which accounted for E244 million excluding the
impact of the acquisition of Guardian Royal Exchange. These non-recurring events
included the gain on the initial public offering of a new class of DLJDIRECT
common stock, as well as realized gains by AXA Royale Belge and AXA France
Assurance.
For the six months ended June 30, 2000, AXA's net income reflects the
following non-recurring events (in euro millions), which represent a net profit
of E18 million, group share:
<TABLE>
<S> <C>
- Increase in property and casualty insurance claims
reserves in the United Kingdom and Ireland, including a
provision of E11 million due to a change in U.K.
legislation concerning non-life insurance bodily injury
claims -76
- Gain on the sale of AXA stock held by the French Property
and Casualty Group +60
- Release of a real estate temporary valuation allowance
held by AXA (holding company) +81
- Additional costs attributable to the December 1999 storms
in Western Europe, for which the provision at December 31,
1999 was E106 million (net group share) -47
----
NET
IMPACT +18
====
</TABLE>
SHAREHOLDERS' EQUITY
At June 30, 2000, AXA's consolidated shareholders' equity including minority
interests totaled E29,727 million, of which the group share was
E21,385 million. The change in shareholders' equity since December 31, 1999 is
presented in the table below:
<TABLE>
<CAPTION>
CONSOLIDATED SHAREHOLDERS' EQUITY IN EURO MILLIONS IN MILLIONS OF SHARES
--------------------------------- ---------------- ---------------------
<S> <C> <C>
AT DECEMBER 31, 1999..................................... 16,357 356.3
- Capital increase with preferential subscription rights
(registered June 15, 2000)............................. 3,654 30.2
- Other capital increases................................ 521 6.6
- Impact of foreign currency fluctuations................ 344 --
- Payment of cash dividends.............................. (713) --
- Other.................................................. 17 --
------ -----
AT JUNE 30, 2000 (BEFORE NET INCOME FOR THE PERIOD)...... 20,180 393.1
- Net income for the six months ended June 30, 2000...... 1,205 --
------ -----
AT JUNE 30, 2000 (INCLUDING NET INCOME FOR THE PERIOD)... 21,385 393.1
====== =====
</TABLE>
SHAREHOLDER VALUE
Based on the weighted average number of ordinary shares (363.3 million
shares at June 30, 2000 compared to 352.2 million at June 30, 1999), basic net
income per ordinary share for the six months ended June 30, 2000 was E3.32
compared to E3.31 for the corresponding period in 1999 (excluding the one-off
impact of Guardian Royal Exchange in 1999). For the six months ended June 30,
2000, diluted net income per ordinary share increased by 0.4% to E3.11, compared
to E3.10 for the corresponding prior period (excluding the one-off impact of
Guardian Royal Exchange in 1999).
118
<PAGE>
For the six months ended June 30, 2000, on an annualized basis, the return
on shareholders' equity(2) was 14.2% compared to 13.4% for the year ended
December 31, 1999 (excluding the impact of Guardian Royal Exchange).
Annualized return on shareholders' equity excluding goodwill,(3) on an
annualized basis, was 17.8% for the six months ended June 30, 2000 and for the
year ended December 31, 1999 (excluding the impact of Guardian Royal Exchange).
Excluding the impact of non-recurring material events and the impact of
Guardian Royal Exchange in 1999, basic net income per ordinary share for the six
months ended June 30, 2000 was E3.27 compared to E2.62 for the corresponding
period of 1999 and diluted net income per ordinary share was E3.06 compared to
E2.45 for the corresponding prior period, an increase of 25.1%.
------------------------
2 Based on annualized net income to average consolidated shareholders' equity,
excluding the respective period's net income.
3 The ratio of annualized net income (group share), excluding goodwill
amortization, to average shareholders' equity for the period, before income
appropriation and excluding goodwill.
119
<PAGE>
LIFE INSURANCE SEGMENT
The following tables present the gross premiums and net income attributable
to AXA's Life Insurance Segment for the periods Indicated:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR THE SIX-MONTH FOR THE YEAR
PERIOD ENDED ENDED
-------------------
GROSS PREMIUMS JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
------------------------------------------------------------------------------------------------
France................................................... 6,485 4,777 10,555
United States............................................ 6,402 5,046 10,777
United Kingdom........................................... 3,952 3,474 7,205
Asia/Pacific............................................. 1,574 1,301 2,859
Germany.................................................. 1,374 1,255 2,757
Belgium.................................................. 512 410 912
Other countries.......................................... 1,151 956 2,025
------------------------------------------------------------------------------------------------
TOTAL.................................................... 21,448 17,218 37,091
------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
INCLUDING MINORITY INTERESTS GROUP SHARE
-----------------------------------------------------------------------
FOR THE SIX-MONTH FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR PERIOD ENDED FOR THE YEAR
------------------- ENDED ------------------- ENDED
NET INCOME JUNE 30, JUNE 30, DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999 2000 1999 1999
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
France............................... 215 145 332 215 145 331
United States........................ 242 237 465 141 137 270
United Kingdom....................... 138 157 317 77 104 194
Asia/Pacific......................... -- 93 120 (6) 32 38
Germany.............................. 10 9 18 8 6 13
Belgium.............................. 87 89 186 87 89 186
Other countries...................... 66 59 83 62 57 81
--------------------------------------------------------------------------------------------------------------
TOTAL................................ 757 789 1,521 584 570 1,112
--------------------------------------------------------------------------------------------------------------
</TABLE>
FRENCH LIFE INSURANCE GROUP
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR THE SIX-MONTH FOR THE YEAR
PERIOD ENDED ENDED
-------------------
JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
------------------------------------------------------------------------------------------------
Gross premiums........................................... 6,485 4,777 10,555
Net income (group share)................................. 215 145 331
------------------------------------------------------------------------------------------------
</TABLE>
Excluding the transfer of the bodily injury portfolio from the property and
casualty insurance companies which contributed gross premiums of E72 million,
gross premiums increased by 33.7% on a constant structural basis.
The increase in gross premiums for the six months ended June 30, 2000 is
attributable to 53.1% growth in individual retirement savings-type products and
29.1% growth in group retirement products, compared to total net growth for
these products of 4.3% for the six months ended June 30, 1999 and of 9.1% for
the year ended December 31, 1999. Sales growth was significant
120
<PAGE>
particularly in separate account (unit linked) products due to the continuance
of favorable investment market conditions. Separate account products represented
approximately 58% of individual retirement savings gross premiums for the six
months ended June 30, 2000, compared to 45% for the year ended December 31,
1999, and 71% of new business, compared to 49% for the six months ended
June 30, 1999.
The E70 million increase in the French Life Insurance Group's contribution
to AXA's consolidated net income for the six months ended June 30, 2000 as
compared to the corresponding period in the previous year is attributable to the
following:
- a E38 million increase in the net investment result (after tax) primarily
related to an increase of E16 million attributable to an increase in
invested assets resulting in increased investment income earned, and a
E10 million increase in realized gains in the group life business,
- a E65 million increase in the insurance technical result(4) primarily due
to:
- a significant increase in the group life insurance technical result,
reflecting a favorable loss reserve development (E12 million after tax) in
the first six months of 2000, compared with an unfavorable loss reserve
development generated in the first six months of 1999 due to a change in
the discount rate used to calculate insurance liabilities (E7 million
after tax),
- business growth, principally in savings-related products, and
- a E39 million after tax increase in general expenses(5) related to growth
in new business, with commissions paid to intermediaries up by
E39 million, or 27.6%, as compared to the corresponding prior period. The
250 basis point improvement in the ratio of general expenses to gross
premiums (12.0% for the six months ended June 30, 2000) was due to an
increase in sales productivity and a change in the product mix. For
savings-related products, the annualized ratio of general expenses to
insurance reserves for the six months ended June 30, 2000 was 1.42%,
compared to 1.46% for the corresponding prior period. For all life
insurance business, the ratio for the six months ended June 30, 2000 was
1.94% compared to 1.92% for the corresponding prior period.
U.S. LIFE INSURANCE GROUP(6)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR THE SIX-MONTH FOR THE YEAR
PERIOD ENDED ENDED
-------------------
JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
------------------------------------------------------------------------------------------------
Gross premiums........................................... 6,402 5,046 10,777
Net income (group share)................................. 141 137 270
------------------------------------------------------------------------------------------------
AVERAGE EXCHANGE RATE (EURO/$)........................... 1.04 0.92 0.94
------------------------------------------------------------------------------------------------
</TABLE>
------------------------
4 Insurance technical result is a term used by AXA in its life insurance
operations and represents the difference between earned premiums and the
change in life insurance reserves (excluding interest and bonuses credited
to policyholders), and includes claims handling expenses.
5 General expenses represent acquisition costs and administrative expenses
incurred (excluding acquisition costs which have been deferred and will be
amortized over the contract term).
6 In 1999 there was an intra-group transaction which resulted in a
reclassification of E51 million between general expenses and net investment
result with no impact to net income.
121
<PAGE>
On a constant exchange rate basis, gross premiums increased by 13.9% for the
six months ended June 30, 2000. The growth recorded in the first quarter 2000
(22.1%) was followed by a slowdown in the second quarter 2000 (4.3%) due to
uncertainty arising from investment market volatility. Gross premiums from
individual retirement savings-type products, which accounted for 62% of gross
premiums, increased by 14.6% due to the significant growth recorded by the
non-proprietary wholesale distribution network (44% growth related to brokers,
financial advisors and banks versus 3.1% growth related to the agency force).
Gross premiums from individual life insurance products (which accounted for
22% of gross premiums) increased by 1.9%. Gross premiums from other products
(which accounted for 16% of gross premiums) increased by 33% given the high
level of written premiums by institutions.
The U.S. Life Insurance Group's contribution to AXA's consolidated net
income was E141 million, an increase of E4 million compared to the six months
ended June 30, 1999. This increase is mainly attributable to the appreciation of
the U.S. dollar to the euro between the two periods which contributed
E17 million and the increase in AXA's ownership interest, to 58.5% compared to
57.7% at June 30, 1999 as a result of AXA Financial's stock repurchase program,
which contributed E2 million. On a comparable basis, the contribution to AXA's
net income decreased by E15 million. Excluding non-recurring events that
impacted the six months results ended June 30, 1999 (the E51 million gain
realized on the initial public offering of DLJDIRECT tracking stock and an
exceptional writedown of deferred acquisition costs of E44 million related to
revised future cash flow estimates), the decrease was E8 million, primarily due
to the following events:
- A decrease in the net investment result of E14 million (group share),
principally due to realized losses on high yield bonds which, contrary to
1999, were not offset by gains realized on other assets. These losses were
partially offset by an increase in investment income attributable to
higher returns on investment, particularly on equity securities, below
grade bonds and short-term investments.
- An improvement in the insurance technical result (E32 million, group
share). The significant increase in management fees on separate account
products was attributable to growth in portfolio value due to both market
appreciation and new business, partially offset by a deterioration in the
insurance technical result of the health insurance line and a less
favorable balance on reinsurance ceded.
- An increase in general expenses of E24 million, group share, resulting
primarily from higher expenditures related to strategic initiatives and
business development-related distribution costs. The ratio of general
expenses to gross premiums deteriorated, from 12.9% for the six months
ended June 30, 1999 to 14.1% for the corresponding period in 2000. The
annualized ratio of general expenses to gross insurance reserves was 1.90%
for the six months ended June 30, 2000 compared to 1.56% for the
corresponding period in the prior year. These ratios do not include the
portion of IT-related costs which were capitalized (E55 million for the
six months ended June 30, 2000 versus E27 million for the same period in
the prior year).
122
<PAGE>
U.K. LIFE INSURANCE GROUP
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD ENDED
---------------------------------- FOR THE YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999 1999
PRO FORMA(A)
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
Gross premiums............................... 3,952 3,474 3,807 7,205
Net income (group share)..................... 77 104 104 194
------------------------------------------------------------------------------------------------------
Average exchange rate (Euro/L)............... 1.63 1.49 1.49 1.52
------------------------------------------------------------------------------------------------------
</TABLE>
(a) The gross premiums and net income for the six months ended June 30, 1999
includes two months of post-acquisition operating results of the Guardian
Royal Exchange operations acquired in May 1999. The pro forma column for the
six months ended June 30, 1999 reflects the gross premiums and net income
for the six months ended June 30 1999 as if AXA had acquired the Guardian
Royal Exchange operations on January 1, 1999. There was no net income or
loss derived from the operations of Guardian Royal Exchange for the first
four months in 1999.
Gross premiums written by AXA Sun Life totaled E3,377 million, while gross
health premiums written by the PPP Healthcare Group were E575 million. On a
comparable basis, gross premiums from life insurance operations decreased by
8.4%, primarily due to a high level of new with-profit business written in the
six months ended June 30, 1999 as a result of promotional campaigns during that
period which did not exist during the first six-month period ended June 30,
2000. On a comparable basis, gross health insurance premiums remained unchanged,
with the increase in group health product portfolio offset by a reduction in the
individual health product portfolio.
The contribution to AXA's net income (net group share) for the six months
ended June 30, 2000 was E74 million from life insurance business and E3 million
from the healthcare business.
On a constant exchange rate basis, excluding the impact of the sale by AXA
Sun Life of its equity interest in PanEuroLife in 1999 (E7 million, net group
share), the contribution of the U.K. Life Insurance Group to AXA's consolidated
net income decreased by E12 million, primarily attributable to the following
events:
- Due to a low level of new business, general expenses had a negative impact
on net income (decrease of E24 million, net group share). The ratio of
general expenses to gross premiums increased by 140 basis points to 13.9%
at June 30, 2000. The annualized ratio of general expenses to insurance
reserves improved, 1.34% for the six months ended June 30, 2000 compared
to 1.42% for the corresponding prior year. Insurance reserves increased
more than general expenses due to an increase in market value of assets
relating to the separate account (unit-linked) products.
- Due to changes in tax regulations in 1999 whereby the tax rate decreased
from 31% to 30%, AXA Sun Life released a deferred tax provision of
E8 million for the six months ending June 30, 1999. For the six months
ended June 30, 2000, AXA Sun Life has been impacted adversely by a new tax
treatment for savings products, resulting in a higher tax expense for the
shareholder (E8 million).
- An increase in fees on managed assets of E11 million, net group share due
to growth in assets under management and the market value of these assets.
- An additional provision for pension misselling established to settle
related liabilities arising from a review of all past business involving
transfers from employer-sponsored pension plans to personal pension
products offered by the insurer (E6 million, net group share). The level
of the additional provision recorded for the six months ended June 30,
2000 was lower than the comparable provision recorded in the corresponding
prior period.
- An increase in realized gains (E6 million, net group share).
123
<PAGE>
The health insurance contribution to AXA's consolidated net income was
unchanged as a E2 million increase in realized gains was offset by a 150 basis
point deterioration in the claims ratio, net of reinsurance, due to the
strengthening of the reserve established to cover the settlement of outstanding
claims with hospitals and a still high claims ratio on group business.
ASIA/PACIFIC LIFE INSURANCE GROUP
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED
------------------- FOR THE YEAR ENDED
JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------
Gross premiums........................................... 1,574 1,301 2,859
Net income (group share)................................. (6) 32 38
---------------------------------------------------------------------------------------------------
</TABLE>
The following table presents information on gross premiums for the
Asia/Pacific Life Insurance Group for the periods indicated:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED
------------------- FOR THE YEAR ENDED
GROSS PREMIUMS JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------
Australia-New Zealand.................................... 1,036 807 1,810
Hong Kong................................................ 393 351 742
Korea.................................................... 49 42 114
Japan(a)................................................. 55 58 133
Singapore................................................ 40 43 59
China.................................................... 1 -- 1
---------------------------------------------------------------------------------------------------
TOTAL.................................................... 1,574 1,301 2,859
---------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes three months of gross premiums in the six months to June 30, 2000
as compared to six months of gross premiums in the six months to June 30,
1999 following a change in reporting period from December 31 to
September 30.
Gross premiums in Australia and New Zealand increased by 11.7% on a constant
exchange rate basis. Retirement savings premiums increased by 14.3% due to a
more competitive product offering and health insurance premiums increased by
6.4% due to government incentives encouraging consumers to take out private
medical insurance.
On a constant exchange rate basis, gross premiums written by AXA China
Region (Hong Kong) decreased by 1%. Gross premiums on group retirement products
decreased by 17.4% primarily due to two factors: (i) several large single
premium contracts were issued in the first six months of 1999, and (ii) the
market is currently waiting for the launch of mandatory pension funds.
Individual savings-related and health products, which accounted for 76% of total
premiums, increased by 4.9% primarily due to an increase in average premiums in
the portfolio.
124
<PAGE>
The following table presents information on net income for the Asia/Pacific
Life Insurance Group for the periods indicated:
<TABLE>
------------------------------------------------------------------------------------------------------------
INCLUDING MINORITY INTERESTS GROUP SHARE
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOR THE SIX-MONTH FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR PERIOD ENDED FOR THE YEAR
------------------- ENDED ------------------- ENDED
NET INCOME JUNE 30, JUNE 30, DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999 2000 1999 1999
------------------------------------------------------------------------------------------------------------
Australia-New Zealand........ (45) 49 77 (23) 22 37
Hong Kong.................... 51 50 64 23 16 19
Korea........................ 3 4 9 3 4 9
Japan (a).................... (10) (15) (28) (9) (15) (28)
Singapore.................... 3 5 3 1 5 3
China........................ (2) -- (5) (1) -- (2)
------------------------------------------------------------------------------------------------------------
TOTAL........................ -- 93 120 (6) 32 38
------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes three months of gross premiums in the six months to June 30, 2000
as compared to six months of gross premiums in the six months to June 30,
1999 due to a change in reporting period from December 31 to September 30
following the acquisition of Nippon Dantai in March 2000.
AUSTRALIA AND NEW ZEALAND
On a constant exchange rate basis, the contribution to AXA's consolidated
net income (group share) was a loss of E46 million. The operating result for the
six months ended June 30, 1999 benefited from a E10 million gain on the sale of
equity interests. Excluding this item, the deterioration of the operating result
was due to:
- a decrease in the net investment result (net of interest credited to
policyholders and policyholder participation in profits) of E20 million
(group share), due to a deterioration in the financial markets in the
first six months of 2000.
- a stable insurance technical result, primarily attributable to surrender
charges from general account policyholders switching to separate account
(unit-linked) products, offset by the deterioration in the disability
claims ratio, where the company experienced significant unfavorable loss
development (E4 million, group share).
- a E9 million (group share) increase in general expenses primarily due to a
E8 million (group share) provision for restructuring (compared to
E2 million at June 30, 1999). The annualized ratio of general expenses to
insurance reserves was 4.58% for the six months ended June 30, 2000
compared to 3.91% for the corresponding prior period.
HONG KONG
The E7 million increase in AXA China Region's contribution to AXA's
consolidated net income was due primarily to the increase in AXA's ownership,
from 34.7% to 47.1%, following the buyout of minority interests in
December 1999 by AXA Australia. On a constant exchange rate and structural
basis, net income remained unchanged.
The net investment result declined by E6 million (group share). In the first
half of 2000, AXA China Region realized significant losses on its bond portfolio
(E8 million, group share), partially offset by higher investment income earned.
In addition, due to increases in interest rates, AXA China Region has revised
certain assumptions used to estimate future cash flows on business in its
insurance portfolio (value of purchased business inforce). The change in
assumptions increased its contribution to net income (group share) by
E6 million.
125
<PAGE>
SOUTH KOREA
On a constant exchange rate basis, Dongbu AXA Life's contribution to AXA's
consolidated net income decreased by E1 million due principally to a decline in
the net investment result related to lower interest rates.
JAPAN
The contribution to AXA's net income for the six months ended June 30, 2000
does not reflect the acquisition of Nippon Dantai and relates only to AXA Life
Japan for the period from January 1 to March 31, 2000. Following the Nippon
Dantai acquisition, there was a change in the reporting date of AXA Life Japan
from December 31 to September 30. AXA Life Japan had a loss of E9 million due to
the high general expenses that are characteristic of a business in the
development phase that has grown sharply since it began operations. The
E15 million loss reported for the six months ended June 30, 1999 was for two
quarters.
SINGAPORE
The contribution to AXA's net income decreased by E4 million due to:
- a reduction in AXA's ownership of AXA Life Singapore from 100% to 47.1%
following the transfer of this operating unit on October 1, 1999 to AXA
Asia Pacific Holdings.
- significant realized capital gains (E2 million, group share) for the six
months ended June 30, 1999.
CHINA
In China, the net loss (group share) of E1 million was primarily due to the
high general expenses that are characteristic of an operating unit in the
development phase.
GERMAN LIFE INSURANCE GROUP
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR
------------------- ENDED
JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
Gross premiums.............................................. 1,374 1,255 2,757
Net income (group share).................................... 8 6 13
------------------------------------------------------------------------------------------------
</TABLE>
On a comparable basis, gross life insurance premiums increased by 1.8%,
while gross health insurance premiums increased by 8.2%. Growth in the life
insurance business was primarily due to the success of separate account (unit
linked) products which have increased by 151% due to strong market demand for
savings products. Separate acount products accounted for 4% of gross premiums.
On a comparable basis, the contribution to AXA's net income for the six
months ended June 30, 2000 increased by E1 million compared to the corresponding
prior period.
The contribution from the life insurance business to AXA's consolidated net
income increased by E2 million. Since the contribution to net income by Albingia
(a former subsidiary of Guardian
126
<PAGE>
Royal Exchange) was neutral in the six months ended June 30, 2000 and 1999, the
increase in life insurance business is attributable to AXA Colonia as described
below:
- The insurance technical result increased by E39 million before tax, in
particular, relating to a decrease in the level of insurance reserves
established in the period, in line with the 35.7% decline in new single
premium business.
- The investment result increased by E99 million before tax due to the high
level of dividends received in respect of mutual funds during the six
months ended June 30, 2000.
- The two items above were offset by the increase in the insurance reserves
deriving from interest credited and bonuses credited to policy holders of
E112 million due to positive investment result and insurance technical
result.
- Acquisition and administrative expenses increased by E25 million (before
tax) due to the rise in new business and a E3 million charge relating to
the Holocaust matter. Excluding Albingia(7), the ratio of general expenses
to gross premiums increased slightly, from 16.0% to 17.9%, while the
annualized ratio of general expenses to insurance reserves rose from 1.68%
to 1.78%.
The contribution from the health insurance business to AXA's consolidated
net income declined by E1 million due principally to a deterioration in the
claims ratio (E13 million), partly offset by an improvement in the net
investment result (E9 million) related to higher income generated by bonds and
equities. General expenses were stable. The ratio of general expenses to gross
premiums decreased slightly (from 24.8% to 24.2%) due to an increase in
premiums. Tax expense decreased by E3 million.
BELGIAN LIFE INSURANCE GROUP
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX-MONTH FOR THE YEAR
PERIOD ENDED ENDED
------------------- DECEMBER
JUNE 30, JUNE 30, 31,
(IN EURO MILLIONS) 2000 1999 1999
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
Gross premiums.............................................. 512 410 912
Net income (group share).................................... 87 89 186
------------------------------------------------------------------------------------------------
</TABLE>
On a comparable basis, gross premiums increased by 26.3%. The gross premiums
in individual life business, which accounted for 71% of gross premiums,
increased by 28% partly due to growth in separate account (unit linked) products
of 131%. Separate account (unit linked) products represent approximately 35% of
all individual life insurance premiums written. The increase was also
attributable to a broader distribution of savings products via the banking
network and brokers (38%). This increase was partially offset by an 8% decline
in personal protection products. The gross premiums in group life business,
which accounted for 29% of gross premiums, increased by 16% due to higher sales
of segregated fund products.
On a constant methodological basis for allocating the tax expense between
the life insurance and property and casualty insurance segments, net income
decreased by E15 million due primarily to a decline in the net investment
result. The level of capital gains on equity decreased by E23 million for the
six months ended June 30, 2000, partially offset by a reduction in the provision
for mortgage loans (E15 million). Investment income also declined by
E4 million. The level of capital gains was particularly high in the six months
ended June 30, 1999 and dividends paid to shareholders have reduced the
investment base. General expenses were stable despite significant
------------------------
7 Including Albingia, these ratios would be 17.4% and 1.66%, respectively, for
the six months ended June 30, 2000
127
<PAGE>
business growth due to the positive effects of the restructuring program
initiated in 1999 and the harmonization of accounting policies between AXA and
former Royale Belge companies. As a result, the ratio of general expenses to
gross premiums improved by 340 basis points to 14.8% and the ratio of general
expenses to insurance reserves decreased from 1.89% to 1.77% on an annualized
basis.
OTHER LIFE INSURANCE GROUP
The following table shows gross premiums by country for the Other Life
Insurance Group for the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR
GROSS PREMIUMS ------------------- ENDED
JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Netherlands................................................. 526 481 875
Spain....................................................... 230 166 333
Italy....................................................... 154 107 343
Luxembourg.................................................. 35 42 104
Others (a).................................................. 204 160 371
------------------------------------------------------------------------------------------------
TOTAL....................................................... 1,151 956 2,025
------------------------------------------------------------------------------------------------
</TABLE>
(a) Portugal, Switzerland, Canada, Austria, Hungary, Morocco and Turkey.
On a comparable basis, gross premiums underwritten by the Other Life
Insurance Group increased by 16.1% due to strong growth in Italy (44.3%), Spain
(38.7%) and the Netherlands (9.5%), where strong investment market performance
has contributed to the success of separate account (unit linked) products.
The following table shows net income by country for the Other Life Insurance
Group for the periods indicated:
--------------------------------------------------------------------------------
<TABLE>
INCLUDING MINORITY INTERESTS GROUP SHARE
--------------------------------- ---------------------------------
FOR THE FOR THE
FOR THE SIX-MONTH YEAR FOR THE SIX-MONTH YEAR
PERIOD ENDED ENDED PERIOD ENDED ENDED
------------------- DECEMBER ------------------- DECEMBER
NET INCOME JUNE 30, JUNE 30, 31, JUNE 30, JUNE 30, 31,
(IN EURO MILLIONS) 2000 1999 1999 2000 1999 1999
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
Netherlands.......................... 28 30 40 28 29 40
Spain................................ 11 7 1 7 5 1
Italy................................ 17 15 25 17 15 25
Luxembourg........................... -- 2 2 -- 2 2
Others (a)........................... 10 6 15 9 5 13
------------------------------------------------------------------------------------------------------------
TOTAL................................ 66 59 83 62 57 81
------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Portugal, Switzerland, Canada, Austria, Hungary, Morocco and Turkey.
THE NETHERLANDS. The life insurance business contribution totaled
E26 million while the health insurance business contribution was E2 million. The
E6 million (group share) decrease in the life insurance contribution was
principally due to a E3 million decrease in acquisition costs deferred,
following the adoption of a new cost allocation model at the end of 1999, and a
E2 million decrease in the net investment result. The E4 million increase in the
health insurance business contribution can be attributed to an improvement in
the claims ratio following premium rate increases.
128
<PAGE>
SPAIN. The E2 million increase was primarily due to an improvement in the
insurance technical result (E2 million, group share) deriving from surrender
charges relating to policyholders switching their investments in traditional
savings products to separate account (unit linked) products.
ITALY. Excluding the impact of the deconsolidation of Eurovita effective
January 1, 2000, the contribution to AXA's consolidated net income increased by
E6 million. This increase is mainly attributable to an improvement in the
insurance technical result (E7 million net of tax) resulting in particular from
the release of a E3 million provision for interest rates risks established at
year-end 1999. The net investment result was stable, with the increase in
realized gains on equity investments (E5 million) during the first six months of
2000 identical to the release of the provision on South American government
bonds recorded at June 30, 1999.
LUXEMBOURG. The contribution to consolidated net income declined due to an
increase in bonuses to policyholders.
PORTUGAL. The contribution to AXA's consolidated net income decreased by
E1 million due to higher fixed costs, including promotional expenses in
connection with new universal life contracts.
AUSTRIA AND HUNGARY. The contribution to AXA's consolidated net income was
E1.5 million, an increase of E1 million compared to the corresponding prior
period. The increase was mainly due to lower rates of interest credited to
policyholders and a reduction in general expenses.
PROPERTY AND CASUALTY INSURANCE SEGMENT
The tables below present the gross premiums and net income attributable to
AXA's Property and Casualty Insurance Segment for the periods indicated.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
GROSS PREMIUMS PERIOD ENDED FOR THE YEAR
(IN EURO MILLIONS) ------------------- ENDED
JUNE 30, JUNE 30, DECEMBER 31,
2000 1999 1999
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
France...................................................... 2,136 2,219 3,926
Germany..................................................... 1,899 1,573 2,766
United Kingdom.............................................. 1,376 777 2,008
Belgium..................................................... 685 701 1,285
Other countries............................................. 2,301 1,642 3,607
------------------------------------------------------------------------------------------------
TOTAL....................................................... 8,396 6,912 13,593
------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
INCLUDING MINORITY INTERESTS GROUP SHARE
--------------------------------- ---------------------------------
FOR THE FOR THE
FOR THE SIX-MONTH YEAR FOR THE SIX-MONTH YEAR
PERIOD ENDED ENDED PERIOD ENDED ENDED
------------------- DECEMBER ------------------- DECEMBER
NET INCOME JUNE 30, JUNE 30, 31, JUNE 30, JUNE 30, 31,
(IN EURO MILLIONS) 2000 1999 1999 2000 1999 1999
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
France............................... 220 122 244 220 122 244
Germany.............................. 55 59 73 48 39 48
United Kingdom....................... (94) (4) 7 (53) -- 5
Belgium.............................. 84 162 240 84 162 239
Other countries...................... 22 62 76 26 39 34
------------------------------------------------------------------------------------------------------------
TOTAL................................ 287 401 640 324 362 571
------------------------------------------------------------------------------------------------------------
</TABLE>
129
<PAGE>
FRENCH PROPERTY AND CASUALTY INSURANCE GROUP
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR
------------------- ENDED
JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
Gross premiums.............................................. 2,136 2,219 3,926
Net income (group share).................................... 220 122 244
------------------------------------------------------------------------------------------------
</TABLE>
Excluding the transfer of the bodily injury portfolio of business to life
insurance companies (E71 million), and the E12 million negative impact from a
change in methodology concerning Natio Assurance, which was formerly fully
consolidated and is now proportionately consolidated, gross property and
casualty premiums were stable.
The deterioration of automobile insurance gross premiums (0.8% decrease
compared to the six months ended June 30, 1999) slowed significantly despite
market conditions which remained difficult. The premium rate increases being
gradually implemented should help offset the decrease in property insurance
business (2.2% decrease compared to the six months ended June 30, 1999). The
decrease in automobile and property insurance lines was offset by the increase
in construction insurance gross premiums (6.7%, primarily due to higher gross
premiums in structural damage insurance) and the 300 basis point increase in
natural catastrophe insurance premium rates. Direct Assurance recorded growth in
gross premiums of 33.6% for the six months ended June 30, 2000 compared to the
six months ended June 30, 1999.
The E98 million increase in the contribution of the French Property and
Casualty Group to AXA's consolidated net income (group share) was principally
due to:
- a E160 million increase in the net investment result (group share, after
tax), including E148 million (after tax) due to an increase in realized
gains on the sale of equity securities, including E60 million on the sale
of treasury stock.
- a E41 million decline in the underwriting result (net of reinsurance,
after tax), partly due to a 450 basis point increase in the claims ratio
to 84.5% resulting from:
- the current accident year claims ratio, net of reinsurance, remaining
stable at 82% due to better claims ratio management and the first
positive effects of the harmonization of personal lines, and
- a E39 million increase in insurance reserves (after tax, reinsurance
and the release of catastrophe equalization reserves) or E62 million
increase (before tax and after reinsurance and the release of
catastrophe equalization reserves). At June 30, 2000, the total cost of
claims related to the aforementioned storms was E124 million after tax
(E200 million before tax). The catastrophe equalization reserve was
increased by E18 million to cover future risks of this type.
- an increase in the ratio of general expenses to written premiums of 90
basis points to 27.4%.
- the financial statements for the six months ended June 30, 1999 included a
tax savings of E16 million recorded in respect of the capital loss on the
sale of Lucia, a former subsidiary, in June 1999.
130
<PAGE>
GERMAN PROPERTY AND CASUALTY INSURANCE GROUP
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR
---------------------------------- ENDED
JUNE 30, JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999 1999
PRO FORMA(A)
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
Gross premiums.................................. 1,899 1,573 1,951 2,766
Net income (group share)........................ 48 39 34 48
---------------------------------------------------------------------------------------------------
</TABLE>
(a) The gross premiums and net income for the six months ended June 30, 1999
includes two months of post-acquisition operating results of the Guardian
Royal Exchange operations acquired in May 1999. The pro forma column for the
six months ended June 30, 1999 reflects the gross premiums and net income
for the six months ended June 30, 1999 as if AXA had acquired the Guardian
Royal Exchange operations on January 1, 1999.
On a comparable basis, gross premiums decreased by 1.1%. Annual growth in
the German property and casualty market as a whole is estimated at 1.0% for the
full year 2000. Gross automobile insurance premiums (34% of total premiums) grew
by 1.3% due in particular to an increase in new commercial motor fleet business.
Gross property insurance premiums (22% of total premiums) decreased by 3.1% due
to intense market pressures on premium rates and efforts to improve the risk
profile of the commercial risks portfolio.
On a comparable basis, the German Property and Casualty Group contribution
to AXA's consolidated net income increased by E14 million as compared to the
corresponding prior period. This increase includes the positive impact in 1999
of the reduction in the tax rate affecting deferred tax liabilities
(E18 million), and in 2000 of an increase in AXA's ownership by 14%
(E10 million). Excluding the last two items above, the E22 million increase in
net income reflected the following:
- The claims ratio for all accident years (net of reinsurance) increased by
310 basis points to 81.3%. The claims ratio for the current accident year
improved by 430 basis points due to a decline in the frequency of
automobile insurance claims, which was particularly high for the six
months ended June 30, 1999, and the absence of significant claims in
commercial risk insurance. Conversely, the favorable loss reserve
development for the six months ended June 30, 2000 was much lower than for
the corresponding prior period, particularly in marine business and inward
reinsurance.
- A E78 million increase in the investment result (before tax) due to higher
income earned on mutual fund investments following the tendering of
Mannesmann securities (E37 million) in connection with the acquisition of
Mannesmann by Vodafone.
- A E13 million increase in general expenses (before tax), impacting the
ratio of general expenses to earned premiums which increased from 32.3% to
33.2%.
- A E7 million increase in tax expense.
- An increase in goodwill amortization of E3 million related to the
additional ownership interest acquired by AXA since July 1, 1999.
131
<PAGE>
BELGIAN PROPERTY AND CASUALTY INSURANCE GROUP
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR
(IN EURO MILLIONS) ------------------- ENDED
JUNE 30, JUNE 30, DECEMBER 31,
2000 1999 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross premiums.............................................. 685 701 1,285
Net Income (group share).................................... 84 162 239
================================================================================================
</TABLE>
Excluding the Royale Belge Re portfolio, which ceased underwriting business
in 1997, gross premiums increased by 0.5%, reflecting mixed growth in the
various lines of property and casualty insurance business. Gross automobile
insurance premiums (44% of total premiums) grew by 3% due to extensions of
insurance coverage, an increase in the portfolio of business and premium rate
increases. Conversely, lower rates on workers' compensation policies and a
reduction in the individual fire insurance portfolio affected adversely overall
growth in gross premiums.
On a constant methodological basis for allocating the tax expense between
the life insurance and property and casualty insurance segments, the
contribution to AXA's net income decreased by E66 million, reflecting the
following events:
- The claims ratio for all accident years, net of reinsurance, of 79.1%
represented an improvement of 640 basis points compared to the
corresponding prior period and, therefore, increased net income by
E20 million. This increase was due to an increase in favorable loss
reserve development and a decrease in the claims ratio for the current
accident year due to a reduction in claims-handling expenses.
- The net investment result decreased by E89 million (group share). This
decrease was due to the particularly high level of realized gains for the
six months ended June 30, 1999 which funded the payment of dividends and,
therefore, reduced the level of total investments in these operations.
- General expenses decreased by E8 million (group share) as a result of a
restructuring program initiated in 1999. However, the ratio of general
expenses to earned premiums remained stable at 31.4%, due to a slight
decrease in earned premiums.
U.K. PROPERTY AND CASUALTY INSURANCE GROUP
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR
(IN EURO MILLIONS) ---------------------------------- ENDED
JUNE 30, JUNE 30, JUNE 30, DECEMBER 31,
2000 1999 1999 1999
PRO FORMA(A)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross premiums.................................. 1,376 777 1,322 2,008
Net income (group share)........................ (53) -- (10) 5
---------------------------------------------------------------------------------------------------
Average exchange rate (euro/L).................. 1.63 1.49 1.49 1.52
===================================================================================================
</TABLE>
(a) The gross premiums and net income for the six months ended June 30, 1999
includes two months of post-acquisition operating results of the Guardian
Royal Exchange operations acquired in May 1999. The pro forma column for the
six months ended June 30, 1999 reflects the gross premiums and net income
for the six months ended June 30, 1999 as if AXA had acquired the Guardian
Royal Exchange operations on January 1, 1999.
On a comparable basis, gross premiums increased by 7.3% due to a 15.6%
growth in gross automobile insurance premiums (44% of total premiums) reflecting
rate increases and a growth in the portfolio of insurance business with affinity
groups.
132
<PAGE>
The contribution of the U.K. Property and Casualty Group to AXA's
consolidated net income for the six months ended June 30, 2000 decreased by
E43 million as compared to the corresponding prior period (E38 million on a
constant exchange rate basis).
The decrease in net income was primarily due to an increase in insurance
reserves, which reduced net income (group share) by E65 million. The increase in
reserves included E56 million for prior periods and E9 million for the current
fiscal year (E47 million in automobile insurance and E18 million in casualty
insurance). This increase was due to the deterioration in the claims experience
in the U.K. market and legislation enacted in March 2000 which required insurers
to readjust compensation levels for bodily injury claims (leading to an increase
in insurance reserves of E11 million, including E9 million in respect of prior
accident years).
As a result of these events, the claims ratio for all accident years (net of
reinsurance) deteriorated by 680 basis points to 86.7%.
General expenses increased by E6 million (on a constant exchange rate basis,
group share), principally due to an increase in commission rates related to the
increase in premiums from affinity group business. The expense ratio rose by 290
basis points to 38.3%.
The net investment result increased by E9 million (group share) due to an
increase in net realized gains compared to the six months ended June 30, 1999.
OTHER PROPERTY AND CASUALTY INSURANCE GROUP
The following table presents gross premiums by country for the Other
Property and Casualty Insurance Group for the periods indicated:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR
------------------- ENDED
GROSS PREMIUMS JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Italy....................................................... 516 434 903
Spain....................................................... 449 355 729
Canada...................................................... 335 283 580
Ireland (a)................................................. 214 72 257
Netherlands................................................. 165 143 248
Morocco..................................................... 75 33 88
Others (b).................................................. 547 323 802
------------------------------------------------------------------------------------------------
TOTAL....................................................... 2,301 1,642 3,607
================================================================================================
</TABLE>
a) Including gross premiums written by Guardian Royal Exchange's Irish
subsidiary in the first four months of 1999, prior to the acquisition, gross
premiums from the Irish property and casualty operations would have been
E204 million for the six months ended June 30, 1999.
b) Portugal, Luxembourg, Switzerland, Austria, Hungary, Turkey and countries in
the Asia/Pacific region.
On a comparable basis, gross premiums written by the Other Property and
Casualty Group increased by 13.8%, with particularly strong growth recorded in
Italy (19%), Spain (26.6%) and Portugal (8.1%) due to the combined effect of
premium rate increases and portfolio growth. On a comparable basis, growth in
Canada was 2.8%, and in the Netherlands, despite satisfactory growth in the
automobile insurance portfolio (7.5%), overall growth was only 1.5% due to AXA's
decision to cease its co-insurance business.
133
<PAGE>
The table below presents the contribution to consolidated net income by
country for the periods indicated:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
INCLUDING MINORITY INTERESTS GROUP SHARE
-----------------------------------------------------------------------
FOR THE SIX-MONTH FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR PERIOD ENDED FOR THE YEAR
------------------- ENDED ------------------- ENDED
NET INCOME JUNE 30, JUNE 30, DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999 2000 1999 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Italy................................ 20 (6) -- 20 (6) --
Spain................................ 4 (2) (9) 3 -- (3)
Canada............................... 11 6 11 11 6 11
Ireland (a).......................... (20) 2 7 (11) 1 4
Netherlands.......................... 17 -- 2 17 -- 2
Morocco.............................. (8) 58 69 (4) 36 35
Others (b)........................... (1) 5 (3) (9) 3 (14)
--------------------------------------------------------------------------------------------------------------
TOTAL................................ 22 62 76 26 39 34
==============================================================================================================
</TABLE>
(a) Including net income from Guardian Royal Exchange's Irish subsidiary in the
first four months of the 1999, prior to the acquisition, net income from the
Irish property and casualty operations would have been E5 million for the
six months ended June 30, 1999.
(b) Portugal, Luxembourg, Switzerland, Austria, Hungary, Turkey and countries in
the Asia/Pacific region.
ITALY. The contribution to net income (group share) increased by
E26 million primarily due to the deferred tax asset established in relation to
provisions for premium cancellations, which became deductible due to a change in
local regulations. The net investment result increased by E9 million for the six
months ended June 30, 2000. The net investment result for the six months ended
June 30, 1999 was adversely affected by a provision on South American government
bonds. The increase in the net investment result was offset by an increase in
the claims ratio for all accident years of 870 basis points to 90.5%, net of
reinsurance, primarily due to premium rate freezes in automobile insurance
enacted by the Italian Government. No provision has been established to date to
cover fines for violations of anti-trust regulations, as notified by the Italian
anti-trust body to most insurance companies in April 2000. The market as a whole
has stated its intention to contest the penalties levied by the Italian
Government. AXA is currently reviewing this situation.
SPAIN. The net income (group share) of E3 million is an improvement of
E3 million as compared to the corresponding prior period and consists of the
following items:
- Excluding Direct Seguros, net income for the six months ended June 30,
2000 was E6 million, an increase of E2 million compared to the
corresponding prior period. The net improvement in the underwriting result
(E18 million, group share) was partially offset by a decrease in the net
investment result (E13 million, group share) which was attributable to the
significant level of real estate related gains realized in the first six
months of 1999. The strong growth in gross premiums (24.4%) has not led to
an increase in the claims ratio which, net of reinsurance, decreased by
900 basis points, to 82.9% (including Direct Seguros).
- The contribution of direct marketing insurance operations was a loss of
E3 million, which reflects a E1 million improvement due to an improved
claims ratio.
CANADA. On a constant exchange rate basis, the contribution to net income
(group share) increased by E3 million for the six months ended June 30, 2000
compared to the corresponding prior period. The E6 million increase in the net
investment result is due to higher realized gains attributable to a strong
financial market performance in Canada. This increase was partially offset by a
130 basis point increase in the claims ratio for all accident years, net of
reinsurance, to 68.8% for the six months ended June 30, 2000, due in particular
to lower favorable loss development than in 1999. General expenses remained
virtually unchanged for the six months ended June 30, 2000
134
<PAGE>
compared to the corresponding prior period, leading to a 50 basis point
improvement in the general expenses to earned premiums ratio.
IRELAND. On a comparable basis, the contribution to AXA's consolidated net
income decreased by E16 million primarily due to the strengthening of insurance
reserves, which had an unfavorable impact on net income for the six months ended
June 30, 2000 of E11 million, group share, primarily relating to the automobile
portfolio and due to the rise in the average cost of bodily injury claims in
Ireland. As a result of these events, the claims ratio for all accident years,
net of reinsurance, increased by 1,600 basis points to 100.2% for the six months
ended June 30, 2000 compared to the corresponding prior period. The slight
increase in general expenses (E1 million) increased the expense ratio by 100
basis points. Due to the increase in interest rates, the bond portfolio was
restructured and resulted in realized losses of E4 million for the six months
ended June 30, 2000.
THE NETHERLANDS. The contribution to AXA's consolidated net income
increased by E17 million for the six months ended June 30, 2000 compared to the
corresponding prior period. Net income from the property insurance business was
E17 million, a E20 million improvement. The increase was primarily due to the
release of an unused Year 2000 provision (E19 million, group share). Net income
from the brokerage business was break even compared to a contribution of
E2 million for the six months ended June 30, 1999. This decrease was due to
amortization of goodwill related to the acquisition of a new broker in
connection with business development recorded at June 30, 2000.
MOROCCO. The contribution to AXA's consolidated net income includes six
months of operating activity for the Compagnie Africaine d'Assurance (CAA),
acquired by AXA Al Amane on July 1, 1999. The E40 million decrease compared to
the six months ended June 30, 1999 is primarily attributable to realized gains
of E27 million in the first six months of 1999 in connection with the
acquisition of CAA and to a E4 million valuation allowance on equity investments
at June 30, 2000.
PORTUGAL. The E6 million contribution to AXA's consolidated net income
includes the former Guardian branch office. The E1 million increase compared to
the six months ended June 30, 1999 was primarily due to a E3 million increase in
realized gains attributable to financial market performance.
LUXEMBOURG. The contribution to AXA's consolidated net income was stable at
E2 million.
AUSTRIA AND HUNGARY. The E2 million contribution to AXA's consolidated net
income represents a E1 million decrease compared to the six months ended
June 30, 1999. This decrease is attributable to a decrease in the underwriting
results and higher general expenses, partially offset by an increase in the net
investment result.
JAPAN. Most of the net loss of E25 million provided by AXA Direct Japan was
due to investment made for the purpose of developing its direct marketing
operations. To date, AXA Direct Japan has sold more than 23,000 contracts, of
which 35% were sold over the Internet. The net loss of E5 million for the six
months ended June 30, 1999 included only one month of business activity.
HONG KONG AND SINGAPORE. The contribution from property and casualty
operations to AXA's consolidated net income increased by E4 million and
E1 million, respectively, primarily reflecting the consolidation of former
subsidiaries of Guardian Royal Exchange that were not consolidated at the
June 30, 1999 reporting date. The E4 million contributed by Hong Kong was due to
favorable loss development in the property insurance portfolio. The E2 million
net loss provided by Singapore was due to a high claims ratio in casualty and
automobile insurance as well as high general expenses.
135
<PAGE>
TURKEY. The E3 million contribution to AXA's consolidated net income can be
attributed to the combined effect of strong growth in gross premiums and a 900
basis point decrease in the claims ratio, as well as a satisfactory net
investment result in a local environment characterized by high interest rates.
INTERNATIONAL INSURANCE SEGMENT
The following table present the gross premiums and net income for the
International Insurance Segment for the periods indicated:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR
------------------- ENDED
GROSS PREMIUMS JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AXA Corporate Solutions..................................... 2,136 1,722 2,818
- AXA REASSURANCE......................................... 1,417 983 1,385
- AXA GLOBAL RISKS........................................ 697 732 1,400
- AXA CESSIONS............................................ 22 6 34
Assistance.................................................. 147 137 281
Others (a).................................................. 25 2 10
------------------------------------------------------------------------------------------------
TOTAL....................................................... 2,308 1,860 3,109
================================================================================================
</TABLE>
(a) Mainly Saint Georges Re, English & Scottish
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
INCLUDING MINORITY INTERESTS GROUP SHARE
-----------------------------------------------------------------------
FOR THE SIX-MONTH FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR PERIOD ENDED FOR THE YEAR
------------------- ENDED ------------------- ENDED
NET INCOME JUNE 30, JUNE 30, DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999 2000 1999 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AXA Corporate Solutions.............. 65 21 (61) 62 17 (65)
- AXA REASSURANCE.................. 63 79 100 60 73 93
- AXA GLOBAL RISKS................. (3) (61) (153) (3) (61) (151
- AXA CESSIONS..................... 5 4 (7) 5 4 (7)
Assistance........................... 5 5 11 5 5 11
Others (a)........................... (9) (2) 3 (9) (3) 2
--------------------------------------------------------------------------------------------------------------
TOTAL................................ 61 24 (47) 58 19 (51)
==============================================================================================================
</TABLE>
(a) Mainly Saint Georges Re, English & Scottish
136
<PAGE>
AXA CORPORATE SOLUTIONS
AXA REASSURANCE
The 33.2% increase in gross premiums on a comparable basis was primarily
attributable to growth in property insurance premiums (which account for 92% of
total premiums) due to the development of direct underwriting of natural
catastrophe business (for a total of E90 million), an active underwriting
strategy in the natural catastrophe reinsurance retrocession market, that is
reinsuring of business written by reinsurers and insurers (E37 million), and new
business in the other property and casualty product lines (E50 million).
The contribution to AXA's consolidated net income decreased by E13 million
(group share).
The claims ratio for all accident years (including claims-handling expenses)
was 79.7% for the six months ended June 30, 2000 compared to 80.9% for the
corresponding prior period.
- Business development, particularly strong in the natural catastrophe
retrocession market, increased net income (group share) by E46 million.
- Conversely, strengthening of insurance reserves in respect of prior
accident years totaled E45 million after tax, an increase of E26 million.
The reserves included E27 million for unfavorable loss development on
natural catastrophe claims, including E15 million in connection with the
December 1999 storms in Western Europe. Following the establishment of the
latter provision, E25 million (after tax) of catastrophe equalization
reserves was released.
- In addition, the operating result was also reduced by E32 million due to
the payment of premiums relating to new retrocession treaties.
The net investment result decreased by E22 million as the level of realized
gains declined.
The acquisition of a U.S.-based company to undertake direct underwriting of
natural catastrophe business resulted in additional goodwill of E7 million,
fully amortized.
AXA GLOBAL RISKS
Gross premiums recorded by AXA Global Risks declined by 8.1% on a comparable
basis due to the decision to cease writing new business in unprofitable lines in
the United Kingdom and the United States.
The E58 million reduction in net loss attributable to AXA Global Risks
reflects:
- A E61 million increase (group share) in the net investment result
primarily due to significant realized gains during the six months ended
June 30, 2000 (E83 million before tax compared to E13 million before tax
for the corresponding prior period).
- A E10 million decrease after tax (group share) in the underwriting result,
net of reinsurance, reflecting:
- A E43 million provision (E27 million after tax) was recorded for
financial guarantees granted by AXA Global Risks to corporate clients.
The decision to increase the provision was made after rating agencies
lowered the rating of some of these corporations during the six months
ended June 30, 2000. AXA Global Risks ceased writing this type of
business at year-end 1999.
137
<PAGE>
- The six months ended June 30, 1999 were marked by a sharp increase in
the U.K. claims ratio for prior accident years (E15 million, group
share).
- The underwriting result for the current accident year, net of
reinsurance, deteriorated by E4 million primarily due to an increase in
the cost of reinsurance.
Excluding the additional provision on financial guarantees, the claims ratio
for all accident years, net of reinsurance (including claims-handling expenses)
decreased by 390 basis points to 102.8%.
AXA CESSIONS
The contribution of the AXA Cessions group to AXA's consolidated net income
for the six months ended June 30, 2000 was relatively stable at E5 million.
ASSISTANCE
The 7.4% increase in gross premiums on a comparable basis was primarily due
to growth in foreign subsidiaries.
For the six months ended June 30, 2000, the contribution of AXA Assistance
to AXA's consolidated net income was stable at E5 million. The contribution for
the six months ended June 30, 1999 included the release of a contingency
provision (E4 million). Excluding the impact of this release, the contribution
to net income increased by E4 million. The net income contribution from
subsidiaries based in Belgium, Poland and Spain improved primarily as a result
of more stringent insurance risk selection practices.
OTHER TRANSNATIONAL ACTIVITIES
Saint Georges Re recorded a net loss of E9 million (net group share)
representing a decrease of E4 million (net group share). The decrease is due to
a new treaty established to protect Guardian Royal Exchange's businesses in
run-off (agencies and branch offices which have ceased to underwrite insurance
business) effective as of January 1, 2000.
ASSET MANAGEMENT SEGMENT
The tables below present the revenues and net income for the Asset
Management Segment for the periods indicated:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
FOR THE SIX-MONTH
GROSS REVENUES PERIOD ENDED FOR THE YEAR
(IN EURO MILLIONS) ------------------- ENDED
JUNE 30, JUNE 30, DECEMBER 31,
2000 1999 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Capital............................................ 1,061 743 1,674
AXA Investment Managers..................................... 170 104 227
National Mutual Funds Management............................ 13 12 27
------------------------------------------------------------------------------------------------
TOTAL....................................................... 1,244 858 1,928
------------------------------------------------------------------------------------------------
</TABLE>
138
<PAGE>
On a comparable basis, revenues earned by the Asset Management Segment
increased by 33.7%, 33.3% at Alliance Capital and 37.3% at AXA Investment
Managers, due in both cases to growth in assets under management, principally
concentrated in high-growth equity mutual funds.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
INCLUDING MINORITY INTERESTS GROUP SHARE
-----------------------------------------------------------------------
---------------------------------- ----------------------------------
FOR THE SIX-MONTH FOR THE SIX-MONTH
NET INCOME PERIOD ENDED FOR THE YEAR PERIOD ENDED FOR THE YEAR
(IN EURO MILLIONS) ------------------- ENDED ------------------- ENDED
JUNE 30, JUNE 30, DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31,
2000 1999 1999 2000 1999 1999
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Alliance Capital..................... 258 127 313 65 28 72
AXA Investment Managers.............. 21 15 22 13 9 11
National Mutual Funds Management..... 6 (10) 3 3 (5) 1
--------------------------------------------------------------------------------------------------------------
TOTAL................................ 286 132 338 81 33 84
==============================================================================================================
</TABLE>
ALLIANCE CAPITAL
On a constant exchange rate basis, the increase in the net income
contribution of Alliance Capital was E29 million, reflecting:
- The contribution of Alliance Capital Management (E111 million) increased
by E39 million (64.6%) on a constant exchange rate and structural basis
due to growth in assets under management (25.4% compared to the six months
ended June 30, 1999) and a more profitable asset mix. In addition, the
increase in general expenses was lower than the increase in revenues.
Consequently, the ratio of general operating expenses to revenue decreased
to 59.8% for the six months ended June 30, 2000 from 63.3% in the
corresponding prior period.
- The intermediate holding companies generated a loss of E46 million, a
decrease of E10 million on a constant exchange rate basis. This decrease
was due to an increase in tax expense related to earnings growth recorded
by the operating unit, partially offset by the reduction in the tax rate
resulting from the legal organizational restructuring that was completed
at the end of 1999 (a savings of E10 million, group share).
AXA INVESTMENT MANAGERS
On a comparable basis, the contribution of AXA Investment Managers to AXA's
consolidated net income for the six months ended June 30, 2000 increased by
E4 million, due to a decrease in goodwill amortization of E3 million. Goodwill
recorded at June 30, 1999 included the full amortization of additional goodwill
of E5 million recorded over the period.
Excluding this event, net income was stable. The positive impact of growth
in assets under management, which increased by E36 billion compared to the six
months ended June 30, 1999 (15% on a constant exchange rate and structural
basis), was offset by the increase in general expenses. Net income reflects:
- The net loss from AXA Rosenberg, E1 million net of goodwill amortization
reduced by E4 million due to several significant performance-related
commissions (E10 million).
- The contribution of AXA Investment Managers U.K. declined by E5 million.
In 1999, AXA Investment Managers U.K. released a provision established in
respect of a real-estate dispute, which increased its contribution to
AXA's consolidated net income (group share) by E3 million. In the first
six months of 2000, costs related to the reorganization of the front
office led to a E1 million decrease in its contribution to AXA's net
income (group share).
The contribution of companies consolidated for the first time was
E1 million.
139
<PAGE>
Future revenues and net income of Alliance Capital will be impacted due to
its acquisition of Sanford C. Bernstein, completed on October 2, 2000. See "The
Companies--Recent Developments" for further information.
NATIONAL MUTUAL FUNDS MANAGEMENT
The net loss of E5 million (net group share) for the six month period ended
June 30, 1999 included a tax expense of E5 million on the gain realized in the
sale of its asset management subsidiary to AXA Investment Managers (the gross
gain was eliminated in consolidation). Excluding this event, the increase in net
income was primarily due to an increase on fee income in all lines of business
attributable to the increase in assets under management (9% compared to the six
months ended June 30, 1999).
OTHER FINANCIAL SERVICES SEGMENT
The tables below present the revenues and net income for the Other Financial
Services Segment for the periods indicated:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR
------------------- ENDED
GROSS REVENUES JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Donaldson, Lufkin & Jenrette............................... 7,061 4,390 9,671
Real estate and other financial companies.................. 552 587 1,136
-----------------------------------------------------------------------------------------------
TOTAL...................................................... 7,612 4,976 10,806
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
INCLUDING MINORITY INTERESTS GROUP SHARE
-----------------------------------------------------------------------
---------------------------------- ----------------------------------
FOR THE SIX-MONTH FOR THE SIX-MONTH
NET INCOME PERIOD ENDED FOR THE YEAR PERIOD ENDED FOR THE YEAR
(IN EURO MILLIONS) ------------------- ENDED ------------------- ENDED
JUNE 30, JUNE 30, DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31,
2000 1999 1999 2000 1999 1999
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette......... 408 251 541 170 105 226
Real estate and other financial
companies.......................... 43 44 2 39 39 (5)
--------------------------------------------------------------------------------------------------------------
TOTAL................................ 451 295 543 208 144 221
==============================================================================================================
</TABLE>
DONALDSON, LUFKIN & JENRETTE
The sale of AXA's interest in Donaldson, Lufkin & Jenrette to Credit Suisse
Group was completed on November 3, 2000, see "The Companies-Recent Developments"
for further information on this transaction. As a consequence, revenues and net
income from the Other Financial Services Segment will decrease significantly in
future periods.
On a constant exchange rate basis, revenue earned by Donaldson, Lufkin &
Jenrette increased by 41.9% due to significant growth in interest income
(55.9%), fee income (51.3%), revenues earned in equity portfolio transactions
(52.4%) and brokerage fees (47.1%), partially offset by the decrease in revenues
from syndicated issues (33.8%), principally fixed-income.
The contribution of Donaldson, Lufkin & Jenrette to AXA's consolidated net
income increased by E44 million on a constant exchange rate basis (41.9%),
reflecting:
- Favorable growth in its syndicated security business, with pre-tax
operating earnings nearly tripling compared to the six months ended
June 30 1999, and in financial services operations, whose main businesses
are stock market settlement through Pershing and online
140
<PAGE>
brokerage through DLJDIRECT, which grew by 60% primarily due to higher
brokerage fees and an increase in the number of stock market transactions.
- The investment banking division grew by 23% compared to the six months
ended June 30, 1999 primarily due to the significant level of realized
gains for the six months ended June 30, 2000 and the increase in
investment banking and venture capital advisory fees.
- These satisfactory results were partially offset by the decrease in the
fixed-income products division (36%) principally due to the decline in
syndicated bond activity (59%), in line with bond market trends.
- The 32.2% increase in general operating expenses was in line with net
revenue growth, while costs related to international development
(particularly in Europe) continued to have an adverse impact on earnings.
REAL ESTATE AND OTHER FINANCIAL COMPANIES
The contribution to AXA's consolidated net income from AXA's French banking
operations decreased by E7 million for the six months ended June 30, 2000
compared to the corresponding prior period. Banque Worms, which was not
consolidated in the financial statements for the six months ended June 30, 1999,
is now accounted for by the equity method of accounting. The negative
contribution from Banque Worms (E15 million, net group share) included a
E13 million provision (net group share) relating to doubtful debts. Net income
from AXA Banque increased by E5 million due to a non-recurring financial
servicing commission on government bonds, and net income from AXA's French
banking operations increased by E4 million, primarily due to growth in
outstanding loans, partially offset by losses recorded by Banque Worms.
The contribution of AXA Bank Belgium to AXA's consolidated net income was
stable at E18 million for both six-month periods.
Net income from the real estate companies for the six months ended June 30,
2000 was stable compared to the corresponding prior period.
On October 24, 2000, AXA and Deutsche Bank executed a non-binding letter of
intent relating to the sale of Banque Worms to Deutsche Bank. For further
information, see "The Companies--Recent Developments."
HOLDING COMPANY ACTIVITIES
The Holding company activities consists of AXA's non-operating companies,
including AXA, the parent company of the group (which we refer to as the
"Company"), AXA Financial, AXA Asia Pacific Holdings and Sun Life & Provincial
Holdings.
141
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
INCLUDING MINORITY INTERESTS GROUP SHARE
-----------------------------------------------------------------------
FOR THE SIX-MONTH FOR THE SIX-MONTH
PERIOD ENDED FOR THE YEAR PERIOD ENDED FOR THE YEAR
------------------- ENDED ------------------- ENDED
NET INCOME JUNE 30, JUNE 30, DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31,
(IN EURO MILLIONS) 2000 1999 1999 2000 1999 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AXA.................................. 22 362 286 22 362 286
AXA France Assurance................. (10) 66 61 (10) 66 61
Other French holding companies....... 7 6 12 8 5 12
Holdings -- AXA Financial Inc........ (24) 90 87 (14) 52 51
Holdings -- AXA Asia Pacific......... (11) (5) (36) (5) (2) (17)
Holdings -- Sun Life & Provincial.... (15) (331) (490) (8) (183) (277)
Other foreign holding companies...... (46) 50 (36) (44) 41 (31)
--------------------------------------------------------------------------------------------------------------
TOTAL............................ (77) 238 (117) (51) 341 84
--------------------------------------------------------------------------------------------------------------
</TABLE>
142
<PAGE>
THE COMPANY
The Company's contribution for the six months ended June 30, 1999 included
the dilution gain of E503 million to AXA due to a decrease in ownership interest
in Sun Life & Provincial Holdings, which issued ordinary shares to finance the
acquisition of Guardian Royal Exchange in May 1999. Excluding this gain, the
Company's loss for the six months ended June 30, 2000 was reduced by
E163 million (group share) compared to the corresponding prior period,
reflecting:
- the release of an E81 million (group share) temporary valuation allowance
on real estate that was deemed no longer necessary given prevailing market
conditions,
- a decrease (E20 million, group share) in the expense related to the
exercise of AXA subsidiary stock purchase options,
- realized gains on the sale of securities (E22 million, group share, of
which E16 million on the sale of BNP securities and certificates of
guaranteed value),
- a E20 million (group share) increase in dividends received from
non-consolidated equity interests, and
- no provision for tax expense relative to the distribution of dividends by
the Company, compared to a E25 million charge for the year ended
December 31, 1999, as dividends are not declared until the financial
reporting year end .
OTHER HOLDING COMPANIES
For the six months ended June 30, 1999, net income from AXA France Assurance
included a gain of E82 million (group share) on the sale of equity investments
in BNP, a writedown of E17 million on AXA Australia securities, and a realized
gain of E5 million on the sale of PanEuroLife. Excluding these events, the
negative contribution to AXA's consolidated net income for the six months ended
June 30, 2000 was stable.
The contribution from AXA Financial, Inc. for the six months ended June 30,
1999 was impacted by a realized gain of E51 million relating to the initial
public offering of DLJDIRECT tracking stock.
The 1999 contribution from Sun Life & Provincial Holdings included the
non-recurring amortization of goodwill on the U.K. and Irish property and
casualty subsidiaries of Guardian Royal Exchange (E186 million).
The E60 million decrease in the contribution from the Belgian holding
companies was due to the exceptionally high level of realized gains on equities
for the six months ended June 30, 1999 (E50 million, of which E27 million on
GBL). For the six months ended June 30, 2000 there was a E5 million increase in
its debt servicing charge and an asset impairment allowance recorded of
E4 million.
The remainder of the decrease in the contribution from other foreign holding
companies (E25 million) is attributable primarily to the German holding
companies, related to the favorable impact of a change in tax regulations in
1999 (E10 million) and an increase in interest expense for the six months ended
June 30, 2000 in connection with the acquisition of Albingia (E5 million).
LIQUIDITY AND CAPITAL RESOURCES
For a discussion of the funding of the acquisition of the minority interests
in AXA Financial, see "The Exchange Offer--Sources and Amount of Funds".
143
<PAGE>
SOURCES OF LIQUIDITY
At June 30, 2000, AXA's consolidated balance sheet included cash and cash
equivalents of E29.3 billion.
As a holding company, AXA's principal sources of funds are dividends from
subsidiaries and funds that may be raised through the issuance of debt or equity
securities and bank or other borrowings. AXA has expanded its insurance
operations through a combination of acquisitions, joint ventures, direct
investments and internal growth. This expansion has been funded primarily
through a combination of (i) proceeds from the sale of non-core businesses and
assets, (ii) dividends received from operating subsidiaries, and (iii) proceeds
from the issuance of convertible debt securities and other debt securities, as
well as borrowings (including from affiliates), and the issuance of new ordinary
shares.
AXA anticipates that cash dividends received from operating subsidiaries
will continue to cover its operating expenses including planned capital
investment in existing operations, interest payments on its outstanding debt and
mezzanine capital, and dividend payments during each of the next three years.
AXA expects that anticipated investment in subsidiaries and existing operations,
future acquisitions and strategic investments will be funded from available cash
flow remaining after payments of dividends, debt service and operating expenses,
proceeds from the sale of non-strategic assets and businesses and future issues
of debt and equity securities.
Certain of AXA's direct and indirect subsidiaries are subject to
restrictions on the amount of dividends and debt repayments that can be paid to
AXA and its affiliates (see Note 19 to the AXA's audited consolidated financial
statements included in the 1999 AXA Form 20-F, which is incorporated by
reference in this prospectus. AXA does not believe that such restrictions
constitute a material limitation on its ability to meet its obligations or pay
dividends.
AXA and each of its major operating subsidiaries are responsible for
financing their respective operations. AXA will from time to time, however,
arrange for and participate in financing the operations of subsidiaries.
On November 17, 2000, AXA filed a registration statement on Form F-3
(Registration No. 333-12872) with the SEC registering $3.0 billion of debt
securities which may be issued from time to time. AXA is considering increasing
the principal amount of debt securities registered under that registration
statement to $5.0 billion.
MEZZANINE CAPITAL AXA has obligations that are not, under French GAAP,
characterized or classified in the consolidated balance sheet as debt or equity
capital. These funds are referred to as mezzanine capital and include
subordinated debt and mandatorily convertible bonds and notes. On a consolidated
basis at June 30, 2000, AXA's subordinated debt, including subordinated debt
convertible into ordinary shares of AXA, and mandatorily convertible bonds and
notes was E7.0 billion, an increase of E1.7 billion from December 31, 1999. The
increase is attributable to the issuance of subordinated debt by AXA for the
purpose of financing the acquisition of AXA Nichidan Holding and the buyout of
AXA China Region's minority interests as set out below.
- In February 2000, E1.1 billion of 3.75% subordinated convertible notes due
January 1, 2017. AXA has the right to redeem these notes starting in
January 2007 at a price of E196.00 per note. The issuance price was
E165.50 per note. Unless previously converted, redeemed or cancelled, the
notes will mature and become repayable in full on January 1, 2017. The
conversion into shares of all the notes issued would result in the
issuance of 6.6 million AXA ordinary shares.
- In March 2000, E500 million of 7.25% undated subordinated notes. These
notes can be redeemed by AXA at any time in full at par (100% of the
nominal value of E25 per note).
144
<PAGE>
The 4.5% mandatory convertible bonds were issued in connection with the
acquisition of (i) Abeille Re (1995) which mature in January 2001 and will
convert into 7.08 million ordinary shares of AXA (subject to certain
antidilution adjustments) of which 2.83 million ordinary shares will be owned by
subsidiaries of AXA, and (ii) Compagnie UAP (1997) which matured in January,
2000 and were converted into 4.1 million ordinary shares of AXA in accordance
with the terms and conditions of these notes and increased shareholders' equity
by E282 million.
FINANCING DEBT On a consolidated basis as at June 30, 2000, AXA's
consolidated financing debt, primarily comprised of long-term debt and
convertible debt, was E7.2 billion, an increase of E1.8 billion from
December 31, 1999. On June 21, 2000, AXA Financial borrowed $1.5 billion from
Bank of America N.A. pursuant to a promissory note with an interest rate of
7.06% which matured and was repaid in full on September 22, 2000. The proceeds
from the borrowing and available cash were used to purchase 32.6 million units
of limited partnership interest of Alliance Capital Management LP. Alliance
Capital used the cash proceeds to fund the cash portion of the consideration of
its acquisition of the assets and liabilities of Sanford C. Bernstein which
closed on October 2, 2000.
For information on AXA's financing arrangements relating to the acquisition
of the minority interests in AXA Financial see "The Exchange Offer--Sources and
Amount of Funds".
OPERATING DEBT At June 30, 2000, AXA's consolidated operating debt,
comprised of borrowings principally used by the financial services subsidiaries
to provide working capital, was E13.1 billion, an increase of E1.4 billion from
December 31, 1999. This increase was attributable to the following activities of
Donaldson, Lufkin & Jenrette:
- In February 2000, a shelf registration was filed with the SEC to enable
Donaldson, Lufkin & Jenrette to issue $3.1 billion of senior debt,
subordinated debt securities, preferred stock and warrants. During first
quarter 2000, Donaldson, Lufkin & Jenrette issued $500 million 8% senior
notes due 2005 and $485 million of medium-term notes due 2007.
- In April 2000, a $10 billion Euro medium-term note program was
established. During second quarter 2000, $890 million medium-term notes
with various maturity dates through 2005 were issued. In addition,
$354 million medium-term notes with various maturity dates through 2002
were issued under a shelf registration. At June 30, 2000, $1.0 billion was
outstanding under the $2.0 billion commercial paper program.
- In July 2000, the $2.5 billion revolving credit facility was amended to
increase the aggregate commitment to $2.8 billion, of which $2.4 billion
may be unsecured. There were no borrowings outstanding under this
agreement at June 30, 2000.
In connection with the sale of Donaldson, Lufkin & Jenrette, the borrowings
set out above will not appear in our consolidated balance sheet at December 31,
2000 since the transaction closed on November 3, 2000.
AXA, the holding company, also maintains standby committed credit facilities
in an aggregate amount of E1.6 billion, of which E235 million was drawn as of
June 30, 2000.
At June 30, 2000, the potential number of ordinary shares which would be
issued upon conversion of subordinated convertible debt and the remaining
mandatory convertible notes due to mature in January 2001 was approximately
23.2 million ordinary shares in accordance with the terms and conditions of the
debt and notes.
In June 2000, AXA raised net cash proceeds of E3.7 billion through the
issuance of 30.2 million new ordinary shares with preferential subscription
rights (see "Comparison of Certain Rights of AXA Financial Stockholders and AXA
Shareholders--Preemptive or Preferential Subscription Rights"), in preparation
for the funding of its buyout of Sun Life & Provincial Holdings' minority
interests.
145
<PAGE>
The Year 2000 employee stock ownership program led to a capital increase of
E237 million.
USES OF FUNDS
AXA's principal uses of funds are (i) payment of operating expenses,
(ii) servicing of its debt obligations, (iii) payment of dividends to
shareholders, and (iv) investment in strategic activities, including direct
marketing insurance operations.
AXA holding company's interest expense for the six-month period ended
June 30, 2000 and 1999 was E176 million and E101 million, respectively.
At AXA's ordinary general meeting of shareholders held on May 3, 2000, the
shareholders approved a cash dividend of approximately E713 million (E2.00 per
ordinary share) in respect of 1999. This dividend was paid in cash in May 2000.
In connection with the acquisition of Nippon Dantai and the integration of
Nippon Dantai with AXA's subsidiary, AXA Life Japan, AXA plans to invest a total
of approximately Y200 billion (approximately E2 billion) in 2000 and 2001,
including the amount already invested as of June 30, 2000 of Y105 billion
(approximately E1 billion).
In 1998, AXA Financial began a capital stock repurchase program, which was
increased from 16 million to 30 million shares of capital stock following a
stock split in September 1998. Under the stock repurchase program authorized by
its Board of Directors, the holding company repurchased approximately
2.0 million shares of common stock at a cost of approximately $57.5 million
during first quarter 2000; no repurchases were made in second quarter 2000.
CONSOLIDATED CASH FLOWS
Net cash provided by operating activities was E11.5 billion for the
six-month period ended June 30, 2000 compared to E15.5 billion for the six-month
period ended June 30, 1999. The decrease in net cash provided by operations was
mainly attributable to increase in trading activities and broker/dealers
receivables (net E2.3 billion).
Net cash used in investing activities for the six-month period ended
June 30, 2000 was E9.8 billion compared to net cash used of E15.9 billion in the
corresponding prior period. The change in cash used in investing activities is
primarily attributable to lower level of investment purchase activity relating
to separate accounts assets compared to the corresponding prior period.
Net cash received from financing activities for the six-month period ended
June 30, 2000 was E7.8 billion compared to E2.8 billion in the corresponding
prior period. The increase in net cash provided by financing activities is
primarily attributable to increases of capital of the holding company
(E4.2 billion).
The net impact of foreign exchange was a E0.7 billion increase in net cash
for the six-month period ended June 30, 2000 compared to an increase of
E0.6 billion in the corresponding prior period. The net addition to cash due to
changes in the scope of consolidation increased to E5.1 billion for the
six-month period ended June 30, 2000 compared to a positive E2.7 billion in the
corresponding prior period, primarily attributable to the acquisition of AXA
Nichidan (Nippon Dantai).
The operating, investing and financing activities described above, as well
as the impact of foreign exchange and change in scope of consolidation, resulted
in an increase in cash and equivalents of E15.1 billion in the six-month period
ended June 30, 2000 compared to an increase of E5.2 billion in the corresponding
prior period.
146
<PAGE>
RECONCILIATION FROM FRENCH GAAP TO U.S. GAAP
There are differences between generally accepted accounting principles in
France and in the United States which can result in material adjustments for
U.S. GAAP purposes. For a discussion of the differences between French GAAP and
U.S. GAAP which materially affect the determination of AXA's consolidated net
income and shareholders' equity, see Note 28 to AXA's audited consolidated
financial statements included in the 1999 AXA Form 20-F, which is incorporated
by reference in this prospectus. As discussed in AXA's unaudited interim
consolidated financial statements, there have been no material changes in
accounting principles from that which were described in Note 28 of AXA's
consolidated financial statements for the year ended December 31, 1999.
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD ENDED
----------------------------------
JUNE 30, 2000 JUNE 30, 1999
EM EM
<S> <C> <C>
Consolidated net income in accordance with French GAAP...... 1,205 1,469
Adjustments to U.S. GAAP.................................... (21) (550)
----- -----
Consolidated net income in accordance with U.S. GAAP........ 1,184 919
</TABLE>
--------------------------------------------------------------------------------
Under French GAAP, in accounting for U.K. with-profit contracts, revenue and
expense are matched in net income by including both changes in the estimated
fair values of assets allocated to U.K. with-profit contracts and corresponding
increases or reductions in the liability for U.K. with-profit policyholder
benefits. U.S. GAAP, which has developed in an environment that differs from the
one in which the U.K. with-profit contract was developed, requires that the
change in unrealized investment gains or losses on assets allocated to U.K.
with-profit contracts be excluded from net income, while requiring recognition
of the corresponding change in the liability for with-profit policyholder
benefits in net income. Accordingly, AXA believes this exclusion results in
amounts that do not fully reflect the economic effect of the U.K. with-profit
contracts. A rise in the estimated fair value of these assets results in an
increase in the liability for policyholder benefits and a reduction in AXA's
consolidated U.S. GAAP net income or shareholders' equity and, conversely, a
decline in the estimated fair value of these assets results in a decrease in the
liability for policyholder benefits and an increase in AXA' s consolidated U.S.
GAAP net income. Set forth below is AXA's consolidated net income in accordance
with U.S. GAAP except for adjustment for the change in unrealized investment
gains or losses on assets allocated to U.K. with-profit contracts, which
presentation AXA believes is more meaningful under the circumstances.
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Consolidated net income in accordance with U.S. GAAP........ 1,184 919
Change in unrealized investment gains (losses) on assets
allocated to U.K. with-profit contracts, net of deferred
tax....................................................... (218) 596
----- -----
Consolidated net income in accordance with U.S. GAAP, except
for adjustment for the change in unrealized investment
gains (losses) on assets allocated to U.K. with-profit
contracts................................................. 966 1,515
----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD ENDED
----------------------------------
JUNE 30, 2000 JUNE 30, 1999
NET INCOME PER ORDINARY SHARE: -------------- --------------
E E
<S> <C> <C>
Amount in accordance with French GAAP
- basic................................................... 3.32 4.17
- diluted................................................. 3.11 3.90
Amount in accordance with U.S. GAAP
- basic................................................... 3.30 2.68
- diluted................................................. 3.13 2.50
Amount in accordance with U.S. GAAP, except for change in
unrealized investment gains or losses on assets allocated
to U.K. with-profit contracts, net of deferred tax........
- basic................................................... 2.69 4.41
- diluted................................................. 2.56 4.11
----------------------------------------------------------------------------------------------------
</TABLE>
For the six-month period ended June 30, 2000, the U.S. GAAP consolidated net
income of E1,184 million represented a E21 million decrease from E1,205 million
under French GAAP. For the
147
<PAGE>
six-month period ended June 30, 1999, the U.S. GAAP consolidated net income of
E919 million represented a decrease of E550 million from net income under French
GAAP of E1,469 million. The French GAAP to U.S. GAAP adjustment for both
reporting periods is primarily attributable to the following items:
- ACCOUNTING TREATMENT OF UNREALIZED INVESTMENT GAINS AND LOSSES ON ASSETS
BACKING U.K. WITH-PROFIT CONTRACTS. Unrealized investment gains and losses
are included in net income under French GAAP whereas under U.S. GAAP
unrealized investment gains and losses on investments classified as
"available-for-sale" are excluded from U.S. GAAP net income and reported
in Other Comprehensive Income, a separate component of Shareholders'
Equity. Due to a change in investment markets, the assets backing the U.K.
with-profit contracts had an unrealized loss during the six-month period
ended June 30, 2000. As a consequence, net income under U.S. GAAP
increased by E312 million gross of tax (E218 million net of tax) with no
impact to shareholders' equity. For the six-month period ended June 30,
1999, the investments allocated to the U.K. with-profit contracts had an
unrealized gain of E863 million (E596 million net of tax) and thereby
decreased net income in accordance with U.S. GAAP with no impact to
shareholders' equity;
- DIFFERENCES IN PURCHASE ACCOUNTING AND GOODWILL. For the six-month period
ended June 30, 2000, net income under U.S. GAAP decreased by E177 million
(gross of tax) compared to an increase of E206 million comprised of two
separate but related adjustments; a E282 million positive adjustment on
purchase accounting plus a E76 million negative adjustment on dilution
gain recorded by AXA due to the decrease in its ownership interest in Sun
Life & Provincial Holdings, which issued ordinary shares to finance the
acquisition of Guardian Royal Exchange during the six months ended
June 30, 1999.
- A E177 million negative adjustment was recorded for the six-month
period ended June 30, 2000 primarily due to (i) the accounting for
additional reserve strengthening in the former operations of Guardian
Royal Exchange in the United Kingdom and Ireland relating to the
pre-acquisition period. Under French GAAP this was an adjustment to the
opening balance sheet at the date of acquisition with no impact on
current period operating results whereas under U.S. GAAP the additional
insurance reserves were recorded as a post-acquisition charge, and
(ii) the accounting for the acquisition of the minority interests in
AXA China Region whereby under French GAAP goodwill was determined
using carrying value of the portion of assets acquired and liabilities
assumed at the date of acquisition whereas under U.S. GAAP the goodwill
was determined using the fair value of the portion of assets acquired
and liabilities assumed at the date of acquisition.
- A E206 million positive adjustment recorded for the six-month period
ended June 30, 1999 primarily due to the accounting for the acquisition
of Guardian Royal Exchange. Under French GAAP an exceptional
amortization charge of E446 million (E259 million, group share) was
recorded against French GAAP earnings as there was a significant
deficiency in insurance claims reserves recorded in the opening balance
sheet by AXA. The deficiency mainly related to the difference between
local statutory basis and AXA's accounting policies on establishing
property and casualty reserves. This exceptional amortization charge of
goodwill was not recorded against goodwill under U.S. GAAP and,
therefore, AXA's net income under U.S. GAAP increased by a
corresponding amount;
- ACCOUNTING FOR CAPITAL GAINS ON TREASURY SHARES SOLD DURING THE PERIOD. In
the six-month period ended June 30, 2000 1,118,407 treasury shares were
sold by AXA to FINAXA resulting in a capital gain of E60 million (net
group share). There was no similar activity in the
148
<PAGE>
corresponding prior period. Under French GAAP realized gains on the sale
of treasury shares were included in French GAAP earnings whereas under
U.S. GAAP realized gains on the sale of treasury shares were recorded as
an increase in Additional Paid-In Capital, a component within
Shareholders' Equity. As a consequence, net income under U.S. GAAP
decreased by E75 million before tax with no impact to shareholders'
equity; and
- CATASTROPHE AND EQUALIZATION RESERVES. Under French GAAP, such reserves
are established under local statutory regulations, where relevant, for
future catastrophe and other unusual losses whereas under U.S. GAAP, such
losses are not provided for until the loss event occurs and the liability
is incurred. For the six months ended June 30, 2000 these reserves
decreased by approximately E42 million before tax, corresponding to an
increase in operating results under French GAAP. This increase in
operating results was eliminated in determining net income under U.S.
GAAP. For the six-month period ended June 30, 1999, these reserves
increased by E18 million before tax, corresponding to a decrease in
operating results under French GAAP. This decrease in operating results
was eliminated in determining net income under U.S. GAAP.
NEW ACCOUNTING PRONOUNCEMENTS WHICH HAVE NOT YET BEEN ADOPTED
See Note 14 to the unaudited interim consolidated financial statements
included elsewhere in this prospectus and Note 2 to our audited consolidated
financial statements included in the 1999 AXA Form 20-F, which is incorporated
by reference in this prospectus.
OTHER MATTERS
AXA's insurance and asset management operations are subject to regulation in
their countries of operation. These regulations include such things as a
requirement to maintain a minimum solvency margin. The primary objective of the
solvency margin is to protect policyholders (see "Item 1--Description of
Business--Additional Factors which may Affect AXA--Regulation" included in the
1999 AXA Form 20-F).
Market risk represents the potential loss as a result of absolute and
relative price movements in financial instruments due to changes in interest
rates, equity prices, foreign currency exchange rates, and other factors. AXA's
exposure to market risk varies by nature across its operations. For further
information on market risk please see "Item 9A--Qualitative and Quantitative
Disclosure about Market Risk" included in the 1999 AXA Form 20-F.
PERSPECTIVES
By reason of the sale of Donaldson, Lufkin & Jenrette, the operating results
for the year ended December 31, 2000 should benefit from a significant capital
gain. However, as a consequence of this transaction, revenues and net income
from the Other Financial Services Segment will decrease significantly in future
periods.
149
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma financial information should be read in conjunction
with (i) the audited historical consolidated financial statements and the
related notes for the years ended December 31, 1999, 1998 and 1997 and as of
December 31, 1999 and 1998 and the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in the 1999
AXA Form 20-F and AXA Financial's Current Report on Form 8-K filed with the SEC
on November 14, 2000, both of which are incorporated by reference in this
prospectus; (ii) AXA's unaudited consolidated financial statements and related
notes for the six months ended June 30, 2000 and the related Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
six months ended June 30, 2000, included elsewhere in this prospectus; and
(iii) AXA Financial's unaudited consolidated financial statements and related
notes and the section entitled "Management's Discussion and Analysis of
Financial Condition, and Results of Operations" for the nine months ended
September 30, 2000 included in its Quarterly Report on Form 10-Q and
incorporated by reference in this prospectus. The AXA Financial Current Report
on Form 8-K filed with the SEC on November 14, 2000 includes audited historical
consolidated financial statements for the financial years indicated above which
have been restated to reflect Donaldson, Lufkin & Jenrette as a discontinued
operation. See "Where You Can Find More Information" for information on how to
obtain copies of the documents incorporated by reference in this prospectus.
The unaudited pro forma financial information gives the pro forma effect of
the following three transactions after giving effect to the pro forma
assumptions and adjustments described in the notes to the unaudited pro forma
financial information:
- BUYOUT OF 43.8% MINORITY INTERESTS IN SUN LIFE & PROVINCIAL HOLDINGS. As
of June 30, 2000, AXA and its subsidiaries had a 56.2% economic interest
in Sun Life & Provincial Holdings. On July 12, 2000 the acquisition of the
minority interests in Sun Life & Provincial Holdings became fully
unconditional, at which time Sun Life & Provincial Holdings was delisted
from the London Stock Exchange. The transaction was completed on July 26,
2000. Each minority shareholder of Sun Life & Provincial Holdings received
500 pence in cash and a special dividend of 5 pence for each Sun Life &
Provincial Holdings ordinary share. As a consequence of this transaction,
the direct and indirect ownership interest of AXA in Sun Life & Provincial
Holdings increased to 100%. The aggregate purchase consideration for the
buyout of the minority interests in Sun Life & Provincial Holdings was
approximately L2.3 billion (or approximately E3.7 billion based on the
exchange rate as of July 12, 2000).
- SALE OF DONALDSON, LUFKIN & JENRETTE. As of June 30, 2000, AXA had a 58.5%
economic (direct and indirect) interest in AXA Financial which, together
with certain other of its affiliates, had a 71% interest in Donaldson,
Lufkin & Jenrette. On November 3, 2000, AXA, AXA Financial, The Equitable
Life Assurance Society of the United States and AXA Participations Belgium
sold their 71% interest in Donaldson, Lufkin & Jenrette. Total proceeds
included cash of $2,377 million and 25.7 million shares of the Credit
Suisse Group. On November 6, 2000, the Credit Suisse Group repurchased
6.4 million of its shares from AXA Financial and its affiliates that were
parties to the stock purchase agreement relating to the sale of Donaldson,
Lufkin & Jenrette for a consideration of $1,200 million. As a result,
total cash received on the sale of Donaldson, Lufkin & Jenrette amounted
to $3,577 million (E4,155 million) and the market value at November 3,
2000 of the remaining 19.3 million shares of the Credit Suisse Group was
$3,765 million (E4,373 million). Total consideration in respect of this
transaction therefore was $7,342 million (E8,528 million). All
translations of U.S. dollars to euro in this paragraph have been based on
the Euro Noon Buying Rate on November 3, 2000 of E1.00=$0.861.
- BUYOUT OF MINORITY INTERESTS IN AXA FINANCIAL. As of June 30, 2000, AXA
had an economic (direct and indirect) interest of 58.5% of the issued and
outstanding shares of AXA Financial's
150
<PAGE>
common stock. AXA's direct and indirect ownership interests in AXA
Financial increased to 60.3% following AXA's acquisition of minority
interests in Sun Life & Provincial Holdings in July 2000. As of
October 25, 2000, AXA and its subsidiaries were the beneficial owners of
60.1% of the issued and outstanding shares of AXA Financial's common
stock. In connection with this exchange offer and subsequent merger, the
minority shareholders of AXA Financial will receive $35.75 in cash and
0.295 of an AXA ADS for each outstanding share of common stock of AXA
Financial. Based on the closing price of the AXA ADS on November 6, 2000,
this corresponds to $56.25 for each AXA Financial share.
The tables below set forth unaudited pro forma condensed consolidated
financial information of AXA as of and for the six months ended June 30, 2000
and for the year ended December 31, 1999. The unaudited pro forma financial
information assumes that each of the three transactions occurred on June 30,
2000, for the pro forma balance sheet, and on January 1, 1999, for the pro forma
income statements, subject to the assumptions and adjustments described in the
notes to the unaudited pro forma financial information.
THE UNAUDITED PRO FORMA FINANCIAL INFORMATION IS PROVIDED FOR ILLUSTRATIVE
PURPOSES ONLY AND DOES NOT PURPORT TO BE INDICATIVE OF WHAT THE ACTUAL RESULTS
OF OPERATIONS OR FINANCIAL CONDITION OF AXA AND ITS SUBSIDIARIES WOULD HAVE BEEN
HAD THESE TRANSACTIONS BEEN CONSUMMATED ON OR AS OF THE DATES INDICATED, NOR
DOES IT PURPORT TO BE INDICATIVE OF THE RESULTS OF OPERATIONS OR FINANCIAL
CONDITION THAT MAY BE ACHIEVED IN THE FUTURE.
Prior to the three transactions reflected in the unaudited pro forma
information, the results of operations and financial condition of Sun Life &
Provincial Holdings, AXA Financial and Donaldson, Lufkin & Jenrette, all of
which were subsidiaries of AXA, were consolidated and included in AXA's
unaudited interim consolidated financial statements as of and for the six months
ended June 30, 2000, included elsewhere in this prospectus, and in AXA's audited
consolidated financial statements included in the 1999 AXA Form 20-F, which is
incorporated by reference in this prospectus. The net assets and net income
attributable to the minority shareholdings in Sun Life & Provincial Holdings and
in AXA Financial, which included a minority interest in Donaldson, Lufkin &
Jenrette, were excluded from AXA's consolidated shareholders' equity and net
income and included in the balance sheet and income statement as a separate line
item entitled "Minority interests". Consequently, the unaudited pro forma
financial information presented in the tables below is based on:
(i) AXA's unaudited interim consolidated financial statements as of and for
the six months ended June 30, 2000 and audited consolidated financial
statements for the year ended December 31, 1999, which were prepared in
accordance with French GAAP,
(ii) Adjustments to reflect the buyout of minority interests in Sun Life &
Provincial Holdings based on the purchase consideration at the date the
transaction was declared fully unconditional (July 12, 2000) and the
financial information used to prepare AXA's unaudited interim
consolidated financial statements as of and for the six months ended
June 30, 2000 and audited consolidated financial statements for the
year ended December 31, 1999,
(iii) Adjustments to reflect the sale of Donaldson, Lufkin & Jenrette based
on the selling price at the date of the transaction (November 3, 2000)
and the historical financial information used to prepare AXA's
unaudited interim consolidated financial statements as of and for the
six months ended June 30, 2000 and audited consolidated financial
statements for the year ended December 31, 1999, and
(iv) Adjustments to reflect the buyout of minority interests in AXA
Financial based on the purchase consideration as set out in this
exchange offer as of November 6, 2000 and the historical financial
information used to prepare AXA's unaudited interim consolidated
151
<PAGE>
financial statements as of and for the six months ended June 30, 2000
and audited consolidated financial statements for the year ended
December 31, 1999.
AXA's consolidated financial statements have been prepared in accordance
with French GAAP, which differs in certain material respects from U.S. GAAP.
Note 28 to AXA's audited consolidated financial statements included in the 1999
AXA Form 20-F, and incorporated by reference in this prospectus, provides a
description of the material differences between French GAAP and U.S. GAAP as
they relate to AXA for the year ended December 31, 1999. For the six months
ended June 30, 2000 there have been no material changes in accounting principles
from those described in Note 28. A reconciliation of AXA's pro forma net income
for the six months ended June 30, 2000 and for the year ended December 31, 1999
and AXA's pro forma shareholders' equity as of June 30, 2000 from French GAAP to
U.S. GAAP is also provided in the information below.
The acquisition of the minority interests in Sun Life & Provincial Holdings
and AXA Financial will be accounted for using the purchase method of accounting
under French GAAP and U.S. GAAP. Under U.S. GAAP, the purchase consideration for
each of these acquisitions will be allocated to the portion of assets acquired
and the liabilities assumed based on their respective fair values at the
respective date of acquisition. The excess of purchase price over the fair value
of the portion of tangible and identifiable intangible assets acquired, net of
liabilities assumed, will be recorded as goodwill, and will be amortized as a
charge against income over 30 years. Under French GAAP, the portion of assets
acquired and of liabilities assumed, in respect of acquisitions of minority
interests, are not recorded at their fair value at the acquisition date but
remain at their carrying values used to prepare the consolidated financial
statements before the minority interest acquisition occurred. In addition, a
portion of the goodwill, being the purchase consideration less the carrying
amounts of the portion of assets acquired and liabilities assumed, can be
charged directly to shareholders' equity (in proportion to the value of shares
issued by the acquiror to finance the acquisition to total purchase price). Any
remaining goodwill will be recorded as an asset and will be amortized as a
charge against income over 30 years.
The pro forma adjustments reflecting the consummation of each of the three
transactions are based upon the assumptions and adjustments set forth in the
notes accompanying the unaudited pro forma financial information. The unaudited
pro forma financial information is based on currently available information and
assumptions and estimates which management believes are reasonable. These
assumptions and estimates, however, are subject to change because, among other
things:
- The basis for determining the fair value of the portion of tangible assets
and identifiable intangible assets acquired, net of liabilities assumed,
for the purposes of presenting the pro forma financial information in
accordance with U.S. GAAP, has not yet been completed in respect of the
acquisitions of minority interests in AXA Financial and Sun Life &
Provincial Holdings. Therefore, the actual financial position and results
of operations may differ, perhaps significantly, from the pro forma
amounts reflected in this prospectus because of a variety of factors,
including:
-- adjustments made to reflect the fair value of the portion of tangible
assets acquired and liabilities assumed on the closing date (as the
acquired portion of net assets is based on carrying values under U.S.
GAAP as of the date of the most recent balance sheet at June 30, 2000 for
Sun Life & Provincial Holdings and AXA Financial for purposes of
presenting the pro forma financial information below), that may increase
or decrease goodwill, perhaps materially, under U.S. GAAP depending on
the nature of the adjustment, and
-- the extent to which the excess of purchase price over the fair value of
the portion of tangible net assets acquired is attributable to
identifiable intangible assets, being the "Value of Purchased Business
In-force", to be amortized over the remaining insurance
152
<PAGE>
policy contract terms, which will decrease the amount allocated to
goodwill once it is determined, but would increase the amount charged
against income over the period of amortization, which is shorter than the
30-year goodwill amortization period.
- The capital gain on the sale of Donaldson, Lufkin & Jenrette under French
GAAP and U.S. GAAP is dependent on the carrying value of Donaldson,
Lufkin & Jenrette's net assets at the disposal date. The carrying value of
net assets of Donaldson, Lufkin & Jenrette is as of the date of the most
recent balance sheet at June 30, 2000 for the purposes of presenting the
pro forma financial information below.
- The purchase consideration for the minority interests in AXA Financial is
not yet final as (i) part of the consideration is based on the value of an
AXA ADS at the time of the consummation of the exchange offer and merger
(French GAAP only), (ii) the number of AXA Financial shares tendered in
the exchange offer may change as a result of the exercise of outstanding
options (impact calculation under both French GAAP and U.S. GAAP), and
(iii) under both French and U.S. GAAP the transaction costs associated
with this acquisition will not be known fully until the transaction is
completed and, therefore, an estimate has been used for the purpose of the
pro forma financial information. In addition, the cash portion of the
consideration will be primarily funded through debt financing. Pursuant to
a letter dated October 18, 2000, Bank of America International Limited,
Chase Manhattan plc, SG Investment Banking and UBS Warburg Ltd. have,
subject to specified conditions, committed to provide AXA with a
$5.0 billion multi-currency dual tranche credit facility. AXA also
currently intends to finance the offer and the merger partially with the
net proceeds of an offering of approximately $1.5 billion in aggregate
principal amount of subordinated notes. The subordinated notes will be
issued under a registration statement on Form F-3 (Registration No.
333-12872), which was filed with the SEC on November 17, 2000, allowing
for the issuance from time to time of up to $3.0 billion principal amount
of debt securities. AXA is considering increasing the principal amount of
debt securities that may be issued under this registration statement to
$5.0 billion. The size and terms of this offering will depend on a number
of factors, including market conditions prevailing at the time of the
offering. The allocation between the different sources of financing will
be determined by AXA and may be modified based on the market conditions
and such other factors as AXA may deem appropriate. For the purposes of
presenting the pro forma financial information below, we have used the
financing assumptions presented in Note 6. For further information on the
debt financing for the offer and merger, you should read the section
entitled "The Exchange Offer--Sources and Amounts of Funds", which is
included elsewhere in this prospectus.
- The cost of compensation attributable to outstanding options to acquire
shares of AXA Financial common stock, which will become immediately and
fully exercisable upon expiration of the initial offer period. The cost of
compensation is based on the difference between the market price of a
share of AXA Financial common stock at November 6, 2000 and the weighted
average strike price of the outstanding stock options. This cost will be
included in the purchase consideration under French GAAP and will likely
be recorded as compensation expense under U.S. GAAP.
- The impact of foreign exchange rates on the unaudited pro forma financial
information given that (i) the buyout of the minority interests in Sun
Life & Provincial Holdings was effected in pound sterling and the sale of
Donaldson, Lufkin & Jenrette and the buyout of minority interests in AXA
Financial will be effected in U.S. dollars, and (ii) AXA's functional and
reporting currency is the euro. For the purposes of presenting the pro
forma financial information below, the financial information has been
based on the historical foreign exchange rates in effect as of June 30,
2000 and the average foreign exchange rates for the six months ended
June 30, 2000 and for the year ended December 31, 1999 as set out
153
<PAGE>
below. THESE EXCHANGE RATES ARE DIFFERENT FROM THE EXCHANGE RATE USED FOR
CONVENIENCE TRANSLATIONS ELSEWHERE IN THIS PROSPECTUS.
<TABLE>
<CAPTION>
SUN LIFE & DONALDSON, LUFKIN
PROVINCIAL & JENRETTE AND
HOLDINGS AXA FINANCIAL
-------------------------------- -----------------------
<S> <C> <C>
Amounts for the year ended December 31, 1999
(average rate for the year)...................... E1.00=L0.66 E1.00=$1.06
Amounts as at June 30, 2000 (period-end rate)...... E1.00=L0.63 E1.00=$0.95
Amounts for the six months ended June 30, 2000
(average rate for the period).................... E1.00=L0.61 E1.00=$0.96
</TABLE>
The amounts pertaining to pro forma French GAAP and as reconciled to U.S.
GAAP for AXA, after taking effect of each of the three transactions, are also
expressed in U.S. dollars, the latter being presented solely for your
convenience and translated at the Euro Noon Buying Rate of E1.00 = $0.8583 on
November 7, 2000.
Accordingly, the allocations to goodwill and the determination of the
capital gain (net of tax) on the sale of Donaldson, Lufkin & Jenrette set forth
below are preliminary and have been made solely for the purpose of developing
the pro forma financial information presented below.
In addition to these three transactions, we have disclosed in AXA's
consolidated financial statements for the six months ended June 30, 2000 and for
the year ended December 31, 1999 other acquisitions which have been made within
the AXA group of companies since January 1, 2000, including (i) the buyout of
the minority shareholders in AXA China Region, whose financial year end is
September 30, (Hong Kong-December 1999), (ii) the acquisition of Nippon Dantai
(Japan-March 2000), (iii) two acquisitions undertaken by AXA Reinsurance (John
Hancock P&C Insurance Company and USF RE Insurance Company, which were
consolidated on January 1, 2000), and (iv) Alliance Capital's acquisition of
Sanford C. Bernstein & Co., Inc. (United States-October 2000). No pro forma
financial information relating to these acquisitions has been provided.
154
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
FRENCH GAAP
AT JUNE 30, 2000
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
AXA --------------------------------------------
HISTORICAL
UNAUDITED MINORITY AXA PRO FORMA
CONDENSED BUYOUT OF SALE OF MINORITY UNAUDITED
CONSOLIDATED SUN LIFE & DONALDSON, BUYOUT OF CONDENSED
BALANCE PROVINCIAL LUFKIN & AXA CONSOLIDATED
SHEET HOLDINGS JENRETTE FINANCIAL BALANCE SHEET
-------------- ------------ ----------- ----------- -----------------------
(EM) (EM) (EM) (EM) (EM) ($M)
<S> <C> <C> <C> <C> <C> <C>
Goodwill 5,434 1,923 (1) (204)(4b) 5,085 (5) 12,237 10,503
Investments including separate
account assets 439,321 -- (59,878)(4b) -- 383,816 329,429
4,373 (3)
Cash and cash equivalents 29,263 (3,625)(2a) (1,879)(4b) (1,993) 25,921 22,248
4,155 (3)
Deferred acquisition costs and
value of purchased business in
force 12,705 -- -- -- 12,705 10,904
Broker-dealer receivables 61,382 -- (58,667)(4b) -- 2,715 2,330
Other assets 41,454 -- (1,478)(4b) -- 39,976 34,311
-------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 589,557 (1,702) (113,579) 3,092 477,368 409,725
-------------------------------------------------------------------------------------------------------------------------------
Future policy benefits, other
policy liabilities, insurance
claims and claims expenses
(including separate account
liabilities) 372,939 -- -- -- 372,939 320,094
Total short and long term debt
(excluding subordinated debt
and mandatorily convertible
notes) 20,317 39 (2a) (9,185)(4b) 4,081 (6b) 15,252 13,090
Securities sold under repurchase
agreements 54,555 -- (54,551)(4b) -- 4 3
Broker-dealer related payables 51,412 -- (50,871)(4b) -- 541 464
Accrued expenses and other
liabilities 53,641 67 (1) (3,401)(4b) 38 (5) 52,705 45,237
2,360 (4c) --
-------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES, EXCLUDING
SUBORDINATED DEBT AND
MANDATORILY CONVERTIBLE NOTES 552,864 106 (115,648) 4,119 441,441 378,889
-------------------------------------------------------------------------------------------------------------------------------
Minority interests 8,342 (1,808)(2c) 1,087 (4b, (4,006)(6f) 3,615 3,103
4c)
Subordinated debt and
mandatorily convertible notes 6,967 -- (837)(4b) 1,747 (6b) 7,877 6,761
Shareholders' equity:
Ordinary shares and share
premium 12,786 -- -- 4,149 (5) 16,935 14,535
Retained earnings 8,599 1,820 (4c) (2,916)(5,6d) 7,503 6,440
-------------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY (NET
ASSETS) 21,385 -- 1,820 1,233 24,438 20,975
-------------- ------------ ----------- ----------- ----------- ---------
TOTAL LIABILITIES, MINORITY
INTERESTS, SUBORDINATED DEBT,
MANDATORILY CONVERTIBLE NOTES
AND SHAREHOLDERS' EQUITY 589,557 (1,702) (113,579) 3,092 477,368 409,725
-------------------------------------------------------------------------------------------------------------------------------
Net assets per ordinary share
(see Note 10c) 54.40 -- 4.63 2.94 58.36 50.09
Net assets per ADS (see Note
10a) 27.20 -- 2.31 1.47 29.18 25.05
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE NUMBER OF AXA ORDINARY SHARES OUTSTANDING ARE AS FOLLOWS: AS OF JUNE 30,
2000 -- 393.13 MILLION WHICH INCLUDES THE 30.22 MILLION ORDINARY SHARES OF AXA
ISSUED ON JUNE 15, 2000 TO FUND THE ACQUISITION OF THE MINORITY INTERESTS IN SUN
LIFE & PROVINCIAL HOLDINGS; AND AFTER THE CONSUMMATION OF THE EXCHANGE OFFER AND
SUBSEQUENT MERGER -- 418.75 MILLION ASSUMING ACCEPTANCE OF THE OFFER BY 100% OF
AXA FINANCIAL MINORITY SHAREHOLDERS (SEE NOTE 10C).
See accompanying Notes to the Unaudited Pro Forma Financial
Information which are an integral part of this information.
155
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 1--SUN LIFE & PROVINCIAL HOLDINGS--DETERMINATION AND ALLOCATION OF PURCHASE
PRICE
For the purposes of the pro forma financial information, the buyout of the
minority interests of Sun Life & Provincial Holdings is based on AXA's economic
interest in Sun Life & Provincial Holdings of 56.2% at June 30, 2000.
<TABLE>
<S> <C>
(EURO IN MILLIONS):
Consideration:
Cash payment of L2,239 million (see Note 2a).............. 3,589
Additional cash payment through loan notes (see Note
2a)..................................................... 39
Cost to settle outstanding employee stock options of Sun
Life & Provincial Holdings (see Note 2b)................ 44
Professional fees and other direct transaction expenses... 23
-----
Total cost to acquire the Sun Life & Provincial Holdings
minority interests (the purchase price)................... 3,695
Less: Preliminary book value of net assets acquired (see
Note 2c).................................................. 1,808
Less: Payment of special dividend (see Note 2d)............. (36)
-----
Excess of the purchase price over the fair value of the
tangible net assets acquired (goodwill on a preliminary
basis).................................................... 1,923(*)
=====
</TABLE>
------------------------
(*) Goodwill to be amortized over 30 years, approximately E64 million per year
NOTE 2--SUN LIFE & PROVINCIAL HOLDINGS--PRO FORMA BALANCE SHEET ADJUSTMENTS
All pound sterling to euro translations provided in Note 2 are based on the
pound sterling to euro exchange rate of L1.00=E1.6028 as of the closing date of
the transaction (July 12, 2000).
(a) On May 3, 2000, AXA announced a capital increase with preferential
subscription rights (see "Comparison of Certain Rights of AXA Shareholders
and AXA Financial Stockholders--Preferential Subscription Rights"). The
total net proceeds from the offering of 30.2 million newly issued AXA
ordinary shares was approximately E3,656 million (E277 million corresponding
to the nominal value of the ordinary shares issued plus E3,379 million in
share premium). Of the total net cash proceeds, approximately
E3,589 million has been used to fund the minority buyout in Sun Life &
Provincial Holdings.
According to the terms of the transaction, AXA obtained loan notes of
L24 million (approximately E39 million). The loan notes have an interest
rate of LIBOR less 0.75%, approximately 5.56%.
Total cash obtained from the capital increase and loan notes was
approximately E3,695 million of which E3,656 million in respect of the newly
issued ordinary shares was included in AXA's consolidated balance sheet at
June 30, 2000. Of the E3,695 million, E3,625 million was used to finance the
minority buyout in Sun Life & Provincial Holdings.
156
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 2--SUN LIFE & PROVINCIAL HOLDINGS--PRO FORMA BALANCE SHEET ADJUSTMENTS
(CONTINUED)
(b) The total cost of E44 million includes a cash payment of L8 million
(E13 million) to settle outstanding employee stock options of Sun Life &
Provincial Holdings which will not be exchanged for AXA share options,
E4 million representing the cost attributable to the remaining outstanding
employee stock options of Sun Life & Provincial Holdings to be exchanged for
AXA share options, and L17 million (E27 million) relating to a continuation
plan whereby the Sun Life & Provincial Holdings stock options will be
retained by the optionholders and at date of exercise will be converted into
an equivalent number of AXA shares.
(c) Net assets attributable to minority interests in AXA's consolidated balance
sheet at June 30, 2000.
(d) In connection with the transaction, a special dividend of 5 pence per share
has been paid by Sun Life and Provincial Holdings amounting, in the
aggregate, to approximately L22 million (E36 million).
NOTE 3--DONALDSON, LUFKIN & JENRETTE--DETERMINATION OF SELLING PRICE AND
CALCULATION OF CAPITAL GAINS
For the purposes of the pro forma financial information, the capital gain
from the sale of Donaldson, Lufkin & Jenrette is based on (i) total sales
proceeds using the Euro Noon Buying Rate of E1.00 = $0.861 on November 3, 2000,
the date on which the sale was completed, (ii) AXA's economic interest of 60.1%,
representing AXA's direct and indirect ownership interest of 58.5% in AXA
Financial at June 30, 2000 adjusted to reflect the increase in AXA's ownership
interest in AXA Financial as a result of AXA acquiring the outstanding minority
interest in Sun Life & Provincial Holdings in July 2000 as well as stock options
exercised up to November 6, 2000.
<TABLE>
<CAPTION>
TOTAL NET AXA
PROCEEDS GROUP SHARE
(EURO IN MILLIONS): ---------- -------------
<S> <C> <C>
Proceeds from sale of Donaldson, Lufkin & Jenrette:
Cash received--$3,577 million (see Note 4a)............... 4,155
Credit Suisse Group shares--$3,765 million (see Note
4a)..................................................... 4,373
-----
Assumed proceeds from the sale of Donaldson, Lufkin &
Jenrette.................................................. 8,528
=====
AXA's group share of the sale proceeds...................... 5,194
Less:
Preliminary book value of net assets sold (group share)
(see Note 4b)........................................... 1,662
Income tax expense on proceeds (see Note 4c).............. 1,401
Sale costs (net group share).............................. 17
-----
Preliminary capital gain (after-tax, group share) (see Note
4c)....................................................... 2,114
=====
</TABLE>
157
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 4--DONALDSON, LUFKIN & JENRETTE--PRO FORMA BALANCE SHEET ADJUSTMENTS
ALL TRANSLATIONS OF U.S. DOLLARS TO EURO IN NOTE 4 ARE BASED ON THE EURO
NOON BUYING RATE ON NOVEMBER 3, 2000 OF E1.00=$0.861.
(a) The sale of Donaldson, Lufkin & Jenrette was completed on November 3, 2000.
Total proceeds included cash of $2,377 million and 25.7 million shares of
the Credit Suisse Group. On November 6, 2000, the Credit Suisse Group
repurchased 6.4 million of its shares from AXA Financial and its affiliates
that were parties to the stock purchase agreement relating to the sale of
Donaldson, Lufkin & Jenrette for a consideration of $1,200 million pursuant
to the terms of that agreement. As a result, total cash received on the sale
of Donaldson, Lufkin & Jenrette amounted to $3,577 million (E4,155 million)
and the market value as of November 3, 2000 of the remaining 19.3 million
shares of the Credit Suisse Group after the repurchase of a portion by
Credit Suisse Group was $3,765 million (E4,373 million). Total consideration
in respect of this transaction therefore totaled $7,342 million
(E8,528 million).
(b) Elimination of historical assets and liabilities of Donaldson, Lufkin &
Jenrette (on a consolidated basis) as reported previously in AXA's
consolidated balance sheet as of June 30, 2000.
Net assets of Donaldson, Lufkin & Jenrette, after elimination of its own
minority interests, amounted to E1,956 million, as included previously in
AXA's consolidated balance sheet at June 30, 2000. This amount is reduced by
E294 million, which corresponds to the related cumulative translation
adjustment which would be recorded against earnings at the date of the
transaction and is recorded as a charge against retained earnings for the
purposes of the unaudited pro forma financial information. The net amount is
E1,662 million.
(c) The capital gain has not been included in the pro forma income statement but
reflected as an adjustment to AXA Financial's retained earnings and AXA
Group's share in AXA Financial's retained earnings. Total proceeds and
related tax expense, including transaction costs, for AXA before elimination
of minority interests in AXA Financial were E8,528 million and
E2,360 million, respectively; transaction costs were estimated to be
approximately $25 million (E29 million). The after-tax capital gain for AXA
is E2,114 million (group share) which is included in AXA's pro forma
retained earnings after the reduction of the cumulative translation
adjustment of E294 million. Therefore, the impact on AXA's pro forma
retained earnings is E1,820 million. The minority interest portion of the
after-tax capital gain (before consummation of the buyout of the minority
interests in AXA Financial) is included in AXA's pro forma minority
interests.
NOTE 5--AXA FINANCIAL--DETERMINATION AND ALLOCATION OF PURCHASE PRICE
For purposes of the pro forma financial information, the buyout of minority
interests of AXA Financial is based on AXA's 60.1% economic interest in AXA
Financial, representing AXA's direct and indirect ownership interest of 58.5% in
AXA Financial at June 30, 2000 adjusted to reflect the increase in ownership
that resulted from AXA's acquisition of the minority interests in Sun Life &
Provincial Holdings in July 2000 as well as stock options exercised up to
November 6, 2000.
Pursuant to the terms of the offer and merger described in this prospectus,
AXA proposes to acquire the entire common equity interest in AXA Financial by
(1) exchanging AXA ADSs and cash for all outstanding shares of AXA Financial
common stock other than shares already owned, directly
158
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 5--AXA FINANCIAL--DETERMINATION AND ALLOCATION OF PURCHASE PRICE
(CONTINUED)
or indirectly, by AXA or that are held by AXA Financial in treasury and
(2) promptly after completion of the offer, merging a wholly owned subsidiary,
AXA Merger Corp., with and into AXA Financial. Under the terms of the offer and
subsequent merger, AXA is offering to exchange $35.75 in cash and 0.295 of an
AXA ADS for each share of AXA Financial common stock (which corresponds to
$56.25 at November 6, 2000 based on the market price of an AXA ADS on that
date).
<TABLE>
<CAPTION>
(EURO IN MILLIONS):
<S> <C> <C>
Assumed consideration:
Cash in hand--$1,207 million (see Note 6a)................ 1,405
AXA ADSs to be issued--$3,561 million (see Note 6a)....... 4,149
Cash from debt financing--$5,003 million (see Note 6b).... 5,828
------
11,382
Assumed cost to settle outstanding employee stock options of
AXA Financial in cash (see Note 6c)....................... 587
Professional fees and other direct transaction expenses (see
Note 6e).................................................. 38
------
Assumed total cost to acquire AXA Financial minority
interests (the purchase price)............................ 12,007
Less: Preliminary book value of net assets acquired (see
Note 6f).................................................. 4,006
------
Excess of the purchase price over the fair value of the
tangible net assets acquired (goodwill on a preliminary
basis) (see Note 6d)...................................... 8,001
======
Allocation of Goodwill (see Note 6d):
Charged directly to shareholders' equity.................. 2,916
Goodwill asset (*)........................................ 5,085
------
Total..................................................... 8,001
======
</TABLE>
------------------------
(*) Goodwill to be amortized over 30 years, approximately E169 million per
year.
NOTE 6--AXA FINANCIAL: PRO FORMA BALANCE SHEET ADJUSTMENTS
ALL TRANSLATIONS OF US DOLLARS TO EURO IN NOTE 6 ARE BASED ON THE EURO NOON
BUYING RATE ON NOVEMBER 6, 2000 OF E1.00 = $0.8584.
(a) For purposes of the pro forma financial information, it is assumed that all
the AXA Financial minority shareholders will accept the offer. As of
November 6, 2000, based on the market price of an AXA ADS of $69.50 on that
date and the number of outstanding shares of AXA Financial common stock held
by minority shareholders (173.7 million), the consideration to be paid in
the offer corresponds to $56.25 per share of AXA Financial common stock. The
price per share of AXA Financial common stock translates into an aggregate
consideration to be paid of $9,771 million (E11,382 million). Based on this
assumed purchase consideration and the number of shares held by minority
shareholders at November 6, 2000, the cost to AXA and
159
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 6--AXA FINANCIAL: PRO FORMA BALANCE SHEET ADJUSTMENTS (CONTINUED)
AXA Merger Corp. of financing the exchange offer (excluding fees and
expenses relating to such financing) is expected to be as follows:
- cash of $6,210 million (E7,233 million), or $35.75 per share, which
will be provided partly from cash in hand and the remainder through the
use of a $5.0 billion multi-currency dual tranche credit facility (see
Note 6b) and the net proceeds of a $1.5 billion subordinated notes
offering (see Note 6b); and
- based on an exchange ratio of 0.295, approximately 25.6 million
ordinary shares of AXA, represented by 51.2 million AXA ADSs (since one
AXA ordinary share represents two AXA ADSs), will be issued by AXA,
which based on a market value for the AXA ADSs of $69.50 on
November 6, 2000 represents $3,561 million (E4,149 million).
Based on the above information, approximately 35% of the total purchase
consideration will be funded by ordinary shares to be issued by AXA in
the form of AXA ADSs.
(b) Cash to be obtained through debt financing is as summarized below:
$5.0 BILLION CREDIT FACILITY. The following amounts are available under the
$5.0 billion credit facility (i) up to $2.25 billion of unsecured
indebtedness under a 364-day revolving facility with an interest rate on the
amount drawn based on LIBOR plus a margin of 0.275% per year, and (ii) up to
an aggregate principal amount of $2.75 billion of unsecured term loans
maturing in three years, but in no event later than December 31, 2003, with
an interest rate on the amount drawn based on LIBOR or EURIBOR, as
applicable, plus a margin of 0.30% per year during the first year (including
a utilization fee of 0.025%), a margin of 0.325% per year during the second
year, and a margin of 0.35% per year during the third and final year.
SUBORDINATED DEBT. On November 17, 2000, AXA filed a registration statement
on Form F-3 (Registration No. 333-12872), registering $3.0 billion of debt
securities to be issued from time to time. AXA is considering increasing the
principal amount of debt securities registered under that registration
statement to $5.0 billion.
Based on current prevailing market conditions and other factors relevant to
the transaction, it is assumed, for purposes of presenting the unaudited pro
forma financial information, that AXA expects to finance the acquisition as
follows: (i) $3,503 million (E4,081 million) drawn under the $5.0 billion
credit facility, consisting of $753 million incurred under the revolving
facility and $2,750 million incurred under the term loan facility and
(ii) $1,500 million (E1,747 million) from the issuance of subordinated
notes. Therefore, the total amount of cash obtained through debt is assumed
to be $5,003 million (E5,828 million), in the aggregate. The final
allocation between the credit facility and the subordinated notes may differ
from the allocation assumed in connection with the preparation of the
unaudited pro forma financial information. The exact size and terms of the
offering of subordinated notes will depend on a number of factors, including
market conditions at the time of the offering.
160
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 6--AXA FINANCIAL: PRO FORMA BALANCE SHEET ADJUSTMENTS (CONTINUED)
For the purposes of preparing the unaudited pro forma financial information
an assumed blended average interest rate of 5.9% was used. The actual
interest rates may differ from the interest rates assumed for the
preparation of the unaudited pro forma financial information.
(c) The estimated compensation expense attributable to the outstanding options
to acquire shares of AXA Financial common stock which will become
immediately and fully exercisable upon the expiration of the initial offer
period is approximately $775 million (E903 million). On an after-tax basis,
using AXA Financial's statutory tax rate of 35%, the estimated cost
associated with these stock options is approximately $504 million (or
E587 million).
(d) In accordance with French GAAP, a portion of the goodwill can be recorded as
a charge directly against AXA consolidated shareholders' equity in
proportion to the value of shares issued to total purchase price. It is
assumed that approximately 35% (see Note 6a) of the total goodwill will be
charged against AXA consolidated shareholders' equity, as 35% of the total
purchase price is to be paid in AXA ordinary shares in the form of ADSs. The
remaining goodwill will be recorded as an asset and amortized over
30 years.
(e) Represents the estimated cost relating to professional fees and expenses in
connection with the transaction of E60 million (E38 million net of AXA's
statutory tax rate of 37.5%). Fees and expenses are preliminary and comprise
principally legal, finance and advisory costs, but exclude professional fees
and other direct expenses associated with the issuance of the debt to be
used to partly finance the offer and the merger.
(f) Elimination of net assets previously attributable to minority interests as
reported previously in AXA's consolidated balance sheet at June 30, 2000 and
adjusted to reflect the sale of Donaldson, Lufkin & Jenrette which is
presented separately in the pro forma financial information (see Note 4c).
161
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FRENCH GAAP
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
AXA HISTORICAL --------------------------------------------------
UNAUDITED MINORITY MINORITY
CONDENSED BUYOUT OF SALE OF BUYOUT
CONSOLIDATED SUN LIFE & DONALDSON, OF
STATEMENT OF PROVINCIAL LUFKIN & AXA
INCOME HOLDINGS JENRETTE FINANCIAL
-------------- ----------- ----------- ----------
(EM) (EM) (EM) (EM)
<S> <C> <C> <C> <C>
Gross premiums and financial 39,337 -- (7,061)(8a) --
services revenues,
including change in
unearned premium reserve
Net investment result 8,711 (1)(7a) (154)(8a) (172)(9a)
-------------------------------------------------------------------------------------------------
TOTAL REVENUES 48,049 (1) (7,215) (172)
-------------------------------------------------------------------------------------------------
Insurance benefits and (32,129) -- -- --
claims
Reinsurance ceded, net 53 -- -- --
Acquisition expenses (2,987) -- -- --
Administrative expenses (10,387) -- 6,582 (8a) --
Amortization of goodwill, (85) (32)(7b) 5 (8a) (85)(9b)
net
-------------------------------------------------------------------------------------------------
TOTAL BENEFITS, CLAIMS AND (45,534) (33) 6,587 (85)
OTHER DEDUCTIONS
-------------------------------------------------------------------------------------------------
Income before income tax 2,515 (33) (628)(8a) (257)
expense
Income tax (expense) (748) -- 221 (8a) 64 (9a)
benefit
Minority interests (560) 13 (7c) 238 (8a) 138 (9c)
Equity in income from (1) -- -- --
unconsolidated entities
-------------------------------------------------------------------------------------------------
NET INCOME (LOSS) IN 1,205 (20) (170)(8b) (55)
ACCORDANCE WITH FRENCH
GAAP
-------------------------------------------------------------------------------------------------
Net income (loss) per
ordinary share (see Note
10b)
--basic 3.32 (0.05) (0.43) (0.13)
--diluted 3.11 (0.05) (0.40) (0.12)
Net income (loss) per ADS
(see Note 10a)
--basic 1.66 (0.02) (0.22) (0.07)
--diluted 1.56 (0.02) (0.20) (0.06)
-------------------------------------------------------------------------------------------------
<CAPTION>
AXA PRO FORMA
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT
OF INCOME
---------------------------
(EM) ($M)
<S> <C> <C>
Gross premiums and financial 32,276 27,702
services revenues,
including change in
unearned premium reserve
Net investment result 8,384 7,196
----------------------------
TOTAL REVENUES 40,660 34,899
----------------------------
Insurance benefits and (32,129) (27,576)
claims
Reinsurance ceded, net 53 45
Acquisition expenses (2,987) (2,564)
Administrative expenses (3,805) (3,266)
Amortization of goodwill, (197) (169)
net
----------------------------
TOTAL BENEFITS, CLAIMS AND (39,065) (33,530)
OTHER DEDUCTIONS
----------------------------
Income before income tax 1,597 1,371
expense
Income tax (expense) (463) (397)
benefit
Minority interests (171) (147)
Equity in income from (1) (1)
unconsolidated entities
----------------------------
NET INCOME (LOSS) IN 961 825
ACCORDANCE WITH FRENCH
GAAP
----------------------------
Net income (loss) per
ordinary share (see Note
10b)
--basic 2.29 1.97
--diluted 2.21 1.90
Net income (loss) per ADS
(see Note 10a)
--basic 1.15 0.98
--diluted 1.11 0.95
----------------------------
</TABLE>
THE WEIGHTED AVERAGE NUMBER OF AXA ORDINARY SHARES OUTSTANDING ARE AS FOLLOWS:
FOR THE SIX MONTHS ENDED JUNE 30, 2000--363.31 MILLION (BASIC) AND
389.67 MILLION (DILUTED); AFTER THE CONSUMMATION OF THE SUN LIFE & PROVINCIAL
HOLDINGS TRANSACTION (AND THE ISSUANCE OF 30.22 MILLION ORDINARY SHARES OF AXA
ON JUNE 15, 2000 IN CONNECTION THEREWITH)--393.53 MILLION (BASIC) AND
419.89 MILLION (DILUTED); AND AFTER THE CONSUMMATION OF THE EXCHANGE OFFER AND
SUBSEQUENT MERGER--419.15 MILLION (BASIC) AND 445.51 MILLION (DILUTED) ASSUMING
ACCEPTANCE OF THE OFFER BY 100% OF AXA FINANCIAL MINORITY SHAREHOLDERS (SEE
NOTE 10B).
See accompanying Notes to the Unaudited Pro Forma Financial
Information which are an integral part of this information.
162
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FRENCH GAAP
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
AXA HISTORICAL --------------------------------------------
UNAUDITED MINORITY MINORITY
CONDENSED BUYOUT OF SALE OF BUYOUT AXA PRO FORMA
STATEMENT OF SUN LIFE & DONALDSON, OF UNAUDITED CONDENSED
CONSOLIDATED PROVINCIAL LUFKIN & AXA CONSOLIDATED STATEMENT
INCOME HOLDINGS JENRETTE FINANCIAL OF INCOME
-------------- ----------- ----------- ---------- -------------------------
(EM) (EM) (EM) (EM) (EM) ($M)
<S> <C> <C> <C> <C> <C> <C>
Gross premiums and financial services
revenues, including change in
unearned premium reserve............ 66,537 -- (9,671)(8a) -- 56,866 48,808
Net investment result................. 15,630 (2)(7a) (98)(8a) (344)(9a) 15,186 13,034
---------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES........................ 82,167 (2) (9,769) (344) 72,052 61,842
---------------------------------------------------------------------------------------------------------------------------------
Insurance benefits and claims......... (56,681) -- -- -- (56,681) (48,649)
Reinsurance ceded, net................ 808 -- -- -- 808 694
Acquisition expenses.................. (5,616) -- -- -- (5,616) (4,820)
Administrative expenses............... (15,863) -- 8,944 (8a) -- (6,919) (5,939)
Amortization of goodwill, net......... (634) (64)(7b) 8 (8a) (169)(9b) (859) (737)
---------------------------------------------------------------------------------------------------------------------------------
TOTAL BENEFITS, CLAIMS AND OTHER
DEDUCTIONS.......................... (77,986) (64) 8,952 (169) (69,267) (59,452)
---------------------------------------------------------------------------------------------------------------------------------
Income before income tax expense...... 4,183 (66) (817) (513) 2,785 2,391
Income tax expense.................... (1,292) 1 (7a) 276 (8a) 129 (9a) (887) (761)
Minority interests.................... (858) 179 (7c) 315 (8a) 269 (9c) (95) (82)
Equity in income from unconsolidated
entities............................ (10) -- -- -- (10) (9)
---------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) IN ACCORDANCE WITH
FRENCH GAAP......................... 2,021 114 (226)(8B) (115) 1,793 1,539
---------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per ordinary share
(see Note 10b)
-- basic............................ 5.73 0.30 (0.59) (0.28) 4.39 3.76
-- diluted.......................... 5.39 0.28 (0.56) (0.17) 4.21 3.61
Net income (loss) per ADS (see Note
10a)
--basic............................. 2.86 0.15 (0.29) (0.14) 2.19 1.88
--diluted........................... 2.70 0.14 (0.28) (0.13) 2.10 1.81
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE WEIGHTED AVERAGE NUMBER OF AXA ORDINARY SHARES OUTSTANDING ARE AS FOLLOWS:
FOR THE YEAR ENDED DECEMBER 31, 1999--352.99 MILLION (BASIC) AND 376.14 MILLION
(DILUTED); AFTER THE CONSUMMATION OF THE SUN LIFE & PROVINCIAL HOLDINGS
TRANSACTION (AND THE ISSUANCE OF 30.22 MILLION ORDINARY SHARES OF AXA ON
JUNE 15, 2000 IN CONNECTION THEREWITH)--383.21 MILLION (BASIC) AND
406.36 MILLION (DILUTED); AND AFTER THE CONSUMMATION OF THE EXCHANGE OFFER AND
SUBSEQUENT MERGER--408.83 MILLION (BASIC) AND 431.98 MILLION (DILUTED) ASSUMING
ACCEPTANCE OF THE OFFER BY 100% OF AXA FINANCIAL MINORITY SHAREHOLDERS (SEE
NOTE 10B).
See accompanying Notes to the Unaudited Pro Forma Financial Information which
are an
integral part of this information.
163
<PAGE>
NOTE 7--SUN LIFE & PROVINCIAL HOLDINGS--PRO FORMA INCOME STATEMENT
ADJUSTMENTS
(a) Based on an interest rate of 5.56% (see Note 2a), interest expense
arising on the debt issued in connection with this transaction has been
calculated as approximately E2 million per year before tax. This gives
rise to an assumed tax benefit of approximately E1 million using AXA's
statutory tax rate of 37.5%. Interest expense is included in the "net
investment result" and not in "administrative expenses" under French
GAAP.
(b) Preliminary goodwill attributable to the acquisition of E1,923 million
to be amortized over 30 years, or E64 million per year or E32 million for
six months (see Note 1). There is no tax effect.
(c) For the period indicated, reclassification of historical after-tax
income previously attributable to and included under the separate
heading, "Minority interests", in AXA's consolidated statements of
income.
NOTE 8--DONALDSON, LUFKIN & JENRETTE--PRO FORMA INCOME STATEMENT ADJUSTMENTS
(a) Elimination of Donaldson, Lufkin & Jenrette's historical revenues and
expenses (on a consolidated basis) as reported previously in AXA's
historical consolidated statements of income for the periods indicated.
(b) The capital gain from the sale of Donaldson, Lufkin & Jenrette has been
included only in pro forma retained earnings and has not been reflected
in the pro forma income statement (see Note 4c).
NOTE 9--AXA FINANCIAL--PRO FORMA INCOME STATEMENT ADJUSTMENTS
(a) Using the assumed blended average interest rate of 5.9% (see Note 6),
the pre-tax interest expense is approximately E344 million (or
E215 million on an after-tax basis) for a full year, and E172 million (or
E107 million on an after-tax basis) for a six-month period. AXA's
statutory tax rate is 37.5%. The actual interest rates may differ from
the interest rates assumed for purposes of preparing the unaudited pro
forma financial information. In addition, the final allocation of funds
between the credit facilities and the subordinated notes may change,
further impacting on the interest expense.
If the blended average interest rate on these borrowings increases or
decreases by 50 basis points, interest expense will increase or decrease
by E29 million, or E18 million net of tax, per year.
The unaudited pro forma financial information provided is based on the
assumption that all outstanding stock options would be exercised at the
closing of the initial offer period for a total consideration of
$504 million net of tax (E587 million). This assumption is based on the
terms of the offer whereby all outstanding stock options become
immediately and fully exercisable at the close of the offer period.
Assuming only 50% of the stock options are exercised and AXA Financial
purchases AXA ADR call options for the remaining 50%, the total amount of
cash obtained through debt financing would need to be increased by
$257 million (E300 million) to $5,260 million (E6,128 million).
Therefore, the increase in debt would increase interest expense by
E13 million net of tax per year.
(b) Preliminary goodwill attributable to the acquisition, to be amortized
over 30 years, of E169 million for a full year, or E85 million for a
six-month period (see Note 5). There is no tax effect.
164
<PAGE>
(c) For the period indicated, reclassification of historical after-tax
income previously attributable to and included under the separate
heading, "Minority interests", in AXA's consolidated statements of
income.
NOTE 10--NET INCOME PER ORDINARY SHARE ADJUSTMENTS
(a) Solely for convenience, the net income per ordinary share amounts have
been divided by two, the number of ADSs representing one ordinary share.
(b) The pro forma weighted average number of ordinary shares of AXA
presented below includes the capital increase to partly fund the buyout
of the minority interests in AXA Financial in connection with this
exchange offer and subsequent merger, assuming 100% acceptance of the
offer by the minority stockholders and without taking into account the
exercise of any AXA Financial stock options.
<TABLE>
<CAPTION>
PRO FORMA WEIGHTED AVERAGE NUMBER OF
SHARES (MILLIONS)
-------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED
JUNE 30, 2000 DECEMBER 31, 1999
-------------------- --------------------
(BASIC) (DILUTED) (BASIC) (DILUTED)
<S> <C> <C> <C> <C>
Existing AXA ordinary shares............................. 363.31 389.67 352.99 376.14
AXA shares issued to fund the Sun Life & Provincial
Holdings transaction (registered on June 15, 2000)..... 30.22 30.22 30.22 30.22
------ ------ ------ ------
393.53 419.89 383.21 406.36
Anticipated number of newly issued ordinary shares in the
form of AXA ADSs assuming 100% acceptance of the offer
(see Note 6a).......................................... 25.62 25.62 25.62 25.62
------ ------ ------ ------
419.15 445.51 408.83 431.98
====== ====== ====== ======
</TABLE>
(c) The pro forma number of ordinary shares in issue of AXA presented below
includes the capital increase to fund the buyout of the minority
interests in Sun Life & Provincial Holdings and to partly fund the buyout
of the minority interest in AXA Financial in connection with this
exchange offer and subsequent merger, assuming 100% acceptance of the
offer by the minority stockholders and without taking into account the
exercise of any AXA Financial stock options.
<TABLE>
<CAPTION>
SHARES IN ISSUE
(MILLIONS)
---------------
<S> <C>
Existing AXA ordinary shares (at June 30, 2000)*............ 393.13
Anticipated number of newly issued ordinary shares in the
form of AXA ADSs assuming 100% acceptance of the offer
(see Note 6a)............................................. 25.62
------
418.75
======
</TABLE>
------------------------
(*) Already includes the 30.22 million ordinary shares of AXA issued on
June 15, 2000 and used to fund the acquisition of the minority interests in
Sun Life & Provincial Holdings.
165
<PAGE>
SIGNIFICANT DIFFERENCES BETWEEN FRENCH GAAP AND U.S. GAAP
The pro forma financial information has been prepared in accordance with
French GAAP, which differs in certain material respects from U.S. GAAP.
The main differences between French GAAP and U.S. GAAP that are relevant to
the pro forma financial information relate to:
(i) PURCHASE ACCOUNTING FOR ACQUISITION OF MINORITY INTERESTS. Under French
GAAP goodwill is determined based on the difference between the
purchase price (at the closing date) including transaction costs, the
cost of converting outstanding stock options of the target company in
an acquisition of a minority interest and the carrying value of net
assets at the date of acquisition. The difference represents goodwill.
A portion of goodwill is charged directly to shareholders' equity to
the extent that shares are issued in connection with the transaction.
The remaining amount is recorded as a goodwill asset and amortized over
the remaining estimated useful life.
Under U.S. GAAP goodwill is determined based on the difference between
the purchase price (determined using the average market rate over a
period consisting of a number of days before and after the date on which
the merger agreement is signed and announced), including transaction
costs, and the fair value of net identifiable assets at the date of
acquisition. The difference represents total goodwill which is recorded
as an asset and amortized over the remaining estimated useful life. The
cost of converting outstanding stock options of the target company in an
acquisition of a minority interest would likely be treated as a
compensation expense, and therefore, would be excluded from the purchase
price.
As previously described, the allocation to goodwill under both French
GAAP and U.S. GAAP is preliminary and, therefore, the purchase
accounting adjustments from French GAAP to U.S. GAAP is preliminary.
(ii) TREATMENT OF THE UNREALIZED INVESTMENT GAINS OR LOSSES ATTRIBUTABLE TO
U.K. WITH-PROFIT CONTRACTS ADMINISTERED BY SUN LIFE & PROVINCIAL
HOLDINGS' LIFE INSURANCE SUBSIDIARY. Under French GAAP, in accounting
for U.K. with-profit contracts, revenue and expense are matched in net
income since both changes in the estimated fair values of assets
allocated to the U.K. with-profit contracts and corresponding increases
or reductions in the liability for U.K. with-profit policyholder
benefits. U.S. GAAP, which has developed in a different environment
than that in which the U.K. with-profit contract was developed,
requires that the change in unrealized investment gains or losses on
assets allocated to U.K. with-profit contracts be excluded from net
income, while requiring recognition of the corresponding change in the
liability for with-profit policyholder benefits in net income.
Accordingly, AXA believes this exclusion under U.S. GAAP results in
amounts that do not fully reflect the economic effect of the U.K.
with-profit contracts. An increase in the estimated fair value of these
assets results in an increase in the liability for policyholder
benefits and a reduction in AXA's consolidated U.S. GAAP net income
and, conversely, a decline in the estimated fair value of these assets
results in a decrease in the liability for policyholder benefits and an
increase in AXA's consolidated net income. As a result, under U.S. GAAP
the unrealized investment gains or losses are not recognized in
earnings but recorded in "Other comprehensive income" being a separate
component within Shareholders' equity. Prior to the acquisition of the
minority interests in Sun Life & Provincial Holdings, the amount of the
net loss from the Sun Life & Provincial Holdings operations
attributable to the minority interests would have been reflected under
the balance sheet and income statement caption of "Minority interests".
As a consequence of the acquisition of the minority interests, the
amount of the net unrealized investment gains or losses previously
166
<PAGE>
attributable to the minority interests of Sun Life & Provincial
Holdings will be recorded in AXA's "Other comprehensive income".
Further details on the U.K. with-profit life contracts can be found in
the 1999 AXA Form 20-F, under "Item 1--Description of Business--U.K.
Life Insurance Group", which is incorporated by reference in this
prospectus.
We have presented below AXA's consolidated net income in accordance with
both (i) U.S. GAAP and (ii) U.S. GAAP, except for the adjustment for the change
in unrealized investment gains or losses on assets allocated to the U.K.
with-profit contracts in Sun Life & Provincial Holdings' life insurance
operations, net of deferred tax. AXA believes that this second presentation is
more meaningful under the circumstances.
The differences, as they affect the historical consolidated financial
statements of AXA, are described in more detail together, where appropriate,
with an explanation of the method used to determine the adjustments to net
income and shareholders' equity in Note 28 of the 1999 AXA Form 20-F, which is
incorporated by reference in this prospectus.
The following information summarizes the material adjustments which
reconciles the pro forma net income and pro forma shareholders' equity under
French GAAP to the amounts that would have been reported in accordance with U.S.
GAAP.
167
<PAGE>
UNAUDITED RECONCILIATION FROM FRENCH GAAP TO U.S. GAAP:
<TABLE>
<CAPTION>
NET INCOME SHAREHOLDERS' EQUITY
-------------------------------------------------- ------------------------
SIX MONTHS ENDED YEAR ENDED
NOTE JUNE 30, 2000 DECEMBER 31, 1999 AT JUNE 30, 2000
-------- ---------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EM $M EM $M EM $M
AXA (HISTORICAL) - (*)
Amounts in accordance with
French GAAP 1,205 1,034 2,021 1,735 21,385 18,355
Adjustments to reconcile
from French GAAP to U.S.
GAAP (21) (18) (812) (697) 5,930 5,090
---------------------- ---------------------- ------------------------
Amounts as reported under
U.S. GAAP (*) 1,184 1,016 1,209 1,038 27,315 23,445
---------------------- ---------------------- ------------------------
AXA (PRO FORMA)-
PRO FORMA ADJUSTMENTS UNDER FRENCH
GAAP (***)
- Minority buyout in Sun
Life & Provincial
Holdings (20) (17) 114 98 - -
- Sale of Donaldson,
Lufkin & Jenrette (170) (146) (226) (194) 1,820 1,562
- Minority buyout in AXA
Financial (55) (46) (115) (99) 1,233 1,058
---------------------- ---------------------- ------------------------
(244) (209) (227) (195) 3,053 2,620
---------------------- ---------------------- ------------------------
Pro Forma French GAAP to U.S. GAAP
adjustments (**) -
- Minority buyout in Sun
Life & Provincial
Holdings (11c) 104 89 (892) (766) - -
- Sale of Donaldson,
Lufkin & Jenrette (11d) - - - - - -
- Minority buyout in AXA
Financial (11a,e) (42) (36) (58) (50) 1,842 1,581
---------------------- ---------------------- ------------------------
62 53 (950) (816) 1,842 1,581
---------------------- ---------------------- ------------------------
AXA (PRO FORMA) AMOUNTS IN
ACCORDANCE WITH U.S. GAAP 1,002 860 32 27 32,210 27,646
------------------------------------------------------------------------------------------------------------------------------
AXA (Pro Forma) Amounts in
accordance with U.S. GAAP 1,002 860 32 27 32,210 27,646
Change in unrealized investment
gains or losses on assets
allocated to U.K. with-profit
contracts, net of deferred tax
- AXA (Historical) (*) (218) (187) 1,030 884 206 177
- Pro forma adjustment (11c) (170) (146) 835 716 - --
--------- --------- --------- --------- --------- ---------
AXA (PRO FORMA) AMOUNTS IN
ACCORDANCE WITH U.S. GAAP, EXCEPT
FOR ADJUSTMENT FOR UNREALIZED
INVESTMENT GAINS OR LOSSES ON
ASSETS ALLOCATED TO U.K.
WITH-PROFIT CONTRACTS 614 527 1,897 1,627 32,416 27,823
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) As previously reported in AXA's audited historical consolidated financial
statements provided in the 1999 AXA Form 20-F, and AXA's unaudited interim
consolidated financial statements for the six-month period ended June 30, 2000.
(**) There were no material French GAAP to U.S. GAAP adjustments arising from
the financing of either the buyout of the minority interests in Sun Life &
Provincial Holdings or the buyout of the minority interests in AXA Financial.
Adjustments primarily relate to material differences in purchase accounting
between French GAAP and U.S. GAAP. Refer to Note 11 for further details on these
differences.
(***) See Unaudited Pro Forma Condensed Consolidated Balance Sheet and
Statements of Income (as appropriate) which have been prepared under French
GAAP.
168
<PAGE>
NET INCOME PER ORDINARY SHARE/ADS:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER
JUNE 30, 2000 31, 1999
----------------------------------------- -----------------------------------------
AXA AXA AXA AXA
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
------------------- ------------------- ------------------- -------------------
IN ACCORDANCE WITH U.S. GAAP E $ E $ E $ E $
---------------------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net income per ordinary share (see Note
12b)....................................
-- Basic................................ 3.30 2.83 2.41 2.07 3.46 2.97 0.08 0.07
-- Diluted.............................. 3.13 2.69 2.34 2.00 3.32 2.85 0.18 0.15
Net income per ADS (see Note 12a)
-- Basic................................ 1.65 1.42 1.21 1.04 1.73 1.48 0.04 0.03
-- Diluted.............................. 1.57 1.34 1.17 1.00 1.66 1.42 0.09 0.08
---------------------------------------------------------------------------------------------------------------------------------
IN ACCORDANCE WITH U.S. GAAP, EXCEPT FOR
ADJUSTMENT FOR UNREALIZED INVESTMENT
GAINS OR LOSSES ON ASSETS ALLOCATED TO
U.K. WITH-PROFIT CONTRACTS
Net income per ordinary share (see Note
12b)
-- Basic................................ 2.69 2.31 1.48 1.27 6.41 5.50 4.68 4.02
-- Diluted.............................. 2.56 2.20 1.46 1.24 6.08 5.22 4.54 3.90
Net income per ADS (see Note 12a)
-- Basic................................ 1.35 1.15 0.74 0.64 3.21 2.75 2.34 2.01
-- Diluted.............................. 1.28 1.10 0.73 0.62 3.04 2.61 2.27 1.95
---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS PER ORDINARY SHARE/ADS:
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30, 2000
-----------------------------------------
AXA HISTORICAL AXA PRO FORMA
------------------- -------------------
IN ACCORDANCE WITH U.S. GAAP E $ E $
---------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Net assets (in Euro millions)............................... 27,315 23,445 32,210 27,646
- per ordinary share (see Note 12c)....................... 70.31 60.34 77.78 66.76
- per ADS (see Note 12a).................................. 35.15 30.17 38.89 33.38
-------------------------------------------------------------------------------------------------------
IN ACCORDANCE WITH U.S. GAAP, EXCEPT FOR ADJUSTMENT IN
UNREALIZED INVESTMENT GAINS ON REAL ESTATE ALLOCATED TO
U.K. WITH-PROFIT CONTRACTS
Net assets (in Euro millions)............................... 27,521 23,621 32,416 27,823
- per ordinary share (see Note 12c)....................... 70.84 60.80 78.27 67.18
- per ADS (see Note 12a).................................. 35.42 30.40 39.14 33.59
-------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Financial Information
which are an integral part of this information.
169
<PAGE>
DETERMINATION AND ALLOCATION OF PURCHASE PRICE (FRENCH GAAP TO U.S. GAAP
ADJUSTMENT)
<TABLE>
<CAPTION>
(IN EURO MILLIONS): SUN LIFE & PROVINCIAL HOLDINGS AXA FINANCIAL
------------------- ------------------------------ --------------
<S> <C> <C>
Preliminary goodwill in accordance with French GAAP (see
Notes 1
and 5).................................................... 1,923 5,085
Addback of goodwill charged directly to shareholders" equity
under French GAAP......................................... -- 2,916
Adjustment to the basis for determining the purchase price
(see Note 11a)............................................ -- (360)
Less: Cost to settle outstanding employee stock options of
Sun Life & Provincial Holdings and AXA Financial (see
Notes 1, 5 and 11b)....................................... (44) (587)
Preliminary book value of net assets acquired:
(Increase) Decrease in Book value of net assets acquired
(French GAAP to U.S. GAAP adjustment), previously
included under the heading "Minority interests" in AXA's
consolidated condensed balance sheet under U.S. GAAP
(See Note 11c).......................................... (617) 460
----- -----
Excess of the purchase price over the fair value of the
tangible net assets acquired (goodwill on a preliminary
basis) in accordance with U.S. GAAP (see Note 11b)........ 1,262 7,514
===== =====
GOODWILL AMORTIZATION USING 30 YEARS:
Under French GAAP (see Notes 1 and 5)..................... (64) (169)
Under U.S. GAAP........................................... (42) (250)
----- -----
Increase (decrease) to net income under U.S. GAAP......... 22 (81)
===== =====
</TABLE>
NOTE 11--PRO FORMA ADJUSTMENTS (FRENCH GAAP TO U.S. GAAP)
(a) DETERMINATION OF PURCHASE PRICE ON AN EXCHANGE OFFER: Under French GAAP, the
purchase price will be determined based on the market price of an AXA ADS
represented by an ADR at the closing date. Under U.S. GAAP, the purchase
price will be determined based on the average market price of the AXA ADS
represented by an ADR over a period starting before and ending after the
date the Merger Agreement was signed and announced (October 17, 2000).
(b) ACCOUNTING FOR STOCK-BASED COMPENSATION: Under French GAAP, the cost of
settling or exchanging outstanding share options in connection with an
acquisition of a minority interest in a subsidiary can be included in the
total purchase price. Under U.S. GAAP, such costs are not permitted to be
included in the purchase price as it is in connection with an acquisition by
a principal stockholder and, accordingly, such costs would likely be treated
as compensation expense, and, therefore, would be excluded from the purchase
price.
(c) SUN LIFE & PROVINCIAL HOLDINGS ADJUSTMENTS: The French GAAP to U.S. GAAP
adjustment is primarily attributable to the treatment of the unrealized
investment gains or losses attributable to the U.K. with-profit contracts
administered by Sun Life & Provincial Holdings' life insurance subsidiary.
As previously stated, U.S. GAAP requires the change in unrealized investment
gains or losses on assets allocated to U.K. with-profit contracts to be
excluded from net income, while requiring recognition of the corresponding
change in the liability for with-profit policyholder benefits in net income.
This gives rise to a net loss from the Sun Life & Provincial Holdings
operations under U.S. GAAP as the unrealized gains or losses are not
recorded in operating results but recorded in "Other comprehensive income,"
a separate component within shareholders' equity. Consequently, prior to the
acquisition the amount of the net loss from the Sun Life & Provincial
Holdings operations attributable to the minority interests would have been
reflected under the balance sheet caption of "Minority interests". As AXA
has acquired the remaining 43.8% minority interests (at June 30, 2000), the
amount of the net loss attributable to the minority interests must be
reported within AXA's consolidated net income (group share),
170
<PAGE>
NOTE 11--PRO FORMA ADJUSTMENTS (FRENCH GAAP TO U.S. GAAP) (CONTINUED)
with a corresponding reclassification to "Other comprehensive income" in
AXA's consolidated shareholders' equity, to record the unrealized investment
gains previously attributable to the minority interests of Sun Life &
Provincial Holdings. Because "Retained earnings" decreases and "Other
comprehensive income" increases, Shareholder's equity remains unchanged
(except for real estate adjusted from market value to depreciated cost).
(d) DONALDSON, LUFKIN & JENRETTE ADJUSTMENTS: The French GAAP to U.S. GAAP
adjustments attributable to Donaldson, Lufkin & Jenrette are not significant
as there are relatively few differences in accounting principles.
(e) AXA FINANCIAL ADJUSTMENTS: The net income French GAAP to U.S. GAAP
adjustment for AXA Financial primarily relates to the additional goodwill
expense recorded under U.S. GAAP of E93 million. In addition, net assets
under U.S. GAAP are lower than under French GAAP for AXA Financial due to
(i) purchase GAAP adjustments recognized under U.S. GAAP which have not been
recognized in French GAAP in historical transactions, and (ii) the treatment
of certain insurance liabilities. The impact on shareholders' equity is
comprised of: (i) the increase in shareholders' equity under U.S. GAAP for
the reversal of the E2,916 million excess of purchase price taken as a
direct charge against shareholders' equity under French GAAP (representing
the proportion of purchase price funded by AXA ADSs), (ii) the decrease of
E487 million due to a decrease in the purchase price under U.S. GAAP of
E947 million offset by a decrease in net assets under U.S. GAAP of
E460 million, and (iii) the decrease in shareholders' equity under U.S. GAAP
of E587 million relating to the non-recurring compensation expense
associated with the AXA Financial stock options.
NOTE 12--NET INCOME PER ORDINARY SHARE ADJUSTMENTS UNDER U.S. GAAP
(a) Solely for convenience, the net income per ordinary share amounts have
been divided by two, the number of ADSs representing one ordinary share.
(b) The pro forma weighted average number of ordinary shares of AXA
presented below includes the capital increase to fund the buyout of the
minority interests in Sun Life & Provincial Holdings and issuance of
additional AXA ordinary shares in the form of AXA ADSs to partly fund the
buyout of the minority interests in AXA Financial in connection with this
exchange offer and subsequent merger, assuming 100% acceptance of the
offer by the minority stockholders and without taking into account the
exercise of any AXA Financial stock options.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
------------------------------------------- -------------------------------------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
-------------------- -------------------- -------------------- --------------------
(BASIC) (DILUTED) (BASIC) (DILUTED) (BASIC) (DILUTED) (BASIC) (DILUTED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WEIGHTED AVERAGE NUMBER OF
ORDINARY SHARES
(IN MILLIONS)
Under French GAAP (see Note 10b).... 363.31 389.67 419.95 445.51 352.99 376.14 408.83 431.98
U.S. GAAP adjustment for Treasury
shares............................ (4.15) (4.15) (4.15) (4.15) (3.67) (3.67) (3.67) (3.67)
------ ------ ------ ------ ------ ------ ------ ------
Under U.S. GAAP..................... 359.16 385.52 415.00 441.36 349.32 372.47 405.16 428.31
------ ------ ------ ------ ------ ------ ------ ------
</TABLE>
(c) The pro forma number of ordinary shares in issue of AXA presented below
includes the capital increase to fund the buyout of the minority interests
in Sun Life & Provincial Holdings and issuance of additional AXA ordinary
shares to partly fund the buyout of the minority interests in AXA Financial
in connection with this exchange offer and subsequent merger,
171
<PAGE>
assuming 100% acceptance of the offer by the minority stockholders and
without taking into account the exercise of any AXA Financial stock
options.
<TABLE>
<CAPTION>
AT JUNE 30, 2000*
------------------------
NUMBER OF ORDINARY SHARES OF AXA IN ISSUE: HISTORICAL PRO FORMA
(IN MILLIONS) ---------- -----------
<S> <C> <C>
Under French GAAP (see Note 10c).......................... 393.13 418.75
U.S. GAAP adjustment for treasury shares.................. (4.61) (4.61)
------ ------
Under U.S. GAAP........................................... 388.52 414.14
------ ------
</TABLE>
------------------------------
* Already includes the 30.22 million ordinary shares of AXA issued and
registered on June 15, 2000 and used to fund the acquisition of the minority
interests in Sun Life & Provincial Holdings.
172
<PAGE>
NOTE 13--TREATMENT OF THE SALE OF DONALDSON, LUKFIN & JENRETTE
On November 3, 2000, AXA's interest in Donaldson, Lukfin & Jenrette was sold
to the Credit Suisse Group. The pro forma impact of this disposal on AXA's
consolidated balance sheet as at June 30, 2000 and AXA's consolidated statement
of income for the six months ended June 30, 2000 and for the year ended
December 31, 1999 is included in the tables presented previously within this
section of the prospectus.
In accordance with U.S. GAAP, the sale of Donaldson, Lufkin & Jenrette is
regarded as a discontinued operation and, therefore, the net income and net
income per ordinary share (on a basic and diluted basis) will be restated for
the year ending December 31, 2000 and for the prior reporting years ended
December 31, 1999 and 1998 to reflect net income from continuing operations and
net income from the discontinued operations of Donaldson, Lukfin & Jenrette.
Such presentational requirements do not exist under French GAAP and, therefore
the presentation of the consolidated statement of income for AXA in accordance
with French GAAP will not change in future periods. The changes to the
presentation in accordance with U.S. GAAP will be reflected in the notes to the
consolidated financial statements which will be included in AXA's Annual Report
on Form 20-F for the year ended December 31, 2000. In this regard, we provide
below supplemental information regarding the impact of the sale of Donaldson,
Lufkin & Jenrette as it relates to AXA's consolidated net income in accordance
with U.S. GAAP for the six months ended June 30, 2000 and 1999 and for each of
the years ended December 31, 1999, 1998 and 1997.
The financial information presented below (i) is unaudited, (ii) is not
indicative of either AXA's consolidated results of operations that would have
occurred had this transaction taken place in earlier periods or AXA's future
consolidated results of operations, (iii) excludes the operating results of
Donaldson, Lufkin & Jenrette with no further accounting or presentational
adjustments, and (iv) does not include either the capital gain on the disposal
of Donaldson, Lukfin & Jenrette or any
173
<PAGE>
potential investment income earned on the proceeds obtained from the disposal,
such as dividend income on the Credit Suisse Group shares.
<TABLE>
<CAPTION>
DERIVED FROM FINANCIAL
INFORMATION PREPARED IN
ACCORDANCE WITH U.S.
GAAP, EXCEPT FOR
DERIVED FROM ADJUSTMENT FOR CHANGE IN
FINANCIAL INFORMATION DERIVED FROM FINANCIAL UNREALIZED INVESTMENT
PREPARED IN INFORMATION PREPARED IN GAINS OR LOSSES ON ASSETS
(IN EURO MILLIONS EXCEPT ACCORDANCE WITH ACCORDANCE WITH U.S. ALLOCATED TO UK WITH-
PER ORDINARY SHARE DATA IN EURO) U.S. GAAP GAAP PROFIT CONTRACTS
------------------------------------ --------------------- ------------------------------ ------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------------- ------------------------------ ------------------------------
NET INCOME PER NET INCOME PER
ORDINARY SHARE ORDINARY SHARE
NET ------------------- NET -------------------
TOTAL REVENUES INCOME BASIC DILUTED INCOME BASIC DILUTED
--------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE SIX MONTHS ENDED
JUNE 30, 2000
AXA Historical.................... n/a 1,184 3.30 3.13 966 2.69 2.56
DLJ............................... n/a (170) (0.48) (0.42) (170) (0.47) (0.41)
AXA, excluding DLJ................ n/a 1,014 2.82 2.71 796 2.22 2.15
FOR THE SIX MONTHS ENDED
JUNE 30, 1999
AXA Historical.................... n/a 919 2.68 2.50 1,515 4.41 4.11
DLJ............................... n/a (105) (0.31) (0.26) (105) (0.31) (0.25)
AXA, excluding DLJ................ n/a 814 2.37 2.24 1,410 4.10 3.86
FOR THE YEAR ENDED
DECEMBER 31, 1999
AXA Historical.................... 56,343 1,209 3.46 3.32 2,239 6.41 6.08
DLJ............................... (9,768) (226) 0.65 (0.56) (226) (0.65) (0.55)
AXA, excluding DLJ................ 46,575 983 2.81 2.76 2,013 5.76 5.53
FOR THE YEAR ENDED
DECEMBER 31, 1998
AXA Historical.................... 48,739 749 2.24 2.11 1,457 4.36 4.09
DLJ............................... (7,595) (129) 0.38 (0.34) (129) (0.39) (0.33)
AXA, excluding DLJ................ 41,144 620 1.86 1.77 1,328 3.97 3.76
FOR THE YEAR ENDED
DECEMBER 31, 1997
AXA Historical.................... 43,458 310 0.98 0.90 1,263 3.99 3.74
DLJ............................... (6,852) (153) (0.48) (0.45) (153) (0.46) (0.41)
AXA, excluding DLJ................ 36,606 157 0.50 0.45 1,110 3.53 3.33
</TABLE>
174
<PAGE>
THE COMPANIES
AXA
25, avenue Matignon
75008 Paris
France
Tel.: (011-33-1) 40 75 57 00
AXA is the holding company for an international group of financial services
companies focusing on insurance and asset management. With gross premiums and
financial services revenues of E66.5 billion for the year ended December 31,
1999 and E41.0 billion for the six months ended June 30, 2000, AXA is one of the
largest insurance groups in the world and the largest French insurance group. At
December 31, 1999 AXA had nearly 140,000 employees and agents working in more
than 60 countries.
AXA has five operating business segments:
- Life Insurance,
- Property and Casualty Insurance,
- International Insurance,
- Asset Management, and
- Other Financial Services.
AXA holds its interest in its U.S. life insurance and asset management
operations through AXA Financial.
LIFE INSURANCE SEGMENT
AXA's Life Insurance Segment offers a range of life insurance products
primarily in the United States, France, the United Kingdom, Australia, Japan,
Germany and Belgium, as well as in certain other countries in Western Europe,
North America and the Asia/Pacific region. These products include both
retirement products and life and health products for individuals and groups,
with an emphasis on separate account (unit-linked) products and other
savings-oriented products. In 1999, the Life Insurance Segment accounted for
E37.1 billion or 56% of AXA's gross premiums and financial services revenues.
For the six months ended June 30, 2000, the Life Insurance Segment accounted for
E21.4 billion or 52% of AXA's gross premiums and financial services revenues.
PROPERTY AND CASUALTY INSURANCE SEGMENT
AXA's Property and Casualty Insurance Segment offers a range of property and
casualty insurance products principally in France, Germany, the United Kingdom
and Belgium, and to a lesser extent in other countries in Western Europe, North
America and the Asia/Pacific region. In 1999, the Property and Casualty
Insurance Segment accounted for E13.6 billion or 20% of AXA's gross premiums and
financial services revenues. For the six months ended June 30, 2000, the
Property and Casualty Insurance Segment accounted for E8.4 billion or 20% of
AXA's gross premiums and financial services revenues.
INTERNATIONAL INSURANCE SEGMENT
AXA has recently completed the reorganization of its reinsurance operations
and large commercial risk insurance operations. The reorganization was prompted
by the global presence and corresponding needs of AXA's largest clients and
would enable AXA to provide a range of global insurance products and services on
a worldwide basis. As a result of the reorganization, AXA
175
<PAGE>
Reinsurance, AXA Global Risks and AXA Cessions, the principal companies in this
segment, were integrated into one company named AXA Corporate Solutions. The
services offered by AXA Corporate Solutions include loss prevention, actuarial
studies/risk analysis, run-off management (claims administration) and insurance
and reinsurance risk transfer. Insurance and reinsurance risk transfer includes
non-traditional reinsurance through the capital markets, a service in which the
insurer retains risk but financial instruments, such as derivatives, are used to
finance the risks either prior to or after the loss has occurred. In 1999, the
International Insurance Segment accounted for E3.1 billion or 5% of AXA's gross
premiums and financial services revenues. For the six months ended June 30,
2000, the International Insurance Segment accounted for E2.3 billion or 6% of
AXA's gross premiums and financial services revenues.
ASSET MANAGEMENT SEGMENT
Asset management has become increasingly important to AXA both from a
strategic and profitability perspective. The development of third party asset
management activities is a key part of AXA's financial services strategy,
capitalizing on existing strengths and expanding client base. As of June 30,
2000 and based on the market values of the assets as of that date, AXA had funds
under management of E882 billion, including assets managed on behalf of third
party clients of E429 billion. AXA has asset management specialists in each of
its major markets: Western Europe, the United States and the Asia/Pacific
region. Its two principal asset management subsidiaries are Alliance Capital and
AXA Investment Managers. AXA has traditionally offered asset management services
to institutional clients. In recent years, AXA has experienced strong growth in
sales of mutual funds to individuals and retail clients. In 1999, the Asset
Management Segment accounted for E1.9 billion or 3% of AXA's gross premiums and
financial services revenues. For the six months ended June 30, 2000 the Asset
Management Segment accounted for E1.2 billion or 3% of AXA's gross premiums and
financial services revenues.
OTHER FINANCIAL SERVICES SEGMENT
Prior to the sale of Donaldson, Lufkin & Jenrette, the operations of the
Other Financial Services Segment consisted primarily of the U.S.-based
investment and merchant bank Donaldson, Lufkin & Jenrette. Donaldson, Lufkin &
Jenrette was sold to the Credit Suisse Group on November 3, 2000, see "Recent
Developments". In addition, AXA conducts other financial services activities,
primarily through subsidiaries in Belgium and France. The Other Financial
Services Segment in 1999 accounted for E10.8 billion or 16% of AXA's gross
premiums and financial services revenues. For the six months ended June 30,
2000, the Other Financial Services Segment accounted for E7.6 billion or 19% of
AXA's gross premiums and financial services revenues. In 1999 and for the six
months ended June 30, 2000, approximately 90% of AXA's financial services
revenues were attributable to Donaldson, Lufkin & Jenrette.
AXA MERGER CORP.
The Corporation Trust Center
1209 Orange Street
Wilmington, DE 19801
Tel.: (302) 658-7581
AXA Merger Corp. is a Delaware corporation and wholly owned subsidiary of
AXA formed in connection with the offer and merger. AXA Merger Corp. was formed
in connection with the offer and the merger and has not carried on any
activities other than in connection with the offer and the merger.
176
<PAGE>
AXA FINANCIAL
1290 Avenue of the Americas
New York, NY 10104
Tel.: (212) 554-1234
AXA Financial is a diversified financial services organization offering a
broad spectrum of insurance and investment management services. It is one of the
world's largest asset managers, with total assets under management of
approximately $417.4 billion as of September 30, 2000, excluding assets held by
Donaldson, Lufkin & Jenrette. Following the sale of Donaldson, Lufkin &
Jenrette, AXA Financial has two operating business segments:
- Financial Advisory/Insurance, which comprises AXA Advisors, AXA Network
and Equitable Life and its subsidiaries, including Equitable of Colorado;
and
- Investment Management, which comprises Alliance Capital.
As of December 31, 1999, AXA Financial had approximately 17,600 employees.
Of these, approximately 5,000 were employed in the Financial Advisory/Insurance
Segment and approximately 2,400 were employed in the Investment Management
Segment. The remaining were employed by Donaldson, Lufkin & Jenrette. In
addition, more than 7,500 financial professionals worked in the Financial
Advisory/Insurance segment.
FINANCIAL ADVISORY/INSURANCE SEGMENT
The Financial Advisory/Insurance Segment offers a variety of traditional,
variable and interest-sensitive life insurance products, variable and
fixed-interest annuity products, mutual fund and other investment products and
financial planning and asset management services to individuals, small groups,
small and medium-size businesses, state and local governments and not-for-profit
organizations, as well as financial planning services to individuals. It also
administers traditional participating group annuity contracts with conversion
features, generally for corporate qualified pension plans, and association plans
which provide full service retirement programs for individuals affiliated with
professional and trade associations. This segment includes separate accounts for
individual and group insurance and annuity products. The Financial
Advisory/Insurance Segment accounted for approximately $3.36 billion or 66% of
AXA Financial's total consolidated revenues for the nine months ended
September 30, 2000. Financial Advisory/Insurance Segment products are marketed
on a retail basis in all 50 states, the District of Columbia, Puerto Rico and
the U.S. Virgin Islands by AXA Advisors and AXA Network. Equitable Life products
are also distributed on a wholesale basis through major securities firms,
affiliated and non-affiliated broker-dealers and banks. Equitable Life, which
was established in the State of New York in 1859, is among the largest life
insurance companies in the United States.
INVESTMENT MANAGEMENT SEGMENT
The Investment Management Segment, which comprises Alliance Capital, one of
the largest investment advisors in the United States, provides diversified
investment management services to the Financial Advisory/Insurance Segment and
to a variety of institutional clients, including corporate and public employees
pension funds, endowments, foundations and other U.S. and foreign institutions,
as well as to high net worth individuals and, through various investment
vehicles, to individual investors. The Investment Management Segment accounted
for approximately $1.74 billion or 34% of AXA Financial's consolidated total
revenues for the nine months ended September 30, 2000. As of September 30, 2000,
Alliance Capital had approximately $388.4 billion in assets under management,
including $324.1 billion for third party clients.
177
<PAGE>
DISCONTINUED OPERATIONS
On November 3, 2000, AXA Financial and certain of its affiliates sold their
71% interest in Donaldson, Lufkin & Jenrette to the Credit Suisse Group. Prior
to the date, Donaldson, Lufkin & Jenrette constituted the Investment Banking and
Brokerage Segment of AXA Financial. Through Donaldson, Lufkin & Jenrette, AXA
Financial was involved in securities underwriting, sales and trading; merchant
banking; financial advisory services; investment research; venture capital;
correspondent brokerage services; securities lending; online interactive
brokerage services; and asset management and other advisory services. For
information concerning the sale of Donaldson, Lufkin & Jenrette to Credit Suisse
Group, see "Recent Developments".
In September 1991, Equitable Life discontinued the operations of the Wind-Up
Annuity and GIC lines of business, reflecting management's strategic decision to
focus its attention and capital on its core businesses. Discontinued operations
includes Wind-Up Annuity products, the terms of which were fixed at issue, which
were sold to corporate sponsors of terminating qualified defined benefit plans,
and GIC products pursuant to which Equitable Life is contractually obligated to
credit an interest rate which was set at the date of issue. These contracts have
fixed maturity dates on which funds are to be returned to the contractholder. At
December 31, 1999, $999.3 million of contractholder liabilities were
outstanding, substantially all of which were related to Wind-Up Annuities.
AXA is the largest shareholder of AXA Financial. As of October 25, 2000, AXA
and its subsidiaries beneficially owned approximately 60.1% of the AXA Financial
common stock. AXA Financial is incorporated in the state of Delaware.
RECENT DEVELOPMENTS
THIS INFORMATION SHOULD BE READ IN CONJUNCTION WITH OTHER EVENTS WHICH HAVE
OCCURRED SUBSEQUENT TO DECEMBER 31, 1999 AS DISCLOSED IN NOTE 27 OF AXA'S
CONSOLIDATED FINANCIAL STATEMENTS IN THE 1999 AXA FORM 20-F, WHICH IS
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND THE INFORMATION PROVIDED IN
AXA'S UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED JUNE 30, 2000 INCLUDED ELSEWHERE IN THIS PROSPECTUS.
In June, 2000, AXA notified, Banco Bilbao Vizcaya Argentaria, SA that AXA
intends to exercise its right to acquire the 30% interest of Banco Bilbao
Vizcaya Argentaria in AXA Aurora, their Spanish insurance joint venture. AXA
Aurora was established in 1992 as a joint venture and sells both life insurance
and property/casualty insurance products in the Spanish market. Assuming
consummation of this transaction, AXA will own 100% of AXA Aurora which will
continue to be AXA's primary insurance operation in Spain. Pursuant to the terms
of that right, AXA has offered to acquire the interest of Banco Bilbao Vizcaya
Argentaria for E161 million. AXA and Banco Bilbao Vizcaya Argentaria are
currently negotiating the final terms and conditions of this transaction. AXA
anticipates that the transaction will be completed prior to December 31, 2000.
In July 2000, AXA acquired the outstanding minority interests in Sun Life &
Provincial Holdings for approximately L2.3 billion (E3.7 billion based on the
exchange rate as of the date of the acquisition). The transaction was approved
by the minority shareholders of Sun Life & Provincial Holdings during their
extraordinary general meeting held on June 20, 2000, and subsequently approved
by the High Court of Justice in England and Wales on July 10, 2000. On July 12,
2000, the transaction was declared fully unconditional, at which time, Sun
Life & Provincial Holdings was delisted from the London Stock Exchange. On
July 26, 2000, the transaction was completed. AXA financed the acquisition
primarily through the issuance of 30.2 million new ordinary shares in June,
2000. The net cash proceeds of this offering were approximately E3.7 billion.
Each minority shareholder of Sun Life & Provincial Holdings received 500 pence
in cash and a special dividend of 5 pence for each Sun Life & Provincial Holding
ordinary share. As a consequence of this
178
<PAGE>
transaction, AXA's direct and indirect interest in Sun Life & Provincial
Holdings increased from 56.2% as of June 30, 2000 to 100%. You can find
information regarding the financial impact on AXA of this transaction in
"Unaudited Pro Forma Financial Information" contained elsewhere in this
prospectus.
On July 25, 2000, AXA proposed a financial reorganization relating to the
"Inherited Estate" of AXA Equity & Law, one of its life insurance subsidiaries
in the United Kingdom. As a consequence of the financial reorganization, a
portion of the assets of AXA Equity & Law that have accumulated over the years
in the Inherited Estate will be attributed to AXA as the shareholder, and a
portion will be allocated to policyholders in the form of policy bonuses. To
facilitate this attribution to shareholders, AXA will, in addition, make cash
payments to policyholders who elect in favor of the proposal. These cash
payments will amount to approximately L300 million if all policyholders elect in
favor of the proposal. The amount to be distributed to the shareholder will be
subject to a series of stringent safeguards and in any case may not be
distributed before 2006. After review by the Financial Services Authority, which
supervises life insurance operations in the United Kingdom, this proposal has
been submitted to the relevant policyholders for approval. The proposal is
subject to the approval of policyholders holding at least 35% of the value of
with-profit policies. As of November 7, 2000, policyholders holding
approximately 78% of the value of with-profit policies had elected to accept the
proposal. The proposal is also subject to final court approval. This transaction
is not expected to be completed before January 1, 2001, at the earliest.
Assuming that the required court approval is obtained, the financial impact of
this reorganization in AXA's consolidated financial statements will depend on
the valuation of the Inherited Estate at December 31, 2000 and the percentage of
policyholders, by contract value, who elect in favor of the proposal. At
December 31, 1999, the fair value of the Inherited Estate, including the value
of the portfolio and before deducting the incentive payment to be made to
policyholders who accept the proposal, was estimated at L1.7 billion (E2.7
billion). This reorganization will lead to a change in accounting principles
relating to U.K. with-profit contracts and the way income is calculated for
AXA's life insurance subsidiaries in the United Kingdom and will impact
shareholders' equity under French GAAP. The impact of the financial
reorganization on AXA's consolidated results of operations, liquidity and
financial condition under both French GAAP and U.S. GAAP in future periods is
currently under review.
On October 2, 2000, Alliance Capital Management L.P. and Alliance Capital
Management Holding L.P., both affiliates of AXA Financial, completed the
acquisition of substantially all of the assets and assumed substantially all of
the liabilities of Sanford C. Bernstein, a New York based asset management
company, and its subsidiaries for a total consideration of $3.5 billion
(E3.6 billion), consisting of approximately $1.4 billion in cash and
40.8 million units of limited partnership interest of Alliance Capital
Management L.P. In connection with this transaction, AXA Financial has agreed to
provide liquidity to the former shareholders of Sanford C. Bernstein after a
two-year lock out period by allowing the 40.8 million private units of limited
partnership interest to be sold to AXA Financial over the subsequent eight
years. Generally not more than 20% of such units may be sold to AXA Financial in
any one annual period. To fund the cash portion of the acquisition, Alliance
Capital Management L.P. entered into a financing agreement with AXA Financial,
pursuant to which, in June 2000 AXA Financial purchased 32.6 million units of
limited partnership interest of Alliance Capital Management L.P. for an
aggregate purchase price of $1.6 billion. Following the consummation of this
acquisition, AXA Financial owned an approximate 53% economic interest in
Alliance Capital's operations.
On October 24, 2000, AXA and Deutsche Bank executed a non binding letter of
intent relating to the sale of Banque Worms to Deutsche Bank. In connection with
this transaction, it is anticipated that a subsidiary of AXA (the obligations of
which will be guaranteed by AXA) will (i) make representations and warranties
customary for a transaction of this nature, (ii) retain certain of Banque Worms'
assets, including those relating to discontinued business activities with
respect to
179
<PAGE>
shipping finance, commodity financing and the closure of foreign branches as
well as the majority of Banque Worms' investment securities, and (iii) provide a
guaranty to Deutsche Bank covering certain losses incurred by Banque Worms as a
result of payment defaults with respect to loans transferred with Banque Worms
in the transaction.
On November 3, 2000, AXA, AXA Financial, The Equitable Life Assurance
Society of the United States and AXA Participations Belgium sold their 71%
interest in Donaldson, Lufkin & Jenrette. Total proceeds included cash of $2,377
million and 25.7 million shares of the Credit Suisse Group. On November 6, 2000,
the Credit Suisse Group repurchased 6.4 million of its shares from AXA Financial
and its affiliates that were parties to the stock purchase agreement relating to
the sale of Donaldson, Lufkin & Jenrette for a consideration of $1,200 million.
As a result, total cash received on the sale of Donaldson, Lufkin & Jenrette
amounted to $3,577 million (E4,155 million) and the market value as of
November 3, 2000 of the remaining 19.3 million shares of the Credit Suisse Group
was $3,765 million (E4,373 million). Total consideration in respect of this
transaction therefore totaled $7,342 million (E8,528 million). All translations
of U.S. dollars to euro in this paragraph have been based on the Euro Noon
Buying Rate on November 3, 2000 of
E1.00 = $0.861. The stock consideration corresponds approximately to a 6.4%
ownership interest in the Credit Suisse Group. You can find information
regarding the financial impact of this transaction on AXA in "Unaudited Pro
Forma Financial Information" included elsewhere in this prospectus.
On November 17, 2000, AXA filed a registration statement on Form F-3
(Registration No. 333-12872) with the SEC registering $3.0 billion of debt
securities which may be issued from time to time. AXA is considering increasing
the principal amount of debt securities registered under that registration
statement to $5.0 billion.
FINANCIAL INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
The unaudited interim financial data are not necessarily indicative of the
revenues or operating results which may be expected for any other period or for
the full year.
AXA
On November 14, 2000, AXA announced unaudited revenue figures for the nine
months ended September 30, 2000.
AXA's gross premiums and financial services revenues for the nine months
ended September 30, 2000 were E 61.8 billion, an increase of E 13.9 million, or
28.9%, as compared to the nine months ended September 30, 1999. On November 3,
2000, Donaldson, Lufkin & Jenrette was sold to the Credit Suisse Group.
Excluding Donaldson, Lufkin & Jenrette, AXA gross premiums and financial
services revenues for the nine months ended September 30, 2000 would have been
E 51.1 billion, an increase of 24%, as compared to the nine months ended
September 30, 1999 after excluding Donaldson, Lufkin & Jenrette.
Gross premiums and financial services revenues for the nine months ended
September 30, 2000 and 1999 by operating business segment (and reporting groups)
are set out in the table below. On a comparable basis (as defined in note 1 to
the table below), AXA's gross premiums and financial services revenues increased
by 14.0%, or an increase of 10% after excluding financial services revenues of
Donaldson, Lufkin & Jenrette.
180
<PAGE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
-------------------------------- PERCENTAGE CHANGE
GROSS PREMIUMS AND FINANCIAL SERVICES SEPTEMBER 30, SEPTEMBER 30, PERCENTAGE ON A COMPARABLE
REVENUES (AMOUNTS IN EURO MILLION) 2000 1999 CHANGE BASIS (1)
------------------------------------- ------------- ------------- ---------- -----------------
<S> <C> <C> <C> <C>
LIFE INSURANCE...................... 33,009 26,226 25.9 11.8
France............................ 9,195 7,357 25.0 25.0
United States..................... 9,600 7,665 25.2 10.7
United Kingdom.................... 5,909 5,330 10.9 (4.2)
Asia/Pacific...................... 3,946 2,026 94.8 18.7
Germany........................... 2,043 1,911 6.9 2.6
Belgium........................... 741 591 25.3 25.3
Other countries................... 1,575 1,345 17.1 13.0
PROPERTY AND CASUALTY INSURANCE..... 11,965 10,212 17.2 3.3
France............................ 3,063 3,060 0.1 0.1
Germany........................... 2,510 2,219 13.1 (1.7)
United Kingdom.................... 2,064 1,427 44.6 2.6
Belgium........................... 988 1,000 (1.3) (0.3)
Other countries................... 3,340 2,506 33.3 12.8
INTERNATIONAL INSURANCE............. 3,306 2,588 27.7 10.5
AXA Corporate Solutions........... 3,033 2,369 28.0 11.0
* AXA REINSURANCE............... 2,084 1,339 55.6 27.9
* AXA GLOBAL RISKS.............. 938 1,019 (8.0) (9.4)
* AXA CESSIONS.................. 12 11 8.2 8.2
Assistance........................ 236 209 12.9 8.1
Other transnational activities.... 36 10 255.7 (59.9)
------ ------ ----- -----
TOTAL INSURANCE..................... 48,279 39,026 23.7 9.4
------ ------ ----- -----
ASSET MANAGEMENT.................... 2,016 1,340 50.5 37.9
Alliance Capital.................. 1,718 1,155 48.8 37.8
AXA Investment Managers........... 280 161 73.9 42.7
National Mutual Funds Management... 18 24 (24.8) (1.3)
OTHER FINANCIAL SERVICES............ 11,502 7,575 51.8 34.6
Donaldson, Lufkin & Jenrette...... 10,687 6,714 59.2 39.3
Other financial and real estate
companies....................... 815 862 (5.4) (2.9)
------ ------ ----- -----
TOTAL FINANCIAL SERVICES............ 13,518 8,915 51.6 35.1
------ ------ ----- -----
TOTAL OPERATING..................... 61,797 47,941 28.9 14.0
------ ------ ----- -----
HOLDINGS............................ -- -- -- --
------ ------ ----- -----
TOTAL............................... 61,798 47,942 28.9 14.0
====== ====== ===== =====
</TABLE>
------------------------
(1) On a comparable basis, revenues for the nine months ended September 30,
2000 are restated using the prevailing foreign currency exchange rates for
the corresponding prior period, in this case for the nine months ended
September 30, 1999 (constant exchange rate basis). Impacts of acquisitions,
disposals and business transfers (constant structural basis) and of changes
in accounting principles (constant methodological basis) are eliminated in
the periods being compared.
All the figures presented below are presented on a comparable basis.
181
<PAGE>
- LIFE INSURANCE SEGMENT. For the nine months ended September 30, 2000,
gross premiums increased by 11.8% as compared to the corresponding prior
period. This increase was primarily attributable to continued growth in
our retirement and savings-related products, in particular, our separate
account (unit-linked) products.
- PROPERTY AND CASUALTY INSURANCE SEGMENT. For the nine months ended
September 30, 2000, gross premiums increased by 3.3% as compared to the
corresponding prior period, principally due to an increase in premium
rates and growth in the insurance portfolios primarily relating to our
insurance operations in the "Other Countries Property and Casualty
Insurance Group", in particular, Spain and Italy.
- INTERNATIONAL INSURANCE SEGMENT. For the nine months ended September 30,
2000, gross premiums increased by 10.5% as compared to the corresponding
prior period, mainly due to an increase in premiums at AXA Corporate
Solutions. This increase was primarily due to a significant increase in
reinsurance premiums in the context of rate increases (or an increase in
gross premiums of 27.9% on a comparable basis compared to gross premiums
of the corresponding prior period), which was partly offset by the
decrease in gross premiums of 9.4%, in respect of large insurance risk
premiums of AXA Global Risks due to the decision taken to cease writing
new business in some unprofitable lines.
- ASSET MANAGEMENT SEGMENT. For the nine months ended September 30, 2000,
revenues increased by 37.9% as compared to the corresponding prior period,
primarily attributable to the continued growth of assets under management,
specifically in retail mutual funds invested in equities. These figures do
not include the results of Sanford C. Bernstein, an asset management
company based in New York, which was acquired by Alliance Capital on
October 2, 2000. The results of Sanford C. Bernstein will be included in
AXA's consolidated results of operations and financial condition in the
fourth quarter of 2000.
- OTHER FINANCIAL SERVICES SEGMENT. For the nine months ended September 30,
2000, financial services revenues increased by 34.6% as compared to the
corresponding prior period, principally due to the strong growth in
revenues at Donaldson, Lufkin & Jenrette of 39.3%. As Donaldson, Lufkin &
Jenrette was sold on November 3, 2000, AXA's consolidated results of
operations for the year ending December 31, 2000 will include the
operating results of Donaldson, Lufkin & Jenrette for the first ten months
of 2000.
AXA FINANCIAL
On November 14, 2000, AXA Financial published its unaudited financial
statements for the nine months ended September 30, 2000.
Consolidated assets under management at September 30, 2000, excluding
amounts held by Donaldson, Lufkin & Jenrette, increased to approximately
$417 billion, an increase of 22.4% from September 30, 1999.
Total sales of life insurance, annuity and mutual fund products by the
Financial Advisory/ Insurance Segment increased to approximately $11 billion for
the nine months ended September 30, 2000, an increase of 10.9%, as compared to
approximately $10 billion in the corresponding prior period. Mutual Fund sales
by Alliance Capital Management for the nine months ended September 30, 2000
increased to approximately $59 billion, an increase of 56.4%, as compared to the
corresponding prior period. Sales in the institutional business increased to
nearly $10 billion, an increase of 62.6%, as compared to the corresponding prior
period.
For the nine months ended September 30, 2000, AXA Financial's after-tax
earnings from continuing operations rose to $521 million, compared with
$351 million, reported in the corresponding prior period. By reason of the sale
of Donaldson, Lufkin & Jenrette, results of the Investment Banking and Brokerage
Segment are now reported as discontinued operations.
182
<PAGE>
For the nine months ended September 30, 2000, AXA Financial's net income was
$483 million, after a $407 million charge for taxes required as a result of
management's decision to dispose of Donaldson, Lukfin & Jenrette, compared with
$834 million in the nine months ended September 30, 1999. The results of the
nine month period ended September 30, 1999 included an after tax gain of
$212 million relating to the sale of an approximately 18% interest in
DLJDIRECT's financial performance through the sale of DLJDIRECT tracking stock.
The gain on the sale of Donaldson, Lukfin & Jenrette, as well as the remaining
taxes on the gain, will be reported in the fourth quarter 2000.
For the nine months ended September 30, 2000, AXA Financial incurred
investment losses of $232.7 million due to $136.3 million of writedowns
primarily on high yield and emerging market securities and $96.4 million of
losses on sales.
RELATED PARTY TRANSACTIONS
As members of the same group of companies, AXA and AXA Financial have, in
the ordinary course of business, entered into a number of agreements relating to
the provision of corporate support services, reinsurance arrangements as well as
agreements relating to the provision of investment management services.
COOPERATION AGREEMENT
Under the terms of the Cooperation Agreement dated as of July 18, 1991, as
amended, Equitable Life, AXA Financial and AXA have established a Cooperation
Committee, consisting of an equal number of representatives from AXA and
Equitable Life, that meets at least quarterly. The Cooperation Committee
established an annual cooperation program and carries out feasibility studies
relating to joint projects and ventures. In addition, the Cooperation Agreement
provides for the establishment of operating committees with respect to strategy,
finance and audit matters, asset management, actuarial matters, products,
marketing, organization, human resources, public relations and electronic data
processing systems. Such operating committees are under the direction of the
Cooperation Committee and meet at least quarterly. The Cooperation Agreement
also provides for the exchange of management between AXA, Equitable Life and
their respective subsidiaries. Unless earlier terminated by agreement of the
parties, the Cooperation Agreement terminates upon the earlier to occur of
(i) September 30, 2001 and (ii) the first date on which AXA, certain of its
subsidiaries and the Trustees under the Voting Trust Agreement own voting
securities representing less than 25% of the total voting power (as defined in
the Standstill Agreement).
SERVICES AGREEMENTS
Equitable Life has entered into an agreement with AXA covering management,
communications, advertising, rating agency and various other services to be
provided to and by AXA and its affiliates. Equitable Life incurred approximately
$6,500,000 in fees for services provided by AXA and its affiliates pursuant to
this services agreement during 1999, and received approximately $7,973,000 for
its services to AXA. Services under this agreement continued to be provided in
2000.
Equitable Life has agreements with GIE AXA Universite and GIE Informatique
AXA, affiliates of AXA, for the provision of services relating to management
training seminars and ongoing maintenance and technical support for computer
software and technology licensed by AXA for use by AXA Financial and its
subsidiaries. Equitable Life incurred approximately $1,323,000 in fees for
services provided by AXA's affiliates pursuant to these agreements during 1999.
Services under these agreements continued to be provided in 2000.
Equitable Life has entered into an agreement with AXA Canada Tech Inc., a
Canadian subsidiary of AXA which provides data processing services to certain of
its affiliated Canadian companies. Under the terms of the agreement, Equitable
Life provides data processing resources
183
<PAGE>
and services to AXA Canada Tech. The agreement will continue in effect until
December 31, 2000 and provides for reimbursement of Equitable Life's start-up
costs (approximately $1.14 million, all of which has been paid) and an annual
fee of CND 2,700,000 (but not less than approximately $2,050,000) to be paid by
AXA Canada Tech for a defined level of services. The agreement also provides
that fees for services above the defined level are determined based on Equitable
Life's cost of providing the incremental usage. Equitable Life received payments
of $2,900,000 from AXA Canada Tech pursuant to this agreement during 1999.
Services will continue to be provided under this agreement through December 31,
2000.
In 1999, GIE Informatique AXA, an affiliate of AXA, entered into a
technology cost contribution agreement with various AXA subsidiaries, including
AXA Financial and Alliance, to enable those participating companies to share the
costs and benefits of cooperative technology development through GIE
Informatique AXA. All participating companies are joint owners of the technology
and processes developed under this agreement. In 1999, AXA Financial's and
Alliance's respective shares of such costs were approximately $2,891,000 and
$1,142,000. AXA Financial and Alliance continued to incur costs under this
agreement in 2000.
REINSURANCE AGREEMENTS
Equitable Life has entered into a reinsurance agreement with AXA Space, an
underwriting manager for space insurance which is 80% owned by AXA America, an
affiliate of AXA. In 1999, Equitable Life earned $1,211,210 in premiums from AXA
Space and paid claims and commissions of $2,013,139 to AXA Space under this
agreement.
Equitable Life has entered into a reinsurance agreement (aviation risks)
with AXA Global Risks, a subsidiary of AXA. In 1999, Equitable Life earned
$791,011 in premiums and paid claims and commissions of $279,465 under this
agreement.
Equitable Life, either directly or indirectly through its subsidiary The
Equitable of Colorado, Inc., has entered into seven life reinsurance agreements
with AXA Corporate Solutions Life Reinsurance Company, an indirect subsidiary of
AXA. In 1999, Equitable incurred premium expenses of $1,085,722 and accrued no
claims due from AXA Corporate Solutions in the aggregate under these seven
agreements.
INVESTMENT MANAGEMENT SERVICES
In 1999, Equitable Life committed to invest E14,000,000 (approximately
$13.9 million) in the aggregate in Europe Select Private Equity Partners LP, a
private equity "fund of funds" co-sponsored by AXA Investment Managers, S.A., an
affiliate of AXA, and AIG Capital Partners, Inc., a subsidiary of American
International Group, Inc. AXA-AIG Asset Management L.P. is the fund's general
partner; AXA-IM PEP Advisor, LLC, an indirect wholly owned subsidiary of AXA
Investment Managers, serves as the fund's investment advisor; and WSW
Capital, Inc., an indirect wholly-owned subsidiary of Donaldson, Lufkin &
Jenrette provides certain administrative and reporting services for the fund.
Alliance Capital is party to a number of agreements with subsidiaries of AXA
for the provision of investment management services. In 1999, the fees related
to services provided by Alliance Capital to AXA and its subsidiaries, other than
AXA Financial and its subsidiaries, under these agreements amounted to
approximately $4.6 million.
Donaldson, Lufkin & Jenrette Securities Corporation, a subsidiary of
Donaldson, Lufkin & Jenrette, from time to time provides investment banking
services to AXA. The fees related to such services were $16,492,000 in 1999.
Donaldson, Lufkin & Jenrette Securities Corporation from time to time also
provides administrative, brokerage and research services to AXA.
Certain directors, members of the Management or Supervisory Boards, officers
and employees of AXA Financial, AXA and certain of their subsidiaries maintain
margin accounts with Donaldson,
184
<PAGE>
Lufkin & Jenrette Securities Corporation. Margin account transactions for these
directors, members of the Management or Supervisory Boards, officers and
employees are conducted by Donaldson, Lufkin & Jenrette Securities Corporation
in the ordinary course of business, are substantially on the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unaffiliated persons and do not involve more than
the normal risk of collectibility or present other unfavorable features.
Donaldson, Lufkin & Jenrette Securities Corporation also, from time to time and
in the ordinary course of business, enters into transactions involving the
purchase or sale of securities from or to these directors, members of the
Management or Supervisory Boards, officers and employees and members of their
immediate families, as principal. Those transactions on a principal basis are
effected on substantially the same terms as similar transactions with
unaffiliated third parties except that in some instances directors, members of
the Management or Supervisory Boards, officers and employees are not charged
placement fees. For information concerning the sale of Donaldson, Lufkin &
Jenrette to Credit Suisse Group, see "Recent Developments".
185
<PAGE>
MARKETS, MARKET PRICES AND DIVIDENDS FOR AXA SECURITIES
MARKET FOR AXA ORDINARY SHARES
The principal trading market for the AXA ordinary shares is the PREMIER
MARCHE of the Euronext Paris SA (which results from the merger of the Paris,
Brussels and Amsterdam Stock Exchanges on October 27, 2000), a self regulatory
organization responsible for supervision of trading in listed securities in
France, which we refer to in this prospectus as the "ParisBourse". The AXA
ordinary shares are also quoted on the Stock Exchange Automatic Quotations
International System (SEAQ International). The AXA ADSs are listed on the New
York Stock Exchange or NYSE. As of October 25, 2000, there were 16,485,918 AXA
ADSs outstanding, representing 2% of the outstanding AXA ordinary shares, held
by 123 registered holders. Almost all of these ADSs were held by U.S. residents.
In addition, as of January 1, 2000, approximately 10% of the outstanding AXA
ordinary shares were held by U.S. residents.
The table below sets forth, for the periods indicated, the reported high and
low closing prices in French francs and euro for the AXA ordinary shares on the
ParisBourse:
<TABLE>
<CAPTION>
PRICE PER AXA
ORDINARY SHARE
-----------------------------------------
HIGH HIGH LOW LOW
CALENDAR PERIOD (E) (FF) (E) (FF)
--------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
1995(2)..................................................... 49.09 322 31.40 206
1996(2)..................................................... 50.92 334 39.95 262
1997(2)..................................................... 72.11 473 49.40 324
1998
First quarter............................................. 100.46 659 67.68 444
Second quarter............................................ 113.42 744 94.97 623
Third quarter............................................. 130.65 857 77.74 510
Fourth quarter............................................ 123.48 810 63.92 417
Annual....................................................
1999
First quarter............................................. 136.50 895 110.10 722
Second quarter............................................ 133.80 878 108.50 712
Third quarter............................................. 126.80 832 100.10 657
Fourth quarter............................................ 147.00 964 114.80 753
Annual.................................................... 147.00 964 100.10 657
2000
First quarter............................................. 147.80 969 121.50 796
Second quarter............................................ 170.10 1,115 137.80 904
July...................................................... 166.00 1,088 152.00 997
August.................................................... 175.50 1,131 160.30 1,051
September................................................. 167.90 1,101 148.00 971
October................................................... 156.20 1,025 147.00 964
November(3)............................................... 164.90 1,082 157.20 1,031
</TABLE>
------------------------
(1) All conversions between euro and French francs have been made at the legal
rate of conversion of FF6.55957 per E1.00, established in connection with
the launch of the euro.
(2) The annual high and low market prices.
(3) Through November 20, 2000.
Official trading of listed securities on the ParisBourse, including the AXA
ordinary shares, is transacted through French stockbrokers (SOCIETES DE BOURSE)
and other authorized financial
186
<PAGE>
intermediaries, and takes place continuously on each business day from
9:00 a.m. to 5:30 p.m. with a pre-opening session from 7:45 a.m. to 9:00 a.m.
during which transactions are recorded but not executed, and a pre-closing
session from 5:30 p.m. to 5:35 p.m. The ParisBourse has introduced continuous
trading by computer during exchange hours for most listed securities, including
the AXA ordinary shares. Listed securities may generally be traded at any time
outside the ParisBourse. Any trade effected after the close of a stock exchange
session will be recorded on the next ParisBourse trading day at the closing
price for the relevant security at the end of the previous trading day's
session. The ParisBourse publishes a daily Official Price List which includes
price information on each listed security.
Securities listed on the ParisBourse are traded on one of three markets. The
securities of most large public companies, including AXA, are traded on the
PREMIER MARCHE. Securities of small and medium sized companies are traded on the
SECOND MARCHE. Securities of certain other companies maybe traded on the NOUVEAU
MARCHE. Shares listed on the ParisBourse are placed in one of several categories
depending on the volume of trading transactions. With effect as of
September 25, 2000, AXA's ordinary shares are listed in the category known as
CONTINU A, which includes the most actively traded shares (i.e., a minimum daily
trading volume of 250,000 shares or twenty trades).
Trading and clearance & settlement procedures are the same for all markets
on the ParisBourse, with cash settlement the general rule. However, a Deferred
Settlement Service (SERVICE DE REGLEMENT DIFFERE) is offered by intermediaries
for a selection of securities meeting capitalization and liquidity criteria,
regardless of the market on which they are listed. To be eligible for clearance
and settlement through the Deferred Settlement Service, a share must either be
included in the SBF 120 index, a benchmark index which comprises the stocks in
the CAC 40 index and an additional 80 of the most actively traded stocks listed
on the ParisBourse, or show market capitalization of at least E1 billion, and
daily trading averaging at least E1 million on the ParisBourse. A fee is charged
for this service. As for all other fees, intermediaries set the applicable rate
freely without the intervention of market authorities. Intermediaries are
entitled to refuse deferred settlement instructions, whether to buy or to sell.
The AXA ordinary shares are eligible for clearance through the Deferred
Settlement Service.
With a deferred settlement instruction, the purchaser may elect not to pay
and not to receive the securities until the end of the month. The transfer of
ownership of equity securities traded on the ParisBourse pursuant to a deferred
settlement instruction takes place the last business day of the month. The
purchaser may decide, five days before the end of the calendar month (the
determination date), either (i) to settle the trade no later than on the last
trading day of such month or (ii) upon payment of an additional fee, to extend
settlement to the determination date of the following month with the option
either to settle no later than the last trading day of that month or to further
postpone settlement until the next determination date. The purchaser may
maintain that option on each subsequent determination date upon payment of an
additional fee.
In accordance with French securities regulation, any sale of securities
executed with a deferred settlement instruction during the month of, and prior
to, a dividend payment date is deemed to occur after payment of the dividend,
and the purchaser's account will be credited with an amount equal to the
dividend paid to the seller and the seller's account will be debited in the same
amount.
Trading in the listed securities of an issuer may be suspended by
ParisBourse if quoted prices exceed certain price limits defined by regulations
of the CONSEIL DES MARCHES FINANCIERS, the self-regulatory organization that has
general regulatory authority over the French stock exchanges and whose members
include representatives of French stockbrokers. In particular, if the quoted
price of a CONTINU A security varies by more than 10% from the previous day's
closing price, trading may be suspended for up to 15 minutes. Further
suspensions for up to 15 minutes are also
187
<PAGE>
possible if the price again varies by more than 5%. ParisBourse may also suspend
trading of a listed security in certain other limited circumstances, including,
for example, the occurrence of unusual trading activity in the security.
On October 25, 2000, there were 395,240,755 outstanding AXA ordinary shares.
TRADING ON THE NEW YORK STOCK EXCHANGE
The Bank of New York serves as depositary with respect to the AXA ADSs
traded on the New York Stock Exchange. Each ADS represents the right to receive
one half an AXA ordinary share.
The table below sets forth, for the periods indicated, the reported high and
low closing prices in U.S. dollars for the AXA ADSs on the NYSE:
<TABLE>
<CAPTION>
PRICE PER
AXA ADS
-------------------
HIGH LOW
CALENDAR PERIOD ($) ($)
--------------- -------- --------
<S> <C> <C>
1996(1)..................................................... 31.87 25.75
1997(2)..................................................... 36.50 29.25
1998
First quarter............................................. 56.56 36.18
Second quarter............................................ 65.62 51.81
Third quarter............................................. 71.25 44.06
Fourth quarter............................................ 72.50 38.25
1999
First quarter............................................. 80.25 59.56
Second quarter............................................ 73.25 57.00
Third quarter............................................. 65.25 53.75
Fourth quarter............................................ 73.63 61.25
2000
First quarter............................................. 71.69 59.69
Second quarter............................................ 80.62 66.00
July...................................................... 79.62 71.62
August.................................................... 79.00 70.31
September................................................. 73.69 65.88
October................................................... 67.94 59.69
November(3)............................................... 70.69 67.50
</TABLE>
------------------------
(1) Reflects high and low market price from June 25, 1996, the first-trading day
on the NYSE, to December 31, 1996. Prior to June 25, 1996 there was no
market for the AXA ADSs in the United States.
(2) The annual high and low market prices.
(3) Through November 20, 2000.
We cannot assure you of the market price of AXA ordinary shares or ADSs. We
urge you to obtain current market quotations for these securities.
DIVIDENDS
AXA has paid dividends on the AXA ordinary shares in each year for at least
the past five years. AXA pays dividends in euro. Future dividends will depend on
AXA's earnings, financial condition and other factors. Proposals for dividend
payments are made by the Management Board, subject to prior approval by the
Supervisory Board, and are submitted for final approval to AXA's shareholders at
an ordinary general meeting of shareholders.
188
<PAGE>
Dividends paid to holders of AXA ordinary shares and ADSs represented by
ADRs will generally be subject to French withholding tax at a rate of 25% which,
subject to certain procedures and exceptions, may be reduced to 15% for holders
who are residents of the United States. Certain holders of AXA ordinary shares
and ADSs represented by ADRs may be entitled to receive a subsequent payment
equal to the French AVOIR FISCAL, a form of tax credit, in an amount equal to
40% or 50% of any dividends paid by AXA, less applicable French withholding tax.
For more information on taxation of dividends, see "Taxation--Ownership of AXA
Ordinary Shares and ADRs--French Taxation" and "--Material U.S. Federal Income
Tax Considerations for U.S. Shareholders" for a summary of certain French and
U.S. Federal tax consequence to U.S. Holders of AXA ordinary shares and ADSs
represented by ADRs.
The following table sets forth the total dividends paid per AXA ordinary
share and per ADS with respect to each year indicated, with or without the
French AVOIR FISCAL, and before deduction of any French withholding tax.
Dividends paid in respect of each financial year are paid in the subsequent
year.
<TABLE>
<CAPTION>
NET GROSS
DIVIDEND DIVIDEND
NET DIVIDEND NET INCOME GROSS DIVIDEND PER PER
PER ORDINARY PER ORDINARY PER ORDINARY ADS ADS
SHARE SHARE SHARE (1) (2)(3) (1)(2)(3)
-------------------- -------------------- -------------------- --------- ---------
FINANCIAL YEAR (EURO)(4) (FF) (EURO)(4) (FF) (EURO)(4) (FF) ( $) ( $)
-------------- --------- -------- --------- -------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995................. 0.99 6.50 2.57 16.86 1.49 9.75 0.63 0.94
1996................. 1.14 7.50 3.10 20.36 1.72 11.25 0.72 1.08
1997................. 1.37 9.00 3.71 24.34 2.06 13.50 0.75 1.13
1998................. 1.70 11.15 4.52 29.65 2.55 16.73 0.94 1.42
1999................. 2.00 13.12 5.73 37.59 3.00 19.68 1.01 1.51
</TABLE>
------------------------
(1) Payment equivalent to the French AVOIR FISCAL, a form of tax credit, less
applicable French withholding tax, will be made only following receipt of a
claim for such payment, and, in any event, not until after the close of the
calendar year in which the respective dividends are paid. Certain U.S. tax
exempt holders of AXA ordinary shares or ADSs will not be entitled to full
payments of AVOIR FISCAL.
(2) ADSs were first issued on June 25, 1996.
(3) Translated solely for convenience into U.S. dollars per ADS at the French
Franc Noon Buying Rates or, for 1999, the Euro Noon Buying Rate on the
respective payment dates. Because each ADS represents one-half of an
ordinary share, amounts indicated in U.S. dollars per ADS equal one-half of
the equivalent dividends per ordinary share. For convenience only, AVOIR
FISCAL amounts have been converted into U.S. dollars at the French Franc
Noon Buying Rate or, for 1999, the Euro Noon Buying Rate on the respective
payment dates, although such amounts are paid subsequent to those payment
dates. Also, the French Franc Noon Buying Rate and the Euro Noon Buying Rate
may be different from the rate used by the depositary to convert French
francs and euro to U.S. dollars for purposes of making payments to holders
of ADSs.
(4) All conversions between euro and French francs have been made at the legal
conversion rate of FF6.55957 per E1.00 established at the launch of the
euro.
189
<PAGE>
MARKETS, MARKET PRICES AND DIVIDENDS FOR AXA FINANCIAL
COMMON STOCK
The common stock of AXA Financial is listed on the New York Stock Exchange,
which is the principal market for the common stock. As of November 10, 2000,
there were 434,949,735 shares of AXA Financial common stock outstanding held by
481,186 registered holders.
The table below set forth, for the periods indicated, the reported high and
low closing prices for the AXA Financial common stock on the NYSE as well as the
dividends declared with respect to the common stock:
<TABLE>
<CAPTION>
PRICE PER
SHARE OF
COMMON
STOCK(1)
-------------------
HIGH LOW DIVIDENDS
CALENDAR PERIOD ($) ($) ($)
--------------- -------- -------- ----------
<S> <C> <C> <C>
1998
First quarter................................. 29.91 21.75 .025
Second quarter................................ 37.47 28.22 .025
Third quarter................................. 41.66 20.69 .025
Fourth quarter................................ 29.88 15.50 .025
1999
First quarter................................. 36.16 28.58 .025
Second quarter................................ 37.28 30.97 .025
Third quarter................................. 34.59 26.94 .025
Fourth quarter................................ 36.13 25.50 .025
2000
First quarter................................. 38.12 25.94 .025
Second quarter................................ 44.00 34.00 .025
July.......................................... 40.75 35.00
August........................................ 52.31 38.44
September..................................... 52.50 49.00
October....................................... 54.06 49.69
November(2)................................... 55.81 54.94
</TABLE>
------------------------------
(1) All dollar amounts have been adjusted to reflect the two-for-one stock
split.
(2) Through November 20, 2000.
Since 1992, AXA Financial's Board of Directors has declared quarterly cash
dividends of $.025 per share on the outstanding shares of its common stock
(giving effect to the 1999 stock split). During 1999, aggregate cash dividends
paid on AXA Financial's common stock were $43.7 million. Stockholders of record
at the close of business on December 4, 2000 are entitled to receive a dividend
of $0.025 per share of AXA Financial common stock, payable on December 12, 2000.
190
<PAGE>
EXCHANGE RATES
Prior to January 1, 1999, the French franc was a part of the European
Monetary System exchange rate mechanism known as the "EMS". Within the EMS,
exchange rates fluctuated within permitted margins, fixed by central bank
intervention. Under the provisions of the Treaty on European Union negotiated at
Maastricht in 1991 and signed by the members states of the European Union in
early 1992, a European Monetary Union, which we refer to in this prospectus as
"EMU", superseded the EMS on January 1, 1999, and a single European currency
known as the "euro", was introduced. The following 11 member states participate
in the EMU and have adopted the euro as their national currency: Austria,
Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands,
Portugal and Spain. In the aggregate, these members are referred to as "the EMU
states" in this prospectus. The legal rate of conversion between the French
franc and the euro was fixed on January 1, 1999, at FF6.55957 = E1.00.
Transactions in euro commenced on January 1, 1999.
Since January 1, 1999, the euro has been the lawful currency of the EMU
states, although euro banknotes and coins are not expected to enter circulation
until January 1, 2002. New public debt is already being issued in euro.
Beginning January 1, 2002, the participating member states will issue new
euro-denominated notes and coins for use in cash transactions. By July 1, 2002,
the Central European Bank will withdraw their respective currencies from
circulation, and these currencies will no longer be legal tender for any
transactions. These events may not take place on time or otherwise as currently
expected.
The Federal Reserve Bank no longer quotes noon buying rates for currencies
of any of the EMU States, including France.
Most currency amounts in this prospectus are expressed in euro or in U.S.
dollars. Solely for your convenience, this prospectus contains translations of
certain euro amounts into U.S. dollars at specified rates. These translations
should not be construed as representations that the euro amounts actually
represent such U.S. dollar amounts or could have been, at the relevant date,
converted into U.S. dollars at the rate indicated or at any other rate. Unless
otherwise stated, the translations of euro to U.S. dollars have been made using
the exchange rate of E1.00 = $0.8583, the noon buying rate in New York City for
cable transfers in euro as certified for customs purposes by The Federal Reserve
Bank of New York (which we refer to in this prospectus as the "Euro Noon Buying
Rate") on November 7, 2000. On November 20, 2000, the Euro Noon Buying Rate was
E1.00 = $0.8486.
The following table sets forth, for the periods and dates indicated, certain
information concerning the noon buying rate in New York City for cable transfers
in French francs as certified for customs purposes by the Federal Reserve Bank
of New York (the "French Franc Noon Buying Rate") and the Euro Noon Buying Rate.
These rates are presented only for your convenience and
191
<PAGE>
were not used by AXA in the preparation of its consolidated financial statements
contained in this prospectus or included in the 1999 AXA Form 20-F.
<TABLE>
<CAPTION>
AT END OF AVERAGE RATE
PERIOD (1) (2) HIGH LOW
------------------- ------------------- ------------------- -------------------
YEAR E FF E FF E FF E FF
---- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 0.75 4.91 0.76 4.96 0.82 5.39 0.73 4.76
1996 0.80 5.24 0.78 5.12 0.80 5.27 0.75 4.90
1997 0.91 5.99 0.88 5.79 0.97 6.35 0.79 5.20
1998 0.85 5.60 0.90 5.90 0.95 6.21 0.82 5.39
1999 0.99 6.51 0.94 6.20 0.85 5.55 0.99 6.51
2000
(THROUGH
NOVEMBER 20) 1.18 7.73 1.09 7.15 0.97 6.35 1.21 7.93
</TABLE>
------------------------------
(1) Euro Noon Buying Rates per $1.00 in 1999 and French Franc Noon Buying Rates
per $1.00 in 1995, 1996, 1997 and 1998. All conversions between euro and
French francs have been made at the legal rate of conversion of FF6.55957
per E1.00, established at the launch of the euro.
(2) The average of the French Franc Noon Buying Rates and Euro Noon Buying Rates
on the last business day of each full month during the relevant period.
Fluctuations in the exchange rate between the euro and the U.S. dollar will
affect the U.S. dollar equivalent of the euro trading price of the AXA ordinary
shares on the ParisBourse and, as a result, are likely to affect the market
price of the AXA ADSs traded on the New York Stock Exchange. These fluctuations
will also affect the U.S. dollar equivalent of cash dividends paid in euro on
the AXA ordinary shares represented by the AXA ADSs, as well as the U.S. dollar
equivalent of the proceeds that a holder of AXA ADSs would receive upon the sale
in France of any AXA ordinary shares withdrawn from the depositary. For a
discussion of the impact of currency fluctuations on the value of your AXA
holding and on AXA's financial condition and results of operations, see "Item
9--Management's Discussion and Analysis of Financial Condition and Results of
Operations--General Information--Currency Fluctuations" in the 1999 AXA
Form 20-F, which is incorporated by reference in this prospectus and "Risk
Factors--The trading price of AXA ADSs and dividends paid on AXA ADSs may be
materially adversely affected by fluctuations in the exchange rate for
converting euro into U.S. dollars" and "-Fluctuations in the value of the euro
may have a significant impact on our operating results" included elsewhere in
this prospectus.
192
<PAGE>
DESCRIPTION OF CAPITAL STOCK OF AXA
The following is a summary of the terms of AXA's capital stock, including
brief descriptions of provisions contained in the STATUTS of AXA and applicable
French laws in effect on the date of this prospectus. The STATUTS are the French
equivalent of the Certificate of Incorporation and bylaws of a Delaware
corporation. These summaries and descriptions do not purport to be complete
statements of these provisions. References to provisions of the AXA's STATUTS
are qualified in their entirety by reference to the full STATUTS of AXA, an
English translation of which is filed as an exhibit to the registration
statement on Form F-4, of which this prospectus is a part. Many of the rights
and restrictions affecting AXA ordinary shares, including those associated with
shareholders' meetings and voting rights, preferential subscription rights and
dividends, are discussed in the "Comparison of Certain Rights of AXA Financial
Stockholders and AXA Shareholders" section of this prospectus. If you would like
more information about the rights of holders of AXA ADSs, you should review the
"Description of AXA American Depositary Shares" section of this prospectus.
GENERAL
As of October 20, 2000, there were 395,240,755 ordinary shares outstanding,
with an aggregate nominal value of E3,616,452,908.25. All these ordinary shares
were fully paid and non assessable. As of October 20, 2000:
- 4,657,547 ordinary shares were held by AXA in its treasury or by
subsidiaries of AXA,
- 23,178,087 ordinary shares were reserved for issuance upon conversion of
outstanding redeemable bonds and convertible notes, and
- 8,881,325 ordinary shares were subject to outstanding stock options
granted by AXA.
CHANGES IN SHARE CAPITAL
As a rule, the share capital of AXA may be increased only with the approval
of a majority representing two thirds of the shareholders at an extraordinary
general meeting following a recommendation of the Management Board and after a
prior authorization of the Supervisory Board. Increases in AXA's share capital
may be effected by the issuance of additional ordinary shares which may be
effected:
- for cash,
- in satisfaction of indebtedness incurred by AXA,
- for assets contributed to AXA in kind,
- by capitalization of existing reserves, profits or share premium,
- upon conversion, exchange or redemption of equity-linked securities issued
by AXA,
- upon the exercise of share warrants or other similar securities consisting
of rights to subscribe for ordinary shares or of stock options, or
- in place of a cash dividend.
The increase in share capital effected by capitalization of reserves,
profits or share premium, requires a simple majority of the votes cast at an
extraordinary meeting of shareholders. In the case of an increase in share
capital in connection with the issuance of shares instead of a cash dividend the
voting and quorum procedures of an ordinary meeting of shareholders will apply.
At an extraordinary general meeting held on May 5, 1999, AXA's shareholders
specifically authorized the Management Board (after prior authorization of the
Supervisory Board in accordance
193
<PAGE>
with AXA's STATUTS) to increase AXA's share capital in connection with exchange
offers by AXA to acquire shares of other companies, in accordance with
Article 193-1 of the French Company law (as newly codified in Article L.225-148
of the CODE DE COMMERCE). The AXA ordinary shares underlying the ADSs offered in
the offer and merger will be issued pursuant to this provision.
The shareholders of AXA may delegate to the Management Board the powers
required to effect, in one or more stages, any increase in share capital
previously authorized by them. In certain circumstances, the AXA shareholders
may also delegate to the Management Board the powers required to effect any
decrease in share capital previously authorized by them. Such a decision is
subject to the prior authorization of the Supervisory Board.
The share capital of AXA may be decreased only with the approval of the
shareholders at an extraordinary general meeting. The share capital may be
reduced by reducing the number of outstanding ordinary shares. The conditions
under which the capital may be decreased will vary depending upon whether or not
the reduction is attributable to losses incurred by AXA. Under French law, all
holders of ordinary shares must be treated equally. If the reduction is not
attributable to losses incurred by AXA, each shareholder will be offered an
opportunity to participate in the share capital reduction, except in the case of
a share repurchase program. The number of outstanding ordinary shares may be
reduced, either by an exchange of ordinary shares or by the repurchase and
cancellation by AXA of its ordinary shares. If, as a consequence of losses, the
net assets (CAPITAUX PROPRES) of AXA are reduced below one-half of its share
capital, the Management Board must, within four months from the approval of the
accounts showing this loss, convene an extraordinary general meeting of
shareholders in order to decide whether AXA ought to be dissolved before the end
of its statutory term. If the dissolution is not declared, the share capital
must be reduced, subject to the legal provisions concerning the minimum capital
of SOCIETES ANONYMES, by an amount at least equal to the losses which could not
be charged against reserves if, by the end of the second fiscal year following
the fiscal year during which the accounts showing the losses have been approved,
the net assets of the company have not been restored up to an amount at least
equal to one-half of the share capital.
REPURCHASE AND REDEMPTION OF ORDINARY SHARES
Under French law, AXA may not issue shares to itself. However, it may,
either directly or through a financial intermediary acting on its behalf,
purchase its ordinary shares for one of three purposes:
(1) to reduce its share capital by canceling the ordinary shares it purchases
upon proposal of the Management Board and after prior authorization of the
Supervisory Board, with its shareholders' approval at an extraordinary
general meeting,
(2) to provide shares to its employees under a profit-sharing plan, or stock
option plan; and
(3) to acquire up to 10% of its share capital, provided its shares are listed on
a regulated market (e.g., the PREMIER MARCHE). To acquire its shares for
this purpose, AXA must first file a NOTE D'INFORMATION that has received the
visa of the COB and obtain its shareholders' approval at an ordinary general
meeting. That approval remains valid for a period of no more than 18 months
from the date of the general shareholders' meeting granting the approval.
In the case of repurchases of ordinary shares under (3) above, AXA has one
of three options. It may:
- keep the shares as treasury shares;
- sell or transfer them, including to its employees under a profit-sharing
plan or stock option plan; or
194
<PAGE>
- cancel the shares upon proposal of the Management Board and after prior
authorization of the Supervisory Board, only with its shareholders'
approval at an extraordinary meeting.
AXA may not cancel more than 10% of its outstanding share capital over any
24-month period. In addition, AXA may not repurchase under either (2) or
(3) above an amount of shares that would result in AXA holding, directly or
through a person acting on its behalf, more than 10% of its outstanding share
capital.
AXA must hold any shares it repurchases in registered form. These shares
must also be fully paid. Ordinary shares repurchased and held by AXA are deemed
outstanding under French law but are not entitled to dividends, voting rights or
preferential subscription rights.
After making a purchase of its own shares, AXA must file monthly reports
with the COB and the CONSEIL DES MARCHES FINANCIERS that contain specified
information about subsequent transactions. The CMF makes this information
publicly available.
MARKET MANIPULATION RULES
Under REGLEMENT N(O) 90-04 (as amended by REGLEMENT N(O) 98-03) of the COB,
AXA may not trade in its own shares (and other equity-related financial
instruments) for the purpose of manipulating the market. There are three
requirements that need to be satisfied for trades by a company in its own
securities to be considered valid. Specifically, in order to be deemed valid:
- trades must be executed by only one intermediary in each trading session,
except during the period of issuance of any securities if the trades are
made to ensure the success of the issuance;
- any block trades may not be made at a price above the current market
price; and
- each trade must be made at a price that falls between the lowest and the
highest trading price of the trading session during which it is executed.
If the securities, like AXA's ordinary shares, are continuously quoted
(COTATION EN CONTINU), then a trade must meet three further requirements to be
considered valid:
- the trade must not influence the determination of the quoted price before
the opening of trading, at the first trade of the securities, at the
reopening of trading following a suspension, or, as applicable, in the
last half-hour of any trading session or at the fixing of the closing
price;
- the trade must not be carried out in order to influence the price of a
derivative instrument relating to the securities; and
- the trade must not account for more than 25% of the average total daily
trading volume on the ParisBourse in the securities during a reference
period determined by REGLEMENT N(O) 90-04.
In addition, there are two periods during which a company is not permitted
to trade in its own securities:
- the fifteen-day period before the date on which it makes public its
consolidated or annual accounts; and
- the period beginning on the date at which the company becomes aware of
information that, if disclosed, would have a significant impact on the
market price of its securities and ending on the date this information is
made public.
195
<PAGE>
DIVIDENDS
AXA may distribute dividends to its stockholders from net income in each
fiscal year after deductions for depreciation and provisions, as increased or
reduced by any profit or loss carried forward from prior years, and as reduced
by the legal reserve fund allocation described below. These distributions are
also subject to the requirements of French company law and the STATUTS of AXA.
Under French company law, AXA must allocate 5% of its net income in each
fiscal year, after reduction for losses carried forward from previous years, if
any, to a legal reserve fund until the amount in that fund equals 10% of the
nominal amount of its share capital. The legal reserve is distributable only
upon AXA's liquidation.
Upon proposal by AXA's Management Board and subject to prior approval by the
Supervisory Board, the shareholders of AXA may decide to allocate all or part of
distributable profits to special or general reserves, to carry them forward to
the next fiscal year as retained earnings, or to allocate them to the
shareholders as dividends. The Management Board may propose a dividend for
approval by the shareholders at the annual general meeting of shareholders. If
AXA has earned distributable income since the end of the previous fiscal year,
as reflected in an interim income statement certified by its auditors, the
Management Board may distribute, subject to French company law and regulations,
interim dividends to the extent of the distributable income without stockholders
approval.
AXA must distribute dividends to its shareholders pro rata according to
their share holdings. Dividends are payable to holders of shares outstanding on
the date of the shareholders' meeting approving the distribution of dividends,
or, in the case of interim dividends, on the date the Management Board meets and
approves the distribution of interim dividends. The actual dividend payment date
is decided by shareholders at an ordinary general meeting or by the Management
Board subject to prior approval by the Supervisory Board, if no decision is
taken by the shareholders. AXA must pay any dividends or interim dividends
within nine months of the end of its fiscal year. Dividends not claimed within
five years of the date of payment become property of the French state.
Under AXA's STATUTS, at an ordinary annual general meeting, the shareholders
may authorize the Management Board to grant an option to each shareholder to
receive dividends in either cash or additional shares.
FORM, HOLDING AND TRANSFER OF SECURITIES
FORM OF AXA ORDINARY SHARES. AXA's STATUTS provide that AXA ordinary shares may
be held in registered or bearer form.
HOLDING AND TRANSFER OF AXA ORDINARY SHARES. Under French regulations
relating to the replacement of share certificates and share registers by a
system of entries in share accounts (DEMATERIALISATION), AXA no longer maintains
a register of holders of ordinary shares but instead maintains, through a
transfer agent, share accounts in which transfers of registered ordinary shares
are recorded. As a result, no share certificates are issued by or on behalf of
AXA. Shareholders' ownership rights are represented by book entries instead of
share certificates.
Any owner of ordinary shares of AXA may elect to have its ordinary shares
held in registered form and registered in its name in an account maintained by
AXA Banque for and on behalf of AXA or held in bearer form and recorded in its
name in an account maintained by an accredited financial intermediary, such as a
French broker, bank or other authorized financial institution. It may, at its
expense, change from one form of holding to the other. Both methods are operated
through
196
<PAGE>
Sicovam SA (which we refer to in this prospectus as "SICOVAM"), an organization
which maintains share and other securities accounts of French publicly quoted
companies and a central depositary system through which transfers of shares and
other securities in French publicly quoted companies between accredited
financial intermediaries are recorded.
In the case of ordinary shares in bearer form, the ordinary shares will be
held on their holder's behalf by the accredited financial intermediary and will
be recorded in an account maintained by the accredited financial intermediary
with SICOVAM. That account is separate from the AXA share account. Each
accredited financial intermediary will maintain a record of ordinary shares held
through it and may issue certificates of registration with respect to these
shares. If this alternative is adopted, the ordinary shares are referred to as
being in bearer form, although no bearer document of title is issued by or on
behalf of AXA with respect to them. Ordinary shares held in bearer form may only
be transferred through accredited financial intermediaries.
However, in the special case of ordinary shares held in bearer form by a
beneficial owner who is not a resident of France, SICOVAM may agree to issue,
upon request by AXA, a bearer depository receipt (CERTIFICAT REPRESENTATIF) with
respect to such ordinary shares for use only outside France. In this case, the
name of the holder is deleted from the accredited financial intermediary's
books. Title to the ordinary shares represented by a bearer depository receipt
will pass upon delivery of the relevant receipt outside France.
Registered ordinary shares must be converted into bearer shares before being
traded on the ParisBourse and, accordingly, must be registered in an account
maintained by an accredited intermediary. A shareholder may initiate a transfer
by giving instructions to the relevant accredited intermediary. For dealings on
the ParisBourse, a tax assessed on the price at which the securities were
traded, or IMPOT SUR LES OPERATIONS DE BOURSE, is payable at the rate of 0.3% on
transactions of up to FF1 million and at a rate of 0.15% on transactions
exceeding this amount, capped at FF4,000 per transaction. This tax is subject to
a rebate of FF150 per transaction. However, non-residents of France are not
required to pay this tax. In addition, a fee or commission is payable to the
broker involved in the transaction, regardless of whether the transaction occurs
within or outside France. Normally, no registration duty is payable in France,
unless the transfer instrument has been executed in France.
REQUIREMENTS FOR HOLDINGS EXCEEDING SPECIFIED PERCENTAGES
French company law provides that any person or entity that, directly or
indirectly, acting alone or in concert with other shareholders, becomes the
owner of more than 5%, 10%, 20%, 33 1/3%, 50% or 66 2/3% of the outstanding
share capital or voting rights of AXA (including through ADSs), or whose holding
falls below any of these levels, must notify AXA within fifteen calendar days
and the CONSEIL DES MARCHES FINANCIERS within five trading days of exceeding or
falling below the relevant level. This notification has to be made by written
notice of the shareholder that states the number of ordinary shares and voting
rights held by it.
In addition, AXA's STATUTS provide that any individual or entity acting
alone or in concert with others, that acquires ordinary shares resulting in a
direct or indirect holding of 0.5% or more of the outstanding share capital or
voting rights of AXA, including through the acquisition of AXA ADRs representing
the AXA ADSs, must notify AXA by registered letter with return receipt requested
within five calendar days of the date of the acquisition ("INSCRIPTION EN
COMPTE") of the ordinary shares or in the case of a holder of ADSs, within five
days of the registration of the ADRs representing the ADSs), as a result of
which the shareholder, acting alone or in concert with others, has reached or
exceeded that percentage. The individual or entity must further notify AXA
pursuant to the above conditions each time an additional 0.5% threshold is
passed. Any shareholder, including any holder
197
<PAGE>
of AXA ADRs representing the AXA ADSs, whose holding falls below any of these
thresholds must also notify AXA.
French company law imposes additional reporting requirements on persons who,
acting alone or in concert with others, acquire more than 10% or 20% of the
outstanding shares or voting rights in AXA. These persons must file with the
CONSEIL DES MARCHES FINANCIERS, the COB and AXA a report disclosing their
intentions for the 12-month period following the acquisition. The report must
provide information as to whether the acquirer intends to continue purchasing
shares, acquire control of AXA or seek nomination to the Management Board. This
report must be filed within fifteen calendar days of the date either of these
thresholds has been crossed. The CONSEIL DES MARCHES FINANCIERS makes the notice
public and the person or persons who have acquired the voting rights must
publish a press release in a financial newspaper having national circulation in
France. Upon any change of intention, the acquirer must file a new report.
In order to permit holders of ordinary shares to give the notices required
by law and AXA's STATUTS, AXA is obligated to publish in the BULLETIN DES
ANNONCES LEGALES OBLIGATOIRES ("BALO") not later than fifteen calendar days
after AXA's annual ordinary general meeting of shareholders, information with
respect to the total number of voting rights outstanding as of the date of the
meeting. In addition, if the number of outstanding voting rights changes by 5%
or more, AXA is required to publish in the BALO, within fifteen calendar days of
a change, the number of voting rights outstanding and provide the CONSEIL DES
MARCHES FINANCIERS with a written notice. In order to facilitate compliance with
the notification requirements, a holder of ADSs may deliver any such
notification to the depositary with respect to ordinary shares represented by
ADSs and the depositary will, as soon as practicable, forward the notification
to AXA and the CONSEIL DES MARCHES FINANCIERS.
A holder of ordinary shares, including, for purposes of this paragraph, a
holder of ADSs, who fails to comply with the disclosure requirements under
French company law set forth in the above paragraphs, will not be permitted, in
accordance with, and subject to limitations provided under French company law
and the deposit agreement, to exercise voting rights with respect to any
ordinary shares exceeding the above-referenced thresholds to the extent
ownership of these ordinary shares was not properly disclosed to AXA, until the
end of a two-year period following the date on which the holder complies with
these disclosure requirements. In case of violation of the notification
requirements provided for under AXA's STATUTS, the voting limitations described
above will apply if one or more shareholders holding 5% or more of the share
capital request their implementation and if their demand is registered in the
minutes of the relevant shareholders general meeting. In addition, in both
cases, a French court may in specified circumstances, upon the request of AXA's
Management Board, any holder of AXA ordinary shares or the COB, eliminate all or
part of the voting rights (and not only with respect to the shares in excess of
the relevant threshold) of the relevant holder for a period not to exceed five
years.
Under the stock market regulations of the CONSEIL DES MARCHES FINANCIERS,
and subject to limited exemptions granted by the CONSEIL DES MARCHES FINANCIERS,
any person or persons acting in concert acquiring one-third or more of the share
capital or voting rights of AXA must immediately notify the CONSEIL DES MARCHES
FINANCIERS and initiate a public tender offer for the balance of its share
capital. The tender offer must also cover all securities issued by AXA that are
convertible into or exchangeable for equity securities.
Pursuant to its STATUTS, AXA may obtain from SICOVAM, at AXA's own cost, at
any time and according to the provisions of French company law, any information
relating to the identity of the holders of ordinary shares and other
equity-linked securities with the right to vote in general meetings of
shareholders as well as the number of ordinary shares or other equity-linked
securities held by any of them.
198
<PAGE>
LIQUIDATION RIGHTS
If AXA is liquidated, the assets remaining after it pays its debts,
liquidation expenses and all of its remaining obligations will first be used to
repay its shares up to the amount of its stated capital. After these payments
have been made, the shareholders of AXA will receive any surplus in proportion
of their shareholdings.
CONVERTIBLE/EXCHANGEABLE BONDS
On February 17, 2000, AXA issued 6,646,524 subordinated convertible notes,
each of an issue price of E165.50, for an aggregate principle amount of
E1,099,999,722. The interest rate is 3.75% per year payable annually on
January 1 of each year and the gross yield to maturity is 6.00% per year
assuming no conversion, redemption or suspension of interest payments takes
place prior to maturity. The notes have a maturity date of January 1, 2017. At
the time of issuance, each note was convertible into one ordinary share of AXA,
subject to adjustment for transactions including the issuance of securities with
preferential subscription rights the increase of share capital in specified
circumstances and the absorption, merger or spin-off of the company. Each note
is presently convertible into 1.01 AXA ordinary shares following adjustments
made in connection with the issuance of ordinary shares by AXA in May 2000. The
notes have a redemption price on maturity of E269.16 per note. AXA has the
option to redeem the notes at any time after January 1, 2007 at a price offering
a gross yield to redemption of 6.00% per note if the average price of an AXA
ordinary share over a period of 10 consecutive trading days exceeds 125% of the
early redemption price. AXA also has the option to redeem the notes prior to
maturity at a price of E269.16 per note, together with accrued interest, if less
than 10% of the notes issued are outstanding. There is no guarantee or other
security of AXA's obligations under the notes.
On February 8, 1999, AXA issued 8,034,204 subordinated convertible notes,
each at an issue price of E165, for an aggregate principal amount of
E1,524,489.945. The interest rate is 2.50% per year, payable annually on
January 1 of each year, and the gross yield to maturity is 4.45% per year,
assuming no conversion or redemption takes place prior to maturity. The notes
have a maturity date of January 1, 2014. At the time of issuance, each note was
convertible into one ordinary share of AXA, subject to adjustment for
transactions, including the issuance of securities with preferential
subscription rights, the increase of share capital in specified circumstances,
and the absorption merger or spin-off of the company. Each note is presently
convertible into 1.01 AXA ordinary shares following adjustments made in
connection with the issuance of ordinary shares by AXA in May 2000. The notes
have a redemption price on maturity of E230.88 per note. AXA has the option to
redeem the notes at any time after January 1, 2005 at a price offering a gross
yield to redemption of 4.45% per note, if the average price of the AXA ordinary
share over a period of 10 consecutive trading days exceeds 125% of the early
redemption price. AXA also has the option to redeem the notes prior to maturity
of a price of E230.38 per note, together with accrued interest, if less than 10%
of the notes issued are outstanding. There is no guarantee or other security of
AXA's obligations under the notes.
In October 1995, AXA issued mandatorily convertible bonds having an
aggregate principal amount of E320,000,000. The bonds have an interest rate of
4.5% per year and a maturity date of January 1, 2001. In December 1996, certain
of AXA's subsidiaries repurchased by cash E128,000,000 of aggregate principal
amount of the mandatorily convertible bonds. At December 31, 1999 mandatorily
convertible bonds in an aggregate principal amount of E192,000,000 were
outstanding. At maturity, the outstanding bonds will be converted into an
aggregate of 7.08 million AXA ordinary shares, of which 2.83 million will be
owned by subsidiaries of AXA.
199
<PAGE>
DESCRIPTION OF AXA'S AMERICAN DEPOSITARY SHARES
The following is a summary of certain provisions of the deposit agreement
pursuant to which the AXA ADRs are to be issued and a summary of certain
applicable provisions of French law. The deposit agreement is among AXA, The
Bank of New York, as depositary, and the holders from time to time of ADRs. This
summary describes the material terms and conditions of the deposit agreement but
does not purport to be complete and is qualified in its entirety by reference to
the deposit agreement, which has been filed as an exhibit to the Registration
Statement on Form F-4, of which this prospectus constitutes a part. The deposit
agreement will also be filed as an exhibit to a registration statement on Form
F-6 which will be filed with the SEC in connection with the registration of the
AXA ADSs offered in the offer and merger. Additional copies of the deposit
agreement are available for inspection at the Corporate Trust Office of the
Depositary in New York, which currently is located at 101 Barclay Street, New
York, New York 10286 and at the principal Paris office of the custodian,
currently AXA Banque, or any of their successors.
Terms used in this summary and not otherwise defined shall have the
respective meanings set forth in the deposit agreement.
AMERICAN DEPOSITARY RECEIPTS
AXA ADRs evidencing ADSs are issuable by the depositary pursuant to the
deposit agreement. Each ADS initially represents one-half of an AXA ordinary
share. In this description, we refer to the deposited AXA ordinary shares as of
any time, together with all other securities, cash and property received by the
depositary or the custodian in respect of these securities and at such time held
under the deposit agreement, as the "Deposited Securities". Only persons in
whose names ADRs are registered on the books of the depositary will be treated
by the depositary and AXA as ADR holders.
The depositary will hold all deposited AXA ordinary shares in bearer form
unless the holder of an ADR:
- certifies that it is a registered holder who is holding its ADR as the
beneficial owner and not on behalf of, or for the benefit of, another
person (which we refer to in this description as an "Eligible Owner") and
- requests the depositary to hold the number of deposited AXA ordinary
shares represented by its ADSs in registered form.
It is expected that AXA Financial stockholders who tender their shares of
AXA Financial common stock in the offer will hold the AXA ADR, representing the
AXA ADSs they receive in exchange therefor in book-entry form through the Direct
Registration System.
Upon the request of any such holder, the depositary, as promptly as
practicable, will cause the number of deposited AXA ordinary shares represented
by that holder's ADSs to be held in registered form.
The rights of holders and beneficial owners of ADRs are subject to the same
disclosure requirements regarding acquisition and ownership of AXA ordinary
shares that are applicable to holders and beneficial owners of AXA ordinary
shares pursuant to the STATUTS of AXA or French law, as each may be amended from
time to time. Failure to comply with these disclosure requirements may affect
the holder's or beneficial owner's ability to give voting instructions in
respect of the AXA ordinary shares represented by its ADSs. See "Description of
Capital Stock of AXA--Form, Holding and Transfer of Securities" for a
description of the disclosure requirements applicable to AXA ordinary shares and
the consequences of non-compliance as of the date of this prospectus.
DEPOSIT AND WITHDRAWAL OF AXA ORDINARY SHARES
French law provides that ownership of capital shares issued by a French
company generally will be evidenced only by a record of ownership maintained by
either the issuer or its agent or an
200
<PAGE>
accredited financial intermediary, such as a bank. Thus references to deposit,
receipt, surrender, withdrawal and delivery of AXA ordinary shares refer only to
book-entry transfers and do not contemplate the physical transfer or delivery of
certificates evidencing such AXA ordinary shares. See "Description of Capital
Stock of AXA--Form, Holding and Transfer of Securities".
Subject to the provisions of the deposit agreement, the depositary has
agreed that, upon receipt of notice from the custodian as provided in the
deposit agreement of a deposit of AXA ordinary shares with the custodian in form
satisfactory to the custodian (in the case of AXA ordinary shares to be held in
bearer form), or upon delivery to the depositary of AXA ordinary shares (in the
case of AXA ordinary shares to be held in registered form), together with any
required certifications, the depositary will execute and deliver, at its
Corporate Trust Office to, or upon the order of, the depositor or the persons
named in the custodian's notice, an ADR or ADRs registered in the name or names
requested by such person or persons for the number of ADSs issuable in respect
of that deposit, but only upon payment to the depositary of its fee for
execution and delivery of ADRs and taxes and governmental charges.
Upon surrender of an ADR at the Corporate Trust Office for the purpose of
withdrawal of the Deposited Securities represented by that ADR, and upon payment
of the fees and charges provided in the deposit agreement and subject to the
other provisions of the deposit agreement, the Deposited Securities and the
STATUTS of AXA, the holder of the ADR is entitled to the delivery to it, or upon
its order, of the Deposited Securities at such time represented by the ADSs
evidenced by such ADR. For certain limitations on the withdrawal of AXA ordinary
shares, see "--Transfer of American Depositary Receipts" below. Such delivery
will, as regards AXA ordinary shares, be made to an account designated by that
holder:
- in AXA's shares register maintained by AXA Banque for and on behalf of AXA
in the case of AXA ordinary shares in registered form or
- in an account maintained by an accredited financial intermediary in the
case of AXA ordinary shares in bearer form.
Holders of AXA ordinary shares generally cannot receive physical
certificates evidencing such AXA ordinary shares. Under French law, no
fractional AXA ordinary shares may be delivered. Therefore, the depositary will
only accept the surrender for such purpose of ADSs representing a whole number
of AXA ordinary shares.
At the request, risk and expense of any holder so surrendering an ADR, and
for the account of that holder, the depositary will direct the custodian to
forward proper documents of title, if available, for any of the Deposited
Securities to the depositary for delivery at the Corporate Trust Office of the
Depositary.
Unless requested in writing by AXA to cease doing so and subject to the
provisions of the deposit agreement, the depositary may execute and deliver ADRs
prior to the receipt of AXA ordinary shares and deliver AXA ordinary shares upon
the receipt and cancellation of ADRs which have been pre-released. The
depositary may receive ADRs in lieu of AXA ordinary shares in satisfaction of a
pre-release. Each such pre-release or delivery of AXA ordinary shares must be:
- subject to a written representation from the person to whom ADRs or AXA
ordinary shares are to be delivered that that person or its customer
-- at the time of the relevant transaction, owns the AXA ordinary shares or
ADRs to be remitted, as the case may be,
-- assigns all beneficial right, title and interest in the relevant AXA
ordinary shares or ADRs, as the case may be, to the depositary in its
capacity as such and for the benefit of the holders of ADRs and
-- will not take any action with respect to these AXA ordinary shares or
ADRs, as the case may be, that is inconsistent with the transfer of their
beneficial ownership, including,
201
<PAGE>
without the consent of the depositary, disposing of these AXA ordinary
shares or ADRs, as the case may be, other than in satisfaction of the
pre-release;
- at all times fully collateralized with cash, U.S. government securities or
other collateral of comparable safety and liquidity;
- terminable by the depositary on not more than five business days notice;
and
- subject to such further indemnities and credit regulations as the
depositary deems appropriate.
The depositary will also set dollar limits with respect to pre-release
transactions to be entered into with any particular pre-releasee on a
case-by-case basis as the depositary deems appropriate. For purposes of enabling
the depositary to fulfill its obligations to holders of ADRs under the deposit
agreement, the collateral referred to in the preceding paragraph shall be held
by the depositary as security for the performance of the pre-releasee's
obligations to the depositary in connection with a pre-release transaction,
including the pre-releasee's obligation to deliver AXA ordinary shares or ADRs
upon termination of a pre-release transaction.
Neither the depositary nor the custodian will accept for deposit any AXA
ordinary shares
- which would be, to the actual knowledge of the depositary, required to be
registered under the Securities Act prior to public sale in the United
States, unless a registration statement is in effect relating to these AXA
ordinary shares or
- the deposit of which would, to the actual knowledge of the depositary,
infringe any provisions of French law.
Every person depositing AXA ordinary shares under the deposit agreement,
including every person depositing AXA ordinary shares on behalf of an owner of
AXA ordinary shares, by taking such action will be deemed to represent and
warrant that these AXA ordinary shares are validly issued, fully paid and
non-assessable and that the person making the deposit is duly authorized so to
do. Every such person, including every person depositing AXA ordinary shares on
behalf of an owner of AXA ordinary shares, will also be deemed to represent that
the relevant AXA ordinary shares are not restricted securities under the
Securities Act. These representations and warranties will survive the deposit of
these AXA ordinary shares and issuance of corresponding ADRs.
DIVIDENDS, OTHER DISTRIBUTIONS AND RIGHTS
Subject to any restrictions imposed by applicable law, regulations or
permits, the depositary is required to convert or cause to be converted all cash
dividends and other cash distributions received by it on the Deposited
Securities into U.S. dollars, to the extent that in the depositary's reasonable
judgment these cash dividends or cash distributions can be converted on a
reasonable basis into U.S. dollars and transferred to the United States, and to
distribute as promptly as practicable in the amount received, less any
reasonable and customary expenses incurred by the depositary in connection with
conversion, to the ADR holders entitled to the relevant amounts in proportion to
the number of ADSs held by them. The amount distributed will be reduced by any
amounts required to be withheld by AXA or the depositary on account of taxes or
other governmental charges. See "Taxation". It is expected that the depositary
will convert euro (or any other foreign currency) into U.S. dollars by selling
euro (or such other foreign currency) and purchasing U.S. dollars on the spot
currency market. If the depositary determines, following consultation with AXA,
that any foreign currency received by it cannot be converted on a reasonable
basis into U.S. dollars and transferred to the United States, the depositary may
distribute the foreign currency received by it to, or in its discretion hold the
foreign currency, uninvested and without liability for interest, for the
respective accounts of, the ADR holders entitled to receive the same.
Whenever the depositary or the custodian receives any distribution, other
than cash, AXA ordinary shares or rights, in respect of the Deposited
Securities, the Depositary will cause the
202
<PAGE>
securities or property received by it to be distributed to the holders of ADRs
entitled thereto, in proportion to their holdings, in any manner that the
depositary may reasonably deem equitable and practicable for accomplishing such
distribution; PROVIDED, HOWEVER, that if the depositary determines that that
distribution cannot be made proportionately among ADR holders that are entitled
to it, or if for any other reason the depositary deems that distribution not to
be feasible, the depositary may adopt the method that it deems equitable and
practicable for the purpose of effecting that distribution, including, after
consultation with AXA, the public or private sale of all or any part of the
securities or other property and the distribution to ADR holders that are
entitled to that property of the net proceeds of the sale.
If the holders of AXA ordinary shares are granted the option to receive
dividends on their AXA ordinary shares in the form of cash or additional AXA
ordinary shares, ADR holders shall be entitled to benefit from that option to
the extent the offering of the option to ADR holders is lawful and practicable,
and subject to the terms of the deposit agreement.
If a distribution by AXA consists of a dividend in, or other distribution
without payment of any subscription price of, AXA ordinary shares, including
pursuant to any program under which holders of Deposited Securities may elect to
receive cash or AXA ordinary shares, the depositary may distribute pro rata to
each holder of outstanding ADRs, subject to the provisions of the deposit
agreement, including the provisions in respect of the withholding of taxes and
governmental charges and the payment of fees, additional ADRs for an aggregate
number of ADSs representing the number of AXA ordinary shares received as
dividend or free distribution. The depositary may withhold any such distribution
if it does not receive adequate assurances from AXA that the distribution does
not require registration under the U.S. Securities Act of 1933. Instead of
distributing ADRs for fractional ADSs, the depositary will sell the aggregate of
such fractions and distribute the net proceeds as in the case of a distribution
received in cash, or take any other action, with the approval of AXA, as may be
appropriate. If additional ADRs are not so distributed, each ADS shall also
represent the additional AXA ordinary shares distributed in respect of the
Deposited Securities represented by that ADS.
If AXA offers or causes to be offered to the holders of Deposited Securities
any rights to subscribe for additional AXA ordinary shares or any rights of any
other nature, the depositary, after consultation with AXA, will determine the
procedure to be followed to make these rights available to ADR holders or to
dispose of these rights on behalf of ADR holders. If the depositary, by the
terms of the rights offering or for any other reason, may not either make these
rights available to ADR holders or dispose of these rights and distribute the
net proceeds to the holders, then the depositary will allow the rights to lapse.
If the depositary determines in its discretion that it is lawful and feasible to
make these rights available to certain holders of ADRs but not to others:
- the depositary will distribute to every ADR holder with respect to whom it
determines the distribution to be lawful and feasible, in proportion to
the number of ADSs held by that holder, warrants or other instruments, as
set forth in the deposit agreement, and
- in respect of ADR holders, to whom the depositary determines the
distribution not to be lawful and feasible, the depositary will use
reasonable efforts to sell the rights, warrants or other instruments at
public or private sales, at such place or places and upon such terms as
the depositary may deem proper, and distribute the proceeds of the sale
(net of the fees of the depositary and all taxes and governmental charges)
to these ADR holders upon an averaged or other fair and practicable basis
without regard to any distinctions among these ADR holders because of
exchange restrictions, the date of delivery of any ADR or otherwise.
In circumstances in which rights would not otherwise be distributed, if a
holder of an ADR requests the distribution of warrants or other instruments in
order to exercise the rights allocable in respect of the ADSs evidenced by that
ADR, the depositary will make these rights available to that holder upon written
notice from AXA to the depositary that:
- AXA has elected in its sole discretion to permit these rights to be
exercised and
203
<PAGE>
- the holder has executed any documents that AXA has determined in its sole
discretion to be reasonably required under applicable law.
Upon instruction pursuant to warrants or other instruments to the depositary
from a holder to exercise these rights, upon payment by that holder to the
depositary for the account of that holder of an amount equal to the purchase
price of the AXA ordinary shares or other securities to be received upon the
exercise of the rights, and upon payment of the fees of the depositary as set
forth in the warrants or other instruments, the depositary shall, on behalf of
the relevant holder, exercise the rights and purchase these AXA ordinary shares
or other securities and will arrange for AXA ordinary shares so purchased to be
deposited, and for depositary shares representing such AXA ordinary shares to be
delivered to the relevant holder, under a separate deposit agreement to be
entered into between AXA and the depositary providing for the issuance of
depositary receipts subject to appropriate restrictions or deposit and
withdrawal of AXA ordinary shares and transfers of such depositary shares as
required under the Securities Act.
Except as otherwise provided in the preceding paragraph, AXA and the
depositary will not make available to ADR holders any right to subscribe for, to
receive dividends in the form of, or to purchase any securities unless a
registration statement under the Securities Act is in effect or unless the
offering and sale of such securities to ADR holders are exempt from registration
under the provisions of the Securities Act. AXA will have no obligation to
register any rights or securities under the Securities Act.
The depositary will use reasonable efforts to follow the procedures
established by the French tax authorities to enable eligible U.S. holders and
beneficial owners of ADRs to quality for a reduced withholding tax rate of 15%
if available at the time dividends are paid, to recover any excess French
withholding taxes withheld or deducted with respect to dividends and other
distributions of AXA to these holders and beneficial owners of ADRs, to receive
any payment in respect of the AVOIR FISCAL for which these holders and
beneficial owners may be eligible from the French tax authorities and to receive
a refund of any PRECOMPTE paid to the French Treasury by AXA. Upon request of
any U.S. registered holder of ADRs, the depositary will provide a copy of Form
RF 1A EU no. 5052 or Form RF 1A EU no. 50 53, as applicable, or such other form
as may be promulgated from time to time by the French tax authorities for that
purpose, together with instructions to these holders and beneficial owners. The
depositary shall promptly arrange for the filing with the French tax authorities
of all the forms completed by U.S. beneficial owners of ADRs and returned in
sufficient time so that these forms may be filed by December 31 of the year
following the calendar year in which the related dividend is paid. For more
information, please see "Taxation--Ownership of AXA Ordinary Shares and
ADRs--French Taxation".
RECORD DATES
Whenever
- any cash dividend or other cash distribution becomes payable, or any
distribution other than cash is to be made,
- rights are to be Issued with respect to the Deposited Securities,
- for any reason there occurs a change in the number of Deposited Securities
that are represented by each ADS,
- whenever the depository shall receive notice of any meeting of, or
solicitation of consents or proxies from, holders of AXA ordinary shares
or other Deposited Securities, or
- whenever AXA or the depositary finds it necessary or convenient in respect
of any matter,
- the depository will fix a record date, for the determination of holders of
ADRs entitled to receive the relevant dividend, distribution or rights, or
the net proceeds of their disposition, or to give or receive instructions
for the exercise of voting rights at any such meeting or in respect of any
such solicitation or to receive information as to any such meeting or
204
<PAGE>
solicitation, or for fixing the date on or after which each ADS will
represent the changed number of Deposited Securities.
VOTING OF THE UNDERLYING ORDINARY SHARES
The procedures described in this summary must be followed in order for ADR
holders to give voting instructions in respect of the underlying AXA ordinary
shares.
Upon receipt by the depositary of notice of any meeting of holders of AXA
ordinary shares, the depositary will mail to the ADR holders:
- A copy or summary in English of the notice of the meeting sent by AXA.
- A statement that the registered ADR holders as of the close of business on
a record date fixed by the depositary pursuant to the deposit agreement
will be entitled, subject to the applicable provisions of French law,
AXA's STATUTS and the Deposited Securities, which will be summarized in
the statement, to instruct the depositary with regard to the exercise of
the voting rights, if any, pertaining to the AXA ordinary shares or other
Deposited Securities represented by the ADSs evidenced by these holders,
ADRs. The record date fixed by the depositary will normally be
approximately five days before the shareholders' meeting.
- Copies or summaries in English of any materials or other documents
provided by AXA for the purpose of enabling the ADR holders to give voting
instructions.
- A voting instruction card prepared by the depositary and AXA, setting
forth the date established by the depositary for the receipt of the voting
instruction card.
Voting instructions may be given only in respect of a number of ADSs
representing an integral number of AXA ordinary shares. In addition, a
precondition for exercising any voting rights with respect to any holders of
ADSs who are not registered holders of the ADRs evidencing such ADSs on the
books of the depositary is that these holders arrange for deposit in a blocked
account established for that purpose the relevant ADSs for a period to commence
on a date to be specified, which date will not be more than five days prior to
the date of the shareholders' meeting, until the completion of the meeting. For
a discussion of certain additional requirements and limitations relating to an
ADR holder's right to vote, see "Description of Capital Stock of AXA."
In accordance with French company law and the STATUTS of AXA, fully paid AXA
ordinary shares that have been held in registered form in the name of the same
shareholder since at least the beginning of the second full calendar year
preceding the date of the relevant shareholders' meeting are entitled to double
voting rights. Similarly, any eligible owner who has held continuously in its
name, since at least the beginning of the second full calendar year preceding
the date of the relevant shareholders' meeting, ADRs evidencing ADSs
representing AXA ordinary shares entitled to double voting rights will be
eligible to instruct the depositary as to the exercise of double voting rights.
No other ADR holder, including any beneficial owner of ADSs evidenced by ADRs
registered in the name of a bank, broker or other nominee, will be eligible to
instruct the depositary as to the exercise of double voting rights. Deposited
AXA ordinary shares will be entitled to double voting rights to the sole extent
that:
- since at least the beginning of the second full calendar year preceding
the date of the shareholder meeting in question the depositary, upon the
request of holders of ADRs, has held the deposited AXA ordinary shares in
registered form;
- the relevant holders have since at least the same date continuously held
ADRs evidencing ADSs representing that number of AXA ordinary shares; and
- the relevant holders have certified to the depositary, as of the date the
voting instruction card is executed, that they are, and at all times since
the beginning of the second full calendar year preceding the date of the
shareholder meeting in question have been, eligible owners.
205
<PAGE>
Upon receipt by the depositary from a holder of ADRs evidencing ADSs of a
properly completed voting instruction card on or before the receipt date, the
depositary will either, in its discretion,
- use its reasonable efforts, insofar as practical and permitted under any
applicable provisions of French law, the STATUTS of AXA and the Deposited
Securities, to vote or cause to be voted the AXA ordinary shares
represented by these ADSs in accordance with any non-discretionary
Instructions set forth in the voting instruction card or
- forward these instructions to the custodian and the custodian will use its
reasonable efforts, insofar as practical and permitted under any
applicable provisions of French law, STATUTS of AXA and the Deposited
Securities, to vote or cause to be voted the AXA ordinary shares
represented by the ADSs in respect of which a voting instruction card has
been received.
In the case of a voting instruction card received In respect of any holder
of ADSs who is not the registered holder of the ADRs evidencing these ADSs, the
depositary will not vote or cause to be voted the number of AXA ordinary shares
represented by these ADSs, unless the depositary has received verification that
these ADSs have been deposited in a blocked account for the specified period.
The depositary:
- will not vote, or cause to be voted, or attempt to exercise the right to
vote that attaches to, AXA ordinary shares represented by ADSs in respect
of which the voting instruction card is improperly completed or in respect
of which the voting instructions included in the voting instruction card
are illegible or unclear, and
- will, in the case where the voting instruction card is properly completed
except for voting instructions relating to any resolutions to be submitted
to the shareholders' meeting that have been left blank, vote in favor of
these resolutions.
The depositary and AXA may modify or amend the above voting procedures or
adopt additional voting procedures from time to time as they determine may be
necessary or appropriate to comply with French or United States law or the
STATUTS of AXA. These modifications, amendments or additional voting procedures
may limit the practical ability of registered holders and beneficial owners of
ADRs to give voting instructions in respect of the AXA ordinary shares
represented by ADSs or may include restrictions on the ability of registered
holders and beneficial owners of ADRs to sell ADSs during a specified period of
time prior to a shareholders' meeting.
REPORTS AND OTHER COMMUNICATIONS
AXA will furnish to the depositary annual reports in English containing
audited consolidated financial statements, semi-annual reports in English
containing unaudited interim consolidated financial information and English
versions or copies or summaries in English of notices of shareholders' meetings
and other reports and communications that are made generally available by AXA to
its shareholders. The depositary will mail these annual and semi-annual reports
and notices of shareholders' meetings and, at the written request of AXA, any
other reports and communications or summaries thereof to holders of ADRs upon
receipt from AXA. AXA is exempt from the rules under the Exchange Act
prescribing the furnishing and content of proxy statements.
CHANGES AFFECTING DEPOSITED SECURITIES
Upon any change in nominal value, split-up, consolidation or other
reclassification of Deposited Securities, or upon any recapitalization,
reorganization, merger, consolidation or sale of assets affecting AXA or to
which AXA is a party, any securities received by the depositary or the custodian
in exchange for, conversion of, replacement or otherwise in respect of Deposited
Securities will, subject to the deposit agreement and applicable laws, including
the Securities Act, be treated as new Deposited Securities under the deposit
agreement, and each ADR will, subject to the deposit agreement and applicable
laws, including the Securities Act, represent an appropriately adjusted
206
<PAGE>
proportional interest in the Deposited Securities so received in exchange or
conversion or replacement or otherwise, unless additional or new ADRs are
delivered pursuant to the following sentence. In any such case the depositary
may, and shall, if AXA so requests, execute and deliver additional ADRs as in
the case of a stock dividend on the AXA ordinary shares, or call for the
surrender of outstanding ADRs to be exchanged for new ADRs specifically
describing the new Deposited Securities.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of the ADRs and the deposit agreement may at any time be amended by
agreement between AXA and the depositary and such amendment requires no consent
from ADR holders. Any amendment which imposes or increases any fees or charges,
other than taxes and governmental charges, cable, telex or facsimile
transmission costs, delivery costs or other such costs, or which otherwise
prejudices any substantial existing right of ADR holders, will, however, not
take effect as to outstanding ADRs until the expiration of 90 days after written
notice of the relevant amendment shall have been mailed to holders of
outstanding ADRs. Every holder of an ADR at the time the relevant amendment
becomes effective will be deemed, by continuing to hold such ADR, to consent and
agree to the amendment and to be bound by the deposit agreement as amended
thereby. In no event may any amendment impair the right of any ADR holder to
surrender its ADRs and receive in exchange the Deposited Securities represented
by the ADSs evidenced by these ADRs, except where the amendment is required in
order to comply with mandatory provisions of applicable law.
Whenever so directed by AXA, the depositary has agreed to terminate the
deposit agreement by mailing notice of the termination to the holders of all
ADRs then outstanding at least 30 days prior to the date fixed in the notice for
the termination. The depository may likewise terminate the deposit agreement if
at any time 90 days shall have expired after the depositary shall have delivered
AXA a written notice of its election to resign, and a successor depositary shall
not have been appointed and accepted its appointment as provided in the deposit
agreement. If any ADRs remain outstanding after the date of termination, the
depositary thereafter will discontinue the registration of transfers of ADRs,
will suspend the distribution of dividends to the holders of these ADRs and will
not give any further notices or perform any further acts under the deposit
agreement, except that the depositary will continue the collection of dividends
and other distributions pertaining to the Deposited Securities, will sell rights
such as warrants or options as provided in the deposit agreement and will
continue to deliver Deposited Securities, together with any dividends or other
distributions received with respect to these securities and the net proceeds of
the sale of any rights or other property, in exchange for ADRs surrendered to
the depositary. The applicable fees of the depositary and taxes and governmental
charges will be deducted from the cash distributed or proceeds of sales.
At any time after the expiration of one year from the date of termination,
the depositary may sell the Deposited Securities and hold the net proceeds of
the sale together with any cash then held, without liability for interest, for
the pro rata benefit of the holders of ADRs which have not been surrendered.
CHARGES OF DEPOSITARY
To the extent permitted by applicable law or the rules of any securities
exchange upon which ADSs are listed or traded, the depositary will charge any
party depositing or withdrawing AXA ordinary shares or any party surrendering
ADRs or to whom ADRs are issued, including, without limitation, issuance
pursuant to a stock dividend or stock split declared by AXA or an exchange of
stock regarding the ADRs or Deposited Securities or a distribution of ADRs
pursuant to the deposit agreement, where applicable:
- taxes and other governmental charges;
207
<PAGE>
- any registration fees that may from time to time be in effect for the
registration of transfers of AXA ordinary shares generally by the
appointed agent of AXA for transfer or exchange of AXA ordinary shares and
applicable to transfers of AXA ordinary shares to or from the name of the
depositary or its nominee or the Custodian or its nominee on the making of
deposits or withdrawals;
- the air courier, cable, telex and facsimile transmission expenses that are
expressly provided in the deposit agreement to be at the expense of
persons depositing AXA ordinary shares or holders of ADRs;
- reasonable expenses incurred by the depositary in the conversion of
foreign currency pursuant to the deposit agreement;
- a fee of $5.00 or less per 100 ADSs (or portion thereof) for the execution
and delivery of ADRs and the surrender of ADRs for the purpose of
withdrawal of Deposited Securities;
- a fee of $.02 or less per ADS (a portion thereof) for any cash
distribution made pursuant to the deposit agreement, except in the case of
a cash dividend or other cash distribution received from AXA on any
Deposited Securities; and
- a fee for the distribution of securities pursuant to the deposit agreement
in an amount equal to the fee for the execution and delivery of ADRs
referred to above which would have been charged as a result of the deposit
of these securities, but which securities are instead distributed by the
depositary to holders of ADRs and the net proceeds distributed.
The depositary, subject to compliance with all applicable laws, rules and
regulations and subject to the deposit agreement, may own and deal in any class
of securities of AXA and its affiliates and in ADRs.
LIABILITY OF HOLDERS OF ADRS FOR TAXES
If any tax or other governmental charge becomes payable by the custodian or
the depositary with respect to any ADR or any Deposited Securities represented
by the ADSs evidenced by that ADR, such tax or other governmental charge will be
payable by the holder of the ADR to the depositary. The depositary may refuse to
effect registration of any transfer of that ADR or any withdrawal of Deposited
Securities underlying that ADR until payment is made, and may withhold any
dividends or other distributions, or, after reasonably attempting to notify the
relevant holder, may sell for the account of that holder, any part or all of the
Deposited Securities underlying that ADR and may apply any dividends,
distributions or the proceeds of any sale to pay any tax or other governmental
charge. In this case, the relevant ADR holder will remain liable for any
deficiency.
TRANSFER OF AMERICAN DEPOSITARY RECEIPTS
The ADRs are transferable on the books of the depositary; PROVIDED, HOWEVER,
that the depositary may close the transfer books at any time or from time to
time, when transfer agents located in The City of New York generally close their
transfer books, and at any other time, following consultation with AXA to the
extent practicable, when deemed expedient by the depositary in connection with
the performance of its duties or at the request of AXA. As a condition precedent
to the execution and delivery, registration of transfer, split-up, combination
or surrender of any ADR, the delivery of any relevant distribution or the
withdrawal of Deposited Securities, the depositary or the custodian may require
payment of a sum sufficient to reimburse it for any applicable stock transfer,
registration or conversion fee and payment of any applicable fees provided in
the deposit agreement.
The depository may refuse to deliver ADRs, register the transfer of any ADR
or make any distribution of, or related to, AXA ordinary shares until it has
received such proof of citizenship, residence, exchange control approval or
payment of taxes and other governmental charges, the identity of any person
legally or beneficially interested in the ADR and the nature of that person's
interest, or to provide such other information as the depositary may deem
necessary or proper or
208
<PAGE>
AXA reasonably may require. The delivery, transfer and registration of transfer
of ADRs generally may be suspended during any period when the transfer books of
the depositary are closed, or if any such action is deemed necessary or
advisable by the depositary or AXA at any time or from time to time, subject to
the provisions of the deposit agreement. The surrender of outstanding ADRs and
the withdrawal of Deposited Securities may not be suspended, subject only to:
- temporary delays caused by closing the transfer books of the depositary
for the deposit of AXA ordinary shares in connection with voting at a
shareholders' meeting or the payment of dividends;
- the payment of fees, taxes and similar charges; and
- compliance with any U.S. or foreign laws or governmental regulations
relating to the ADRs or to the withdrawal of the Deposited Securities.
The depositary will keep books, at the Corporate Trust Office, for the
registration and transfer of ADRs, which at all reasonable times will be open
for inspection by the holders of ADRs, provided that these inspections will not
be for the purpose of communicating with holders in the interest of a business
or object other than the business of AXA or a matter related to the deposit
agreement or the ADRs.
GOVERNING LAW
The Deposit Agreement is governed by the laws of the State of New York.
GENERAL
Neither the depositary nor AXA nor any of their respective directors,
employees, agents or affiliates will be liable to any holder of ADRs, if by
reason of any provision of any present or future law or regulation of the United
States or any other country, or of any other governmental or regulatory
authority or stock exchange, or by reason of any provision, present or future,
of AXA's STATUTS, or by reason of any provision of any securities issued or
distributed by AXA, or any offering or distribution thereof, or by reason of any
act of God or war or other circumstances beyond its control, the Depositary or
AXA or any of their respective directors, employees, agents, or affiliates shall
be prevented, delayed or forbidden from, or be the subject of any civil or
criminal penalty on account of, doing or performing any act or thing which by
the terms of the deposit agreement or the Deposited Securities it is provided
will be done or performed. In addition, neither will the depositary nor AXA nor
any of their respective directors, employees, agents or affiliates will incur
any liability to any holder of any ADR by reason of any nonperformance or delay,
caused by the reasons described in the previous sentence, in the performance of
any act or thing provided for by the terms of the deposit agreement, or by
reason of any exercise of, or failure to exercise, any discretion provided for
under the deposit agreement.
AXA and the depositary assume no obligation nor will they be subject to any
liability under the deposit agreement to holders or beneficial owners of ADRs,
other than to perform their respective obligations specifically described in the
deposit agreement without negligence, willful misconduct or bad faith.
209
<PAGE>
EXCHANGE CONTROLS AND OTHER LIMITATIONS
AFFECTING SECURITY HOLDERS
FOREIGN EXCHANGE CONTROLS
Under current French foreign exchange control regulations, there are no
limitations on the amount of cash payments that may be remitted by AXA to
residents of the United States. Laws and regulations concerning foreign exchange
controls do require, however, that all payments or transfers of funds made by a
French resident to a non-resident be handled by an accredited financial
intermediary. In France, all registered banks and substantially all credit
establishments are accredited financial intermediaries.
OWNERSHIP OF ORDINARY SHARES OR ADSS
Under current French company law and AXA's STATUTS, there are no general
limitations on the right of non-resident or non-French persons to own or, where
applicable, vote the AXA ordinary shares, whether held in the form of shares or
ADSs. No prior authorization is required in connection with acquiring a
controlling interest in AXA. However, both European Union and non-European Union
residents must file a DECLARATION ADMINISTRATIVE, or administrative notice, with
French authorities in connection with the acquisition of a controlling interest
in any French company. Under existing administrative foreign direct investment
regulations and administrative rulings, ownership by non-residents of France of
more than 20% of a listed company's share capital or voting rights is regarded
as a controlling interest, but a lower percentage might be held to be a
controlling interest in certain circumstances. The factors that will be taken
into account in making that determination include the existence of:
- an option of the acquiring party to buy additional shares,
- loans and guarantees granted by the acquiring party to the French company
in amounts evidencing control over the financing of the French company,
and
- patent licenses granted by an acquiring party or management of technical
assistance agreements with the acquiring party that place the French
company in a dependent position vis-a-vis that party or its group.
Under current French insurance regulations, any person, or group of persons
acting in concert, who is not a resident of a member state of the European
Economic Area must obtain authorization from the French Ministry of the Economy
prior to entering into a transaction to acquire a direct or indirect interest,
or to increase or decrease its direct or indirect interest, in AXA if such
transaction would allow that person, or group of persons acting in concert, to
(i) acquire control of, or cease to control, AXA or (ii) increase its interest
to 10%, 20%, 33.33% or 50% of AXA's voting power, including, in each case,
through the holding of ADSs. Furthermore, any such transaction allowing such
person, or group of persons acting in concert, to hold AXA ordinary shares
representing in aggregate in excess of 5% of AXA's voting power requires that
person to provide prior notice to the French Ministry of the Economy. No prior
authorization or prior notice, as the case may be, is required for such a
transaction entered into by a person, or group of persons acting in concert, who
is a resident of a member state of the European Economic Area, although that
person, or group of persons, is required to provide the French Ministry of the
Economy with notice upon completion of the transaction.
210
<PAGE>
COMPARISON OF CERTAIN RIGHTS OF
AXA SHAREHOLDERS AND AXA FINANCIAL STOCKHOLDERS
AXA IS ORGANIZED UNDER THE LAWS OF THE REPUBLIC OF FRANCE AND THE RIGHTS OF
ITS SHAREHOLDERS ARE GOVERNED BY FRENCH LAW AND AXA'S STATUTS, WHICH IS THE
EQUIVALENT OF A CERTIFICATE OF INCORPORATION AND BY-LAWS IN THE UNITED STATES.
AXA FINANCIAL IS INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND THE
RIGHTS OF ITS STOCKHOLDERS ARE GOVERNED BY THE GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE (WHICH WE REFER TO IN THIS DOCUMENT AS THE "DELAWARE GENERAL
CORPORATION LAW") AND AXA FINANCIAL'S CERTIFICATE OF INCORPORATION AND BY-LAWS.
VOTING RIGHTS
AXA. Each holder of ordinary shares or ADSs is entitled to one vote for
each ordinary share (or two ADSs) held of record. However, holders of fully paid
ordinary shares who have held these shares in registered form since at least the
beginning of the second full calendar year preceding the date of a shareholders'
meeting, enjoy double voting rights with respect to these shares. For a
description of the circumstances under which holders of ADRs enjoy double voting
rights with respect to the ordinary shares underlying their ADRs, see
"Description of AXA's American Depositary Shares--Voting of the Underlying
Ordinary Shares."
AXA FINANCIAL. Each holder of shares of AXA Financial common stock is
entitled to one vote for each share held of record.
AMENDMENT OF ORGANIZATIONAL DOCUMENTS
AXA. Under French law, the shareholders have generally the power to amend
the STATUTS. Such an amendment requires the approval of two thirds of the
shareholders attending or represented at an extraordinary shareholders' meeting.
Generally, shareholders holding one third of the voting power of AXA's
outstanding ordinary shares would constitute a quorum. See "--Annual and Special
Stockholders' Meetings--AXA".
AXA FINANCIAL. Under the Delaware General Corporation Law, an amendment to
the certificate of incorporation of a corporation requires the approval of the
board of directors and the approval of holders of a majority of the outstanding
stock entitled to vote upon the proposed amendment. In addition, holders of the
outstanding shares of a class are entitled to vote as a separate class on a
proposed amendment that would:
- increase or decrease the aggregate number of authorized shares of such
class (unless this class voting right has been eliminated in the
certificate of incorporation in certain circumstances),
- increase or decrease the par value of the shares of that class; or
- alter or change the powers, preferences or special rights of the shares of
that class, so as to affect them adversely.
The AXA Financial certificate of incorporation provides that the certificate
of incorporation may be amended as prescribed by Delaware law.
Under the Delaware General Corporation Law, the stockholders have the power
to adopt, amend or repeal the by-laws and the directors may also have such power
if it is conferred upon them by the certificate of incorporation. The AXA
Financial certificate of incorporation and by-laws allow the directors and
stockholders to amend or repeal the by-laws.
APPRAISAL RIGHTS
AXA. French company law does not provide an appraisal procedure allowing
dissenting shareholders to have their shares appraised in the context of a
merger or consolidation. However, French law provides that, in certain
circumstances, including mergers, spin-offs, asset contributions
211
<PAGE>
or squeeze-outs, an independent expert must pass upon the fairness of the
consideration being offered.
Rights of appraisal are not available to AXA shareholders in connection with
the merger.
AXA FINANCIAL. Under the Delaware General Corporation Law, appraisal rights
are available to stockholders in connection with certain mergers and
consolidations. Appraisal rights are not available for any shares of stock of
the constituent corporation surviving the merger if the merger did not require
for its approval the vote of the holders of the surviving corporation. In
general, unless otherwise provided in the corporation's certificate of
incorporation, there are no appraisal rights for shares of stock (a) listed on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the NASD, or (b) held of record by more
than 2,000 holders, unless such holders are required to accept anything other
than shares of stock of the surviving corporation, shares of another corporation
so listed or designated or held of record by more than 2,000 holders, cash in
lieu of fractional shares of such stock, or any combination of the above. Under
the Delaware General Corporation Law, when appraisal rights are available,
persons who hold shares of capital stock of such corporation and follow the
procedures set forth in Section 262 of the Delaware General Corporation Law will
be entitled to have their shares of capital stock appraised by the Delaware
Court of Chancery and to receive payment of the "fair value" of their shares,
exclusive of any element of value arising from the accomplishment or expectation
of the merger, together with a fair rate of interest, as determined by that
court.
PREEMPTIVE OR PREFERENTIAL SUBSCRIPTION RIGHTS
AXA. Under French company law, shareholders have preferential rights to
subscribe for additional shares to be issued on a pro rata basis. Additional
shares may be subscribed for with cash or by set-off of cash debts. Shareholders
have also preferential rights to subscribe for any other securities issued which
may either directly result in, or carry rights to subscribe for, additional
ordinary shares. Shareholders may waive their preferential subscription rights
in respect of any particular offering, either individually or collectively at an
extraordinary meeting. In the event of any waiver, the relevant issuance of
securities must be completed within the period prescribed by law, and the AXA
Management Board may offer existing holders of shares a non-transferable
priority right to subscribe to the new securities issued during a limited period
of time. Preferential subscription rights, if not previously waived, are
transferable during the subscription period relating to a particular offering
and may be quoted on the ParisBourse.
AXA FINANCIAL. Under Delaware law, stockholders have no preemptive rights
to subscribe to additional issues of stock or to any security convertible into
such stock unless, and except to the extent that, these rights are expressly
provided for in the certificate of incorporation. The AXA Financial Certificate
of Incorporation does not provide for preemptive rights.
ACTION BY WRITTEN CONSENT OF SHAREHOLDERS
AXA. French company law does not allow shareholder action by written
consent, in lieu of a shareholder meeting, in the case of AXA.
AXA FINANCIAL. The Delaware General Corporation Law provides that, unless
otherwise provided in a corporation's certificate of incorporation, any action
that may be taken at a meeting of stockholders may be taken without a meeting or
provided by the Delaware General Corporation Law, without prior notice and
without a vote, if the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize such action at a
meeting, consent in writing. The AXA Financial certificate of incorporation does
not restrict stockholder action taken by written consent.
212
<PAGE>
ANNUAL AND SPECIAL STOCKHOLDERS' MEETINGS
AXA. ORDINARY AND EXTRAORDINARY MEETINGS. Two types of shareholders'
meetings exist under French company law, ordinary and extraordinary. AXA's
STATUTS provides that an annual ordinary general meeting of shareholders must be
convened by the Management Board or the Supervisory Board within six months of
the end of each fiscal year to approve AXA's annual accounts, as provided by
French law. The Management Board or the Supervisory Board may convene other
ordinary general meetings at any time of year. AXA's STATUTS further provide
that an extraordinary general meeting of shareholders may be convened at any
time of year. Generally, under French company law and AXA's STATUTS, mergers,
increases and decreases in share capital, the creation of new classes of shares,
the issuance of investment certificates or notes convertible or exchangeable
into shares, the contribution of a substantial part of the company's assets, the
transformation and the liquidation of the company require a prior vote of
shareholders at an extraordinary general meeting. Shareholders' meetings are
held for the purposes of discussion and decision as provided by French company
law.
RIGHT TO CALL MEETINGS. AXA's STATUTS provide that the Management Board or
the Supervisory Board may call meetings of shareholders but, if the Management
Board or the Supervisory Board fail to call a required meeting or refuse to call
any meeting, AXA's statutory auditors or, under specified circumstances, an
agent appointed by a court may call such meetings. One or more shareholders
together holding 10% of the issued shares, or a duly qualified association of
shareholders holding their shares in registered form for at least two years and
together holding 1% of AXA's voting power, or any interested party in the case
of an emergency may request the court to appoint such agent. French law further
permits new majority shareholders to call a general meeting to consider certain
matters after their acquisition of control of AXA.
NOTICE. French law provides that at least 30 days prior to the date set for
any meeting of shareholders, that meeting must be announced by means of a
preliminary notice published in the BALO. The notice must indicate the type,
agenda, place, date and time of the meeting.
ATTENDANCE AND VOTING. French law requires that in order to have the right
to attend or be represented at a general meeting of shareholders and vote, a
holder of registered shares must have its shares registered in its name in a
share account maintained by or on behalf of AXA at least five days prior to the
date of the meeting. The AXA STATUTS further provide that the Management Board
may waive or reduce this five day period in the interest of all shareholders.
Shareholders have the right to attend and vote at shareholders' meetings either
personally or by proxy.
French law designates as a quorum the presence in person or by proxy of
shareholders having not less than 25% (in the case of an ordinary general
meeting) or one third (in the case of an extraordinary general meeting) of the
voting power of the outstanding AXA ordinary shares. If a quorum is not present
at any meeting, then the meeting is adjourned. If a shareholders' meeting is
reconvened for lack of a quorum, there is no quorum requirement in the case of
an ordinary general meeting, and 25% of the voting power of the outstanding AXA
ordinary shares must be present (including shares voted by correspondence) for a
quorum to exist for an extraordinary shareholders' meeting.
Under French company law, shares held by entities controlled directly or
indirectly by AXA do not have voting rights. For a description of the voting
rights of shareholders see "--Voting Rights--AXA" above.
French company law provides that a simple majority of the votes of the
shareholders attending or represented at the meeting is required to pass a
resolution at an ordinary general meeting and two-thirds of the votes of the
shareholders attending or represented at the meeting is required to pass a
resolution at an extraordinary general meeting.
AXA FINANCIAL. Under the Delaware General Corporation Law, unless directors
are elected by written consent in lieu of an annual meeting as provided by the
Delaware General Corporation Law,
213
<PAGE>
an annual meeting of stockholders must be held for the election of directors on
a date and at a time designated by or in the manner provided in the by-laws.
Stockholders may, unless the certificate of incorporation otherwise provides,
act by written consent to elect directors; provided, however, that, if such
consent is less than unanimous, such action by written consent may be in lieu of
holding an annual meeting only if all of the directorships to which directors
could be elected at an annual meeting held at the effective time of such action
are vacant and are filled by that action. Any other proper business may be
transacted at the annual meeting. The AXA Financial by-laws provide that the
board of directors shall fix the date, time and place of the meeting. AXA
Financial's by-laws require the secretary or any assistant secretary to cause
written notice of the place, date and hour of each meeting of the stockholders,
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, to be given personally or by mail, not less than 10 nor more
than 60 days prior to the meeting, to each stockholder of record entitled to
vote at that meeting.
Under the Delaware General Corporation Law, a special meeting of
stockholders may be called by the board of directors or by such person or
persons as may be authorized in the certificate of incorporation or the by-laws.
The Delaware General Corporation Law does not provide stockholders with an
automatic right to call special meetings of stockholders. The by-laws of AXA
Financial provide that a special meeting of stockholders may be called at any
time by the Chairman of the Board of Directors, the President or the Board of
Directors pursuant to a written request signed by not less than one-third of the
total number of directors then in office. The by-laws of AXA Financial also
provide that a special meeting of stockholders shall be called by the President,
or in the event of his absence or disability, by any Vice President, in the
event a vacancy exists on the Board of Directors due to the removal of a
director by vote of the stockholders. In addition, a special meeting of
stockholders must be called by the President or any Vice-President, as the case
may be, upon receipt of a written request for the meeting by a stockholder or
stockholders holding in the aggregate not less than 25% of the outstanding
shares of AXA Financial at the time entitled to vote on the particular matter or
matters for which the meeting is called. The written request by a stockholder or
stockholders must set forth the purpose or purposes for which the meeting is
called. If the President, Vice President or the Board of Directors fail to call
the meeting within 20 days after creation of the vacancy or the receipt of the
request or schedules the meeting to occur later than 65 days after such creation
or receipt, any stockholder executing the relevant request may call the meeting.
The AXA Financial by-laws provide that the presence in person or by proxy of
the holders of a majority in voting power of the outstanding shares of stock
entitled to vote at the meeting constitute a quorum. The Delaware General
Corporation Law provides that shares of its own stock belonging to a corporation
or to another corporation, if a majority of the shares entitled to vote in the
election of directors of that other corporation is held, directly or indirectly,
by the corporation, shall neither be entitled to vote nor be counted for quorum
purposes. A corporation or any subsidiary of the corporation has nevertheless
the right to vote stock, including but not limited to its own stock, held by it
in a fiduciary capacity. The AXA Financial by-laws also provide that all other
elections and questions shall, unless otherwise provided by the AXA Financial
Certificate of Incorporation, the rules or regulations of any stock exchange
applicable to the corporation, or applicable law or pursuant to any regulation
applicable to the corporation or its securities, be decided by the affirmative
vote of the holders of a majority in voting power of the shares of stock of the
corporation which are present in person or by proxy at any meeting at which a
quorum is present.
ELECTION OF THE MEMBERS OF THE BOARDS
AXA
MANAGEMENT BOARD. The business and affairs of AXA are managed by a
Management Board composed of up to seven members that are appointed by the
Supervisory Board. Members of the
214
<PAGE>
Management Board are appointed for three years and may be reappointed without
any limitation for additional three-year terms.
The Supervisory Board appoints one of the members of the Management Board as
Chairman for a period corresponding to his term as member of the Management
Board.
SUPERVISORY BOARD. The Supervisory Board may consist of no less than three
and no more than twenty-four members. French company law provides that in
particular circumstances, such as in the event of a merger, the Supervisory
Board may temporarily consist of up to 30 members for a period of up to three
years. The members of the Supervisory Board are appointed by a majority of the
shareholders at their annual general meeting. French company law does not allow
for cumulative voting.
Members of the Supervisory Board are appointed for a four year-term. The
Supervisory Board appoints a Chairman and a Vice-Chairman from among its
members. The Chairman calls and presides over the meetings of the Supervisory
Board.
AXA FINANCIAL. Under the Delaware General Corporation Law, the board of
directors of a corporation must consist of one or more members. The number of
directors must be fixed by, or in the manner provided in, the by-laws, unless
the certificate of incorporation fixes the number of directors. Each director
shall hold office until his or her successor is elected and qualified or until
his or her earlier resignation or removal. The directors are elected at the
annual meeting of stockholders. AXA Financial's by-laws permit the majority of
the entire board of directors to adjust the size of the board from a minimum of
thirteen to a maximum of thirty-six directors. The current number of directors
is fixed at 19. The Board of Directors of AXA Financial consists of one class of
directors. The business and affairs of every Delaware corporation are managed by
or under the direction of a board of directors, except as may be otherwise
provided in the Delaware General Corporation Law or in the corporation's
certificate of incorporation.
REMOVAL OF THE MEMBERS OF THE BOARDS
AXA.
MANAGEMENT BOARD. Any member of the Management Board may be removed from
office by a decision of a majority of AXA's shareholders present at a
shareholders' meeting following the submission of a proposal to that effect by
the Supervisory Board. Removal without cause or reason may constitute grounds
for a claim for damages. Removal of a member of the Management Board does not
automatically result in the termination of that member's employment contract
with AXA. The Chairman of the Management Board may be removed from his position
as Chairman (but not from his position as a member of the Management Board) by a
vote of the majority of the members of the Supervisory Board, at a valid meeting
of the Supervisory Board.
SUPERVISORY BOARD. The members of the Supervisory Board may be removed from
office by decision of a majority of AXA's shareholders present at a
shareholders' meeting. The members of the Supervisory Board may be removed from
office according to a shareholders' decision at any time without notice or
indemnity.
Pursuant to French company law, any change in the composition of the
Management Board or the Supervisory Board caused by the removal, resignation or
death of one or more of their members must be disclosed to the public within one
month of that change.
AXA FINANCIAL. Under the Delaware General Corporation Law and AXA
Financial's by-laws, any director or the entire board of directors may be
removed at any time, with or without cause, by the affirmative vote of the
holders of at least a majority of the outstanding shares entitled to vote at an
election of directors.
215
<PAGE>
FILLING OF VACANCIES
AXA.
MANAGEMENT BOARD. The Supervisory Board is responsible for filling any
vacancies on the Management Board in accordance with French company law.
SUPERVISORY BOARD. A majority of the members of the Supervisory Board
present at a meeting may fill any vacancies. A meeting is validly held if more
than half of the members are physically present at the meeting. Appointments
made by the Supervisory Board are subject to ratification by shareholders at the
general shareholders' meeting immediately following each appointment. A member
appointed to replace another shall only remain in office for the remainder of
the term of his predecessor. In the event that the number of the members of the
Supervisory Board is reduced to less than three, the Management Board shall
immediately proceed to call an ordinary meeting of shareholders in order to fill
the existing vacancies.
AXA FINANCIAL. The Delaware General Corporation Law provides that vacancies
and newly-created directorships may be filled by a majority of the directors
then in office, even though less than a quorum, unless (1) otherwise provided in
the certificate of incorporation or by-laws of the corporation or (2) the
certificate of incorporation directs that a particular class of stock is to
elect such director, in which case any other directors elected by that class, or
a sole remaining director elected by that class, shall fill the vacancy. Subject
to the rights of preferred stockholders, AXA Financial's by-laws provide that
any newly created directorships and any other vacancy occurring on the board may
be filled by a majority of the directors then in office, although less than a
quorum, or by a sole remaining director, except that the stockholders shall fill
any vacancy resulting from the removal of a director by the stockholders.
POWERS AND DUTIES OF THE BOARDS
AXA.
MANAGEMENT BOARD. The Management Board has broad powers to act in the name
of the company within the scope of the company's purpose, and subject to the
authority expressly reserved by French company law to shareholders and the
Supervisory Board. The Chairman of the Management Board or any of its members
who has been granted the same authority may represent the company in
transactions with third parties. Any limitation to the powers of the Management
Board is not enforceable against third parties, who may bring legal action
against the company to enforce commitments made in its name by the Chairman of
the Management Board or any other member granted the same authority to represent
the company, provided that the necessary publicity requirements with respect to
the power of these persons to represent the Company have been met.
Members of the Management Board may, with the approval of the Supervisory
Board, assign among themselves specific tasks and positions in relation to the
management of the company. Despite any such allocation of tasks, members of the
Management Board are still under an obligation to meet regularly to discuss
essential management issues related to the company and to exercise the requisite
due diligence in managing the business and affairs of the company.
The Management Board may at its discretion entrust one or more of its
members or any non-member with special assignments, whether of a permanent or
temporary nature, and grant the necessary powers to allow the assignee to
perform his or her task.
The Management Board presents its report to the Supervisory Board either
orally or in writing summarizing the major developments in the management of the
company. Within three months following the end of the year, the Management Board
prepares the final accounts and the consolidated financial statements of AXA and
submits them to the Supervisory Board for review and
216
<PAGE>
control. The Management Board also submits a proposal to the Supervisory Board
with respect to the allocation of the earnings for the fiscal year.
The Supervisory Board fixes the amount and terms of compensation for each of
the members of the Management Board.
SUPERVISORY BOARD. The Supervisory Board reviews the management of the
company's business and affairs by the Management Board. This supervision may not
give rise to direct or indirect management by the Supervisory Board or any of
its members and may not be performed in a way that precludes the Management
Board from performing its managerial duties.
In accordance with applicable laws and regulations, specified transactions,
such as the sale of real property and the granting of collateral, warrants or
guarantees must be approved by the Supervisory Board. In addition, according to
AXA's STATUTS certain decisions of the Management Board, including decisions on
the establishment of share repurchase programs, mergers and acquisitions,
strategic partnership agreements or the distribution of dividends are subject to
the prior authorization of the Supervisory Board.
The Supervisory Board sets its own internal operating procedures which are
communicated to the Management Board.
Members of the Supervisory Board receive a fixed annual fee, the amount of
which is determined by the shareholders at their annual meeting. The Supervisory
Board may compensate its members for the performance of special tasks or
assignments in accordance with the provisions of French company law.
AXA FINANCIAL. Delaware law provides that the board of directors has the
ultimate responsibility for managing the business and affairs of a corporation.
In discharging this function, directors of Delaware corporations owe fiduciary
duties of care and loyalty to the corporation for which they serve as directors
and to its stockholders.
Delaware courts have held that the directors of a Delaware corporation are
required to exercise an informed business judgment in the performance of their
duties. An informed business judgment means that the directors have informed
themselves of all material information reasonably available to them.
Delaware courts have imposed a heightened standard of conduct upon directors
of a Delaware corporation who take any action designed to defeat a threatened
change in control of the corporation. The heightened standard has two elements.
First, it must be demonstrated that there is a threat to corporate policy or
effectiveness, and, second, that measure must be found to be reasonable in
relation to the perceived threat posed. In addition, under Delaware law, when
the board of directors of a Delaware corporation approves the sale or break-up
of the corporation, the board of directors may, in certain circumstances, have a
duty to obtain the highest value reasonably available to the stockholders.
A director of a Delaware corporation, in the performance of such director's
duties, is fully protected in relying, in good faith, upon the records of the
corporation and upon the information, opinions, reports or statements presented
to the corporation by any of the corporation's officers or employees, or
committees of the board of directors, or by any other person as to matters the
director reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on behalf
of the corporation.
Under Delaware law, it is presumed that the directors of a Delaware
corporation acted on an informed basis, in good faith and in the honest belief
that the action taken was in the best interest of the corporation. This
presumption may be overcome, however, if it is shown by a preponderance of the
evidence that the directors' decision involved a breach of fiduciary duty such
as fraud,
217
<PAGE>
overreaching, lack of good faith, failure of the board to inform itself properly
or actions by the board to entrench itself in office.
SHAREHOLDER NOMINATIONS AND PROPOSALS
AXA. Generally, only actions set forth in a meeting's agenda may be taken
at a shareholders' meeting. Shareholders may, however, dismiss directors even if
this matter was not included in the agenda. Additional resolutions may be
submitted for shareholder approval at a meeting by the Management Board if made
within 10 days of the publication of the preliminary notice in the BALO by:
- one or several shareholders holding 5% of AXA's ordinary shares; or
- a duly qualified association of shareholders who have held their shares in
registered form for at least two years and hold shares representing 1% of
the outstanding voting power.
During the two weeks preceding a meeting of shareholders, any shareholder
may submit by registered mail questions to the Management Board relating to the
agenda for the meeting. The Management Board must respond to these questions.
AXA FINANCIAL. A stockholder may bring business before an annual general
meeting of stockholders if he was a stockholder of record at the time of giving
the required notice and he is entitled to vote at the meeting. If that business
relates to any matter other than the election of directors, the stockholder must
have given timely notice of the business in writing to the Secretary of the
corporation. To be timely, a stockholder's notice shall be delivered to and
received at the principal executive offices of the corporation not less than 60
days nor more than 90 days prior to the first anniversary of the preceding
year's annual meeting. For the ability of stockholders to bring business before
a special meeting of stockholders, see "--Annual and Special Stockholders'
Meetings--AXA Financial."
The by-laws of AXA Financial establish procedures that must be followed for
stockholders to nominate individuals for election to the Board of Directors.
Nominations by stockholders of individuals for election to the Board of
Directors must be made by delivering written notice of such nomination to the
Secretary of AXA Financial not less than 60 days nor more than 90 days prior to
the first anniversary of the preceding year's annual meeting. In the event that
the date of the annual meeting is advanced by more than 30 days or delayed by
more than 60 days from that anniversary date, the stockholder's notice must be
received not earlier than the 90th day prior to the annual meeting and not later
than the close of business on the later of the 60th day prior to the annual
meeting and the 10th day following the date on which public announcement of the
date of that meeting is first made by AXA Financial. The by-laws of AXA
Financial also provide that, in the event that the number of directors to be
elected to the Board of Directors is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Board of Directors made by AXA Financial at least 70 days prior to
the first anniversary of the preceding year's annual meeting, a stockholder's
notice will also be considered timely, but only with respect to nominees for any
new positions created by the increase, if delivered to the Secretary of AXA
Financial not later than the close of business on the 10th day following the
date on which such public announcement is made by AXA Financial. The nomination
notice must set forth certain information about the stockholder making the
nomination, including name and address and class and number of shares of capital
stock of AXA Financial owned beneficially and of record by that stockholder. The
nomination notice must also set forth certain information about the persons to
be nominated, including information concerning the nominees' principal
occupations or employment and the class and number of shares of AXA Financial
that are beneficially owned by each such person.
218
<PAGE>
DIVIDENDS
AXA. AXA may distribute dividends to its shareholders from net income in
each fiscal year (after deductions for depreciation and provisions), as
increased or reduced by any profit or loss carried forward from prior years, and
as reduced by the legal reserve fund allocation described below. These
distributions are also subject to the requirements of French law and the STATUTS
of AXA. Under French law, AXA must allocate 5% of its net income in each fiscal
year, after reduction for losses carried forward from previous years, if any, to
a legal reserve fund until the amount in that fund equals 10% of the nominal
amount of its share capital. The legal reserve is distributable only upon AXA's
liquidation. For additional information on dividend distributions, see
"Description of Capital Stock of AXA--Dividends."
AXA FINANCIAL. The Delaware General Corporation Law provides that a
corporation may pay dividends out of its surplus (the excess of net assets over
capital), or if there is no surplus, out of its net profits for the fiscal year
in which the dividend is declared and/or the preceding fiscal year. The Delaware
General Corporation Law also provides that dividends may not be paid out of the
net profits if the corporation's capital is less than the capital represented by
the issued and outstanding stock of all classes having a preference upon the
distribution of assets.
REPURCHASE AND REDEMPTION OF ORDINARY SHARES
AXA. Under French law, AXA may not issue shares to itself. However, it may
purchase its shares for one of three purposes:
(1) to reduce its share capital by cancelling the shares it has
purchased, with the approval of the shareholders at an extraordinary general
meeting,
(2) to provide ordinary shares to its employees under a profit-sharing
or stock option plan and
(3) after obtaining approval from the shareholders at an ordinary
general meeting and receiving the visa of the COB, to acquire up to 10% of
its share capital, provided the shares thus acquired are listed on a
regulated market.
In the case of ordinary shares AXA repurchases under (3) above, AXA has one
of three options. It may:
- keep the shares as treasury shares,
- sell or transfer them, including to its employees under a profit-sharing
plan or stock option plan, or
- cancel the shares, only with its shareholders' approval at an
extraordinary meeting.
AXA may not cancel more than 10% of its outstanding share capital over any
24-month period. In addition, AXA may not repurchase under either (2) or
(3) above an amount of shares that would result in AXA holding, directly or
through a person acting on its behalf, more than 10% of its outstanding share
capital. AXA must hold any shares it repurchases in registered form. These
shares also must be fully paid. Ordinary shares repurchased and held by AXA are
deemed outstanding under French law but are not entitled to dividends, voting
rights or preferential subscription rights.
AXA FINANCIAL. Under the Delaware General Corporation Law, a corporation
may repurchase or otherwise acquire its own shares, except that a corporation
cannot generally make such a purchase or acquisition if it would cause
impairment of its capital or if the capital of the corporation is already
impaired. A Delaware corporation may, however, purchase or redeem out of capital
any of its preferred shares, or if no preferred shares are outstanding, any of
its own shares if these shares will be retired upon acquisition and the capital
of the corporation will be reduced in accordance with specified limitations.
219
<PAGE>
ANTI-TAKEOVER STATUTES
AXA. There are no French anti-takeover statutes similar to the
anti-takeover statutes enacted by certain states in the United States. However,
a number of provisions are available under French company law that have certain
anti-takeover effects. In the case of AXA, the relevant provisions include,
among other things:
- a company's ability to repurchase its own shares;
- the existence of shares with double voting rights; and
- the Management Board's ability, after prior authorization by the
Supervisory Board, to increase the share capital of a company during a
tender offer provided that that increase by the Management Board had
previously been authorized by the shareholders, the relevant shareholders'
authorization expressly refers to tender offer periods, the share issuance
is not reserved and is in compliance with the company's interest.
In addition, the stock market regulations of the CONSEIL DES MARCHES
FINANCIERS require any person or persons acting in concert acquiring one-third
or more of the share capital or voting rights of AXA to initiate a public tender
offer for the balance of its share capital. The tender offer must also cover all
securities issued by AXA that are convertible into or exchangeable for equity
securities. For provisions of French company law and AXA's STATUTS imposing
notification and disclosure requirements on holders whose AXA shareholding
exceeds specified thresholds see "Description of Capital Stock of AXA--Form,
Holding and Transfer of Securities".
AXA FINANCIAL. AXA Financial is governed by the Delaware Corporation Law
anti-takeover provision, which generally precludes a corporation from engaging
in any "business combination" (I.E., mergers, consolidations, sales of
significant assets, etc.) with any person that owns 15% or more of the
outstanding voting stock of the corporation for a period of three years
following the time that such shareholder obtained ownership of 15% or more of
the outstanding voting stock of the corporation.
The three-year waiting period does not apply, however, if
- prior to the time such person obtained ownership of 15% or more of the
outstanding voting stock of the corporation, the Board of Directors of the
corporation approved either the business combination or the transaction
which resulted in such shareholder owning 15% or more of such stock,
- upon consummation of the transaction which resulted in the shareholder
owning 15% or more of the outstanding voting stock of the corporation,
such shareholder owned at least 85% of the voting stock of the corporation
(with certain exceptions) or
- at or subsequent to such time as the shareholder obtained 15% or more of
the outstanding voting stock of the corporation, the business combination
is approved by the Board of Directors and authorized at an annual or
special meeting of shareholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock that
is not owned by the interested shareholder.
LIABILITY OF MEMBERS OF THE BOARDS
AXA. The members of the Supervisory Board generally have no liability
arising from the management of AXA as long as they have a pure supervisory role.
However, they may be held liable in the event they actually participate in the
management of the company or if they knowingly fail to disclose misdemeanor
committed by the members of the Management Board at the general meeting of
shareholders.
220
<PAGE>
French company law provides that members of the Management Board of a
company can be civilly liable to the company or to third parties for violations
of the French company law, violations of AXA's STATUTS or for mismanaging the
company.
Mismanagement is broadly defined as any act, intentional or unintentional,
contrary to the interest of the company. If mismanagement results in the
company's bankruptcy, the members of the Management Board themselves, in their
individual capacities, may be subject to the bankruptcy procedures.
Members of the Management Board are generally jointly and severally liable
for misconduct by the Management Board, unless misconduct can be attributed to
certain members of the Management Board only. In particular, all of the members
of the Management Board will be jointly and severally liable for actions taken
by the Management Board unless individual members of the Management Board can
prove they were against the action, their opposition is reflected in the minutes
and they took all steps available to them to prevent the action from being
taken.
Third parties, including AXA's shareholders, bringing suit against one or
more members of the Management Board must prove they have suffered an injury,
either personally or through the company, and the members' action caused the
injury. See "--Shareholder Suits".
Members of the Management Board can incur criminal liability for violating
certain provisions of French company law and other laws and regulations,
including employment laws and securities laws and regulations specific to a
company's business. In particular, French company law provides that the members
of the Management Board can be fined and/or sentenced to prison if they, in bad
faith and for their own direct or indirect benefit, use the company's assets or
credit for purposes which they know are detrimental to the company's interests.
AXA FINANCIAL. Under the Delaware General Corporation, the duties of the
board of directors of a Delaware corporation may be enforced directly by the
corporation or by a stockholder on behalf of a corporation through a derivative
action against the board of directors. See "Shareholder Suits."
LIMITATION OF LIABILITY/INDEMNIFICATION OF OFFICERS AND MEMBERS OF THE BOARDS
AXA. French company law prohibits provisions of the articles of association
limiting the liability of the members of the Management or Supervisory Board.
French company law also prohibits a company from indemnifying these members
against their liability as described above. However, if a member of the
Management or the Supervisory Board is sued by a third party and ultimately
prevails in the litigation on all counts, but is nevertheless required to bear
attorneys' fees and costs, AXA can reimburse those fees and costs pursuant to an
indemnification arrangement with the relevant member. Any indemnification
arrangement between AXA and any of the members of the Management or Supervisory
Boards must be approved by AXA's shareholders.
Members of the Management Board are jointly and severally liable to AXA or
third parties, as the case may be, for any violations of the French statutory
provisions governing limited liability companies (SOCIETES ANONYMES), for any
breaches of the AXA's STATUTS or for acts of negligence or misconduct in the
performance of their management duties.
AXA FINANCIAL. The Delaware General Corporation Law permits a corporation
to include in its certificate of incorporation a provision eliminating or
limiting a director's personal liability to the corporation or its stockholders
for monetary damages for breaches of fiduciary duty. However, the Delaware
General Corporation Law expressly provides that the liability of a director may
not be eliminated or limited for
- breaches of his or her duty of loyalty to the corporation or its
stockholders,
221
<PAGE>
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
- the unlawful purchase or redemption of stock or unlawful payment of
dividends or
- any transaction from which the director derived an improper personal
benefit.
The Delaware General Corporation Law further provides that no such provision
shall eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision becomes effective. The AXA
Financial certificate of incorporation contains a provision eliminating director
liability to the fullest extent permitted by the Delaware General Corporation
Law.
The Delaware General Corporation Law permits a corporation to indemnify and
reimburse expenses to directors, officers, employees and agents under specified
circumstances. The by-laws of AXA Financial provide that AXA Financial shall
indemnify a person who was or is a party or was or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he or she is or was or has agreed to become a director or officer of AXA
Financial, or is or was serving or has agreed to serve at the request of AXA
Financial as director or officer of AXA Financial, or with respect to any
present or former director or officer, as an employee or agent, of another
corporation (including, without limitation, the subsidiaries), partnership,
joint venture, trust or other enterprise, including an employee benefit plan, or
by reason of any action alleged to have been taken or omitted in such capacity,
and may indemnify any person who was or is a party or was or is threatened to be
made a party to such an action, suit or proceeding by reason of the fact that he
or she is or was or has agreed to become an employee or agent of AXA Financial,
or is or was serving or has agreed to serve at the request of AXA Financial as
an employee or agent of another corporation (including, without limitation, the
subsidiaries), partnership, joint venture, trust or enterprise, including an
employee benefit plan, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
her or on his or her behalf in connection with such action, suit or proceeding
and any appeal therefrom, if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of AXA
Financial, and, with respect to any criminal action or proceeding had no
reasonable cause to believe his or her conduct was unlawful. The AXA Financial
by-laws also provide that in the case of an action or suit by or in the right of
AXA Financial to procure a judgment in its favor (i) such indemnification is
limited to the defense or settlement of such action or suit, and (ii) 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 AXA Financial unless
and only to the extent that the Delaware Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
that person is fairly and reasonably entitled to indemnity for such expenses
which the Delaware Court of Chancery or such other court shall deem proper.
QUALIFICATIONS OF THE MEMBERS OF THE BOARDS
AXA.
MANAGEMENT BOARD. The members of the Management Board of AXA must be
individuals but need not be shareholders of the company. No member of the
Supervisory Board may be part of the Management Board. Members of the Management
Board may sign employment contracts with AXA for a term that may exceed their
term in the Management Board.
Any member of the Management Board who during a fiscal year reaches the age
of sixty-five while in office is automatically deemed to have resigned at the
end of that fiscal year. However, when a member of the Management Board reaches
that age, the Supervisory Board may choose to extend his term one or more times.
This extension may not be for more than a three-year period.
222
<PAGE>
SUPERVISORY BOARD. The members of the Supervisory Board may be individuals
or legal entities. Members of the Supervisory Board or authorized agents of
legal entities members of the Supervisory Board may not stay in office past the
age of seventy. However, this rule may be waived by the Supervisory Board for up
to one-third of the members of the Supervisory Board (individuals or
representatives of legal entities). Members of the Supervisory Board who have
exceeded the age limit can only be appointed by shareholders for one term for a
maximum two-year period. If any authorized agent of a legal entity which is a
member of the Supervisory Board cannot remain in office for any reason, that
legal entity will have to replace him promptly with someone else.
AXA FINANCIAL. The Delaware General Corporation Law specifies no statutory
criteria or qualifications for directors, and directors of a Delaware
corporation need not be stockholders.
SHAREHOLDER VOTES ON CERTAIN REORGANIZATIONS
AXA. Under French company law, the vote of holders of a two third majority
of the votes of the shareholders attending or represented at the general meeting
is necessary to approve a merger or consolidation. The vote is cast at an
extraordinary general meeting of shareholders.
Under French company law, the vote of the shareholders of a surviving
corporation to a merger at an extraordinary general meeting is needed (except
for a merger of a wholly-owned subsidiary with and into the surviving
corporation).
AXA FINANCIAL. Under the Delaware General Corporation Law, in general, the
vote of holders of a majority of the outstanding shares of capital stock
entitled to vote on that matter is necessary to approve a merger or
consolidation. The Delaware General Corporation Law permits a corporation to
include in its certificate of incorporation a provision requiring for any
corporate action the vote of a larger percentage of the stock or of any class or
series of stock than would otherwise be required. The certificate of
incorporation of AXA Financial does not provide for the vote of a larger
percentage of the stock for a merger or consolidation.
Under the Delaware General Corporation Law, no vote of the stockholders of a
surviving corporation to a merger is needed, however, unless required by the
certificate of incorporation, if:
- the agreement of merger does not amend in any respect the certificate of
incorporation of the surviving corporation,
- the shares of stock of the surviving corporation are not changed in the
merger and
- either no shares of common stock of the surviving corporation and no
shares, securities or obligations convertible into such stock are to be
issued or delivered under the plan of merger or the authorized unissued
shares or the treasury shares of common stock of the surviving corporation
to be issued or delivered under the plan of merger plus those initially
issuable upon conversion of any other shares, securities or obligations to
be issued in the merger does not exceed 20% of the surviving corporation's
common shares outstanding immediately prior to the effective date of the
merger.
In addition, stockholders may not be entitled to vote on certain mergers
with other corporations that own 90% or more of the outstanding shares of each
class of voting stock of the corporation.
RIGHTS OF INSPECTION
AXA. French company law provides that any shareholders may inspect the
company's stock ledger, financial statements, resolutions proposed at general
meetings, minutes of general meetings, the list of the members of the Management
and Supervisory Boards and shareholders the reports of the Management and
Supervisory Boards, the statutory auditors' reports, information concerning
candidates for the Supervisory Board and certain of its other books and records
during the company's usual business hours at the registered office of AXA. Only
documents relating to the last three fiscal years are required to be made
available to shareholders.
223
<PAGE>
AXA FINANCIAL. The Delaware General Corporation Law provides that any
stockholder shall, upon written demand under oath stating the purpose of the
inspection, have the right to inspect for any proper purpose the corporation's
stock ledger, a list of its stockholders and its other books and records during
the corporation's usual hours for business.
SHAREHOLDER SUITS
AXA. Under French company law, one or more shareholders can sue the members
of the Management Board and the Supervisory Board of AXA, on behalf of AXA, for
damages caused to AXA by the members of the Management Board or the Supervisory
Board. Any damages awarded are paid to AXA. One or more shareholders can also
sue the members of the Management Board and the Supervisory Board, in his or her
own name, for damages personally suffered by him or her. In such a case, any
damages awarded are paid to the dissenting shareholder or shareholders. There
are no class action lawsuits permitted under French company law.
AXA FINANCIAL. Under the Delaware General Corporation Law, a stockholder
may bring a derivative action on behalf of the corporation to enforce the rights
of the corporation. A person may institute and maintain a derivative suit only
if such person was a stockholder at the time of the transaction which is the
subject of the suit. Additionally, under Delaware case law, the plaintiff
generally must be a stockholder not only at the time of the transaction which is
the subject of the suit, but also through the duration of the derivative suit.
Delaware law also requires that the derivative plaintiff make a demand on the
directors of the corporation to assert the corporate claim before the suit may
be prosecuted by the derivative plaintiff, unless the demand would be futile and
is, therefore, excused. Further, the plaintiff must be an adequate
representative of the corporation's other stockholders. An individual also may
commence a class action suit on behalf of himself and other similarly situated
stockholders where the requirements for maintaining a class action under
Delaware law have been met.
CONFLICT-OF-INTEREST TRANSACTIONS
AXA. Agreements between AXA and a member of its Management or Supervisory
Board are subject to the approval of the Supervisory Board unless the agreement
is entered into at arm's length and in the ordinary course of business as
defined by French company law. The same applies to agreements in which a member
of the Management or Supervisory Board has an indirect personal interest. In
addition, agreements entered into between AXA and entities that are wholly owned
by, or in unlimited partnership with, any members of the Supervisory or
Management Board, or in which the members of the Management or Supervisory Board
are directors or officers or sit on their Management or Supervisory Board are
also subject to the prior approval of the Supervisory Board. The agreement may
be declared void if it is not submitted to the Supervisory Board for approval
and is proven to be detrimental to AXA. Additionally, AXA's statutory auditors
must be made aware of the agreement within one month of its execution and must
submit a report to shareholders, who then must approve the agreement at their
next meeting. If the agreement is not approved by the shareholders, it will
remain enforceable by third parties against AXA, but AXA may hold the interested
member of the Management or Supervisory Board liable for any damages it suffers
as a result of that agreement.
AXA FINANCIAL. The Delaware General Corporation Law provides that a
transaction involving a Delaware corporation and an interested director of that
corporation is not void or voidable solely for this interest if:
- the material facts as to his or her relationship or interest are disclosed
and a majority of disinterested directors authorizes the transaction in
good faith,
- the material facts are disclosed as to his or her relationship or interest
and a majority of shares entitled to vote on the matter approves the
transaction in good faith or
224
<PAGE>
- the transaction is fair to the corporation at the time it is authorized by
the board of directors, a committee of the board of directors or the
stockholders.
FINANCIAL INFORMATION AVAILABLE TO SHAREHOLDERS
AXA and AXA Financial are each required to file periodic reports with the
SEC containing certain financial information. AXA Financial files Annual Reports
on Form 10-K which contain audited financial statements prepared in accordance
with U.S. GAAP and quarterly reports on Form 10-Q which contain quarterly
financial statements prepared in accordance with U.S. GAAP. AXA files Annual
Reports on Form 20-F which contain annual financial statements prepared in
accordance with French accounting principles together with a reconciliation to
U.S. GAAP and periodic reports on Form 6-K which contain financial statements
for the six-months ended June 30 prepared in accordance with French accounting
principles together with a reconciliation to U.S. GAAP.
EXPERTS
The consolidated financial statements of AXA and its subsidiaries
incorporated in this prospectus by reference to the 1999 AXA Form 20-F have been
so incorporated in reliance on the report of Befec-Pricewaterhouse, member of
Pricewaterhouse Coopers, independent accountants, each given upon the authority
of said firm as experts in accounting and auditing.
The parent company condensed financial statements of AXA incorporated in
this prospectus by reference to the 1999 AXA Form 20-F have been so incorporated
in reliance on the report of Befec-Price Waterhouse, member of
PricewaterhouseCoopers, independent accountants, given upon the authority of
said firm as experts in accounting and auditing.
The consolidated financial statements of AXA Financial incorporated in this
prospectus by reference to AXA Financial's Current Report on Form 8-K dated
November 14, 2000, have been so incorporated in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given upon the authority of
said firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the ordinary shares to be issued pursuant to the offer and
the merger will be passed upon for AXA by Linklaters.
WHERE YOU CAN FIND MORE INFORMATION
AXA and AXA Financial are subject to the information and periodic reporting
requirements of the United States Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance with those requirements, file annual
reports and other information with the SEC. However, as a foreign registrant,
AXA and its shareholders are exempt from some of the Exchange Act reporting
requirements. The reporting requirements that do not apply to AXA or its
shareholders include proxy solicitations rules, the short-swing insider profit
disclosure rules of Section 16 of the Exchange Act and the rules regarding the
furnishing of quarterly reports to the SEC, which are required to be filed only
if required in our home country domicile. AXA generally does not provide
quarterly financial or other quarterly information to its shareholders.
You may read and copy any reports, statements or other information that AXA
or AXA Financial file with the SEC at the SEC's public reference rooms at the
following locations:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N W Seven World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, DC 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
</TABLE>
225
<PAGE>
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. These filings are also available to the public from commercial
document retrieval services. Some of these documents are also available at the
Internet web site maintained by the SEC at "http://www.sec.gov". AXA currently
does not file documents with the SEC electronically, which means that none of
the AXA SEC filings are available on the SEC's website. AXA Financial, however,
does file electronically. Reports and other information concerning AXA and AXA
Financial are also available for inspection at the offices of The New York Stock
Exchange, which is located at 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We filed a registration statement on Form F-4 on November 21, 2000, to
register with the SEC the AXA ordinary shares to be issued to AXA Financial
stockholders in the offer and the merger. This prospectus is a part of that
registration statement and constitutes a prospectus of AXA.
As allowed by SEC rules, this prospectus does not contain all the
information you can find in our registration statement or the exhibits to the
registration statement. In addition on November 21, 2000, we filed with the SEC
a Tender Offer Statement on Schedule TO pursuant to Rule 14d-3 under the
Exchange Act to furnish certain information about the offer. You may obtain
copies of the registration statement on Form F-4 and the Schedule TO (and any
amendments to those documents) in the manner described above.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that:
- incorporated documents are considered part of this prospectus;
- we can disclose important information to you by referring you to those
documents;
- information in this prospectus automatically updates and supersedes
information in earlier documents that are incorporated by reference in
this prospectus;
- information in a document incorporated by reference in this prospectus
automatically updates and supersedes information in earlier documents that
are incorporated by reference in this prospectus; and
- information that we file with the SEC after the date of this prospectus
that is incorporated by reference in this prospectus automatically updates
and supersedes this prospectus.
This prospectus incorporates by reference the documents and financial statements
set forth below, except to the extent modified or superseded by this prospectus,
that we have previously filed with
226
<PAGE>
the SEC. These documents and financial statements contain important information
about AXA and AXA Financial and their financial condition.
<TABLE>
<CAPTION>
AXA SEC FILINGS/FURNISHINGS (FILE NO. 1-14410) PERIOD
---------------------------------------------- ---------------------------------------------
<S> <C>
Annual Report on Form 20-F (including
Amendment No. 1 filed with the SEC on
October 11, 2000)............................ Year ended December 31, 1999
Reports on Form 6-K.......................... Furnished on January 24, 2000, February 2,
2000, February 16, 2000, March 22, 2000, May
11, 2000, June 22, 2000, July 21, 2000,
August 31, 2000, October 19, 2000,
November 8, 2000 and November 16, 2000
Financial Statements......................... As of December 31, 1999 and 1998 and for the
years ended December 31, 1999, 1998 and 1997,
contained on pages 4 through 114 of Amendment
No. 1 to the AXA 1999 Annual Report on Form
20-F filed with the SEC on October 12, 2000
</TABLE>
<TABLE>
<CAPTION>
AXA FINANCIAL SEC FILINGS (FILE NO. 1-11166) PERIOD
-------------------------------------------- ---------------------------------------------
<S> <C>
Annual Reports on Form 10-K.................. Year ended December 31, 1999
Quarterly Reports on Form 10-Q............... Three months ended March 31, 2000,
June 30, 2000 and September 30, 2000
Current Reports on Form 8-K.................. Filed on August 30, 2000, October 18, 2000
and November 14, 2000
Financial Statements......................... As of December 31, 1999 and 1998 and for the
years ended December 31, 1999, 1998 and 1997,
contained in and filed as exhibit 99.1 to the
AXA Financial Current Report on Form 8-K
filed with the SEC on November 14, 2000
Financial Statements......................... As of and for the quarter ended
September 30, 2000, contained on pages 1
through 19 of the AXA Financial Quarterly
Report on Form 10-Q filed with the SEC on
November 14, 2000
Proxy Statement.............................. For the year ended December 31, 1999.
</TABLE>
This prospectus may also incorporate by reference additional documents that
we or AXA Financial may file with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, including any Form 6-K which so provides, from the
date of this prospectus to the date that shares of AXA Financial common stock
are accepted for exchange pursuant to the offer or the date that the offer is
terminated.
We have supplied all information contained or incorporated by reference in
this prospectus relating to us. All information relating to AXA Financial has
been extracted from or is part of publicly available information prepared by AXA
Financial. We were not involved in the preparation of the AXA Financial
information or statements and, for the foregoing reasons, are not in a position
to verify them.
227
<PAGE>
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us, the SEC or
the SEC's Internet web site as described above. Documents incorporated by
reference are available from AXA without charge, excluding all exhibits, except
that if AXA has specifically incorporated by reference an exhibit in this
prospectus, the exhibit will also be provided without charge. AXA Financial
stockholders may obtain documents incorporated by reference in this prospectus
by requesting them in writing or by telephone from the information agent.
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM US, PLEASE DO SO BY
DECEMBER 15, 2000, TO RECEIVE THEM IN A TIMELY MANNER. IF YOU REQUEST ANY
INCORPORATED DOCUMENTS FROM US WE WILL MAIL THEM TO YOU BY FIRST-CLASS MAIL, OR
OTHER EQUALLY PROMPT MEANS, WITHIN ONE BUSINESS DAY OF RECEIPT OF YOUR REQUEST.
This prospectus includes information required by the SEC to be disclosed
pursuant to Rule 13e-3 under the Exchange Act, which governs so-called "going
private" transactions by certain issuers or their affiliates. In accordance with
that rule, AXA, the AXA Group Stockholders and AXA Merger Corp. have filed with
the SEC, under the Exchange Act, a Tender Offer Statement on Schedule TO that
contains the information required by Rule 13e-3 with respect to the transaction.
This prospectus does not contain all of the information set forth in the
Schedule TO, including the Rule 13e-3 information, parts of which are omitted in
accordance with the regulations of the SEC. The Schedule TO, and any amendments
thereto, including exhibits filed as a part thereof, will be available for
inspection and copying at the offices of the SEC as set forth above.
You should rely only on the information contained or incorporated by
reference in this prospectus to accept the offer or to vote on the merger. We
have not authorized anyone to provide you with information that is different
from what is contained in this prospectus. This prospectus is dated
November 21, 2000. You should not assume that the information contained in this
prospectus is accurate as of any date other than that date. None of the mailing
of this prospectus to AXA Financial stockholders, the issuance of ADSs or
ordinary shares in the offer or in the merger or the payment of cash in the
offer or the merger creates any implication to the contrary.
LIMITATION ON ENFORCEMENT OF CIVIL LIABILITIES
UNDER U.S. SECURITIES LAWS AGAINST AXA, ITS MANAGEMENT AND OTHERS
AXA is a French SOCIETE ANONYME A DIRECTOIRE ET CONSEIL DE SURVEILLANCE, a
form of limited liability company with a Management Board and a Supervisory
Board. Most of the members of AXA's Management and Supervisory Boards and most
of AXA's officers and certain of the experts named in this prospectus are
non-residents of the United States, and a substantial portion of the assets of
AXA and these persons are located outside the United States. As a result, it may
not be possible for you to effect service of process within the United States
upon AXA or these persons or to enforce against AXA or them judgments obtained
in U.S. courts based upon the civil liability provisions of the U.S. Federal
securities laws.
AXA has been advised by Linklaters that, if an original action is brought in
The Republic of France, based solely upon the U.S. Federal securities laws,
French courts may not have the requisite jurisdiction to grant the remedies
sought and that actions for enforcement of judgments of U.S. courts, rendered
against the French persons referred to above, would require these French persons
to waive their right under Article 15 of the French Civil Code to be sued only
in The Republic of France. AXA believes that these French persons have not
waived this right.
In addition, actions in the United States under the U.S. Federal securities
laws or otherwise could be affected under certain circumstances by the French
law of 26 July, 1968 (as amended by the law of 16 July, 1980), which may
preclude or restrict the obtaining of evidence in The Republic of France or from
French persons in connection with these actions.
228
<PAGE>
INDEX TO AXA'S UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of June 30, 2000 and
December 31, 1999......................................... F-2
Consolidated Statements of Income for the six months ended
June 30, 2000 and June 30, 1999 and for the year ended
December 31, 1999......................................... F-4
Consolidated Statements of Shareholders' Equity for the six
months ended June 30, 2000 and for the year ended
December 31, 1999......................................... F-5
Consolidated Statements of Cash Flows for the six months
ended June 30, 2000 and June 30, 1999 and for the year
ended December 31, 1999................................... F-6
Notes to the Unaudited Interim Consolidated Financial
Statements................................................ F-7
</TABLE>
F-1
<PAGE>
CONSOLIDATED BALANCE SHEETS
ASSETS
(IN EURO MILLIONS)
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
2000 1999
------------ ----------------
(UNAUDITED)
<S> <C> <C>
Fixed maturities............................................ 136,898 125,137
Equity investments.......................................... 47,715 40,779
Mortgage, policy and other loans............................ 33,373 23,921
Real estate................................................. 12,986 12,864
Assets allocated to U.K. with-profit contracts.............. 25,175 25,332
Trading account securities.................................. 33,211 31,285
Securities purchased under resale agreements................ 29,620 32,345
Investment in companies accounted for by the equity
method.................................................... 1,228 1,408
------- -------
TOTAL INVESTMENTS........................................... 320,206 293,069
======= =======
Cash and equivalents........................................ 29,263 14,130
Broker-dealer receivables................................... 61,382 44,689
Deferred acquisition costs.................................. 8,890 7,782
Value of purchased business inforce......................... 3,815 2,438
Goodwill.................................................... 5,434 2,789
Accrued investment income................................... 3,349 3,245
Other assets................................................ 38,105 29,692
Separate account assets..................................... 119,115 109,647
------- -------
TOTAL ASSETS................................................ 589,557 507,480
======= =======
</TABLE>
The accompanying notes are an integral part of these
unaudited interim consolidated financial statements.
F-2
<PAGE>
LIABILITIES
(IN EURO MILLIONS)
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
2000 1999
----------- ----------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES
Future policy benefits and other policy liabilities......... 183,094 145,648
U.K. with-profit contract liabilities....................... 25,175 25,332
Insurance claims and claims expenses........................ 38,228 37,703
Unearned premium reserve.................................... 7,758 6,263
Securities sold under repurchase agreements................. 54,555 56,199
Broker-dealer related payables.............................. 51,412 37,055
Short-term and long-term debt:
Financing debt (Note 5)................................... 7,171 5,419
Operating debt............................................ 13,146 11,684
Accrued expenses and other liabilities...................... 53,641 44,057
Separate account liabilities................................ 118,684 109,001
------- -------
TOTAL LIABILITIES........................................... 552,863 478,361
======= =======
COMMITMENTS AND CONTINGENCIES (NOTE 9)......................
Minority interests (Note 6)................................. 8,342 7,454
Subordinated debt (Note 8).................................. 6,775 4,832
Mandatorily convertible bonds and notes (Note 7)............ 192 474
SHAREHOLDERS' EQUITY:
Ordinary shares, at nominal value........................... 3,597 3,260
Capital in excess of nominal value.......................... 9,189 5,350
Retained earnings and reserves.............................. 8,599 7,747
------- -------
TOTAL SHAREHOLDERS' EQUITY.................................. 21,385 16,357
------- -------
TOTAL LIABILITIES, MINORITY INTERESTS, SUBORDINATED DEBT,
MANDATORILY CONVERTIBLE BONDS AND NOTES, AND SHAREHOLDERS'
EQUITY.................................................... 589,557 507,480
======= =======
</TABLE>
The accompanying notes are an integral part of these
unaudited interim consolidated financial statements.
F-3
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(IN EURO MILLIONS)
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD
ENDED
------------------------- FOR THE YEAR ENDED
JUNE 30, JUNE 30, DECEMBER 31,
2000 1999 1999
----------- ----------- ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Gross premiums and financial services revenues...... 41,009 31,825 66,528
Change in unearned premium reserve.................. (1,672) (1,227) 9
Net investment results.............................. 8,711 8,596 15,630
------- ------- -------
TOTAL REVENUES...................................... 48,049 39,195 82,167
======= ======= =======
Insurance benefits and claims....................... (32,129) (26,380) (56,681)
Reinsurance ceded, net.............................. 53 (31) 808
Acquisition expenses................................ (2,987) (2,603) (5,616)
Other administrative expenses....................... (10,387) (7,297) (15,863)
Amortization of goodwill, net....................... (85) (398) (634)
------- ------- -------
TOTAL BENEFITS, CLAIMS & OTHER DEDUCTIONS........... (45,534) (36,709) (77,986)
======= ======= =======
Income before income tax expense.................... 2,515 2,486 4,183
Income tax expense.................................. (748) (626) (1,292)
Minority interests in income of consolidated
subsidiaries...................................... (560) (410) (858)
Equity in (loss) income of unconsolidated
entities.......................................... (1) 19 (10)
------- ------- -------
NET INCOME.......................................... 1,205 1,469 2,021
======= ======= =======
<CAPTION>
EURO
----------------------------------------------
<S> <C> <C> <C>
Net income per ordinary share: basic (Note 10)...... 3.32 4.17 5.73
Net income per ordinary share: diluted (Note 10).... 3.11 3.90 5.39
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these
unaudited interim consolidated financial statements.
F-4
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN EURO MILLIONS EXCEPT NUMBER OF SHARES)
<TABLE>
<CAPTION>
ORDINARY SHARES
-------------------- CAPITAL IN
NUMBER EXCESS OF RETAINED
IN NOMINAL NOMINAL EARNINGS AND
MILLIONS VALUE VALUE RESERVES TOTAL
--------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998......... 350.29 3,204 5,118 5,215 13,537
------- ------ ------ ------ -------
Cumulative effect of change in
accounting principle............... -- -- -- (16) (16)
Issuance of ordinary shares.......... 1.16 11 102 -- 113
Cash dividend........................ -- -- -- (582) (582)
Exercise of stock options............ 3.30 30 82 -- 112
Conversion of bonds.................. 1.58 14 49 -- 63
Revision of goodwill from Royale
Belge acquisition.................. -- -- -- 52 52
Impact of currency fluctuations...... -- -- -- 954 954
Change in goodwill from UAP
acquisition........................ -- -- -- 88 88
Transition allowance................. -- -- -- 7 7
Effect of internal restructurings.... -- -- -- 8 8
Net income........................... -- -- -- 2,021 2,021
------- ------ ------ ------ -------
BALANCE AT DECEMBER 31, 1999......... 356.33 3,259 5,351 7,747 16,357
------- ------ ------ ------ -------
Issuance of ordinary shares with
preferential subscription rights... 30.23 277 3,378 -- 3,654
Issuance of ordinary shares (a)...... 2.02 19 197 -- 216
Cash dividend........................ -- -- -- (713) (713)
Exercise of stock options............ 0.38 3 13 -- 16
Conversion of bonds (excluding
mandatorily convertible bonds)..... 0.06 -- 7 -- 7
Conversion of 6% mandatorily
convertible bonds.................. 4.11 38 245 -- 282
Impact of currency fluctuations...... -- -- -- 344 344
Transition allowance................. -- -- -- 3 3
Effect of internal restructurings.... -- -- -- 14 14
Net income........................... -- -- -- 1,205 1,205
------- ------ ------ ------ -------
BALANCE AT JUNE 30, 2000
(UNAUDITED)........................ 393.13 3,596 9,190 8,600 21,385
======= ====== ====== ====== =======
</TABLE>
------------------------------
(a) In the six-month period ended June 30, 2000, the fully consolidated
subsidiary, AXA Participations, was merged with AXA, the holding company,
resulting in the issuance of AXA ordinary shares of 2.02 million and
increasing AXA's shareholders' equity by E216 million.
The accompanying notes are an integral part of these
unaudited interim consolidated financial statements.
F-5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN EURO MILLIONS)
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD
ENDED YEAR ENDED
----------------------------- DECEMBER 31,
JUNE 30, 2000 JUNE 30, 1999 1999
------------- ------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
NET INCOME.......................................... 1,205 1,469 2,021
Adjustments to reconcile net income to net cash
provided by operating activities:
Net realized investment gains..................... (2,136) (2,016) (3,669)
Minority interests in income...................... 560 410 858
Depreciation and amortization expense............. 262 432 1,999
Change in insurance liabilities................... 8,502 9,060 14,863
Net change in trading activities and broker-dealer
receivables & payables.......................... (2,326) 930 (494)
Net change in repurchase agreements............... 1,081 1,678 9,817
Other (a)......................................... 4,317 3,497 8,381
------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES........... 11,465 15,460 33,776
------- ------- -------
Cash flows from investing activities:
Maturities and sales:
Fixed maturities.................................. 29,229 16,460 42,110
Equity investments................................ 11,670 17,884 20,388
Real estate....................................... 559 267 1,692
Loans and other................................... 904 1,435 3,138
Purchases:
Fixed maturities.................................. (28,939) (18,235) (38,666)
Equity investments................................ (13,533) (20,813) (50,517)
Real estate....................................... (192) (175) (668)
Loans and other (b)............................... (9,486) (12,641) (14,046)
Net purchases of property and equipment............. (30) (69) (133)
------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES............... (9,818) (15,887) (36,703)
------- ------- -------
Cash flows from financing activities:
Short and long term debt.......................... 2,761 1,439 818
Mezzanine capital................................. 1,857 1,586 2,126
Issuance of ordinary shares....................... 4,176 512 222
Dividends......................................... (973) (735) (974)
------- ------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES........... 7,821 2,802 2,192
------- ------- -------
Net impact of foreign exchange fluctuations......... 697 577 837
Change in cash due to change in scope of
consolidation....................................... 5,071 2,677 3,548
Change in cash due to reclassifications............. (103) (405) 58
Cash and cash equivalents beginning of period....... 14,130 10,421 10,421
------- ------- -------
CASH AND CASH EQUIVALENTS END OF PERIOD............. 29,263 15,644 14,130
======= ======= =======
</TABLE>
------------------------------
(a) Other debtors and creditors including reinsurance deposits.
(b) Includes the movement in separate account assets
The accompanying notes are an integral part of these
unaudited interim consolidated financial statements.
F-6
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As used herein, the "Company" refers to AXA, a French SOCIETE ANONYME (a
form of limited liability company), while "AXA" refers to the Company and its
subsidiaries, directly or indirectly held.
"Year-end consolidated financial statements" refer to AXA's consolidated
financial statements for the year ended December 31, 1999 included under "Item
18--Financial Statements" of the 1999 AXA Form 20-F, which includes Amendment
No.1 filed with the SEC on October 11, 2000.
For the six months ended June 30, 2000 and 1999 and at June 30, 2000, the
unaudited interim consolidated financial statements have been prepared in French
francs and translated into euros using the legal conversion exchange rate of
E1.00 = FF6.55957 applicable since January 1, 1999. The unaudited interim
consolidated financial statements for the six months ended June 30, 2000 and
1999 were published in euros.
The notes to the unaudited interim consolidated financial statements mention
only those events and transactions which have had a material impact on the
balance sheet at June 30, 2000 and the statements of income for the six months
ended June 30, 2000 and 1999. For more detailed information on the financial
condition of AXA, see the 1999 AXA Form 20-F.
1 ACCOUNTING AND DISCLOSURE CHANGES
The interim consolidated financial statements and financial data as of
June 30, 2000 and for the six months ended June 30, 2000 and 1999 is unaudited;
however, in the opinion of AXA, the interim consolidated financial statements
and financial data includes all adjustments, consisting only of normal recurring
adjustments necessary for a fair statement of the financial condition and
results of operations for the interim periods.
In accordance with the French National Accounting Board's (CONSEIL NATIONAL
DE LA COMPTABILITE--CNC) recommendation dated March 18, 1999 and a
recommendation made by the Commission des Operations de Bourse ("the COB"), the
French stock exchange authority, on June 3, 1999, the interim consolidated
financial statements are prepared using the same accounting policies, estimates
and presentation as those used to prepare the year-end consolidated financial
statements, except for certain adjustments required for interim reporting
purposes.
2 CHANGES IN PRESENTATION
The principal changes in presentation of AXA's consolidated financial
statements for the six-month period ended June 30, 2000 compared to the
six-month period ended June 30, 1999 are set out below. Data for the six months
ended June 30, 1999 have been restated for comparative purposes.
- For segment reporting purposes, the amortization of goodwill on acquired
businesses is included as a charge against income of the acquired
businesses and not of the acquiring company. This presentation is only for
segmental reporting purposes and, therefore, there is no impact arising
from foreign exchange differences.
- The segmentation of activities has been revised to reflect certain changes
during the period. The International Insurance segment, which includes
reinsurance and transnational insurance business, was formed during the
second half of 1999. The transnational insurance business activities were
included previously in the Property and Casualty Insurance Segment.
- In order to improve the reporting of profitability measurements for AXA's
operating units, certain general expenses that were previously charged to
the intermediate holding companies have been reallocated to the operating
units.
F-7
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 CHANGES IN PRESENTATION (CONTINUED)
- In 1999 there was an intra-group operation which resulted in a
reclassification of E51 million between general expenses and net
investment result with no impact to net income.
3 PRINCIPAL CHANGES IN SCOPE OF CONSOLIDATION
- NEWLY CONSOLIDATED COMPANIES
The following companies were included in the scope of consolidation during
the six months ended June 30, 2000:
- the acquisition of Nippon Dantai in March 2000 whereby AXA contributed
cash of approximately E1 billion (Y105 billion) as an increase to AXA
Nichidan Holding's capital. At June 30, 2000 AXA's interest in AXA
Nichidan Holding was 92.5%. The accounting year end is September 30 and,
therefore, the acquisition had no impact on AXA's unaudited consolidated
operating results for the six months ended June 30, 2000. However, AXA's
unaudited consolidated balance sheet as of June 30, 2000 includes the
opening balance sheet of AXA Nichidan. As a result of the acquisition,
AXA's total assets at June 30, 2000 increased by E35.6 billion of which,
on a preliminary basis, approximately E1.6 billion and E1.4 billion
relates to goodwill and the value of purchased business in force,
respectively. The consolidated operating results of AXA Nichidan Holding
from the date of acquisition through to September 30, 2000 will be
included in AXA's consolidated operating results for the year ended
December 31, 2000.
- AXA Reinsurance acquired John Hancock P&C Insurance Company and USF RE
Insurance Company, which were consolidated from January 1, 2000. These
acquisitions did not materially impact AXA's unaudited consolidated
balance sheet and statement of income as of and for the six-month period
ended June 30, 2000.
- ENTITIES NO LONGER CONSOLIDATED
- In Italy, Eurovita was deconsolidated following a change of control in the
company (January 2000).
- In Germany, Tellit Vie was sold (January 2000).
- In Malaysia, SIME AXA was sold (January 2000).
These changes did not have a material impact on AXA's unaudited consolidated
balance sheet and statement of income as of and for the six-month period ended
June 30, 2000.
- OTHER CHANGES
- The buyout of minority interests in AXA China Region by AXA increased
AXA's ownership interest from 34.7% to 47.1% (December 1999): the
accounting year end for AXA China Region is September 30.
- In connection with capital units issued by Alliance Capital Management
Holding and acquired by AXA Financial, AXA's ownership interest increased
from 34.0% to 37.0% (June 2000).
- AXA continued to buy AXA Colonia shares on the open market therefore
increasing AXA's interest from 86% to 90.2%. In addition, due to AXA
Financial's stock repurchase program, AXA's interest in AXA Financial
increased from 58.4% to 58.5% on June 30, 2000.
- The fully consolidated subsidiary, AXA Participations, was merged with
AXA, the Holding Company, effective from January 1, 2000.
F-8
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4 SEGMENT INFORMATION
- GROSS PREMIUMS AND FINANCIAL SERVICES REVENUES BY SEGMENT AND GEOGRAPHIC
REGION
REVENUES
(IN EURO MILLIONS)
<TABLE>
<CAPTION>
FOR THE SIX-MONTH FOR THE YEAR
PERIOD ENDED ENDED
------------------- ------------
JUNE 30, JUNE 30, DECEMBER 31,
2000 1999 1999
-------- -------- ------------
<S> <C> <C> <C>
LIFE INSURANCE.............................................. 21,448 17,218 37,091
France.................................................... 6,485 4,777 10,555
United States............................................. 6,402 5,046 10,777
United Kingdom............................................ 3,952 3,474 7,206
Asia/Pacific.............................................. 1,574 1,301 2,859
Germany................................................... 1,374 1,255 2,757
Belgium................................................... 512 410 912
Other..................................................... 1,151 955 2,025
PROPERTY AND CASUALTY....................................... 8,396 6,912 13,592
France.................................................... 2,136 2,219 3,926
Germany................................................... 1,899 1,573 2,766
United Kingdom............................................ 1,376 777 2,008
Belgium................................................... 685 701 1,285
Other..................................................... 2,301 1,642 3,607
INTERNATIONAL INSURANCE..................................... 2,308 1,860 3,109
AXA Corporate Solutions................................... 2,136 1,721 2,819
* AXA REASSURANCE....................................... 1,417 983 1,385
* AXA GLOBAL RISKS...................................... 697 732 1,400
* AXA CESSIONS.......................................... 22 6 34
Assistance................................................ 147 137 281
Other transnational activities............................ 25 2 10
ASSET MANAGEMENT............................................ 1,244 858 1,928
Alliance Capital.......................................... 1,061 743 1,674
AXA Investment Managers................................... 170 104 227
National Mutual Funds Management.......................... 13 12 27
OTHER FINANCIAL SERVICES.................................... 7,612 4,976 10,806
Donaldson, Lufkin & Jenrette.............................. 7,061 4,390 9,671
Other financial and real estate companies................. 552 586 1,136
HOLDING COMPANIES........................................... 1 -- 1
======= ======= =======
TOTAL....................................................... 41,009 31,825 66,528
======= ======= =======
</TABLE>
F-9
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4 SEGMENT INFORMATION (CONTINUED)
- STATEMENTS OF INCOME BY SEGMENT
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD ENDED JUNE 30,2000
-----------------------------------------------------------------------------------------------
OTHER
PROPERTY INTERNATIONAL ASSET FINANCIAL
LIFE & CASUALTY INSURANCE MANAGEMENT SERVICES HOLDINGS TOTAL
(IN EURO MILLIONS) -------- ----------- ------------- ------------- --------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross premiums and financial
services revenues............ 21,448 8,396 2,308 1,244 7,612 1 41,009
Change in unearned premium
reserve...................... (129) (907) (636) -- -- -- (1,672)
Net investment results......... 6,740 1,370 370 121 226 (116) 8,711
-------- ------- ------- ------- ------- ----- --------
TOTAL REVENUES................. 28,060 8,860 2,041 1,365 7,838 (115) 48,049
-------- ------- ------- ------- ------- ----- --------
Insurance benefits and
claims....................... (24,396) (6,260) (1,472) -- -- -- (32,129)
Reinsurance ceded, net......... 4 89 (11) -- -- -- 53
Acquisition expenses (a)....... (1,323) (1,328) (336) -- -- -- (2,987)
Other administrative
expenses..................... (1,173) (982) (126) (988) (7,129) 11 (10,387)
Amortization of goodwill,
net.......................... (20) (37) (11) (9) (5) (4) (85)
-------- ------- ------- ------- ------- ----- --------
TOTAL BENEFITS, CLAIMS & OTHER
DEDUCTIONS (26,907) (8,517) (1,985) (997) (7,134) 8 (45,534)
-------- ------- ------- ------- ------- ----- --------
Income before income tax
expense...................... 1,152 343 56 368 704 (107) 2,515
Income tax (expense) benefit... (411) (56) 6 (80) (238) 31 (748)
Minority interests in (income)
loss of consolidated
subsidiaries................. (173) 38 (3) (205) (243) 26 (560)
Equity in (loss) income of
unconsolidated entities...... 16 1 -- (2) (15) -- (1)
-------- ------- ------- ------- ------- ----- --------
NET INCOME (LOSS).............. 584 324 58 81 208 (51) 1,205
-------- ------- ------- ------- ------- ----- --------
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999
-----------------------------------------------------------------------------------------------
OTHER
PROPERTY INTERNATIONAL ASSET FINANCIAL
LIFE & CASUALTY INSURANCE MANAGEMENT SERVICES HOLDINGS TOTAL
(IN EURO MILLIONS) -------- ----------- ------------- ------------- --------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross premiums and financial
services revenues............ 17,218 6,912 1,860 859 4,976 -- 31,825
Change in unearned premium
reserve...................... (82) (611) (534) -- -- -- (1,227)
Net investment results......... 6,396 1,087 296 91 31 695 8,596
-------- ------- ------- ------- ------- ----- --------
TOTAL REVENUES................. 23,532 7,388 1,622 950 5,007 695 39,195
-------- ------- ------- ------- ------- ----- --------
Insurance benefits and
claims....................... (20,289) (4,904) (1,187) -- -- -- (26,380)
Reinsurance ceded, net......... 42 (90) 17 -- -- -- (31)
Acquisition expenses (a)....... (1,314) (1,040) (249) -- -- -- (2,603)
Other administrative
expenses..................... (871) (869) (144) (727) (4,548) (138) (7,297)
Amortization of goodwill,
net.......................... (14) (31) (3) (11) (7) (332) (398)
-------- ------- ------- ------- ------- ----- --------
TOTAL BENEFITS, CLAIMS & OTHER
DEDUCTIONS................... (22,446) (6,934) (1,566) (738) (4,555) (470) (36,709)
-------- ------- ------- ------- ------- ----- --------
Income before income tax
expense...................... 1,085 454 56 212 453 226 2,486
Income tax (expense) benefit... (313) (56) (32) (80) (157) 12 (626)
Minority interests in (income)
loss of consolidated
subsidiaries................. (219) (39) (5) (99) (151) 103 (410)
Equity in income of
unconsolidated entities...... 17 2 -- -- -- -- 19
-------- ------- ------- ------- ------- ----- --------
NET INCOME..................... 570 362 19 33 144 341 1,469
-------- ------- ------- ------- ------- ----- --------
</TABLE>
F-10
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4 SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
-----------------------------------------------------------------------------------------------
OTHER
PROPERTY INTERNATIONAL ASSET FINANCIAL
LIFE & CASUALTY INSURANCE MANAGEMENT SERVICES HOLDINGS TOTAL
(IN EURO MILLIONS) -------- ----------- ------------- ------------- --------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross premiums and financial
services revenues............ 37,091 13,593 3,109 1,928 10,806 -- 66,528
Change in unearned premium
reserve...................... (1) 207 (197) -- -- -- 9
Net investment results......... 11,665 2,392 576 210 193 595 15,630
-------- -------- ------- ------- -------- ----- --------
TOTAL REVENUES................. 48,755 16,191 3,488 2,139 10,999 595 82,167
-------- -------- ------- ------- -------- ----- --------
Insurance benefits and
claims....................... (42,226) (11,409) (3,046) -- -- -- (56,681)
Reinsurance ceded, net......... 36 437 335 -- -- -- 808
Acquisition expenses (a)....... (2,614) (2,450) (551) -- -- -- (5,616)
Other administrative
expenses..................... (1,913) (1,800) (250) (1,629) (10,016) (256) (15,863)
Amortization of goodwill,
net.......................... (31) (69) (6) (18) (48) (463) (634)
-------- -------- ------- ------- -------- ----- --------
TOTAL BENEFITS, CLAIMS & OTHER
DEDUCTIONS (46,748) (15,291) (3,518) (1,647) (10,064) (719) (77,986)
-------- -------- ------- ------- -------- ----- --------
Income before income tax
expense...................... 2,006 901 (30) 492 935 (123) 4,183
Income tax (expense) benefit... (516) (265) (17) (154) (347) 8 (1,292)
Minority interests in (income)
loss of consolidated
subsidiaries................. (409) (69) (4) (254) (322) 201 (858)
Equity in (loss) income of
unconsolidated entities 31... 31 4 -- -- (45) (1) (10)
-------- -------- ------- ------- -------- ----- --------
NET INCOME (LOSS).............. 1,112 571 (51) 84 221 84 2,021
-------- -------- ------- ------- -------- ----- --------
</TABLE>
------------------------------
(a) Includes amortization expense for value of purchased business inforce,
change in deferred acquisition expense and other related external costs.
F-11
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5 FINANCING DEBT
Long-term and short-term financing debt increased to E7,171 million at
June 30, 2000, an increase of E1,752 million since December 31, 1999. This
increase was primarily attributable to AXA Financial which borrowed
$1,450 million (E1,519 million) from Bank of America N.A. at 7.06% for a three
month period. These funds were used to purchase newly issued Alliance Capital
units in connection with the acquisition of Sanford C. Bernstein (see Note 12).
6 MINORITY INTERESTS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
(EURO MILLIONS) -------- ------------
<S> <C> <C>
Minority interests at January 1............................. 7,454 5,237
----- -----
Acquisition of Guardian Royal Exchange...................... -- 1,025
Acquisition of Nippon Dantai................................ 94 --
Buyout of AXA China Region minority interests............... (215) --
Capital increase of Alliance Capital........................ 528 --
Acquisition of AXA Colonia minority interests............... (80) --
Dividends paid by consolidated subsidiaries................. (268) (507)
Impact of foreign currency fluctuations..................... 262 851
Other changes............................................... 7 (10)
Minority interests in income................................ 560 858
----- -----
MINORITY INTERESTS AT END OF PERIOD......................... 8,342 7,454
===== =====
</TABLE>
7 MANDATORILY CONVERTIBLE BONDS AND NOTES
In January 1997, in conjunction with the acquisition of UAP, AXA issued
2,057 6% convertible notes, or E282 million aggregate principal amount, (the
"AXA Notes"). The AXA Notes matured on January 1, 2000. According to the terms
of the AXA Notes at maturity, the AXA Notes were converted into 2,000 shares for
each note, or 4.1 million ordinary shares, on January 3, 2000.
8 SUBORDINATED DEBT
In accordance with the French insurance code, debt for which reimbursement
is subordinated to other creditors in the event of a company's liquidation,
insolvency or bankruptcy and which has
F-12
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8 SUBORDINATED DEBT (CONTINUED)
an original maturity of at least five years (notice period of at least five
years in the case of perpetual debt) is considered mezzanine capital.
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, 2000 1999
(IN EURO MILLIONS) ---------------- ---------------
<S> <C> <C>
AXA, THE COMPANY
Perpetual Notes, variable................................. 1,266 1,240
Perpetual Notes........................................... 234 234
Subordinated Convertible Notes............................ 1,518 1,524
Subordinated Perpetual Notes, 7.25% (a)................... 500 --
Subordinated Convertible Notes, 3.75% due 2017 (b)........ 1,099 --
EQUITABLE LIFE:
Surplus Notes, 6.95% due 2005............................. 419 396
Surplus Notes, 7.70% due 2015............................. 209 198
DONALDSON, LUFKIN & JENRETTE:
Subordinated Exchange Notes, 9.58% due 2003............... 215 203
Redeemable Preferred Stock, through 2001.................. 602 570
NICHIDAN LIFE:
Subordinated debt (c)..................................... 222 --
BANQUE IPPA:
Subordinated Notes, variable, through 2004................ 132 132
NATIONAL MUTUAL LIFE:
Deferrable Loan Agreement, variable rate due 2001......... 180 173
Other subordinated debt (under Euro 100 million each)....... 179 162
----- -----
TOTAL....................................................... 6,775 4,832
===== =====
</TABLE>
------------------------------
(a) In March 2000, the Company issued E500 million 7.25% undated subordinated
notes. The notes can be redeemed by the Company in full at par (100% of the
nominal amount) being E25 per note at any time.
(b) In February 2000, the Company issued E1,099 million 3.75% subordinated
convertible notes. The proceeds were used primarily to finance the
acquisition of minority interests in AXA China Region and the acquisition of
Nippon Dantai. The conversion into shares of all notes issued would result
in the issuance of 6.7 million AXA ordinary shares. The Company has the
right to redeem these notes starting in January 2007 at a price of E196.00
per note. The issuance price per note was E165.50. Unless previously
converted, redeemed or cancelled, the notes will mature and become repayable
in full on January 1, 2017 at a price of E269.16 per note.
(c) Nichidan Life (formerly Nippon Dantai) issued various subordinated debt in
1998 to several financial institutions which matures in ten years. The
borrowings are primarily variable rate notes. On certain of the notes the
interest rate is LIBOR plus 100 basis points and on other notes the interest
rate is the long term prime rate plus 0.1% (which increases to the long term
prime rate plus 0.5%).
9 CHANGES IN OFF-BALANCE SHEET COMMITMENTS
There was no significant change in off-balance sheet commitments during the
six-months ended June 30, 2000.
F-13
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10 NET INCOME PER ORDINARY SHARE
The calculation of basic net income per ordinary share assumes no dilution
and is based on the weighted average number of ordinary shares outstanding for
the period. The calculation of diluted net income per ordinary share reflects
the dilution that would have occurred if potential ordinary shares had been
issued and shared in the net income of AXA, if the effect of the potential
ordinary shares would have been dilutive. Potential ordinary shares include
share options granted but not exercised and potential ordinary shares on
convertible debt (on an 'if converted' basis).
The weighted average number of share options outstanding during the year
1999 but not included in the calculation of diluted net income per ordinary
share because the exercise price exceeded the average market price of AXA's
shares (that is, they were 'anti-dilutive') was 12.2 million. There were no
anti-dilutive share options outstanding in the six-month period ended June 30,
2000 and 1999.
<TABLE>
<CAPTION>
JUNE 30, JUNE 30, DECEMBER 31,
2000 1999 1999
------------------- ------------------- -------------------
(IN EURO MILLIONS EXCEPT PER ORDINARY SHARE ORDINARY NET ORDINARY NET ORDINARY NET
AMOUNTS IN EURO AND SHARES INCOME SHARES INCOME SHARES INCOME
ORDINARY SHARES IN MILLIONS) -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET INCOME...................................... 363.31 1,205 352.24 1,469 352.99 2,021
Net income per ordinary share (basic)......... 3.32 4.17 5.73
------ ----- ------ ----- ------ -----
EFFECT OF DILUTIVE SECURITIES
Dilutive securities issued by subsidiaries
(a)......................................... -- (20) -- (15) -- (29)
Share options................................. 3.18 -- 4.56 -- 2.72 --
Convertible debt.............................. 16.00 23 9.24 9 9.24 20
Redeemable bonds, and mandatorily convertible
bonds and notes............................. 7.18 5 11.19 9 11.19 19
------ ----- ------ ----- ------ -----
NET INCOME ATTRIBUTABLE TO ORDINARY SHARES AND
POTENTIALLY DILUTIVE SECURITIES............... 389.67 1,213 377.22 1,472 376.14 2,031
Net income per ordinary share (diluted)....... 3.11 3.90 5.39
------ ----- ------ ----- ------ -----
</TABLE>
------------------------------
(a) Stock options issued by subsidiaries of AXA which are not 100% owned by AXA,
principally AXA Financial and its subsidiaries, Alliance Capital and
Donaldson, Lufkin & Jenrette.
11 RELATED PARTY TRANSACTIONS
In the six-month period ended June 30, 2000, AXA sold 1,118,407 million of
treasury shares to FINAXA for E166 per share representing the quoted market
price at that date. This transaction resulted in a capital gain of E60 million
(net group share). There were no other significant changes in the nature of
related party transactions during the six months ended June 30, 2000 from those
disclosed in the consolidated financial statements for the year ended
December 31, 1999.
F-14
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12 OTHER SIGNIFICANT ITEMS
- ACQUISITION OF SANFORD C. BERNSTEIN BY ALLIANCE CAPITAL
On October 2, 2000, Alliance Capital Management L.P. and Alliance Capital
Management Holding L.P., both affiliates of AXA Financial completed the
acquisition of substantially all the assets and assumed substantially all the
liabilities of Sanford C. Bernstein Inc., an asset management company based in
New York for a total consideration of $3.5 billion consisting of $1.4 billion in
cash and 40.8 million units of limited partnership interests of Alliance Capital
Management L.P. In connection with this transaction, AXA Financial has agreed to
provide liquidity to the former shareholders of Sanford C. Bernstein after a
two-year lock-out period by allowing the 40.8 million private units of limited
partnership interest to be sold to AXA Financial over the subsequent eight
years, but generally not more than 20% of such units in any one annual period.
To fund the cash portion of the acquisition, AXA Financial in June 2000
purchased 32.6 million units of limited partnership interest of Alliance Capital
Management L.P. for an aggregate purchase price of $1.6 billion.
- INSURANCE CLAIMS RESERVES
Due to deteriorating loss ratios in the former Guardian Royal Exchange
property and casualty insurance portfolios in the United Kingdom and Ireland,
together with a review of more current information available on claims
experience and a change in the U.K. regulations relating to bodily injury
claims, additional insurance reserves have been established in respect of this
business.
Amounts relating to the former Guardian Royal Exchange property and casualty
insurance portfolio for the period prior to the date of acquisition were
recorded in the opening balance sheet: E74 million for United Kingdom
(E52 million net of tax, E29 million net group share) and E63 million in Ireland
(E50 million net of tax, E28 million net group share). In addition, provisions
of E65 million and E11 million, net group share, for the United Kingdom and
Ireland, respectively, were recorded as a charge against income in the six-month
period ended June 30, 2000.
DECEMBER 1999 STORMS IN THE WESTERN EUROPE
During the six-month period ended June 30, 2000, the cost incurred in
respect of these storms increased by E47 million (net group share), from
E106 million (net group share) for the year ended December 31, 1999.
- BUSINESS COMBINATIONS
In the six-month period ended June 30, 2000, gross goodwill increased by
E2,679 million, primarily due to the following, using foreign exchange rates as
at June 30, 2000:
- Acquisition of Nippon Dantai- goodwill of E1,640 million to be amortized
over 30 years.
- Increase in ownership interest of Alliance Capital Management--goodwill of
E562 million to be amortized over 20 years.
- Buyout of minority interests in AXA China Region--goodwill of
E300 million to be amortized over 20 years.
- Guardian Royal Exchange -- an increase in insurance claims reserves which
impact the opening balance sheet of Guardian Royal Exchange, goodwill was
revalued resulting in an
F-15
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12 OTHER SIGNIFICANT ITEMS (CONTINUED)
increase of E102 million, which will be amortized over the same period as
the original goodwill established at time of acquisition in 1999.
Goodwill amortization for the six-months ended June 30, 2000 and 1999 was
E85 million and E398 million, respectively. Goodwill amortization for the
six-month period ended June 30, 1999 included an exceptional amortization charge
of E329 million in respect of the acquisition of Guardian Royal Exchange. This
charge related to a significant deficiency in insurance claims reserves recorded
in the opening balance sheet by AXA due to a difference bertween local statutory
basis (for the acquired company) and AXA's accounting policies on establishing
property and casualty reserves.
13 SUMMARY OF DIFFERENCES BETWEEN FRENCH GAAP AND U.S. GAAP
The unaudited interim consolidated financial statements have been prepared
in accordance with French GAAP. French GAAP differs with U.S. GAAP in certain
material respects. Such differences impact the methods of measuring the amounts
shown in the financial statements, financial statement classification and
presentational differences and additional disclosures under U.S. GAAP.
A summary of significant differences in accounting principles is provided in
Note 28 of the December 31, 1999 consolidated financial statements included in
the 1999 AXA Form 20-F. The reconciliation of shareholders' equity and net
income from French GAAP to U.S. GAAP as of June 30, 2000 and for the six months
ended June 30, 2000 and 1999 presented in the tables below have been prepared on
this basis as there have been no material changes in accounting principles since
December 31, 1999.
F-16
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13 SUMMARY OF DIFFERENCES BETWEEN FRENCH GAAP AND U.S. GAAP (CONTINUED)
The effect on consolidated net income and shareholders' equity of applying
the significant differences between French GAAP and U.S. GAAP is summarized
below.
<TABLE>
<CAPTION>
FOR THE SIX-MONTH FOR THE YEAR
PERIOD ENDED ENDED
----------------------------- DECEMBER 31,
JUNE 30, 2000 JUNE 30, 1999 1999
(IN EURO MILLIONS EXCEPT PER ORDINARY SHARE AMOUNTS IN EURO) ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CONSOLIDATED NET INCOME IN ACCORDANCE WITH FRENCH GAAP.... 1,205 1,469 2,021
Differences in scope of consolidation................... 56 126 564
Purchase accounting and goodwill........................ (177) 282 (17)
Investment accounting and valuation..................... (52) (157) (182)
Deferred acquisition costs.............................. (27) (10) (3)
Catastrophe equalization reserves....................... (42) 18 (141)
Future policy benefits.................................. (19) (12) (16)
Deferred taxes.......................................... (2) -- 2
Elimination of inter-company transactions............... (13) -- (18)
Elimination of gain in treasury shares.................. (75) -- --
Change in unrealized investment losses (gains) on assets
allocated to U.K. with-profit contracts............... 312 (863) (1,486)
Restructuring provisions................................ (2) (57) 110
Adjustment on dilution gain (Sun Life & Provincial
Holdings)............................................. -- (76) (61)
Other items............................................. (4) (28) 53
Tax effect of U.S. GAAP reconciling adjustments......... 24 227 382
----- ----- ------
CONSOLIDATED NET INCOME IN ACCORDANCE WITH U.S. GAAP...... 1,184 919 1,209
===== ===== ======
Net income per ordinary share
--basic................................................. 3.30 2.68 3.46
--diluted............................................... 3.13 2.50 3.32
Under French GAAP, in accounting for U.K. with-profit contracts, revenue and expense are matched in net
income by including both changes in the estimated fair values of assets allocated to U.K. with-profit
contracts and corresponding increases or reductions in the liability for U.K. with-profit policyholder
benefits. U.S. GAAP, which was developed in an environment that differs from the one in which the U.K.
with-profit contract was developed, requires the change in unrealized investment gains and losses on
assets allocated to U.K. with-profit contracts be excluded from net income, while requiring recognition
of the corresponding change in the liability for with-profit policyholder benefits in net income.
Accordingly, AXA believes this exclusion results in amounts that do not fully reflect the economic
effect of the U.K. with-profit contracts. A rise in the fair value of these assets results in an
increase in the liability for policyholder benefits and a reduction in AXA's consolidated U.S. GAAP net
income. The adjustment below reversed the exclusion of the change in unrealized investment gains and
losses on assets allocated to U.K. with-profit contracts and sets forth the net income in accordance
with U.S. GAAP, except for such adjustment, resulting in a presentation AXA believes is more meaningful
under the circumstances.
CONSOLIDATED NET INCOME IN ACCORDANCE WITH U.S. GAAP...... 1,184 919 1,209
Change in net unrealized investment (losses) gains on assets
allocated to U.K. with-profit contracts, net of deferred
tax..................................................... (218) 596 1,030
----- ----- ------
CONSOLIDATED NET INCOME IN ACCORDANCE WITH U.S. GAAP, EXCEPT
FOR ADJUSTMENT FOR THE CHANGE IN UNREALIZED INVESTMENT
GAINS OR LOSSES ON ASSETS ALLOCATED TO U.K. WITH-PROFIT
CONTRACTS............................................... 966 1,515 2,239
----- ----- ------
Net income per ordinary share
--basic................................................. 2.69 4.41 6.41
--diluted............................................... 2.56 4.11 6.08
</TABLE>
F-17
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13 SUMMARY OF DIFFERENCES BETWEEN FRENCH GAAP AND U.S. GAAP (CONTINUED)
<TABLE>
<CAPTION>
AT JUNE 30, 2000 AT DECEMBER 31, 1999
(IN EURO MILLIONS) ---------------- --------------------
(UNAUDITED)
<S> <C> <C>
CONSOLIDATED SHAREHOLDERS' EQUITY IN ACCORDANCE WITH
FRENCH GAAP............................................ 21,385 16,358
Differences in scope of consolidation.................. 696 675
Purchase accounting and goodwill....................... 1,319 1,606
Investment accounting and valuation.................... 3,663 3,840
Deferred acquisition costs............................. 316 272
Catastrophe equalization reserves...................... 487 508
Future policy benefits................................. (121) (99)
Deferred taxes......................................... (12) (16)
Elimination of intercompany transactions............... (164) (162)
Treasury shares........................................ (383) (265)
Adjustment on dilution gain (Sun Life & Provincial
Holdings)............................................ -- (111)
Other items............................................ 335 280
------- -------
SUBTOTAL................................................. 27,521 22,886
Unrealized investment gains on real estate allocated to
U.K. with-profit contracts............................... (206) (214)
------- -------
CONSOLIDATED SHAREHOLDER'S EQUITY IN ACCORDANCE WITH
U.S. GAAP.............................................. 27,315 22,672
======= =======
</TABLE>
- COMPREHENSIVE INCOME
Comprehensive income includes net income and represents the change in
shareholders' equity during a period from non-owner sources. It includes "other
comprehensive income" which represents revenues, expenses, gains and losses that
under U.S. GAAP are excluded from net income. The changes in AXA's U.S. GAAP
accumulated other comprehensive income were as follows:
<TABLE>
<CAPTION>
ACCUMULATED OTHER COMPREHENSIVE INCOME
(IN EURO MILLIONS)
<S> <C> <C> <C> <C>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
----------------------- -----------------------
U.S. U.S.
GAAP ADJUSTED (A) GAAP ADJUSTED (A)
-------- ------------ -------- ------------
<S> <C> <C> <C> <C>
BALANCE AT JANUARY I IN ACCORDANCE WITH
U.S. GAAP...................................... 7,938 4,704 6,920 4,126
------ ------ ------ ------
Unrealized appreciation (depreciation) of
investments, net of tax and reclassification
adjustments.................................... (337) (99) 372 (412)
Impact of currency fluctuations.................. 343 320 636 981
Effect of restructurings and intercompany sales
of consolidated subsidiaries................... 74 74 10 10
------ ------ ------ ------
BALANCE AT END OF PERIOD IN ACCORDANCE WITH
U.S. GAAP...................................... 8,018 4,999 7,938 4,704
====== ====== ====== ======
</TABLE>
(a) U.S. GAAP, except for adjustment for the change in net unrealized gains
(losses), net of deferred tax, on assets allocated to U.K. with-profit
contracts.
F-18
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13 SUMMARY OF DIFFERENCES BETWEEN FRENCH GAAP AND U.S. GAAP (CONTINUED)
Comprehensive income, being net income plus the change in other
comprehensive income during the period, in accordance with U.S. GAAP totaled
E1,264 million for the six-month period ended June 30, 2000. The balance in the
cumulative translation adjustment is based on movements in the account since
1994.
- NET INCOME PER ORDINARY SHARE
The calculation of basic and diluted net income per ordinary share under
U.S. GAAP is based on the same methodology as for French GAAP (see Note 10).
However, differences arise due to the underlying differences in accounting
principles as noted below.
For the six months ended June 30, 2000, the negative impact of dilutive
securities issued on a U.S. GAAP basis is set out below:
- The dilution effect of publicly-listed subsidiaries with stock option
plans: E14.3 million on a U.S. GAAP basis compared to E20 million on a
French GAAP basis.
- Ordinary shares of AXA held by AXA and its subsidiaries are treasury
shares. Under U.S. GAAP treasury shares are treated as a reduction in the
weighted average number of ordinary shares outstanding used in calculating
the net income per ordinary share whereas under French GAAP treasury
shares do not impact the calculation of net income per ordinary share. The
weighted average number of treasury shares for the six months ended
June 30, 2000 was 4.16 million.
- The recognition of additional interest expense of E31 million being the
amortization of premium on the E1,524 million 2.5% subordinated
convertible debt issued in February 1999 and the E1,099 million 3.75%
subordinated convertible debt issued in February 2000. Under the terms of
both arrangements, the issuer (AXA) has the right of early redemption at a
price greater than the original issue price per note. The earliest
redemption dates are January 2005 and January 2007 in respect of such debt
issued in 1999 and 2000. Under French GAAP, the additional premium over
the original issue price is not amortized whereas under U.S. GAAP the
premium is amortized over the period up to the earliest redemption date
and, therefore, decreased net income and shareholders' equity under U.S.
GAAP and effected the net income per ordinary share on a diluted basis.
- UNAUDITED PRO FORMA INFORMATION RELATING TO GUARDIAN ROYAL EXCHANGE
In May 1999 AXA acquired Guardian Royal Exchange which was accounted for by
the purchase method of accounting under French GAAP. The results of operations
of Guardian Royal Exchange for the period since the date of acquisition are
included in the AXA's consolidated financial statements at June 30, 2000 (full
six months) and at June 30, 1999 (for the two-month post-acquisition period).
The following summarized unaudited pro forma information as determined under
French GAAP presents the consolidated results of operations of AXA for the
six-month period ended June 30, 1999 and the corresponding six-month prior
period ended June 30, 1998 and assume the Guardian Royal Exchange acquisition
had taken place on January 1 of each year and (1) excludes the exceptional
amortization of goodwill of E118 million, net group share which was recorded
against the French GAAP earnings in six months ended June 30, 1999 relating to a
significant deficiency in insurance claims reserves of the acquired companies at
the date of acquisition, (2) excludes profit
F-19
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13 SUMMARY OF DIFFERENCES BETWEEN FRENCH GAAP AND U.S. GAAP (CONTINUED)
recognized in earnings in 1999 due to the dilution of AXA's ownership interest
in Sun Life & Provincial Holdings to 56.3% from 71.6% (E503 million, group share
included in the six months ended June 30, 1999) in connection with the issuance
of capital by Sun Life & Provincial Holdings to fund the acquisition of Guardian
Royal Exchange, and (3) includes an adjustment to reflect the decrease in
earnings in Sun Life & Provincial Holdings consolidated by AXA due to the
dilution of AXA's ownership interest in Sun Life & Provincial Holdings arising
from the transaction (decrease of E18 million for the four-month period prior to
the Guardian Royal Exchange acquisition in 1999 and a decrease of E39 million
for the six month period ended June 30, 1998, on a pro forma basis).
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
JUNE 30,
-------------------------
1999 1998
AMOUNTS IN ACCORDANCE WITH FRENCH GAAP: (UNAUDITED) (UNAUDITED)
(IN EURO MILLIONS EXCEPT FOR PER SHARE DATA) ----------- -----------
<S> <C> <C>
Gross premiums and financial services revenues.............. 32,284 31,219
Net income.................................................. 1,065 980
------ ------
Net income per ordinary share:
--Basic................................................... 3.02 2.95
--Diluted................................................. 2.82 2.75
---------------------------------------------------------------------------------------
</TABLE>
The amounts include Guardian Royal Exchange's pro forma results of
operations for the six months ended June 30, 1998 and for the first four months
ended April 30, 1999 prior to the acquisition, and actual results of operations
for the post-acquisition two-month period ended June 30, 1999, for those
Guardian Royal Exchange operations acquired and retained by AXA. The pro forma
results of operations were, for the pre-acquisition period, determined using the
historical financial statements of Guardian Royal Exchange prepared under
generally accepted accounting principles in the United Kingdom and adjusted in
certain material respects to conform with French GAAP. In addition, the pro
forma results of operations include amortization of the intangible assets and
interest expense on debt issued to finance the purchase.
The effects of other acquisitions during the six-month period ended
June 30, 2000 and the corresponding prior period were not material and,
accordingly, have been excluded from the pro forma presentation.
These pro forma consolidated results of operations have been prepared for
comparative purposes only and are not indicative of the results of operations
which actually would have resulted had the acquisition occurred on the dates
indicated, or which may result in the future.
F-20
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14 NEW ACCOUNTING STANDARDS
FRENCH GAAP
In 1999, the COMITE DE LA REGLEMENTATION COMPTABLE (French National
Accounting Regulations Committee) issued a statement setting forth a new basis
for preparing consolidated financial statements in France. For insurance
business, this statement becomes effective January 1, 2001 and, therefore,
changes would be reflected in AXA's consolidated financial statements in 2001.
The effect of this statement on French insurance companies is currently under
review. Based on current information available, the basis for preparing and
presenting AXA's Consolidated Financial Statements under French GAAP should not
be affected materially.
U.S. GAAP
Statement of Position No. 98-7 ("SOP 98-7") entitled "Accounting for
Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk" became
effective January 1, 2000. SOP 98-7 provides guidance on the method of
accounting for insurance and reinsurance contracts that do not transfer
insurance risk, using the deposit method of accounting. SOP 98-7 did not have a
material impact on AXA's consolidated financial condition or results of
operations.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("FAS 133") "Accounting for
Derivative Instruments and Hedging Activities". In June 1999, the FASB issued
Statement of Financial Accounting Standards No. 137 ("FAS 137"), "Deferral of
the Effective Date of FASB Statement No 133". FAS 137 allows entities which have
not yet adopted FAS 133 to defer its effective date to all fiscal years
beginning on or after June 15, 2000 (that is for AXA's Consolidated Financial
Statements beginning January 1, 2001). In June 2000, the FASB issued Statement
of Financial Accounting Standards No. 138 ("FAS 138"), "Accounting for Certain
Derivative Instruments and Certain Hedging Activities--An Amendment of FASB
Statement No. 133", which amended certain provisions of FAS 133.
These new standards establish accounting and reporting standards for
derivative instruments, including derivatives embedded in assets and
liabilities, and for hedging activities. It requires all derivatives to be
recognized on the balance sheet at fair value. The accounting for changes in the
fair value of a derivative depends on its intended use. Derivatives not used in
hedging activities must be adjusted to fair value through earnings. Changes in
the fair value of derivatives used in hedging activities will, depending on the
nature of the hedge and hedge effectiveness, be recorded in earnings and/or
other comprehensive income (a separate component of equity). For all hedging
activities, the ineffective portion of a derivative's change in fair value will
be recognized immediately in earnings.
AXA continues to evaluate the potential impact of implementing these new
accounting standards, which will depend, among other things, on additional
interpretations of the standards prior to the effective date, any potential
changes to AXA's current strategy regarding investments in derivatives and
hedging, and the extent to which AXA's existing hedging strategies will meet the
requirements of hedge effectiveness.
The SEC staff issued Staff Accounting Bulletin No. 101 "Revenue Recognition
in Financial Statements" ("SAB 101"). The implementation of SAB 101 was delayed
by the SEC until no later than the quarter ending December 31, 2000. SAB 101 is
not expected to have a material impact on AXA's consolidated financial condition
or results of operations.
F-21
<PAGE>
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15 SUBSEQUENT EVENTS
AXA and its subsidiaries were involved in the following material
transactions subsequent to June 30, 2000:
- In July 2000, AXA acquired the minority interests (43.8%) in Sun Life &
Provincial Holdings for approximately L2.3 billion (E3.7 billion based on
an exchange rate on the date of the acquisition). AXA financed the
acquisition primarily through the issuance of 30.2 million newly issued
ordinary shares. The net cash proceeds of this offering were approximately
E3.7 billion. On July 12, 2000, the transaction was declared fully
unconditional, at which time Sun Life & Provincial Holdings was delisted
from the London Stock Exchange. The transaction was completed on July 26,
2000. Under French GAAP the excess purchase price, including the costs of
transactions, over the portion of the assets acquired and liabilities
assumed, using carrying values at date of acquisition, will be recorded as
goodwill. Under U.S. GAAP the excess purchase price, including the costs
of transactions, over the portion of the assets acquired and liabilities
assumed, using fair values at date of acquisition, will be recorded as
goodwill.
- On July 25, 2000, AXA proposed a financial reorganization relating to the
Inherited Estate of AXA Equity & Law, one of its life insurance
subsidiaries in the United Kingdom. As a consequence of the financial
reorganization, a portion of the assets of AXA Equity & Law that have
accumulated over the years (the Inherited Estate) will be attributed to
AXA as the shareholder, and a portion will be allocated to policyholders
in the form of policy bonuses and cash distributions. If approved by a
sufficient percentage of policyholders (over 35%) and the Court, the
financial impact of this reorganization in AXA's consolidated financial
statements will be determined by the percentage of policyholders electing
in favor of the proposal and the valuation of the Inherited Estate at
December 31, 2000. If approved, this reorganization will lead to a change
in accounting principles relating to U.K. with-profit contracts and the
way income is calculated for AXA's U.K. life insurance subsidiaries under
French GAAP and U.S. GAAP. The impact of the financial reorganization on
AXA's consolidated results of operations, liquidity and financial position
under both French GAAP and U.S. GAAP in future periods is currently under
review.
- On August 30, 2000, AXA Financial and certain of its affiliates entered
into an agreement to sell to Credit Suisse Group their 71% interest in
Donaldson, Lufkin & Jenrette. The consideration consists of
U.S. $2.4 billion plus 25.7 million shares of Credit Suisse Group. The
sale of Donaldson, Lufkin & Jenrette closed on November 3, 2000.
- On October 17, 2000, AXA, AXA Merger Corp. and AXA Financial entered into
a Merger Agreement relating to the acquisition by AXA and AXA Merger Corp.
of the minority interests in AXA Financial pursuant to an exchange offer
followed by a second-step merger. Pursuant to the terms of the Merger
Agreement, AXA Financial minority shareholders will receive 0.295 of an
AXA ADS and $35.75 in cash for each share of AXA Financial common stock.
Similar to the acquisition of the minority interests in Sun Life &
Provincial Holdings, goodwill will be recognized, and the basis for
determining goodwill under French GAAP will differ from that determined
under U.S. GAAP. In addition to the difference in determining goodwill,
since AXA will be issuing ADSs in connection with the transaction,
goodwill will be charged directly to shareholders' equity in proportion to
the value of the ADSs issued to total purchase price paid. The remaining
goodwill will be recognized as an asset and amortized over its useful
life. Under U.S. GAAP, the entire amount representing goodwill is
recognized as an asset and amortized over its estimated useful life.
F-22
<PAGE>
SCHEDULE 1
INFORMATION CONCERNING THE MEMBERS OF THE BOARDS, DIRECTORS AND EXECUTIVE
OFFICERS OF AXA, FINAXA, AXA ASSURANCES I.A.R.D. MUTUELLE, AXA ASSURANCES VIE
MUTUELLE, AXA COURTAGE ASSURANCE MUTUELLE, AXA CONSEIL ASSURANCE MUTUELLE, AXA
FINANCIAL, INC., AND AXA MERGER CORP.
1. MEMBERS OF THE BOARDS AND EXECUTIVE OFFICERS OF AXA. The following table
sets forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employment for the past five years of each director and executive officer of
AXA. During the last five years, none of the directors or executive officers
listed below, to the best knowledge of AXA, (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a
party to any judicial or administrative proceeding (except for matters that were
dismissed without sanction or settlement) that resulted in a judgment, decree or
final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of such laws. Unless otherwise indicated, the current business address
of each person is 21 Avenue Matignon 75008 Paris, France. Unless otherwise
indicated, each such person is a citizen of The Republic of France.
A. MANAGEMENT BOARD
AXA's business is managed by a Management Board (DIRECTOIRE) currently
consisting of five members.
The members of the Management Board are appointed by the Supervisory Board
for a period of three years. The members of the Management Board need not be
shareholders; however, they must be individuals. The Supervisory Board must
appoint one of the members of the Management Board as Chairman.
Under French law, the Management Board has management responsibility for AXA
and broad authority to take actions in the name of AXA, within the scope of the
corporate purpose, and subject to the authority expressly reserved by STATUTS to
the shareholders and the Supervisory Board.
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Henri de Castries............................ Chairman of the Management Board and Chief
Executive Officer of AXA
Member of the Conseil d'Administration of FINAXA,
AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, AXA Courtage Assurance Mutuelle and
AXA Conseil Vie Assurance Mutuelle
Chairman of the Board of AXA Financial, Inc.
Senior Executive Vice President of AXA (1995-2000)
Vice Chairman of AXA Financial, Inc. (1996--1998)
Senior Executive Vice President Financial Services
and Life Insurance Activities in the United
States, Germany, the United Kingdom and Benelux
(1996--2000)
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Executive Vice President Financial Services and
Life Insurance Activities (1993--1996)
Director or Officer of various subsidiaries and
affiliates of the AXA Group
Director of DLJ and Alliance Capital Management
Corporation
General Partner of Alliance Holding and Alliance
Director of Equitable Life
Gerard de La Martiniere...................... Chief Financial Officer of AXA
Group Executive Vice President, Finance, Control
and Strategy of AXA
Member of the Conseil d'Administration of FINAXA
Francoise Colloc'h........................... Group Executive Vice President of AXA
Group Executive Vice President, Human Resources,
Communication and Synergies of AXA (until 2000)
Director of Equitable Life
Director or Officer of various subsidiaries and
affiliates of the AXA Group
Edward Miller(2)............................. Vice Chairman of the Management Board of AXA
President and Chief Executive Officer of AXA
Financial, Inc.
President (1997 - 1998), Chairman, Chief Executive
Officer and Director of Equitable Life
Senior Executive Vice President of AXA
Senior Vice Chairman of Chase Manhattan
Corporation (1996 - 1997)
President of Chemical Bank (1994 - 1996)
Director of various AXA Financial subsidiaries,
including DLJ and Alliance Capital Management
Corporation
General Partner of Alliance Holding and Alliance,
AXA Canada, KeySpan Energy Corporation
Claude Tendil................................ Senior Vice President of AXA
Vice Chairman of the Management Board of AXA
Chairman and Chief Executive Officer of Insurance
Companies in France
Member of the Conseil d'Administration of AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle, AXA Courtage Assurance Mutuelle and AXA
Conseil Vie Assurance Mutuelle
</TABLE>
S-2
<PAGE>
B. SUPERVISORY BOARD
The Supervisory Board supervises management of AXA by the Management Board
and has the responsibility of making whatever ongoing checks and inspections it
deems appropriate and of reviewing such documents as it deems necessary or
appropriate for the performance of its duties.
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
CURRENT BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Claude Bebear................................ Chairman of the Supervisory Board of AXA
Member of the Conseil d'Administration of FINAXA,
AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, AXA Courtage Assurance Mutuelle and
AXA Conseil Vie Assurance Mutuelle
Chairman of the Management Board of AXA (until
2000)
Chairman of the Board of AXA Financial (until
1998)
Chairman and Chief Executive Officer of AXA
(1989--2000)
Chairman or Director of numerous subsidiaries and
affiliated companies of the AXA Group
Director of Schneider Electric
Member of the Supervisory Board of Paribas
Director of Equitable Life (1991--1998)
Antoine Berheim.............................. Retired General Partner of Lazard
Jacques Calvet............................... Vice Chairman of the Supervisory Board of Galeries
Lafayette
Henri de Clermont-Tonnerre................... Chairman and Chief Executive Officer of Ersa
Societe Industrielle et Financiere
Member of the Conseil d'Administration of AXA
Assurances Vie Mutuelle and AXA Conseil Vie
Assurance Mutuelle
David Dautresme.............................. Former Managing Partner of Lazard Freres
Jean-Rene Fourtou............................ Vice Chairman of the Management Board of Aventis
Member of the Conseil d'Administration of FINAXA,
AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, AXA Courtage Assurance Mutuelle and
AXA Conseil Vie Assurance Mutuelle
Chairman and Chief Executive Officer of Rhone-
Poulenc, S.A. (1986 - 1999)
Director of AXA (1999)
Director of Schneider Electric, Paribas, and
Groupe Pernod-Ricard
Member of the Consulting Council of Banque de
France
Director of Equitable Life
</TABLE>
S-3
<PAGE>
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
CURRENT BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Michel Francois-Poncet....................... Chairman of the Supervisory Board of Paribas
Member of the Conseil d'Administration of FINAXA
Patrice Garnier.............................. Vice President of AXA Corporate Solutions
Director or Member of the Supervisory Board of
various AXA entities
Anthony J. Hamilton(1)....................... Group Chairman and Chief Executive of Fox-Pitt,
Kelton Group Ltd.
Non-executive Chairman, Byas, Mosley Group Ltd.
General Partner of Fox-Pitt, Kelton Group Ltd.
Director of various Fox-Pitt, Kelton and Byas,
Mosley Group companies
Henri Hottinguer(4).......................... Chairman of the Supervisory Board of Credit Suisse
Hottinguer Paris
Member of the Conseil d'Administration of FINAXA
Richard Jenrette(2).......................... Senior advisor of Donaldson, Lufkin & Jenrette
Henri Lachmann............................... Chairman and Chief Executive Officer of Schneider
Electric
Member of the Conseil d'Administration of FINAXA,
AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, AXA Courtage Assurance Mutuelle and
AXA Conseil Vie Assurance Mutuelle
Gerard Mestrallet............................ Chairman of the Management Board of Suez Lyonnaise
des Eaux
Friedel Neuber(3)............................ Chairman of the Supervisory Board of Preussag AG
Alfred von Oppenheim(3)...................... Chairman of the Supervisory Board of SAL Oppenheim
Jr & Cie
Michel Pebereau.............................. Chairman and Chief Executive Officer of BNPP
Didier Pineau-Valencienne.................... Vice Chairman of Credit Suisse First Boston
Honorary Chairman of Schneider Electric
Chairman and Chief Executive Officer of Schneider
Electric (1981 - 1999)
Director of CGIP, Aventis, Sema Group PLC (U.K.),
Soft Computing and Swiss Helvetic Fund
Member of the Advisory Board of Booz-Allen &
Hamilton
Director of Equitable Life
Bruno Roger.................................. Senior Manager of Lazard Freres
</TABLE>
S-4
<PAGE>
C. EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Claude Bebear................................ see above
Jean-Luc Bertozzi............................ Executive Officer of AXA France Assurances
Alfred Bouckaert(6).......................... Chief Executive Officer of AXA Royale Belge
Donald Brydon(1)............................. Chief Executive of AXA Investment Managers Europe
Claude Cargou................................ Chief Information Officer
Henri de Castries............................ see above
Francoise Colloc'h........................... see above
Claus Michael Dill(3)........................ Chairman of the Management Board of AXA Colonia
Konzern AG and affiliated companies
Member of the Management Board of AXA Colonia
Konzern AG and affiliated companies
(Apr. 1999 - Jun. 1999)
Member of the Holding Management Board of
Gerling-Konzern (1995 - 1999)
Director or Officer of various subsidiaries and
affiliates of the AXA Group
Member of the Supervisory Board of Deutsche
Arzteversicherung AG, Kolnische
Ruckversicherung-Gesellschaft AG and Rheinboden
Hypothekenbank AG
Denis Duverne................................ Group Executive Vice President, Finance, Control
and Strategy
Director and President of AXA Merger Corp.
Michael Hegarty(2)........................... Senior Vice Chairman and Chief Operating Officer
of AXA Financial Inc.
Vice Chairman of AXA Financial, Inc.
(1998 - 1999)
Senior Executive Vice President of AXA
Financial, Inc. (Jan. 1998--Apr. 1998)
Director, President, and Chief Operating Officer
of Equitable Life
Vice Chairman of Chase Manhattan Corporation
(1996 - 1997)
Vice Chairman of Chemical Bank (1996)
Member of the Executive Board of AXA and a
director of various AXA Financial subsidiaries,
including DLJ and Alliance Capital Management
Corporation
Gerard de La Martiniere...................... see above
Edward Miller(2)............................. see above
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Jean-Marie Nessi............................. Chairman and Chief Executive Officer of AXA
Reassurance
Les Owen(2).................................. Managing Director of AXA Asia Pacific Holdings
Chief Executive Officer of AXA Sun Life
(1997-1999)
Michel Pinault............................... Head of Asia-Pacific Business Unit
Claude Tendil................................ see above
Patrick Thourot.............................. Chief of the Central Actuarial Department
Mark Wood(1)................................. Managing Director of Sun Life & Provincial
Holdings
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF FINAXA. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employment for the past five years of each member of the Conseil
d'Administration and executive officer of FINAXA. During the last five years,
none of the directors or executive officers listed below, to the best knowledge
of FINAXA, (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
such laws. Unless otherwise indicated, the current business address of each
person is 23 Avenue Matignon, 75008 Paris, France. Unless otherwise indicated,
each such person is a citizen of The Republic of France.
A. MEMBERS OF THE CONSEIL D'ADMINISTRATION
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Claude Bebear................................ see above
Henri de Castries............................ see above
Gerard de La Martiniere...................... see above
Jean-Rene Fourtou............................ see above
Pierre de Waziers ........................... Deputy Chairman, BNP Paribas
8 rue Sainte Lucie
75015 Paris, France
Michel Francois-Poncet....................... see above
Henri Hottinguer(4).......................... see above
Paul Hottinguer(4) .......................... President and Chief Executive Officer of
43 rue Taitbout Financiere Hottinguer
75009 Paris, France
Henri Lachmann............................... see above
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Christian Manset ............................ President of Compagnie Financiere Ottomane
7 rue Meyerbeer Director of Compagnie Financiere de Paribas
75009 Paris, France (until 1997)
Georges Rousseau............................. Retired (since 1995)
Member of the Conseil d'Administration of AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle, and AXA Courtage Assurance Mutuelle
Emilio Ybarra ............................... President of Banco Bilbao Vizcaya Argentaria
Paseo de la Castellana, 81 Chairman of Banco Bilbao Vizcaya (until 1997)
28046 Madrid, Spain
</TABLE>
B. EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Claude Bebear................................ Chairman and Chief Executive Officer
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF AXA ASSURANCES I.A.R.D. MUTUELLE. The
following table sets forth the name, current business address, citizenship and
present principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of each member of the Conseil
d'Administration and executive officer of AXA Assurances I.A.R.D. Mutuelle.
During the last five years, none of the directors or executive officers listed
below, to the best knowledge of AXA Assurances I.A.R.D. Mutuelle, (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to any judicial or administrative proceeding
(except for matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of such laws. Unless otherwise indicated,
the current business address of each person is 370 rue Saint-Honore, 75001
Paris, France. Unless otherwise indicated, each such person is a citizen of The
Republic of France.
A. MEMBERS OF THE CONSEIL D'ADMINISTRATION
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Claude Bebear................................ see above
Henri de Castries............................ see above
Jean-Pierre Chaffin ......................... Chairman of the Federation de la Metallurgie
5 rue de La Bruyere Member of the Conseil d'Administration of AXA
75009 Paris, France Assurances Vie Mutuelle and AXA Courtage Assurance
Mutuelle
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Pierre de Waziers ........................... Managing Director of E.A.C.M.
8 rue Sainte Lucie Member of the Conseil d'Administration of AXA
75015 Paris, France Assurances Vie Mutuelle, AXA Courtage Assurance
Mutuelle and AXA Conseil Vie Assurance Mutuelle
Jean-Rene Fourtou............................ see above
Octave Manset................................ Communication Manager of BMW Group Member of the
Conseil d'Administration of AXA Assurances Vie
Mutuelle
Henri Lachmann............................... see above
Jean de Ribes ............................... Managing Director of Fortuny Finance Conseil
38 rue Fortuny Chairman of the Board of Bertin and Simmonds
75017 Paris, France (until 1997)
Member of the Conseil d'Administration of AXA
Assurances Vie Mutuelle and AXA Courtage Assurance
Mutuelle
Francois Richer.............................. Retired (since 1995)
Member of the Conseil d'Administration of AXA
Assurances Vie Mutuelle
Georges Rousseau............................. see above
Claude Tendil................................ see above
Francis Vaudour ............................. Chief Executive Officer of Segafredo Zanetti
14 boulevard Industriel France S.A.
76301 Sotteville les Rouen, France Member of the Conseil d'Administration of AXA
Conseil Vie Assurance Mutuelle
</TABLE>
B. EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Claude Bebear................................ Chairman
Francois Pierson............................. Executive Officer of AXA Assurances I.A.R.D.
Mutuelle, AXA Assurances Vie Mutuelle and AXA
Conseil Vie Assurance Mutuelle
Executive Officer of UAP Vie (1997-1998)
Executive Officer of AXA Assurances (1995-1997)
</TABLE>
4. DIRECTORS AND EXECUTIVE OFFICERS OF AXA ASSURANCES VIE MUTUELLE. The
following table sets forth the name, current business address, citizenship and
present principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of each member of the Conseil
d'Administration and executive officer of AXA Assurances Vie Mutuelle. During
the last five years, none of the directors or executive officers listed below,
to the best knowledge of AXA Assurances Vie Mutuelle, (i) has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to any judicial or
S-8
<PAGE>
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
such laws. Unless otherwise indicated, the current business address of each
person is 370 rue Saint-Honore, 75001 Paris, France. Unless otherwise indicated,
each such person is a citizen of The Republic of France.
A. MEMBERS OF THE CONSEIL D'ADMINISTRATION
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Claude Bebear................................ see above
Jean-Pierre Chaffin.......................... see above
Henri de Castries............................ see above
Henri de Clermont-Tonnerre................... see above
Pierre de Waziers............................ see above
Jean-Rene Fourtou............................ see above
Octave Manset................................ see above
Henri Lachmann............................... see above
Jean de Ribes................................ see above
Francois Richer.............................. see above
Georges Rousseau............................. see above
Claude Tendil................................ see above
</TABLE>
B. EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Francois Pierson............................. see above
</TABLE>
5. DIRECTORS AND EXECUTIVE OFFICERS OF AXA COURTAGE ASSURANCE MUTUELLE. The
following table sets forth the name, current business address, citizenship and
present principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of each member of the Conseil
d'Administration and executive officer of AXA Courtage Assurance Mutuelle.
During the last five years, none of the directors or executive officers listed
below, to the best knowledge of AXA Courtage Assurance Mutuelle, (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to any judicial or administrative proceeding
(except for matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of such laws. Unless otherwise indicated,
the current business address of each person is 26 rue de Louis-le-Grand, 75002
Paris, France. Unless otherwise indicated, each such person is a citizen of The
Republic of France.
S-9
<PAGE>
A. MEMBERS OF THE CONSEIL D'ADMINISTRATION
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Claude Bebear................................ see above
Jean-Pierre Chaffin.......................... see above
Francis Cordier ............................. Chairman and Chief Executive Officer of Group
rue Nicephore Niepce BP Demay Lesieur
323 76304
Sotteveille Les Rouen,
France
Gerard Coutelle.............................. Retired (since 1995)
Henri de Castries............................ see above
Pierre de Waziers............................ see above
Jean-Rene Fourtou............................ see above
Patrice Garnier ............................. Member of the Conseil d'Administration of AXA
Latreaumont Conseil Vie Assurance Mutuelle
76360 Barentin, France
Henri Lachmann............................... see above
Jean de Ribes................................ see above
Georges Rousseau............................. see above
Claude Tendil................................ see above
</TABLE>
B. EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------------- --------------------------------------------------
<S> <C>
Claude Bebear...................................... see above
Jacques Deparis.................................... Chairman of the Supervisory Board of Assurcredit
Director of AXA Assistance France AXA Banque and
AXA Courtage I.A.R.D.
</TABLE>
6. DIRECTORS AND EXECUTIVE OFFICERS OF AXA CONSEIL VIE ASSURANCE MUTUELLE.
The following table sets forth the name, current business address, citizenship
and present principal occupation or employment, and material occupations,
positions, offices or employment for the past five years of each member of the
Conseil d'Administration and executive officer of AXA Conseil Vie Assurance
Mutuelle. During the last five years, none of the directors or executive
officers listed below, to the best knowledge of AXA Conseil Vie Assurance
Mutuelle, (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
such laws. Unless otherwise indicated, the current business address of each
person is 370 rue Saint-Honore, 75001 Paris, France. Unless otherwise indicated,
each such person is a citizen of The Republic of France.
S-10
<PAGE>
A. MEMBERS OF THE CONSEIL D'ADMINISTRATION
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Claude Bebear................................ see above
Henri de Castries............................ see above
Henri de Clermont-Tonnerre................... see above
Pierre de Waziers............................ see above
Jean-Rene Fourtou............................ see above
Patrice Garnier.............................. see above
Henri Lachmann............................... see above
Claude Tendil................................ see above
Francis Vaudour.............................. see above
</TABLE>
B. EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Francois Pierson............................. see above
</TABLE>
7. DIRECTORS AND EXECUTIVE OFFICERS OF AXA FINANCIAL INC. The following
table sets forth the name, current business address, citizenship and present
principal occupation or employment, and material occupations, positions, offices
of employment for the past five years of each director and executive officer of
AXA Financial Inc. During the last five years, none of the directors or
executive officers listed below, to the best knowledge of AXA Financial Inc.,
(i) has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) was a party to any judicial or administrative
proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws, or a finding of any violation of such laws. Unless
otherwise indicated, the current business address of each person is 1290 Avenue
of the Americas, New York, NY 10104. Unless otherwise indicated, each such
person is a citizen of The Republic of France.
A. DIRECTORS
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
CURRENT BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------ --------------------------------------------------
<S> <C>
Claude Bebear................................ see above
John S. Chalsty(2)........................... Chairman of DLJ
Director of DLJ, IBP, Inc., Sappi Limited, and
Occidental Petroleum
Senior Executive Vice President and Member of the
Executive Committee of AXA (1997 - 2000)
President and Chief Executive Officer of DLJ
(1988 - 1998)
</TABLE>
S-11
<PAGE>
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
CURRENT BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------ --------------------------------------------------
<S> <C>
Francoise Colloc'h........................... see above
Henri de Castries............................ see above
Claus-Michael Dill(3)........................ see above
Joseph L. Dionne(2).......................... Retired as Chairman of the McGraw-Hill Companies
Chairman (1988 - 1999) and Chief Executive Officer
(1983 - 1998) of the McGraw-Hill Companies
Retired as Director of the McGraw-Hill Companies
(in April 2000), Harris Corporation and Ryder
Systems, Inc.
Director of Equitable Life
Jean-Rene Fourtou............................ see above
Donald J. Greene(2).......................... Of Counsel and Partner (until 1999) of LeBoeuf,
Lamb, Greene & MacRae, L.L.P.
Director of Equitable Life
Director of McGraw Hill
Anthony J. Hamilton(1)....................... see above
John T. Hartley(2)........................... Retired as Chairman and Chief Executive Officer of
Harris Corporation
Director of Equitable Life
John H.F. Haskell, Jr.(2).................... Senior Advisor of Warburg Dillon Read LLC
Managing Director (1975 - 1999) and Member of the
Board of Directors of Warburg Dillon Read LLC
Director of Pall Corporation (until 1998)
Chairman of the Supervisory Board of Dillon Read
(France) Gestion (until 1998)
Director of Equitable Life
Michael Hegarty(2)........................... see above
Nina Henderson(2)............................ Corporate Vice President of Core Business
Development of Bestfoods
President of Bestfoods Grocery (1997 - 1999)
Vice President of Bestfoods (1997 - 1999)
President of Bestfoods Specialty Markets Group
(1993 - 1997)
Director of Hunt Corporation and PACTIV
Corporation
Director of Equitable Life
</TABLE>
S-12
<PAGE>
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
CURRENT BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------ --------------------------------------------------
<S> <C>
W. Edwin Jarmain(5).......................... President of Jarmain Group Inc. and officer or
director of several affiliated companies
Director of Equitable Life, Alliance Capital
Management Corporation, DLJ, AXA Insurance
(Canada), Anglo Canada General Insurance Company,
and AXA Pacific Insurance Company
Non-executive Chairman and Director of FCA
International Ltd. (1994 - 1998)
Director of Equitable Life
Edward D. Miller(2).......................... see above
Didier Pineau-Valencienne.................... see above
George J. Sella, Jr.(2)...................... Director of Equitable Life
Peter J. Tobin(2)............................ Dean of the Peter J. Tobin College of Business
Administration of St. John's University
Chief Financial Officer at Chase Manhattan
Corporation (1996 - 1997)
Chief Financial Officer of Chemical Bank
(1991 - 1996)
Director of The CIT Group, Inc., H.W. Wilson
Company and P.A. Consulting
Director of Equitable Life
Dave H. Williams(2).......................... Chairman of Alliance Capital Management
Corporation
Chief Executive Officer of Alliance Capital
Management Corporation (1977 - 1999)
Chairman or Director of numerous subsidiaries and
affiliated companies of Alliance Capital
Management Corporation and of mutual funds managed
by Alliance
Senior Executive Vice President of AXA
(1997 - 2000)
Director of Equitable Life
</TABLE>
B. EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Edward D. Miller(2).......................... see above
Michael Hegarty(2)........................... see above
Stanley Tulin(2)............................. Vice Chairman and Chief Financial Officer
Jose Suquet(2)............................... Senior Executive Vice President
Robert Garber(2)............................. Executive Vice President and General Counsel
Peter D. Noris(2)............................ Executive Vice President and Chief Investment
Officer
</TABLE>
S-13
<PAGE>
8. DIRECTORS AND EXECUTIVE OFFICERS OF AXA MERGER CORP. The following table
sets forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices of
employment for the past five years of each director and executive officer of AXA
Merger Corp. During the last five years, none of the directors or executive
officers listed below, to the best knowledge of AXA Merger Corp., (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to any judicial or administrative proceeding
(except for matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of such laws. Unless otherwise indicated,
the current business address of each person is The Corporation Trust Center,
1209 Orange Street, Wilmington, DE 19801. Unless otherwise indicated, each such
person is a citizen of The Republic of France.
A. DIRECTORS
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Denis Duverne................................ see above
</TABLE>
B. EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAMES, CITIZENSHIP AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------------------- --------------------------------------------------
<S> <C>
Denis Duverne................................ see above
Emmanuel Vercoustre.......................... Vice President and Treasurer
Philippe Maso................................ Vice President
Christianne Butte............................ Vice President and Secretary
</TABLE>
------------------------------
(1) Citizen of the U.K.
(2) Citizen of the U.S.
(3) Citizen of the Federal Republic of Germany
(4) Citizen of Switzerland
(5) Citizen of Canada
(6) Citizen of Belgium
S-14
<PAGE>
ANNEX A
CONFORMED COPY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 17, 2000
AMONG
AXA,
AXA MERGER CORP.
AND
AXA FINANCIAL, INC.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C> <C>
ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01. The Offer................................................... A-1
SECTION 1.02. Company Actions............................................. A-4
SECTION 1.03. The Merger.................................................. A-4
SECTION 1.04. Closing..................................................... A-5
SECTION 1.05. Effective Time.............................................. A-5
SECTION 1.06. Effect...................................................... A-5
SECTION 1.07. Certificate of Incorporation and By-laws.................... A-5
SECTION 1.08. Directors................................................... A-5
SECTION 1.09. Officers.................................................... A-5
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock..................................... A-5
SECTION 2.02. Exchange of Certificates.................................... A-7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization, Standing and Power............................ A-10
SECTION 3.02. Capital Structure........................................... A-11
SECTION 3.03. Authority; Execution and Delivery; Enforceability........... A-11
SECTION 3.04. No Conflicts; Consents...................................... A-12
SECTION 3.05. SEC Documents............................................... A-13
SECTION 3.06. Information Supplied........................................ A-13
SECTION 3.07. Opinion of Financial Advisor................................ A-13
SECTION 3.08. Brokers..................................................... A-13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
SECTION 4.01. Organization, Standing and Power............................ A-14
SECTION 4.02. Capital Structure........................................... A-14
SECTION 4.03. Authority; Execution and Delivery; Enforceability........... A-14
SECTION 4.04. No Conflicts; Consents...................................... A-15
SECTION 4.05. SEC Documents............................................... A-15
SECTION 4.06. Information Supplied........................................ A-15
SECTION 4.07. Financing................................................... A-15
SECTION 4.08. Brokers..................................................... A-15
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C> <C>
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business......................................... A-16
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Preparation of Form F-4 and Proxy Statement/Prospectus or A-18
Information Statement/Prospectus; Stockholders
Meeting/Written Consent....................................
SECTION 6.02. Reasonable Best Efforts; Notification....................... A-19
SECTION 6.03. Stock Options; Directors Stock.............................. A-20
SECTION 6.04. Indemnification............................................. A-21
SECTION 6.05. Fees and Expenses........................................... A-23
SECTION 6.06. Public Announcements........................................ A-23
SECTION 6.07. Transfer Taxes.............................................. A-23
SECTION 6.08. Stockholder Litigation...................................... A-23
SECTION 6.09. Affiliates.................................................. A-23
SECTION 6.10. Listing..................................................... A-24
SECTION 6.11. Merger Sub Compliance....................................... A-24
SECTION 6.12. Treatment of DLJ............................................ A-24
SECTION 6.13. Employee Benefits........................................... A-24
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. Conditions to Each Party's Obligation to Effect the A-24
Merger.....................................................
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination................................................. A-25
SECTION 8.02. Effect of Termination....................................... A-26
SECTION 8.03. Amendment................................................... A-26
SECTION 8.04. Extension; Waiver........................................... A-26
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver... A-26
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C> <C>
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Nonsurvival of Representations and Warranties............... A-27
SECTION 9.02. Notices..................................................... A-27
SECTION 9.03. Definitions................................................. A-27
SECTION 9.04. Interpretation.............................................. A-28
SECTION 9.05. Severability................................................ A-28
SECTION 9.06. Counterparts................................................ A-28
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries.............. A-28
SECTION 9.08. Governing Law............................................... A-29
SECTION 9.09. Assignment.................................................. A-29
SECTION 9.10. Jurisdiction................................................ A-29
Exhibit A -- Conditions of the Offer
Exhibit B -- Form of Company Affiliate Letter
Exhibit C -- Voting Agreement
</TABLE>
A-iii
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of October 17, 2000 among AXA, a
societe anonyme organized under the laws of The Republic of France ("PARENT"),
AXA MERGER CORP., a Delaware corporation and wholly owned subsidiary of Parent
("MERGER SUB"), and AXA FINANCIAL, INC., a Delaware corporation (the "COMPANY").
WHEREAS Parent directly and indirectly through subsidiaries owns, through a
voting trust (the "VOTING TRUST") established pursuant to a Voting Trust
Agreement dated as of May 12, 1992, by and among Parent and the voting trustees
named therein, as amended by the First Amendment thereto dated as of
January 22, 1997 (as so amended, the "VOTING TRUST AGREEMENT"), approximately
60.3% of the outstanding Common Stock, par value $.01 per share, of the Company
(the "COMPANY COMMON STOCK");
WHEREAS Parent and Merger Sub propose to make an offer (as it may be amended
from time to time as permitted under this Agreement, the "OFFER") to exchange
(A) all outstanding shares of Company Common Stock, other than (1) shares owned
by Parent and its subsidiaries held in the Voting Trust (such shares, excluding
any shares acquired pursuant to the Offer and deposited in the Voting Trust, the
"AFFILIATE SHARES" and the holders thereof, the "AFFILIATE SHAREHOLDERS") and
(2) shares held in treasury by the Company, for (B) consideration per share of
Company Common Stock equal to the Per Share Merger Consideration (as defined in
Section 2.01(c)), on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS the Board of Directors of the Company (the "COMPANY BOARD"), based
on the unanimous recommendation of a special committee of independent directors
of the Company (the "SPECIAL COMMITTEE"), has (i) approved this Agreement, the
Offer, the merger of Merger Sub with and into the Company, with the Company as
the surviving corporation (the "MERGER"), and the other transactions
contemplated hereby, (ii) determined that the terms of the Offer and the Merger
are fair to and in the best interests of the Company and the holders of Company
Common Stock (other than the Affiliate Shareholders), (iii) declared the
advisability of this Agreement and (iv) recommended acceptance of the Offer and,
to the extent applicable, adoption of this Agreement by such holders of Company
Common Stock, subject to the terms and conditions set forth herein;
WHEREAS a majority of the voting trustees under the Voting Trust have
delivered to the Company a voting agreement signed by each of them (the "VOTING
AGREEMENT"), in the form attached hereto as EXHIBIT C, with respect to the
voting of the shares of Company Common Stock held in the Voting Trust in favor
of the adoption of this Agreement, if applicable, which Voting Agreement may not
be amended without the approval of the Special Committee;
WHEREAS the Board of Directors of Merger Sub has approved this Agreement and
declared its advisability, and simultaneous with the execution and delivery
hereof Parent, as the sole stockholder of Merger Sub, has adopted this
Agreement; and
WHEREAS Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01. THE OFFER. (a) Subject to the conditions set forth in EXHIBIT
A, as promptly as practicable after the date of this Agreement, Parent and
Merger Sub shall commence the Offer within the meaning of the applicable
rules and regulations of the Securities and Exchange Commission (the "SEC"). The
obligations of Parent and Merger Sub to accept for payment, and
A-1
<PAGE>
deliver any payment for, any shares of Company Common Stock tendered pursuant to
the Offer are subject to no conditions other than the conditions set forth in
EXHIBIT A. The initial expiration date of the Offer shall be the 20th business
day following the commencement of the Offer (determined using Rule 14d-1(g)(3)
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")).
Parent and Merger Sub expressly reserve the right to waive any condition to the
Offer or modify the terms of the Offer, except that, without the consent of the
Company (expressed in a resolution adopted by both the Special Committee and the
Company Board), Parent and Merger Sub shall not (i) reduce the amount of
consideration per share of Company Common Stock or change the form of
consideration to be paid pursuant to the Offer or reduce the percentage of
shares of Company Common Stock offered to be acquired in the Offer, (ii) add to
the conditions set forth in EXHIBIT A or modify any condition set forth in
EXHIBIT A in any manner adverse to the holders of Company Common Stock (other
than the Affiliate Shareholders) or (iii) otherwise amend the Offer in any
manner adverse to the holders of Company Common Stock (other than the Affiliate
Shareholders). The Company agrees that no Company Common Stock held by the
Company (including shares of Company Common Stock held in treasury by the
Company) will be tendered pursuant to the Offer. Notwithstanding the foregoing,
Parent and Merger Sub may, without the consent of the Company, (i) extend the
Offer, if at the scheduled expiration date of the Offer any of the conditions to
Parent's and Merger Sub's obligation to purchase shares of Company Common Stock
are not satisfied, until such time as such conditions are satisfied or
irrevocably waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer and (iii) extend the Offer for any reason for a period
of not more than 5 business days beyond the latest expiration date that would
otherwise be permitted under clause (i) or (ii) of this sentence but in no event
ending later than the date set forth in Section 8.01(b)(i) and only so long as
Parent and Merger Sub shall have waived each of the conditions set forth in
EXHIBIT A. In the event that Parent and Merger Sub are unable to consummate the
Offer on the initial scheduled expiration date due to the failure of the
conditions set forth in EXHIBIT A to be satisfied or waived, except to the
extent that such conditions are incapable of being satisfied, Parent and Merger
Sub shall not terminate the Offer and shall extend the Offer (for no more than
10 business days without the consent of the Special Committee) and set a
subsequent scheduled expiration date, and shall continue to so extend the Offer
under such circumstances and set subsequent scheduled expiration dates until the
earlier of (x) the date that such conditions are satisfied or waived and (y) the
date set forth in Section 8.01(b)(i). In addition, notwithstanding the
foregoing, Parent and Merger Sub shall provide a "subsequent offering period",
in accordance with Rule 14d-11 under the Exchange Act, of a number of days
ending on the earliest to occur of (i) 20 business days following commencement
of such subsequent offering period, (ii) the business day prior to the Closing
Date (as defined in Section 1.04) and (iii) December 31, 2000, if extending the
subsequent offering period beyond December 31, 2000 would reasonably be expected
to adversely affect Parent. On the terms and subject to the conditions of the
Offer and this Agreement, Parent and Merger Sub shall (i) if the conditions set
forth in EXHIBIT A have been satisfied or waived by Parent and Merger Sub and
the Offer has expired, accept for payment all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer, (ii) deliver payment
for all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer that Parent and Merger Sub become obligated to purchase
upon expiration of the Offer or initial period of the Offer, as applicable, as
soon as practicable after such expiration and (iii) deliver payment for any
shares of Company Common Stock validly tendered pursuant to the Offer during the
subsequent offer period that Parent and Merger Sub are obligated to purchase
promptly upon such tender. The parties agree and acknowledge that neither the
acceptance for payment nor payment for any shares of Company Common Stock
pursuant to the Offer will affect the Company's obligation to pay any dividends
on such shares with a record date prior to such acceptance for payment or
payment that may have been declared by the Company in accordance with the terms
of this Agreement or prior to the date
A-2
<PAGE>
of this Agreement and which remain unpaid at the time of such acceptance for
payment or payment. Parent will not issue certificates or scrip representing
fractional shares pursuant to the Offer. Parent will pay cash in lieu of
fractional shares in accordance with Section 2.02(d).
(b) As soon as practicable after the date of this Agreement and
consistent with applicable law, Parent shall (i) file or submit for review
on a confidential basis and ultimately file with the SEC a registration
statement on Form F-4, which will include a preliminary prospectus
containing the information required under Rule 14d-4(b) under the Exchange
Act and the information required pursuant to Rule 13e-3 under the Exchange
Act, to register the offer and sale of Parent ADSs (as defined in Section
2.01(c)), as evidenced by Parent ADRs (as defined in Section 2.01(c)), and
the Parent Ordinary Shares (as defined in Section 2.01(c)) underlying the
Parent ADSs, pursuant to the Offer (as supplemented or amended, the "FORM
F-4"); and (ii) together with Merger Sub and the Company, concurrently with
the filing of the Form F-4, file with the SEC a combined Rule 13e-3
Transaction Statement on Schedule 13E-3 and Tender Offer Statement on
Schedule TO under cover of Schedule TO with respect to the Offer which shall
contain or incorporate by reference, among other things, a preliminary or
final prospectus, as the case may be, in accordance with Rule
14d-4(b) under the Exchange Act and a related letter of transmittal (such
combined Rule 13e-3 Transaction Statement on Schedule 13E-3 and Tender Offer
Statement on Schedule TO under cover of Schedule TO, and the documents
included or incorporated by reference therein, pursuant to which the Offer
will be made, together with any supplements or amendments thereto, the
"OFFER DOCUMENTS"); and (ii) as soon as practicable after the Form F-4 shall
become effective cause the Offer Documents to be disseminated to holders of
Company Common Stock. The Form F-4 shall comply in all material respects
with the provisions of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the Offer Documents shall comply in all material
respects with the provisions of the Exchange Act, assuming the accuracy of
the information provided in writing for inclusion therein by the Company.
Each of Parent, Merger Sub and the Company shall (i) promptly correct any
information provided by it for use in the Form F-4 or the Offer Documents if
and to the extent that such information shall have become false or
misleading in any material respect, (ii) take all steps necessary to amend
or supplement the Form F-4 and the Offer Documents and (iii) cause the Form
F-4 and the Offer Documents as so amended or supplemented to be filed with
the SEC and the Offer Documents as so amended or supplemented to be
disseminated to the holders of Company Common Stock, in each case as and to
the extent required by applicable Federal securities laws. The Company, the
Special Committee and their respective counsels shall be given the
opportunity to review the Form F-4 and the Offer Documents prior to filing
with the SEC. Parent shall provide the Company, the Special Committee and
their respective counsels with a copy of any written comments or telephonic
notification of any oral comments Parent or its counsel may receive from the
SEC or its staff with respect to the Form F-4 and the Offer Documents
promptly after the receipt of such comments. Parent and Merger Sub shall
provide the Company, the Special Committee and their respective counsels
with a reasonable opportunity to participate in all material communications
with the SEC and its staff, including any material meetings and telephone
conferences, relating to the Form F-4, the Offer Documents or this
Agreement. If at any time after the date hereof this Agreement is
terminated, Parent and Merger Sub agree that they shall amend the Offer
Documents to reflect such termination.
(c) Parent and Merger Sub shall provide or cause to be provided to the
Exchange Agent (as defined in Section 2.02) on or prior to the expiration of
the Offer (and thereafter on a timely basis) the Parent ADRs and funds
necessary to make payment for any shares of Company Common Stock that Parent
and Merger Sub become obligated to purchase pursuant to the Offer. Following
the purchase by Parent and Merger Sub of shares of Company Common Stock
pursuant to the Offer and prior to the Effective Time, such shares of
Company Common Stock
A-3
<PAGE>
shall be divided and allocated to each of Parent (the "Parent Allocated
Tender Shares") and Merger Sub (the "Merger Sub Allocated Tender Shares") on
a basis to be mutually agreed by Parent and Merger Sub.
SECTION 1.02. COMPANY ACTIONS. (a) The Company hereby approves of and
consents to the Offer, the Merger and the other transactions contemplated by
this Agreement, on the terms and subject to the conditions set forth in this
Agreement.
(b) On the date the Offer Documents are first disseminated to holders of
Company Common Stock, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as supplemented or amended from time to time,
the "SCHEDULE 14D-9") describing the recommendations referred to in Section
3.03(b) and shall mail the Schedule 14D-9 to the holders of Company Common
Stock; PROVIDED, HOWEVER, that the Company Board or the Special Committee
may determine not to make such recommendations or such recommendations may
be withdrawn or modified to the extent that the Special Committee determines
in good faith, after consultation with outside legal counsel, that such
recommendations would be inconsistent with its fiduciary duties to
stockholders of the Company under applicable law. The Schedule 14D-9 shall
comply in all material respects with the provisions of the Exchange Act,
assuming the accuracy of the information provided in writing for inclusion
therein by Parent and Merger Sub. Each of the Company, Parent and Merger Sub
shall promptly correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company shall take all
steps necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the holders of Company Common Stock, in each case as and to
the extent required by applicable Federal securities laws. Parent and its
counsel shall be given the opportunity to review the Schedule 14D-9 prior to
its initial filing with the SEC. The Company shall provide Parent and its
counsel with a copy of any written comments or telephonic notification of
any oral comments the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments. The Company shall provide Parent and Merger Sub and their counsel
with a reasonable opportunity to participate in all communications with the
SEC and its staff, including any meetings and telephone conferences,
relating to the Schedule 14D-9 or this Agreement.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Parent and Merger Sub promptly with mailing labels and
electronic files containing the names and addresses of the record holders of
Company Common Stock as of a recent date and of those persons becoming
record holders subsequent to such date, together with copies of all lists of
stockholders, security position listings and computer files, and shall
furnish to Parent and Merger Sub such additional information and assistance
(including updated lists of stockholders, security position listings and
computer files) as Parent and Merger Sub may reasonably request in
connection with communicating the Offer to the Company's stockholders.
SECTION 1.03. THE MERGER. On the terms and subject to the conditions set
forth in this Agreement, and in accordance with the General Corporation Law of
the State of Delaware (the "DGCL"), Merger Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.05). At the Effective
Time, the separate corporate existence of Merger Sub shall cease and the Company
shall continue as the surviving corporation (the "SURVIVING CORPORATION"). At
the election of Parent, any direct or indirect wholly owned subsidiary of Parent
(that is incorporated in the State of Delaware) may be substituted for Merger
Sub as a constituent corporation in the Merger. In such event, the parties shall
execute an appropriate amendment to this Agreement in order to reflect the
foregoing.
A-4
<PAGE>
SECTION 1.04. CLOSING. The closing (the "CLOSING") of the Merger shall take
place at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York 10019 at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by Law (as defined in Section 3.04),
waiver by all applicable parties) of the conditions set forth in Article VII, or
at such other place, time and date as shall be agreed in writing between Parent
and the Company. The date on which the Closing occurs is referred to in this
Agreement as the "CLOSING DATE".
SECTION 1.05. EFFECTIVE TIME. Prior to the Closing, the parties shall
prepare, and on the Closing Date or as soon as practicable thereafter shall
cause to be filed with the Secretary of State of the State of Delaware, a
certificate of merger or certificate of ownership and merger or other
appropriate documents (in any such case, the "CERTIFICATE OF MERGER") executed
in accordance with the relevant provisions of the DGCL and shall make all other
filings or recordings required under the DGCL. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with such Secretary of
State, or at such later time as Parent and the Company shall agree and specify
in the Certificate of Merger (the time the Merger becomes effective being the
"EFFECTIVE TIME").
SECTION 1.06. EFFECT. The Merger shall have the effect set forth in the
DGCL.
SECTION 1.07. CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The Restated
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the Restated Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable Law.
(b) The By-laws of the Company, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 1.08. DIRECTORS. The directors of the Company immediately prior to
the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.09. OFFICERS. The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed and qualified, as the case may be.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Merger Sub:
(a) AFFILIATE SHARES, PARENT ALLOCATED TENDER SHARES AND CAPITAL STOCK
OF MERGER SUB. Each Affiliate Share issued and outstanding at the Effective
Time and each Parent Allocated Tender Share shall remain outstanding as one
fully paid and nonassessable share of common stock, par value $.01, of the
Surviving Corporation. The issued and outstanding shares of capital stock of
Merger Sub shall be converted into and become that number of fully paid and
non-assessable shares of common stock, par value $.01 per share, of the
Surviving Corporation (the "MERGER SUB SHARES") as shall equal the total
number of issued and outstanding shares of Company Common Stock immediately
prior to the Effective Time minus the sum of (i) the total number of
Affiliate Shares then outstanding and (ii) the total number of Parent
Allocated Tender Shares. Immediately after the Effective Time, the Affiliate
A-5
<PAGE>
Shares, the Parent Allocated Tender Shares, the Merger Sub Shares and the
shares of Company Series D Preferred Stock (as defined in Section 2.01(d))
shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
(b) CANCELLATION OF STOCK. Each share of Company Common Stock that is
held in treasury by the Company and each Merger Sub Allocated Tender Share
shall no longer be outstanding and shall automatically be canceled and shall
cease to exist, and no consideration shall be delivered or deliverable in
exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. (1) Other than the Affiliate
Shares, the Parent Allocated Tender Shares and the Merger Sub Shares and
subject to Sections 2.01(b), 2.01(e), 2.02(d) and 6.03, each issued and
outstanding share of Company Common Stock shall be converted into the right
to receive (A) 0.295 of an American depositary share (each a "PARENT ADS")
of Parent (the "PER SHARE STOCK CONSIDERATION") (each Parent ADS
representing one-half of an Ordinary Share, nominal value euro 9.15 per
share, of Parent ("PARENT ORDINARY SHARE") and evidenced by one American
depositary receipt ("PARENT ADR") issued in accordance with the Deposit
Agreement dated as of June 24, 1996, among Parent, The Bank of New York, as
depositary, and all owners from time to time of Parent ADRs) and (B) $35.75
in cash, without interest (the "PER SHARE CASH CONSIDERATION" and, together
with the Per Share Stock Consideration, the "PER SHARE MERGER
CONSIDERATION"). The consideration payable upon the conversion of shares of
Company Common Stock pursuant to this Section 2.01(c) is referred to
collectively as the "MERGER CONSIDERATION".
(2) As of the Effective Time, all shares of Company Common Stock so
converted pursuant to Section 2.01(c)(1) shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each holder of
a certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to receive
the Merger Consideration payable with respect to such shares upon surrender
of such certificate, any cash in lieu of fractional Parent ADSs to be issued
in exchange for Company Common Stock pursuant to Section 2.02(d) and any
dividends or other distributions to which such holder may be entitled
pursuant to Section 2.02(c) or (e), in each case without interest.
(d) COMPANY SERIES D PREFERRED STOCK. Subject to Section 2.01(e), each
issued and outstanding share of Cumulative Convertible Preferred Stock,
Series D, par value $1.00 per share, of the Company (the "COMPANY SERIES D
PREFERRED STOCK") outstanding immediately prior to the Effective Time shall
remain outstanding as Series D Preferred Stock of the Surviving Corporation
and will have such terms as set forth in the Certificate of Designations,
Preferences, and Relative, Participating, Optional and Other Special Rights
of Preferred Stock and Qualifications, Limitations and Restrictions Thereof
of the Company, dated as of December 8, 1993, pursuant to which they were
issued (the "SERIES D CERTIFICATE OF DESIGNATIONS").
(e) APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to the
contrary, shares ("APPRAISAL SHARES") of Company Common Stock and Company
Series D Preferred Stock that are outstanding immediately prior to the
Effective Time and that are held by any person who is entitled to demand,
and who properly demands, appraisal of such Appraisal Shares pursuant to,
and who complies in all respects with, Section 262 of the DGCL ("SECTION
262") shall not be converted into the right to receive the Merger
Consideration as provided in Section 2.01(c) in the case of Company Common
Stock, or shall not remain outstanding as provided in Section 2.01(d) in the
case of Company Series D Preferred Stock, but rather the holders of
Appraisal Shares shall be entitled to payment of the fair value of such
Appraisal Shares in accordance with Section 262; PROVIDED, HOWEVER, that if
any such
A-6
<PAGE>
holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to appraisal under Section 262, then the right of such holder to be
paid the fair value of such holder's Appraisal Shares shall cease and such
Appraisal Shares shall be deemed to have been converted as of the Effective
Time into, and to have become exchangeable solely for, the right to receive
the Merger Consideration (but without interest thereon) as provided in
Section 2.01(c) in the case of Company Common Stock, or shall remain
outstanding as provided in Section 2.01(d) in the case of Company Series D
Preferred Stock. The Company shall serve prompt notice to Parent of any
demands received by the Company for appraisal of any shares, and Parent
shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, without the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands, or
agree to do any of the foregoing.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. Prior to the
Effective Time, Parent shall select a bank or trust company, which shall be
reasonably acceptable to the Company, to act as exchange agent (the "EXCHANGE
AGENT") for the payment of the Merger Consideration upon surrender of
certificates which immediately prior to the Effective Time represented Company
Common Stock. Immediately prior to the Effective Time, Parent shall deposit or
shall cause to be deposited with or for the account of the Exchange Agent, for
the benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article II, through the Exchange Agent, the Merger
Consideration issuable or payable pursuant to Section 2.01 in exchange for
outstanding shares of Company Common Stock (the certificates representing Parent
ADSs and cash so deposited, including any cash payable in lieu of fractional
Parent ADSs) and any dividends or distributions with respect to such Parent ADSs
with a record date after the Effective Time (without any interest on any such
cash, dividends or distributions), being hereinafter referred to as the
"EXCHANGE FUND"), together with all cash and other property to which holders of
Company Common Stock are entitled pursuant to Section 2.02(e). For purposes of
determining the number of Parent ADSs and the amount of cash to be deposited by
Parent in the Exchange Fund, Parent shall assume that no holder of Company
Common Stock will perfect such holder's right to appraisal of such holder's
Company Common Stock or be entitled to a cash payment in lieu of fractional
Parent ADSs.
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates (the "CERTIFICATES") that immediately prior to
the Effective Time represented outstanding shares of Company Common Stock
whose shares were converted into the right to receive Merger Consideration
pursuant to Section 2.01, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together
with such letter of transmittal, duly executed, and such other documents as
may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted into the right to
receive pursuant to Section 2.01, any cash in lieu of fractional Parent ADSs
to which such holder is entitled pursuant to Section 2.02(d) and any
dividends or other distributions to which such holder is entitled pursuant
to Section 2.02(c), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Company Common Stock
that is not registered in the transfer records of the Company, payment may
be made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
A-7
<PAGE>
otherwise be in proper form for transfer and the person requesting such
payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of Parent that such tax has been paid or is
not applicable. The Merger Consideration will be delivered by the Exchange
Agent as promptly as practicable following the surrender of a Certificate,
the related letter of transmittal, duly executed, and such other documents
as may reasonably be required by the Exchange Agent. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
such surrender the Merger Consideration into which the shares of Company
Common Stock theretofore represented by such Certificate have been converted
into the right to receive pursuant to Section 2.01, any cash in lieu of
fractional Parent ADSs to which such holder is entitled pursuant to Section
2.02(d) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c), in each case, without interest
thereon. No interest shall be paid or accrue on the cash payable upon
surrender of any Certificate.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to the Parent ADSs with a record date after
the Effective Time shall be paid to the holder of any unsurrendered
Certificate, and no cash payment in lieu of fractional Parent ADSs shall be
paid to any such holder pursuant to Section 2.02(d), until the surrender of
such Certificate in accordance with this Article II. Subject to applicable
Law, following surrender of any such Certificate, there shall be paid to the
holder of the Parent ADSs issued in exchange therefor, without interest,
(i) at the time of such surrender, the amount of cash payable in lieu of a
fractional Parent ADS to which such holder is entitled pursuant to Section
2.02(d) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such Parent
ADSs and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
such surrender and with a payment date subsequent to such surrender payable
with respect to such Parent ADSs.
(d) NO FRACTIONAL SHARES. (i) No certificates or scrip representing
fractional Parent ADSs shall be issued upon the surrender for exchange of
Certificates pursuant to this Article II, no dividend or distribution of
Parent shall relate to such fractional interests, and such fractional
interests will not entitle the owner thereof to vote or to any rights of a
holder of Parent ADSs. For purposes of this Section 2.02(d), all fractional
shares to which a single record holder would be entitled shall be aggregated
and calculations shall be rounded to three decimal places.
(ii) Parent shall pay to each former holder of Company Common Stock an
amount in cash equal to the product obtained by multiplying (A) the
fractional interest to which such former holder (after taking into account
all shares of Company Common Stock held at the Effective Time by such
holder) would otherwise be entitled by (B) the average of the closing prices
for a Parent ADS as reported on the New York Stock Exchange (the "NYSE")
Composite Transaction Tape (as reported in THE WALL STREET JOURNAL,
Northeastern edition, or, if not reported thereby, any other authoritative
source reasonably chosen by Parent) for the five consecutive trading days
ending on the trading day immediately prior to the Closing Date. Parent will
deposit or will cause to be deposited a sufficient amount of cash with the
Exchange Agent to cover the payments required to be made pursuant to this
Section 2.02(d)(ii).
(iii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Certificates formerly representing
Company Common Stock with respect to any fractional interests, the Exchange
Agent shall make available such amounts to such holders of Certificates
formerly representing Company Common Stock subject to and in accordance with
the terms of Section 2.02(c).
A-8
<PAGE>
(e) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The Merger
Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have
been paid in full satisfaction of all ownership rights pertaining to such
shares of Company Common Stock, SUBJECT, HOWEVER, to the Surviving
Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have
been declared or made by the Company on such shares of Company Common Stock
in accordance with the terms of this Agreement or prior to the date of this
Agreement and which remain unpaid at the Effective Time, and after the
Effective Time there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of shares of Company
Common Stock that were outstanding immediately prior to the Effective Time
(other than the Affiliate Shares and the Parent Allocated Tender Shares).
If, after the Effective Time, any Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article II.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund that
remains undistributed to the former holders of Company Common Stock for six
months after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any former holder of shares of Company Common
Stock who has not theretofore complied with this Article II shall thereafter
look only to the Surviving Corporation for payment of its claim for Merger
Consideration and any dividends or distributions with respect to the Parent
ADSs.
(g) NO LIABILITY. None of Parent, Merger Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any portion of
the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis;
PROVIDED that, in the case of any losses incurred as a result of such
investments, Parent shall take all actions necessary to ensure that the
Exchange Fund includes cash sufficient to satisfy Parent's obligations to
pay the Merger Consideration payable pursuant to Section 2.01 in exchange
for outstanding shares of Company Common Stock, any cash payable in lieu of
fractional Parent ADSs pursuant to Section 2.02(d) and any dividends or
distributions with respect to Parent ADSs payable pursuant to Section
2.02(c). Any interest and other income resulting from such investments shall
be paid to Parent.
(i) WITHHOLDING RIGHTS. The Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable to any holder
of Company Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such
payment under the United States Internal Revenue Code of 1986, as amended
(the "CODE"), or under any provision of state, local or foreign tax Law. To
the extent that amounts are so withheld and paid over or caused to be paid
over to the appropriate taxing authority by the Surviving Corporation, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by the Surviving
Corporation.
(j) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificate
evidencing shares of Company Common Stock shall have been lost, stolen or
destroyed, the holder of such lost, stolen or destroyed Certificate shall
execute an affidavit of that fact upon request. The holder of any such lost,
stolen or destroyed Certificate shall also deliver a reasonable indemnity
against any claim that may be made against Parent, Merger Sub, the Surviving
Corporation or the Exchange Agent with respect to the Certificate alleged to
have been lost,
A-9
<PAGE>
stolen or destroyed. The affidavit and any indemnity which may be required
hereunder shall be delivered to the Exchange Agent, who shall be responsible
for making payment for such lost, stolen or destroyed Certificate pursuant
to the terms hereof.
(k) ADJUSTMENTS TO PREVENT DILUTION. In the event that Parent changes
the number of Parent Ordinary Shares represented by each Parent ADS issued
and outstanding prior to the Effective Time as a result of a
reclassification, stock split, share combination, stock dividend or
distribution, recapitalization, merger, subdivision, issuer tender or
exchange offer or other similar transaction, the Per Share Stock
Consideration shall be appropriately adjusted to reflect such
reclassification, stock split, share combination, stock dividend or
distribution, recapitalization, merger, subdivision, issuer tender or
exchange offer or other similar transaction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (i) as disclosed in the Company SEC Documents (as defined in Section
3.05) or in the reports, schedules, forms, statements and other documents
required to be filed with the SEC by each of Donaldson, Lufkin & Jenrette, Inc.
("DLJ") and Alliance Capital Management Corporation, Alliance Capital Management
Holding, L.P. and Alliance Capital Management, L.P. (collectively, "ALLIANCE"),
in each case filed and publicly available prior to the date of this Agreement
(the "COMPANY FILED SEC DOCUMENTS") and (ii) for the matters set forth in the
disclosure schedule dated the date hereof delivered by the Company to Parent
prior to the execution of this Agreement (the "DISCLOSURE SCHEDULE"), it being
understood that the Disclosure Schedule shall be deemed disclosure with respect
to the specific Section of this Agreement to which the information stated in
such disclosure relates and such other Sections of this Agreement to the extent
a matter is disclosed in such a way as to make its relevance to the information
called for by such other Section readily apparent, the Company represents and
warrants to Parent and Merger Sub as follows:
SECTION 3.01. ORGANIZATION, STANDING AND POWER. Each of the Company and each
Significant Company Subsidiary (as defined below in this Section 3.01) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized. Each of the Company and its Significant
Company Subsidiaries has full corporate or, in the case of a Significant Company
Subsidiary that is not a corporation, other power and authority necessary to
enable it to own, lease or otherwise hold its properties and assets and to
conduct its businesses as presently conducted, except where such failure,
individually or in the aggregate, has not had and would not reasonably be
expected to have a material adverse effect on the Company (after giving effect
to the consummation of the transactions contemplated by the Stock Purchase
Agreement, dated as of August 30, 2000, among Credit Suisse Group ("CSG"),
Parent, the Company, The Equitable Life Assurance Society of the United States
("EQUITABLE LIFE") and AXA Participations Belgium (as amended, the "CSG/DLJ
PURCHASE AGREEMENT")), on the ability of the Company to perform its obligations
under this Agreement or on the ability of the Company to consummate the Offer,
the Merger and the other transactions contemplated by this Agreement (a "COMPANY
MATERIAL ADVERSE EFFECT"). Each of the Company and its Significant Company
Subsidiaries is duly qualified to do business in each jurisdiction where the
nature of its business or their ownership or leasing of properties make such
qualification necessary except where the failure to so qualify, individually or
in the aggregate, has not had and would not reasonably be expected to have a
Company Material Adverse Effect. For purposes of this Agreement, a "SIGNIFICANT
COMPANY SUBSIDIARY" means any subsidiary of the Company that constitutes a
significant subsidiary within the meaning of Rule 1-02 of Regulation S-X of the
SEC.
A-10
<PAGE>
SECTION 3.02. CAPITAL STRUCTURE. (a) The authorized capital stock of the
Company consists of 2,000,000,000 shares of Company Common Stock and 10,000,000
shares of Preferred Stock, par value $1.00 per share. As of the close of
business on September 30, 2000, (i) 434,568,810 shares of Company Common Stock
were issued and outstanding, (ii) 20,707,776 shares of Company Common Stock were
held by the Company in its treasury, (iii) no shares of Preferred Stock were
issued or outstanding other than 43,920 shares of Company Series D Preferred
Stock, (iv) 28,231 shares of Company Common Stock were deferred and issuable
under the 1998 Stock Plan for Directors and (v) 24,775,229 shares of Company
Common Stock were subject to outstanding options to purchase Company Common
Stock (each, a "COMPANY STOCK OPTION" and collectively, the "COMPANY STOCK
OPTIONS") granted under any of The Equitable Companies Incorporated 1997 Stock
Incentive Plan and The Equitable Companies Incorporated 1991 Stock Incentive
Plan (collectively, the "COMPANY STOCK PLANS") and 44,054,793 additional shares
of Company Common Stock were reserved for issuance pursuant to the Company Stock
Plans and upon conversion of outstanding shares of Company Series D Preferred
Stock. During the period from September 30, 2000 to the date of this Agreement,
the Company has not issued any shares of capital stock (other than pursuant to
the exercise of Company Stock Options) or Company Stock Options. All outstanding
shares of Company Common Stock are, and such shares that may be issued prior to
the Effective Time will be when issued, duly authorized, validly issued, fully
paid and nonassessable. There are not any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on matters on which
holders of Company Common Stock may vote ("VOTING COMPANY DEBT"). Except as set
forth above and except for this Agreement and the transactions contemplated
hereby, there are not, as of the date of this Agreement, any options, warrants,
rights, convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound (i) obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of, or other
equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of, or other equity interest in, the Company
or any Voting Company Debt, (ii) obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such option, warrant,
call, right, security, commitment, Contract, arrangement or undertaking or
(iii) that give any person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights accruing to holders
of capital stock of, or other equity interests in, the Company. As of the date
of this Agreement, there are not any outstanding contractual obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of, or other equity interests in, the Company.
(b) Except for this Agreement, the transactions contemplated hereby and the
Voting Trust Agreement, there are not any voting trusts or other agreements or
understandings to which the Company or any of its subsidiaries is a party or is
bound with respect to the voting of the capital stock of, or other equity
interests in, the Company.
SECTION 3.03. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. (a) The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery by the Company of this Agreement and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company, subject, in the case of the Merger, to receipt of the Company
Stockholder Approval (as defined in Section 3.03(c)), to the extent required by
applicable Law. The Company has duly executed and delivered this Agreement, and,
assuming the due authorization, execution
A-11
<PAGE>
and delivery by each of Parent and Merger Sub, this Agreement constitutes the
Company's legal, valid and binding obligation, enforceable against it in
accordance with its terms.
(b) The Company Board, at a meeting duly called and held, acting on the
unanimous recommendation of the Special Committee, duly and unanimously adopted
resolutions (i) approving this Agreement, the Offer, the Merger and the other
transactions contemplated hereby, (ii) determining that the terms of the Offer
and the Merger are fair to and \ in the best interests of the Company and the
holders of Company Common Stock (other than the Affiliate Shareholders),
(iii) declaring that this Agreement is advisable and (iv) recommending that the
holders of Company Common Stock accept the Offer and tender their shares of
Company Common Stock pursuant to the Offer, and, to the extent applicable, that
the holders of Company Common Stock adopt this Agreement. Such resolutions are
sufficient to render inapplicable to Merger Sub, this Agreement, the Offer, the
Merger, the Voting Agreement and the other transactions contemplated by this
Agreement the restrictions on business combinations set forth in Section 203 of
the DGCL.
(c) The only vote of holders of any class or series of the Company's capital
stock necessary to approve and adopt this Agreement and the Merger is the
adoption of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock at a meeting or by written consent in lieu of a
meeting (the "COMPANY STOCKHOLDER APPROVAL").
SECTION 3.04. NO CONFLICTS; CONSENTS. (a) The execution and delivery by the
Company of this Agreement do not, and the performance of this Agreement and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
person under, or result in the creation of any pledge, lien, charge, mortgage,
encumbrance or security interest of any kind or nature whatsoever (collectively,
"LIENS") upon any of the properties or assets of the Company or any of its
subsidiaries under, any provision of (i) (A) the Company's Restated Certificate
of Incorporation, as amended (the "COMPANY CHARTER"), or the Company's By-laws
(the "COMPANY BY-LAWS") or (B) the comparable charter or organizational
documents of any of the Company's subsidiaries, (ii) any contract, lease,
license, indenture, note, bond, agreement, permit, concession, franchise or
other instrument (a "CONTRACT") to which the Company or any of its subsidiaries
is a party or by which any of their respective properties or assets is bound or
(iii) subject to the filings and other matters referred to in Section 3.04(b),
any judgment, order or decree ("JUDGMENT") or statute, law, ordinance, rule or
regulation ("LAW") applicable to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses (i)(B),
(ii) and (iii) above, any such items that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Company Material
Adverse Effect.
(b) No consent, approval, license, permit, order, authorization or waiver
("CONSENT") of, or registration, declaration or filing with, or permit from, any
Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "GOVERNMENTAL ENTITY"), is
required to be obtained or made by or with respect to the Company or any of its
subsidiaries in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby, other
than (i) filings with the SEC pursuant to the Exchange Act and the Securities
Act (including any reports required to be filed under Sections 13 and 16 of the
Exchange Act), (ii) the filing and recordation of appropriate merger and similar
documents as required by the DGCL, (iii) any registration, declaration or filing
that may be required under applicable Law relating to insurance or other
financial services businesses and (iv) where the failure to obtain such Consents
or to make such registrations, declarations or filings or to obtain such
permits, would not
A-12
<PAGE>
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.05. SEC DOCUMENTS. Each of the Company and Equitable Life has
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC since January 1, 1999 (the "COMPANY SEC DOCUMENTS").
As of its respective date, each Company SEC Document, including any financial
statements or schedules included therein, complied in all material respects with
the requirements of the Exchange Act or the Securities Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with U.S. generally accepted accounting principles ("US
GAAP") (except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present, in all material
respects, the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, recurring year-end audit adjustments).
SECTION 3.06. INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in
(i) the Schedule 14D-9, any Schedule 13E-3 (as defined in Section 6.01), the
Form F-4, the Offer Documents or any Post-Effective Amendment (as defined in
Section 6.01) will, at the respective times any such documents or any amendments
or supplements thereto are filed with the SEC, are first published, sent or
given to the holders of Company Common Stock or become effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any Proxy Statement or Information
Statement (each as defined in Section 6.01) will, at the date such Proxy
Statement or Information Statement is first mailed to holders of Company Common
Stock or at the time of any Company Stockholders Meeting (as defined in Section
6.01), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9, any Proxy Statement or Information Statement and
any Schedule 13E-3 will comply as to form in all material respects with the
requirements of all applicable Laws, including the Exchange Act and the rules
and regulations thereunder. No representation or warranty is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by Parent or Merger Sub specifically for inclusion or
incorporation by reference therein.
SECTION 3.07. OPINION OF FINANCIAL ADVISOR. The Special Committee has
received the opinion of Wasserstein Perella & Co., dated the date of this
Agreement, to the effect that, as of such date, the consideration to be received
in the Offer and the Merger by the holders of shares of Company Common Stock
(other than the Affiliate Shareholders) is fair to such stockholders from a
financial point of view, a copy of which opinion will be delivered to Parent on
or promptly after the date of this Agreement.
SECTION 3.08. BROKERS. No broker, investment banker, financial advisor or
other person, other than Wasserstein Perella & Co. and Morgan Stanley & Co.
Incorporated, the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial
A-13
<PAGE>
advisor's or other similar fee or commission in connection with the Offer, the
Merger or the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or the Special Committee.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Except as set forth in the Parent SEC Documents (as defined in Section 4.05)
filed and publicly available prior to the date of this Agreement (the "PARENT
FILED SEC DOCUMENTS"), Parent and Merger Sub, jointly and severally, represent
and warrant to the Company as follows:
SECTION 4.01. ORGANIZATION, STANDING AND POWER. Each of Parent and Merger
Sub is duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has full corporate power and
authority necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct its businesses as presently conducted, except where
the failure, individually or in the aggregate, has not had and would not
reasonably be expected to have a material adverse effect on Parent, on the
ability of Parent or Merger Sub to perform its obligations under this Agreement
or on the ability of Parent or Merger Sub to consummate the Offer, the Merger
and the other transactions contemplated by this Agreement (a "PARENT MATERIAL
ADVERSE EFFECT"). Each of Parent and Merger Sub is duly qualified to do business
in each jurisdiction where the nature of its business or their ownership or
leasing of properties make such qualification necessary except where the failure
to so qualify, individually or in the aggregate, has not had and would not
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.02. CAPITAL STRUCTURE. (a) As of the close of business on
September 20, 2000, (i) 395,217,111 Parent Ordinary Shares were issued and
outstanding, all of which were validly issued, fully paid and nonassessable,
(ii) 4,705,795 Parent Ordinary Shares were held by Parent in its treasury or by
subsidiaries of Parent, (iii) 24,603,626 Parent Ordinary Shares were reserved
for issuance upon conversion of outstanding redeemable bonds and convertible
notes and (iv) 1,970,996 Parent Ordinary Shares were subject to outstanding
options to purchase Parent Ordinary Shares or Parent ADSs. No approval of the
shareholders of Parent is required to authorize the Parent ADSs to be issued in
connection with the Offer and the Merger. The Parent Ordinary Shares represented
by the Parent ADSs to be issued in connection with the Offer and the Merger,
will be, when issued, validly issued, fully paid and nonassessable.
(b) The authorized capital stock of Merger Sub consists of 1,000 shares of
common stock, par value $1.00 per share, all of which have been validly issued,
are fully paid and nonassessable and are owned by Parent free and clear of any
Lien. As of the date of this Agreement, Merger Sub does not own, nor is it party
to any agreement (other than this Agreement) pursuant to which it has the right
to acquire, any shares of Company Common Stock.
SECTION 4.03. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. Each of
Parent and Merger Sub has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery by each of Parent and Merger Sub of
this Agreement and the consummation by each of Parent and Merger Sub of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or shareholder action on the part of Parent and Merger Sub.
Parent, as sole stockholder of Merger Sub, has, simultaneous with the execution
and delivery hereof, adopted this Agreement. Each of Parent and Merger Sub has
duly executed and delivered this Agreement, and this Agreement constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms.
A-14
<PAGE>
SECTION 4.04. NO CONFLICTS; CONSENTS. (a) The execution and delivery by each
of Parent and Merger Sub of this Agreement do not, and the performance of this
Agreement and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any Lien upon any
of the properties or assets of Parent or any of its subsidiaries under, any
provision of (i) the charter or other comparable organizational documents of
Parent or any of its subsidiaries (other than the Company and its subsidiaries),
(ii) any Contract to which Parent or any of its subsidiaries (other than the
Company and its subsidiaries) is a party or by which any of their respective
properties or assets is bound or (iii) subject to the filings and other matters
referred to in Section 4.04(b), any Judgment or Law applicable to Parent or any
of its subsidiaries (other than the Company and its subsidiaries) or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii) above, any such items that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Parent Material Adverse Effect.
(b) No Consent of, or registration, declaration or filing with, or permit
from, any Governmental Entity is required to be obtained or made by or with
respect to Parent or any of its subsidiaries (other than the Company and its
subsidiaries) in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby, other
than (i) filings with or furnishings to the SEC pursuant to the Exchange Act and
the Securities Act (including any reports required to be filed or furnished
under Sections 13 and 16 of the Exchange Act), (ii) the filing and recordation
of appropriate merger and similar documents as required by the DGCL, (iii) any
registration, declaration or filing that may be required under applicable Law
relating to insurance or other financial services businesses and (iv) where the
failure to obtain such Consents or to make such registrations, declarations or
filings or to obtain such permits, would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.05. SEC DOCUMENTS. Parent has filed or furnished, as applicable,
all reports, schedules, forms, statements and other documents required to be
filed by it with or furnished by it to the SEC since January 1, 1999 (the
"PARENT SEC DOCUMENTS"). As of its respective date, each Parent SEC Document,
including any financial statements or schedules included therein, complied in
all material respects with the requirements of the Exchange Act or the
Securities Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC Document, and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Parent and its consolidated
subsidiaries included in the Parent SEC Documents have been prepared in
accordance with generally accepted accounting principles in France ("FRENCH
GAAP") applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto), include such additional disclosures as are
required by, and comply as to form in all material respects with, the published
rules and regulations of the SEC with respect thereto, and present fairly, in
all material respects, the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, recurring year-end audit adjustments).
SECTION 4.06. INFORMATION SUPPLIED. None of the information supplied or to
be supplied by Parent or Merger Sub for inclusion or incorporation by reference
in (i) the Form F-4, the Offer Documents, any Post-Effective Amendment and any
Schedule 13E-3 will, at the respective times
A-15
<PAGE>
any such documents or any amendments or supplements thereto are filed with the
SEC, are first published, sent or given to holders of Company Common Stock or
become effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) any Proxy
Statement or Information Statement will, at the date such Proxy Statement or
Information Statement is first mailed to the holders of Company Common Stock or
at the time of any Company Stockholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Form F-4, the Offer
Documents, any Post-Effective Amendment and any Schedule 13E-3 will comply as to
form in all material respects with the requirements of all applicable Laws,
including the Securities Act and the Exchange Act, as applicable, and the rules
and regulations thereunder.
SECTION 4.07. FINANCING. Parent has or will have available, prior to the
expiration of the initial period of the Offer and through the consummation of
the Merger, sufficient funds to enable Parent and Merger Sub to consummate the
Offer, the Merger and the other transactions contemplated hereby and to pay all
related expenses.
SECTION 4.08. BROKERS. No broker, investment banker, financial advisor or
other person, other than Goldman, Sachs & Co., Lazard Freres & Co. LLC and BNP
Paribas, the fees and expenses of which will be paid by Parent, is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the Offer, the Merger and the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY THE COMPANY.
Except for (i) matters expressly permitted or contemplated by this Agreement and
(ii) matters set forth in the Disclosure Schedule, from the date of this
Agreement to the Effective Time the Company shall, and shall cause each of its
subsidiaries (other than DLJ and Alliance and their respective subsidiaries) to
(1) conduct its business in the usual, regular and ordinary course consistent
with past practice, including with respect to employee compensation and benefits
(including entering into employment agreements or similar arrangements),
severance and retirement benefits, issuance of debt securities, loans to
subsidiaries, material acquisitions, or sales of material assets; (2) use all
reasonable efforts to preserve intact its current business organization, keep
available the services of its current officers and employees and maintain its
relationships and goodwill with agents, customers, suppliers, licensors,
licensees, distributors and others having business dealings with them to the end
that its goodwill and ongoing business shall be unimpaired at the Effective
Time; (3) continue to submit and/or report matters to its Board or Directors or
similar governance body (or the appropriate committee thereof) for approval or
review, as the case may be, in the usual, regular and ordinary course consistent
with past practice; and (4) continue to consult Parent on all material matters
in the usual, regular and ordinary course consistent with past practice. In the
case of DLJ and Alliance and their respective subsidiaries, the Company shall
not authorize or cause any such subsidiary to take any action that would violate
the immediately preceding sentence. In addition, and without limiting the
generality of the foregoing, except for matters expressly contemplated or
permitted by this Agreement, from the date of this Agreement to the Effective
Time, the Company shall not do any of the following without the prior written
consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock or other equity interests,
other than regular cash dividends with respect to
A-16
<PAGE>
the Company Common Stock not in excess of $0.0250 per share and regular cash
dividends with respect to the Company Series D Preferred Stock in accordance
with the Series D Certificate of Designations, as amended to the date of this
Agreement, in each case with usual declaration, record and payment dates and in
accordance with the Company's past dividend policy, (B) split, combine or
reclassify any of its capital stock or other equity interests or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or other equity interests (other
than the conversion of shares of Company Series D Preferred Stock into shares of
Company Common Stock in accordance with the Series D Certificate of
Designations, as amended to the date of this Agreement) or (C) except in
connection with existing Company Benefit Plans in accordance with their
respective terms on the date hereof and consistent with applicable Law and past
practice, purchase, redeem or otherwise acquire any shares of capital stock of
or any other securities of the Company or any rights, warrants or options to
acquire any such shares or other securities;
(ii) except (x) for the issuance of shares of Company Common Stock upon the
exercise of Company Stock Options outstanding as of the date hereof in
accordance with their terms on the date hereof or pursuant to the 1998 Stock
Plan for Directors in accordance with its terms on the date hereof, (y) for new
grants of Company Stock Options to newly hired employees in the ordinary course
of business consistent with past practice and the issuance of shares of Company
Common Stock upon the exercise of such new grants in accordance with their terms
and (z) for the issuance of shares of Company Common Stock upon the conversion
of Company Series D Preferred Stock in accordance with the Series D Certificate
of Designations, as amended to the date of this Agreement, issue, deliver, sell
or grant (A) any shares of its capital stock or other equity interests, (B) any
Voting Company Debt or other voting securities, (C) any securities convertible
into or exchangeable for, or any options, warrants or rights to acquire, any
such shares, interests, Voting Company Debt, voting securities or convertible or
exchangeable securities or (D) any "phantom" stock, "phantom" stock rights,
stock appreciation rights or stock-based performance units;
(iii) amend its certificate of incorporation or by-laws; or
(iv) authorize any of, or commit or agree to take any of, the foregoing
actions.
(b) CONDUCT OF BUSINESS BY PARENT. Except for matters expressly contemplated
or permitted by this Agreement, from the date of this Agreement to the Effective
Time, Parent shall not:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, the Parent Ordinary Shares, other than regular
dividends with respect to the Parent Ordinary Shares with usual declaration,
record and payment dates, or (B) split, combine or reclassify the Parent
Ordinary Shares or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for the Parent Ordinary Shares; or
(ii) authorize any of, or commit or agree to take any of, the foregoing
actions.
A-17
<PAGE>
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. PREPARATION OF FORM F-4 AND PROXY STATEMENT/PROSPECTUS OR
INFORMATION STATEMENT/PROSPECTUS; STOCKHOLDERS MEETING/WRITTEN CONSENT. (a) If
required by Law in order to consummate the Merger, as soon as practicable
following the expiration of the Offer, Parent and the Company shall prepare and
file with the SEC (i) a post-effective amendment to the Form F-4 for the offer
and sale of the Parent ADSs pursuant to the Merger and in which a proxy
statement prepared by the Company and Parent relating to the Company
Stockholders Meeting (as amended or supplemented from time to time, the "PROXY
STATEMENT") or an information statement prepared by the Company and Parent
pursuant to Rule 14c-2 under the Exchange Act (as amended or supplemented from
time to time, the "INFORMATION STATEMENT"), as applicable, which will contain
the information required under Rule 13e-3 under the Exchange Act, will be
included as a prospectus (the "POST-EFFECTIVE AMENDMENT") and (ii) together with
Merger Sub, a Rule 13e-3 Transaction Statement on Schedule 13E-3 with respect to
the Merger (as supplemented or amended, the "SCHEDULE 13E-3"). Each of the
Company and Parent shall notify the other (and each shall also notify the
Special Committee and its counsel) promptly of the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff for amendments
or supplements to the Post-Effective 29 Amendment, the Proxy Statement, the
Information Statement or the Schedule 13E-3 or for additional information and
shall supply the other with copies of all correspondence between it or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Post-Effective Amendment, the Proxy Statement, the
Information Statement or the Schedule 13E-3. Each of the Company and Parent
shall use its reasonable best efforts to respond as promptly as practicable to
any comments of the SEC with respect thereto. No filing of, or amendment or
supplement to, or correspondence to the SEC or its staff with respect to, the
Post-Effective Amendment, the Proxy Statement, the Information Statement or the
Schedule 13E-3 will be made by either party, without providing the other party a
reasonable opportunity to review and comment thereon. Each of the Company and
Parent shall use its reasonable best efforts to have the Post-Effective
Amendment declared effective under the Securities Act as promptly as practicable
after its filing. The Company will use its reasonable best efforts to cause the
Proxy Statement or Information Statement, as applicable, to be mailed to holders
of the Company's capital stock as promptly as practicable after the
Post-Effective Amendment is declared effective under the Securities Act. Parent
shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or to file a general consent to
service of process) required to be taken under any applicable state securities
laws in connection with the issuance of Parent ADSs pursuant to the Offer and
the Merger, and the Company shall furnish all information concerning the Company
and its stockholders as may be reasonably requested in connection with any such
action and the preparation, filing and/or distribution of the Proxy Statement,
the Information Statement and the Schedule 13E-3. If at any time prior to the
Effective Time any information relating to the Company or Parent, or any of
their respective affiliates, officers or directors, should be discovered by the
Company or Parent which should be set forth in an amendment or supplement to any
of the Post-Effective Amendment, the Proxy Statement, the Information Statement
or the Schedule 13E-3, so that any of such documents would not include a
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly
notify the other parties hereto, and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by Law, disseminated by the Company to holders of the Company's
capital stock.
A-18
<PAGE>
(b) If required by Law in order to consummate the Merger, the Company
shall establish, prior to or as soon as practicable following the date upon
which the Post-Effective Amendment becomes effective, a record date (which
shall be prior to or as soon as practicable following the date upon which
the Post-Effective Amendment becomes effective), and either duly call, give
notice of, convene and hold a meeting of holders of the Company's capital
stock (the "COMPANY STOCKHOLDERS MEETING") or follow all required procedures
in soliciting consents from holders of Company Common Stock, for the purpose
of seeking the Company Stockholder Approval, as applicable. In such event,
the Proxy Statement or the Information Statement, as the case may be, shall
include a description of the recommendations referred to in Section 3.03(b),
and neither the Company Board nor any committee thereof shall withdraw or
modify, or propose to withdraw or modify such recommendations or related
approval; PROVIDED, HOWEVER, that the Company Board or the Special Committee
may determine not to make such recommendations or such recommendations may
be withdrawn or modified to the extent that the Special Committee determines
in good faith, after consultation with outside legal counsel, that such
recommendations would be inconsistent with its fiduciary duties to
stockholders of the Company under applicable law. Without limiting the
generality of the foregoing, the Company agrees that its obligations
pursuant to the first sentence of this Section 6.01(b) shall not be affected
by the withdrawal or modification by either the Company Board or the Special
Committee of its approval or recommendation of this Agreement, the Offer or
the Merger.
(c) Notwithstanding the foregoing, if Parent, Merger Sub or any other
subsidiary of Parent (other than the Company or any of its subsidiaries)
shall acquire at least 90% of the outstanding shares of each class of
capital stock of the Company entitled to vote on a merger and if permitted
by Section 253 of the DGCL, at Parent's sole discretion, the parties shall
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
stockholders meeting or written consent in accordance with Section 253 of
the DGCL (a "SHORT-FORM MERGER").
(d) Parent shall cause Merger Sub to vote any shares of Company Common
Stock owned by it and not held in the Voting Trust in favor of the adoption
of this Agreement, if applicable.
SECTION 6.02. REASONABLE BEST EFFORTS; NOTIFICATION. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties shall
use its reasonable best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other transactions contemplated hereby, including (i) the obtaining of all
necessary actions or nonactions and Consents from Governmental Entities and the
making of all necessary registrations, declarations and filings (including
filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to obtain a Consent from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the preparation of the
Form F-4, the Schedule 13E-3, the Offer Documents and the Schedule 14D-9 and, if
necessary, the Post-Effective Amendment and the Proxy Statement or Information
Statement, (iv) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (v) the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
hereby and to fully carry out the purposes of this Agreement. In connection with
and without limiting the foregoing, each of the parties hereto shall (i) take
all action necessary to ensure that no state takeover statute or similar statute
or regulation is or becomes applicable to this Agreement,
A-19
<PAGE>
the Offer, the Merger or any other transaction contemplated by this Agreement
and (ii) if any state antitakeover statute or similar statute or regulation
becomes applicable to this Agreement, the Offer, the Merger or any other
transaction contemplated by this Agreement, take all action necessary to ensure
that the Offer, the Merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement.
SECTION 6.03. STOCK OPTIONS; DIRECTORS STOCK. (a) COMPANY STOCK OPTIONS. As
soon as practicable following the date of this Agreement, the boards of
directors (or the appropriate committees thereof) of each of the Company, the
Surviving Corporation and/or the Parent shall adopt such resolutions or take
such other actions as may be necessary or required to effect the following:
(1) adjust the terms of all outstanding Company Stock Options to provide
that, at the Effective Time (except to the extent the holder of a Company
Stock Option elects otherwise, as provided further herein), all outstanding
Company Stock Options, whether vested or unvested, shall be assumed by
Parent and converted into an option (a "PARENT OPTION") to acquire, on the
same terms and conditions as were applicable under the Company Stock Option,
a number of Parent Ordinary Shares, to be delivered in the form of Parent
ADSs (rounded up to the nearest whole share) in an amount determined by
multiplying (x) the number of shares of Company Common Stock subject to such
Company Stock Option by (y) the number of Parent ADSs equal to the sum of
(A) the Per Share Stock Consideration plus (B) the number of Parent ADSs
obtained by dividing (i) the Per Share Cash Consideration by (ii) the
closing price for a Parent ADS (the "PARENT CLOSING PRICE") as reported on
the NYSE Composite Transaction Tape (as reported in The Wall Street Journal,
Northeastern edition, or, if not reported thereby, any other authoritative
source chosen by Parent) on the date on which the Effective Time occurs (it
being understood that the Surviving Corporation shall have the right to
acquire the Parent ADSs so deliverable from open-market purchases), at a
price per Parent ADS equal to (A) the aggregate exercise price for the
shares of Company Common Stock otherwise purchasable pursuant to such
Company Stock Option divided by (B) the aggregate number of Parent ADSs
purchasable in accordance with the foregoing (determined without regard to
rounding); PROVIDED that such exercise price shall be rounded down to the
nearest whole cent;
(2) notwithstanding the respective terms of the Company Stock Options,
all outstanding Company Stock Options awarded under the Company Stock Plans,
to the extent that such Options are not already exercisable, shall become
immediately and fully exercisable, pursuant to the terms of the Company
Stock Options, as amended, and the Company Stock Plans, upon the payment by
AXA for shares of Company Common Stock, validly tendered and not withdrawn,
upon expiration of the initial period of the Offer (or if no shares of
Company Common Stock are tendered pursuant to the Offer, at the Effective
Time); provided, however, that a holder of a Company Stock Option, which is
an "incentive stock option" (as defined in Section 422 of the Code) (such
Option, an "ISO"), shall have the opportunity to elect not to have the
vesting of his or her ISO accelerate, in the event and to the extent that
such acceleration would cause the Company Stock Option to lose its status as
an ISO;
(3) notwithstanding anything herein to the contrary, all Company Stock
Options that are ISOs shall be assumed by Parent and converted into Parent
Options pursuant to Section 6.03(a)(1) above; PROVIDED, HOWEVER, that in the
event and to the extent that a holder of Company Stock Options that are ISOs
elects to continue the Parent Options as ISOs, the adjustments provided
herein with respect to any such Options (or portions thereof) shall be
effected pursuant to this Section 6.03(a) with such changes, if any, that
may be necessary in order to be consistent with Section 424(a) of the Code;
and
A-20
<PAGE>
(4) if and to the extent that a holder of any Company Stock Options that
are not ISOs does not elect to convert all or any portion of such Company
Stock Options into Parent Options, each of such holder's outstanding Company
Stock Options shall, immediately prior to the Effective Time, be canceled in
exchange for a cash payment from the Surviving Corporation (subject to any
applicable withholding taxes) equal in value to the product of (A) the total
number of shares of Company Common Stock subject to such Company Stock
Option and (B) the excess of the Merger Consideration Value (as defined
below) over the exercise price per share of Company Common Stock subject to
such Company Stock Option; PROVIDED, HOWEVER, that any holder of a Company
Stock Option who is currently eligible to defer his or her annual
compensation for 2001 into the Company Variable Deferred Compensation Plan
for Executives and who elects to receive the foregoing cash payment may,
pursuant to the terms of such deferred compensation plan, elect to defer
receipt of such cash payment into such Company Benefit Plan. The foregoing
cash payment shall be made on the later of (i) the Effective Time and
(ii) if permitted by Law, as soon as practicable after January 2, 2001. For
purposes of this Section 6.03(a), "MERGER CONSIDERATION VALUE" shall mean,
on a per share basis, the sum of (x) the value of the Per Share Stock
Consideration, based on the Parent Closing Price, plus (y) the Per Share
Cash Consideration.
(b) DIRECTORS STOCK. (1) Any outstanding stock options held by any
non-employee directors or former directors (the "DIRECTORS OPTIONS") shall
be treated the same as the Company Stock Options that are not ISOs, as set
forth in Section 6.03(a)(1), above.
(2) With respect to the Company Stock Plan for Directors (the "DIRECTOR
PLAN"), each Deferred Stock unit credited to each participant's Accounts (as
such terms are defined in the Director Plan) shall be converted, effective
as of the Effective Time, into the Per Share Merger Consideration; PROVIDED,
HOWEVER, that the Per Share Cash Consideration shall be deferred into the
Company's Variable Deferred Compensation Plan for Directors. Both the Per
Share Stock Consideration and the Per Share Cash Consideration shall
otherwise be distributed in accordance with the terms of the Director Plan
and the Variable Deferred Compensation Plan for Directors, as applicable,
pursuant to the distribution elections previously made by the participants
with respect to their respective Accounts therein.
(c) NOTICES. As soon as practicable after the Effective Time, the
Surviving Corporation shall deliver to the holders of Company Stock Options
appropriate notices setting forth such holders' rights pursuant to the
respective Company Stock Plans and the agreements evidencing the grants of
such Company Stock Options and that such Company Stock Options and
agreements shall be assumed by the Surviving Corporation and shall continue
in effect on the same terms and conditions (subject to the adjustments
required by Section 6.03(a)).
(d) MISCELLANEOUS. Prior to the Effective Time, Parent and the Company
shall take all such actions as may be reasonably required to cause any
dispositions of Company Common Stock (including derivative securities with
respect to Company Common Stock) or acquisitions of Parent Ordinary Shares
(including derivative securities with respect to Parent Ordinary Shares)
resulting from the transactions contemplated by this Agreement by each
person who is subject to the reporting requirements of Section 16(a) of the
Exchange Act to be eligible for exemption under Rule 16b-3 promulgated under
the Exchange Act.
SECTION 6.04. INDEMNIFICATION. (a) Parent shall, to the fullest extent
permitted by Law, cause the Surviving Corporation to honor all the Company's
obligations to indemnify (including any obligations to advance funds for
expenses to) the current or former directors or officers of the Company or any
of its subsidiaries (other than DLJ and its subsidiaries) for acts or omissions
by such directors and officers occurring prior to the Effective Time to the
extent that such obligations of the Company or any of its subsidiaries exist on
the date of this Agreement, whether pursuant to
A-21
<PAGE>
the Company Charter, the Company By-laws, the certificate or articles of
incorporation, by-laws or similar organizational documents of such subsidiaries,
individual indemnity agreements or otherwise, and such obligations shall survive
the Merger and shall continue in full force and effect in accordance with the
terms of the Company Charter, the Company By-laws, the certificate or articles
of incorporation, by-laws or similar organizational documents of such
subsidiaries, and such individual indemnity agreements from the Effective Time
until the expiration of the applicable statute of limitations with respect to
any claims against such directors or officers arising out of such acts or
omissions.
(b) For a period of six years from and after the Effective Time, Parent
or the Surviving Corporation shall cause to be maintained in effect the
current policies of directors' and officers' liability insurance maintained
by the Company (provided that Parent may substitute therefor policies with
reputable and financially sound carriers of at least the same coverage and
amounts containing terms and conditions which are no less advantageous and
so long as such substitution results in continuous coverage) with respect to
claims arising from or related to facts or events which occurred at or
before the Effective Time; PROVIDED, HOWEVER, that Parent shall not be
obligated to make annual premium payments for such insurance to the extent
such premiums exceed 200% of the annual premiums paid as of the date hereof
by the Company for such insurance (such 200% amount, the "MAXIMUM PREMIUM").
If such insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum Premium, Parent or
the Surviving Corporation shall maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal to
the Maximum Premium. The provisions of the second preceding sentence shall
be deemed to have been satisfied if prepaid policies reasonably approved in
writing by Parent have been obtained by the Company prior to the Effective
Time for purposes of this Section 6.04, which policies provide such
directors and officers with coverage for an aggregate period of six years
with respect to claims arising from facts or events that occurred on or
before the Effective Time, including in respect of the transactions
contemplated by this Agreement.
(c) From and after the Effective Time, to the fullest extent permitted
by Law and without limitation on the obligations of Parent or the Surviving
Corporation pursuant to Sections 6.04(a) and (b), Parent shall, and shall
cause the Surviving Corporation to, indemnify, defend and hold harmless the
present and former officers and directors of the Company and its
subsidiaries, and any employee of the Company or its subsidiaries who acts
as a fiduciary under any Company Benefit Plan (each an "INDEMNIFIED PARTY")
against all losses, claims, damages, liabilities, fees and expenses
(including attorneys' fees and disbursements), judgments, fines and amounts
paid in settlement (in the case of settlements, with the approval of the
indemnifying party (which approval shall not be unreasonably withheld or
delayed)) (collectively, "LOSSES"), as incurred (payable monthly upon
written request which request shall include reasonable evidence of the
Losses set forth therein) to the extent arising from, relating to, or
otherwise in respect of, any actual or threatened action, suit, proceeding
or investigation, in respect of actions or omissions occurring at or prior
to the Effective Time in connection with such Indemnified Party's duties as
an officer or director or employee of the Company or any of its subsidiaries
to the extent they are based on or arise out of or pertain to the
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that an
Indemnified Party shall not be entitled to indemnification under this
Section 6.04(c) for Losses arising out of actions or omissions by the
Indemnified Party constituting (i) an intentional breach of this Agreement,
(ii) criminal conduct or (iii) any violation of Federal, state or foreign
securities laws.
(d) In the event that Parent or the Surviving Corporation or any of
their successors or assigns (i) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers or conveys all or
A-22
<PAGE>
substantially all its properties and assets to any person, then, and in each
such case, proper provision shall be made so that the successor and assign
of such party assumes the obligations of such party set forth in this
Section 6.04, and in such event all references to Parent or the Surviving
Corporation, as the case may be, in this Section 6.04 shall be deemed a
reference to such successor and assign.
SECTION 6.05. FEES AND EXPENSES. Except as may otherwise be agreed in
writing, all fees and expenses incurred in connection with the Offer, the Merger
and the other transactions contemplated by this Agreement shall be paid by the
party incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
SECTION 6.06. PUBLIC ANNOUNCEMENTS. Parent and Merger Sub, on the one hand,
and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Offer and the Merger, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable Law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange, domestic or foreign. The parties agree that the initial press releases
to be issued with respect to the transactions contemplated by this Agreement
will be in the form previously agreed to by the parties.
SECTION 6.07. TRANSFER TAXES. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (as defined below in this
Section 6.07) (including interest, penalties and additions to any such Taxes)
("TRANSFER TAXES") incurred by the parties hereto in connection with the
transactions contemplated hereby shall be paid by either Merger Sub or the
Surviving Corporation, and the Company shall cooperate with Merger Sub and
Parent in preparing, executing and filing any Federal, state, local, provincial
and foreign Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes ("TAX RETURNS")
with respect to such Transfer Taxes, including, if reasonably requested,
supplying in a timely manner a complete list of all real property interests held
by the Company that are located in New York State and any information with
respect to such property that is reasonably necessary to complete such Tax
Returns. For purposes of this Agreement, "TAXES" includes all forms of taxation,
whenever created or imposed, and whether of the United States or elsewhere, and
whether imposed by a local, municipal, governmental, state, foreign, Federal or
other Governmental Entity, or in connection with any agreement with respect to
Taxes, including all interest, penalties and additions imposed with respect to
such amounts.
SECTION 6.08. STOCKHOLDER LITIGATION. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any transaction
contemplated hereby. No such settlement shall be agreed to without Parent's
consent.
SECTION 6.09. AFFILIATES. Promptly following the date of execution of this
Agreement, the Company shall deliver to Parent a letter identifying all persons
(other than members of the Company Board that are Parent's employees or
designees) who, to the Company's knowledge, at the time this Agreement is
submitted to holders of Company Common Stock for the Company Stockholder
Approval, may be deemed to be "affiliates" of the Company for purposes of
Rule 145 under the Securities Act. The Company shall use its reasonable best
efforts to cause each such person (other than members of the Company Board that
are Parent's employees or designees) who is a holder of Company Common Stock
following the consummation of the Offer to deliver to Parent prior to the
Closing Date, a written agreement substantially in the form attached as
EXHIBIT B.
A-23
<PAGE>
SECTION 6.10. LISTING. Parent shall use its reasonable best efforts to cause
the Parent ADSs that are to be issued pursuant to the Offer and the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, as
promptly as practicable after the date hereof, and in any event prior to the
time any shares of Company Common Stock are accepted for exchange pursuant to
the Offer.
SECTION 6.11. MERGER SUB COMPLIANCE. Parent shall cause Merger Sub to comply
with all of its obligations under this Agreement.
SECTION 6.12. TREATMENT OF DLJ. The parties agree that any breach of
representations and warranties by the Company and its subsidiaries in this
Agreement that relates to DLJ and its subsidiaries will not be deemed a breach
of such representations and warranties if, after giving effect to the
consummation of the transactions contemplated by the CSG/DLJ Purchase Agreement,
such breach has not had and would not reasonably be expected to have a Company
Material Adverse Effect.
SECTION 6.13. EMPLOYEE BENEFITS. (a) CONTINUITY AGREEMENTS; SEVERANCE
BENEFIT PLANS AND POLICIES. With respect to any officer or employee of the
Company (or any of its subsidiaries (other than DLJ or its subsidiaries))
(collectively, the "COMPANY EMPLOYEES") who is covered by a Continuity Agreement
referred to in the Disclosure Schedule (a list of which is set forth on Schedule
6.13), severance benefit plan or severance policy, Parent shall, or shall cause
the Surviving Corporation to, honor all such Continuity Agreements, severance
benefit plans and severance policies through December 31, 2002 or, if later,
until such date as may be required pursuant to the terms of any of the foregoing
in effect on the date of this Agreement (except as may be amended as
contemplated in the Disclosure Schedule).
(b) PRE-EXISTING LIMITATIONS; DEDUCTIBLE; SERVICE CREDIT. With respect to
any employee benefit plans of Parent (or any such plans caused to be established
by the Surviving Corporation) in which the Company Employees participate
effective as of the Effective Time (the "New Benefit Plans"), Parent shall, or
shall cause the Surviving Corporation to: (i) waive all limitations as to
pre-existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Company Employees
under any New Benefit Plan in which such Company Employees may be eligible to
participate after the Effective Time, (ii) provide each Company Employee with
credit for any co-payments and deductibles paid during the calendar year of
implementation of such New Benefit Plans (if any) prior to the Effective Time in
satisfying any applicable deductible or out-of-pocket requirements under any
welfare New Benefit Plan in which such Company Employees may be eligible to
participate after the Effective Time, and (iii) recognize all service of the
Company Employees with the Company or any of its subsidiaries for all purposes
(including for purposes of eligibility to participate, vesting credit,
entitlement for benefits and benefit accrual) in any New Benefit Plan in which
such Company Employees may be eligible to participate after the Effective Time,
to the same extent taken into account under a comparable Company Benefit Plan
immediately prior to the Effective Time (except, with respect to benefit
accrual, to the extent that such recognition would result in a duplication of
benefits).
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or, to the extent permitted by applicable Law, waiver (which, in
the case of the Company, shall be determined by the Special Committee) on or
prior to the Closing Date of the following conditions:
A-24
<PAGE>
(a) STOCKHOLDER APPROVAL. If required by Law in order to consummate the
Merger, the Company shall have obtained the Company Stockholder Approval.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction preventing the consummation of the Merger or the
other transactions contemplated hereby shall be in effect; PROVIDED,
HOWEVER, that prior to asserting this condition each of the parties shall
have used its reasonable best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any such
judgment that may be entered.
(c) EXCHANGE OF SHARES IN THE OFFER. Parent and Merger Sub shall have
accepted for exchange and exchanged all of the shares of Company Common
Stock properly tendered and not withdrawn pursuant to the Offer.
(d) FORM F-4. The Form F-4 and the Post-Effective Amendment, as the case
may be, shall have become effective under the Securities Act and shall not
be the subject of any stop order or proceeding seeking a stop order, and
Parent shall have received all state securities or "blue sky" authorizations
necessary to issue Parent ADSs pursuant to the Merger.
(e) LISTING. The Parent ADSs issuable pursuant to the Merger shall have
been approved for listing on the NYSE, subject to official notice of
issuance.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after receipt of the Company
Stockholder Approval or adoption of this Agreement by the stockholder of Merger
Sub:
(a) by mutual written consent of Parent, Merger Sub and the Special
Committee on behalf of the Company;
(b) by either Parent or the Special Committee on behalf of the Company:
(i) if the purchase of the shares of Company Common Stock pursuant to
the Offer is not consummated on or before June 30, 2001 as a result of
any of the conditions set forth in EXHIBIT A not being satisfied on or
prior to such date, unless the failure to consummate the Offer is the
result of a breach of this Agreement by the party seeking to terminate
this Agreement; PROVIDED, HOWEVER, that the passage of such period shall
be tolled for any part thereof during which any party shall be subject to
a nonfinal order, decree, ruling or action restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger; or
(ii) if any Governmental Entity issues an order, decree or ruling or
takes any other action permanently enjoining, restraining or otherwise
prohibiting the Offer or the Merger and such order, decree, ruling or
other action shall have become final and nonappealable, other than any
such order, decree, ruling or other action of a Governmental Entity not
in the United States, France or the European Union which does not have a
material adverse effect on Parent or any of its material subsidiaries;
(c) by Parent if the Special Committee withdraws or modifies, in a
manner adverse to Parent or Merger Sub, or proposes to withdraw or modify,
in a manner adverse to Parent or Merger Sub, its approval or recommendation
of this Agreement, the Offer or the Merger or fails to recommend to the
holders of Company Common Stock that they accept the Offer and give the
Company Stockholder Approval;
A-25
<PAGE>
(d) by the Special Committee on behalf of the Company if the Special
Committee determines that the terms of the Offer and the Merger are not fair
to or in the best interests of the Company and the holders of Company Common
Stock (other than the Affiliate Shareholders);
(e) by the Special Committee on behalf of the Company if due to an
occurrence or circumstance, not involving a breach by the Company of its
obligations hereunder, which would result in a failure to satisfy any of the
conditions set forth in EXHIBIT A hereto or otherwise, Parent and Merger Sub
shall have terminated the Offer or permitted the Offer to expire without the
exchange of shares of Company Common Stock thereunder or not commenced the
Offer in accordance with this Agreement; or
(f) by the Special Committee on behalf of the Company if any
representation or warranty of Parent and Merger Sub in this Agreement that
is qualified as to Parent Material Adverse Effect shall not be true and
correct or any such representation and warranty that is not so qualified
shall not be true and correct other than for such failures to be true and
correct that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Parent Material Adverse Effect, or Parent
or Merger Sub fails to perform in any material respect any of its respective
covenants contained in this Agreement (provided that the Company is not then
in breach of any representation, warranty or covenant contained in this
Agreement).
SECTION 8.02. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, or Merger Sub or the Company, other than
Section 3.08, Section 4.08, Section 6.05, this Section 8.02 and Article IX,
which provisions shall survive such termination, and except to the extent that
such termination results from the wilful and material breach by a party of any
agreement set forth in this Agreement.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the parties but
only with the approval of the Special Committee at any time before or after
receipt of the Company Stockholder Approval or the adoption of this Agreement by
the stockholder of Merger Sub; PROVIDED, HOWEVER, that after receipt of the
Company Stockholder Approval or the adoption of this Agreement by the
stockholder of Merger Sub, there shall be made no amendment that by Law requires
further approval by such stockholders without the further approval of such
stockholders. Subject to the preceding sentence, this Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
SECTION 8.04. EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.03 and applicable Law, waive compliance with any of the agreements or
conditions contained in this Agreement; PROVIDED, HOWEVER, that any extension or
waiver pursuant to this Section 8.04 that adversely affects the holders of
shares of Company Common Stock shall require the approval of the Special
Committee. Subject to the preceding sentence, any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
SECTION 8.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 8.01, an amendment of this
Agreement pursuant to Section 8.03 or an extension or waiver pursuant to
Section 8.04 shall, in order to be effective, require in the case of Parent,
Merger Sub or the Company, action by its Board of Directors or Management Board
(and, in the case of the Company, action by the Special Committee), as
applicable, or to the extent permitted by applicable Law, the duly authorized
designee of its Board
A-26
<PAGE>
of Directors or Management Board (and, in the case of the Company, the Special
Committee), as applicable.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 9.02. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given upon receipt by the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to
AXA
21, avenue Matignon
75008 Paris
France
Attention: General Counsel
WITH A COPY TO:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
(b) if to the Company, to
AXA Financial, Inc.
1290 Avenue of the Americas
New York, NY 10104
Attention: General Counsel
WITH A COPY TO EACH OF:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Robert E. Spatt, Esq.
AND
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: Michael W. Blair, Esq.
SECTION 9.03. DEFINITIONS. For purposes of this Agreement:
An "AFFILIATE" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
A "COMPANY BENEFIT PLAN" means any collective bargaining agreement or any
bonus, pension, profit sharing, defined compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit,
A-27
<PAGE>
hospitalization, medical or other plan arrangement or understanding (whether or
not legally binding) providing benefits to any current or former employee,
officer or director of the Company or any of its subsidiaries.
A "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" on a party means a
material adverse effect or change on the business, financial condition or
results of operations of such party and its subsidiaries, taken as a whole, in
each case excluding those effects and changes to the extent that they result
from (i) any change in the economy or the financial or securities markets
generally or in the industry of the party or any of its subsidiaries generally,
other than any such effect or change that has a materially more adverse effect
on such party or its subsidiaries than that experienced by similarly situated
companies and (ii) solely in the case of a Company Material Adverse Effect, the
announcement of this Agreement or the consummation of the transactions
contemplated hereby.
A "PERSON" means any individual, firm, corporation, partnership, company,
limited liability company, trust, joint venture, association, Governmental
Entity or other entity.
A "SUBSIDIARY" of any person means another person, an amount of the voting
securities or other voting ownership or voting partnership interests of which or
general partnership in which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly or
indirectly by such first person, excluding, for purposes of the representations,
warranties and covenants of the Company contained in this Agreement (but not the
definition of Company Material Adverse Effect), any subsidiary of the Company
the majority of assets of which are "general account" or "separate account"
investment assets (as referred to in the Company SEC Documents).
SECTION 9.04. INTERPRETATION. When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". Any references to times of day shall
mean New York City time.
SECTION 9.05. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule or Law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.06. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.07. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(a) constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
transactions contemplated hereby and (b) except for the provisions of
Article II and Section 6.04, are not intended to confer upon any person other
than the parties any rights or remedies.
A-28
<PAGE>
SECTION 9.08. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.09. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that (a) Merger Sub may assign, in
its sole discretion, any of or all its rights, interests and obligations under
this Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, and (b) Parent may assign, in its sole discretion, in whole or in part,
the right to purchase and deliver payment for shares of Company Common Stock
tendered pursuant to the Offer to Merger Sub or to any other direct or indirect
wholly owned subsidiary of Parent, but in either case no such assignment shall
relieve Merger Sub or Parent, as applicable, of any of its respective
obligations under this Agreement. Any purported assignment without such consent
shall be void. Subject to the preceding sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 9.10. JURISDICTION. Each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any court of the United States
located in the State of Delaware or of any Delaware state court in the event any
dispute arises out of this Agreement or the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and
(c) agrees that it will not bring any action relating to this Agreement or the
transactions contemplated by this Agreement in any court other than a court of
the United States located in the State of Delaware or a Delaware state court.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have duly executed
this Agreement, all as of the date first written above.
AXA,
by /s/ Henri De Castries______________
Name: Henri de Castries
Title: Chairman of the
Management Board
AXA MERGER CORP.,
by /s/ Gerard de La Martiniere________
Name: Gerard de La Martiniere
Title: Chief Executive Officer
AXA FINANCIAL, INC.,
by /s/ Stanley B. Tulin_______________
Name: Stanley B. Tulin
Title: Vice Chairman and Chief
Financial Officer
A-29
<PAGE>
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer but subject in all respects to
Article I of this Agreement, Parent and Merger Sub shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-l(c) under the Exchange Act (relating to Parent's and
Merger Sub's obligation to deliver payment for or return tendered shares of
Company Common Stock promptly after the termination or withdrawal of the Offer),
to deliver any payment for any shares of Company Common Stock tendered pursuant
to the Offer UNLESS (a) the transactions contemplated by the CSG/DLJ Purchase
Agreement shall have been consummated (provided that in no event shall this
condition be waivable by Parent and Merger Sub without the approval of the
Special Committee on behalf of the Company) and (b) the Parent ADSs issuable
pursuant to the Offer have been approved for listing on the NYSE, subject to
official notice of issuance. Furthermore, notwithstanding any other term of the
Offer but subject in all respects to Article I of this Agreement, Parent and
Merger Sub shall not be required to commence the Offer, accept for payment or,
subject as aforesaid, deliver any payment for any shares of Company Common Stock
not theretofore accepted for payment or paid for, and may terminate or amend the
Offer, with the consent of the Special Committee on behalf of the Company or if,
at any time on or after the date of this Agreement and before the acceptance of
such shares for payment or the payment therefor, any of the following conditions
exists:
(a) the Form F-4 has not been declared effective under the Securities
Act by the SEC or is the subject of a stop order or proceedings seeking a
stop order, or Parent has not received any material state securities or
"blue sky" authorizations necessary to issue Parent ADSs pursuant to the
Offer;
(b) any statute, rule, regulation, legislation, judgment, order or
injunction shall be enacted, entered, enforced, promulgated, amended or
issued with respect to, or deemed applicable to, or any consent or approval
withheld with respect to, (i) Parent, the Company or any of their respective
subsidiaries or (ii) the Offer, the Merger or any other transaction
contemplated by this Agreement, in each of the cases of clause (i) and (ii),
by any Governmental Entity (other than any such statute, rule, regulation,
legislation, judgment, order or injunction of a Governmental Entity not in
the United States, France or the European Union which does not have a
material adverse effect on Parent or any of its material subsidiaries) that
results, directly or indirectly, in (w) a restraint or prohibition on the
making or consummation of the Offer or the Merger or any other transaction
contemplated by this Agreement or any damages in relation thereto that are
material in relation to the Company and its subsidiaries taken as whole,
(x) a prohibition or limitation on the ownership or operation by the
Company, Parent or any of their respective subsidiaries of any material
portion of the business or assets of the Company and its subsidiaries or
Parent and its subsidiaries, in each case taken as a whole, or the
requirement that the Company, Parent or any of their respective subsidiaries
dispose of or hold separate any material portion of the business or assets
of the Company and its subsidiaries or Parent and its subsidiaries, in each
case taken as a whole, as a result of the Offer, the Merger or any other
transaction contemplated by this Agreement, (y) the imposition of material
limitations on the ability of Parent or Merger Sub to acquire or hold, or
exercise full rights of ownership of, any shares of Company Common Stock,
including the right to vote the Company Common Stock acquired by it on all
matters properly presented to the stockholders of the Company (other than
pursuant to the terms of the Voting Trust Agreement) or (z) a prohibition on
Parent or any of its subsidiaries effectively controlling in any material
respect the business or operations of the Company and its subsidiaries,
taken as a whole;
A-30
<PAGE>
(c) the Special Committee shall have withdrawn or modified, or proposed
to withdraw or modify, in a manner adverse to Parent or Merger Sub, its
approval or recommendation of this Agreement, the Offer or the Merger or
failed to recommend to the holders of Company Common Stock that they accept
the Offer and, to the extent applicable, give the Company Stockholder
Approval;
(d) any representation and warranty of the Company in this Agreement
that is qualified as to Company Material Adverse Effect shall not be true
and correct, and any such representation and warranty that is not so
qualified shall not be true and correct other than for such failures to be
true and correct that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect,
in each case as of such time, except to the extent such representation and
warranty expressly relates to an earlier date (in which case on and as of
such earlier date); PROVIDED, HOWEVER, that any breach of representations
and warranties by the Company and its subsidiaries in this Agreement that
relates to DLJ and its subsidiaries will not be deemed a breach of such
representations and warranties if, after giving effect to the consummation
of the transactions contemplated by the CSG/DLJ Purchase Agreement, such
breach has not had and would not reasonably be expected to have a Company
Material Adverse Effect;
(e) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant, of the Company required to be performed or complied with by it
under this Agreement; or
(f) this Agreement shall have been terminated in accordance with its
terms;
which, in the sole and reasonable judgment of Parent and Merger Sub, in any such
case, makes it inadvisable to proceed with such commencement, acceptance for
payment or delivery of payment.
The foregoing conditions are for the sole benefit of Parent and Merger Sub
and may be asserted by Parent and Merger Sub or may be waived by Parent and
Merger Sub in whole or in part at any time and from time to time in their sole
discretion, except in the case of the condition set forth in clause (a) of the
first paragraph of this EXHIBIT A the waiver of which requires the approval of
the Special Committee on behalf of the Company. The failure by Parent or Merger
Sub at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances and each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time.
A-31
<PAGE>
EXHIBIT B
FORM OF COMPANY AFFILIATE LETTER
Dear Sirs:
The undersigned refers to the Agreement and Plan of Merger (the "MERGER
AGREEMENT") dated as of October 17, 2000 among AXA, a societe anonyme organized
under the laws of The Republic of France ("PARENT"), AXA MERGER CORP., a
Delaware corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), and
AXA Financial, Inc., a Delaware corporation (the "COMPANY"). Capitalized terms
used but not defined in this letter have the meanings give such terms in the
Merger Agreement.
The undersigned, a holder of shares of Company Common Stock, is entitled to
receive in connection with the Merger Parent ADSs. The undersigned acknowledges
that the undersigned may be deemed an "affiliate" of the Company within the
meaning of Rule 145 ("RULE 145") promulgated under the Securities Act, although
nothing contained herein should be construed as an admission of such fact.
If in fact the undersigned were an affiliate under the Securities Act, the
undersigned's ability to sell, assign or transfer the Parent ADSs received by
the undersigned in exchange for any shares of Company Common Stock pursuant to
the Merger may be restricted unless such transaction is registered under the
Securities Act or an exemption from such registration is available. The
undersigned (i) understands that such exemptions are limited and that Parent is
not under any obligation to effect any such registration and (ii) has obtained
advice of counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such securities of
Rules 144 and 145(d) promulgated under the Securities Act (as such Rules may be
amended from time to time).
The undersigned hereby represents to and covenants with Parent that the
undersigned will not sell, assign or transfer any of the Parent ADSs received by
the undersigned in exchange for shares of Company Common Stock pursuant to the
Merger except (i) pursuant to an effective registration statement under the
Securities Act, (ii) for sales, transfers or other dispositions made in
conformity with the provisions of Rule 145 or (iii) in a transaction that, in
the opinion of independent counsel reasonably satisfactory to Parent or as
described in a "no-action" or interpretive letter from the Staff of the SEC, is
not required to be registered under the Securities Act.
In the event of a sale or other disposition by the undersigned pursuant to
Rule 145, of Parent ADSs received by the undersigned pursuant to the Merger the
undersigned will supply Parent with evidence of compliance with such Rule, in
the form of a letter in the form of Annex I hereto and the opinion of counsel or
no-action letter referred to above. The undersigned understands that Parent may
instruct its transfer agent to withhold the transfer of any Parent ADSs disposed
of by the undersigned, but that upon receipt of such evidence of compliance the
transfer agent shall effectuate the transfer of the Parent ADSs sold as
indicated in the letter.
The undersigned acknowledges and agrees that (i) the Parent ADSs issued to
the undersigned will all be in certificated form and (ii) appropriate legends
will be placed on certificates representing Parent ADSs received by the
undersigned pursuant to the Merger or held by a transferee thereof, which
legends will be removed by delivery of substitute certificates upon receipt of
an opinion in form and substance reasonably satisfactory to Parent from
independent counsel reasonably satisfactory to Parent to the effect that such
legends are no longer required for purposes of the Securities Act.
A-32
<PAGE>
The undersigned acknowledges that the undersigned has carefully read this
letter and understands the requirements hereof and the limitations imposed upon
the distribution, sale, transfer or other disposition of Parent ADSs.
Very truly yours,
Dated:
A-33
<PAGE>
ANNEX I
TO EXHIBIT B
AXA:
On , the undersigned sold the securities of AXA ("PARENT")
described below in the space provided for that purpose (the "SECURITIES"). The
Securities were received by the undersigned in connection with the merger of AXA
Merger Corp., a subsidiary of Parent, with and into AXA Financial, Inc.
Based upon the most recent report or statement filed by Parent with the
Securities and Exchange Commission, the Securities sold by the undersigned were
within the prescribed limitations set forth in Rule 144(e) promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
The undersigned hereby represents that the Securities were sold in "brokers'
transactions" within the meaning of Section 4(4) of the Securities Act or in
transactions directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of the
Securities to any person other than to the broker who executed the order in
respect of such sale.
Very truly yours,
Dated:
Description of Securities:
A-34
<PAGE>
EXHIBIT C
VOTING AGREEMENT dated as of October 17, 2000 (this "Agreement"),
by Claude Bebear and Patrice Garnier acting as Voting Trustees
under a Voting Trust Agreement dated as of May 12, 1992, as
amended by an amendment thereto dated January 22, 1997 (as
amended, the "Voting Trust Agreement"), among AXA and the voting
trustees (the "Voting Trustees") named therein, to and for the
benefit of AXA Financial, Inc., a Delaware corporation ("AXF").
WHEREAS, concurrently with the execution of this Agreement, AXA, a societe
anonyme organized under the laws of France ("AXA"), AXA Merger Corp., a Delaware
corporation and wholly owned subsidiary of AXA, and AXF are entering into an
Agreement and Plan of Merger (the "Merger Agreement") dated as of the date
hereof relating to the acquisition by AXA of the minority interests in AXF.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings assigned to them in the Merger Agreement.
WHEREAS, according to the terms of the Merger Agreement, the Acquisition
will be structured as a joint tender offer by AXA and AXA Merger Corp. followed
by a merger of AXA Merger Corp. with and into AXF (the "Merger").
WHEREAS, the Merger may have to be approved by a majority of the outstanding
stock of AXF entitled to vote thereon.
WHEREAS, pursuant to the Voting Trust Agreement, AXA has deposited into a
voting trust (the "Voting Trust") the shares of capital stock of AXF
beneficially owned by AXA and certain of its affiliates.
WHEREAS, pursuant to the terms of the Voting Trust Agreement, the Voting
Trustees acting in accordance with Section 3 of the Voting Trust Agreement have
the right and power to exercise all voting rights with respect to the capital
stock of AXF deposited in the Voting Trust.
WHEREAS, Claude Bebear and Patrice Garnier, together with Henri de
Clermont-Tonnerre, are the Voting Trustees under the Voting Trust Agreement.
WHEREAS, AXF has requested the undersigned Voting Trustees to agree, and,
the undersigned Voting Trustees are willing to agree, to take all actions
required under the Voting Trust Agreement in order to cause all shares of
capital stock of AXF held in the Voting Trust as of the date of the relevant
vote to be voted in favor of the adoption of the Merger Agreement, if
applicable.
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, and intending to be legally bound hereby, the parties hereby
agree as follows:
SECTION 1. VOTING OF AXF SHARES. Claude Bebear and Patrice Garnier, as
Voting Trustees under the Voting Trust Agreement, hereby agree that they will
take all actions required under the Voting Trust Agreement in order to cause all
shares of capital stock of AXF held in the Voting Trust as of the date of the
relevant vote to be voted, in any action by written consent of the stockholders
of AXF or at the Company Stockholders Meeting, in favor of the adoption of the
Merger Agreement.
SECTION 2. TERMINATION. This Agreement will terminate upon the earlier to
occur of (a) the Effective Time and (b) the termination of the Merger Agreement
in accordance with the terms thereof. No such termination of this Agreement
shall relieve any party hereto from any liability for any breach of this
Agreement prior to termination.
SECTION 3. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with
A-35
<PAGE>
respect to the subject matter hereof. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of the other parties hereto. Any purported
assignment in violation of this Section 3 shall be void. Subject to the
preceding sentences of this Section 3, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto and their
respective successors and assigns.
SECTON 4. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
SECTION 5. JURISDICTION. Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any court of the United States located in
the State of Delaware or of any Delaware state court in the event any dispute
arises out of this Agreement or the transactions contemplated by this agreement,
(b) agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement in any court other than a
court of the United States located in the State of Delaware or a Delaware state
court.
SECTION 6. HEADINGS. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 7. AMENDMENTS. This Agreement may be amended or modified, and the
terms and conditions hereof may be waived, only by a written instrument signed
by the parties hereto or, in the case of a waiver, by each party waiving
compliance.
SECTION 8. COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first written above.
<TABLE>
<S> <C> <C>
AXA FINANCIAL, INC.
By
------------------------------------------
Name:
Title:
------------------------------------------
Name: Claude Bebear
------------------------------------------
Name: Patrice Garnier
</TABLE>
A-36
<PAGE>
ANNEX B
<TABLE>
<S> <C>
Wasserstein Perella & Co.,
[LOGO] Inc.
31 West 52nd Street
New York, New York 10019-6118
Telephone 212-969-2700
Fax 212-969-7836
</TABLE>
October 17, 2000
Special Committee of the Board of Directors
AXA Financial, Inc.
1290 Avenue of the Americas
New York, NY 10104
Members of the Special Committee of the Board:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the holders (other than AXA ("Purchaser") or any of
its affiliates) of the common stock, par value $0.01 per share (the "Shares") of
AXA Financial, Inc., a Delaware corporation (the "Company"), of the
consideration to be received by such holders pursuant to the terms of the
Agreement and Plan of Merger, dated as of October 17, 2000 (the "Merger
Agreement"), among the Company, Purchaser and AXA Merger Corp ("Sub"). The
Merger Agreement provides for, among other things, a tender offer (the "Tender
Offer") by Purchaser and Sub to acquire all of the outstanding Shares (other
than Shares held in treasury by the Company or Shares owned by Purchaser and its
subsidiaries held in the voting trust (the "Voting Trust") established pursuant
to a Voting Trust Agreement, dated as of May 12, 1992, by and among Purchaser
and the voting trustees named therein, as amended) at a price per Share equal to
$35.75 in cash and 0.2950 American Depositary Shares of Purchaser (collectively,
the "Consideration"), and for a subsequent merger (the "Merger" and, together
with the Tender Offer, the "Transaction") of Sub with and into the Company
pursuant to which each remaining outstanding Share not purchased in the Tender
Offer (other than Shares held in treasury by the Company or Shares owned by
Purchaser and its subsidiaries held in the Voting Trust) will be converted into
the right to receive the Consideration. The terms and conditions of the
Transaction are set forth in more detail in the Merger Agreement. We understand
that Purchaser directly and indirectly through subsidiaries owns, through the
Voting Trust, approximately 60.3% of the outstanding shares of common stock of
the Company.
In connection with rendering our opinion, we have reviewed a draft of the
Merger Agreement, and for purposes hereof, we have assumed that the terms and
conditions of the final form of the Merger Agreement will not differ in any
material respect from the draft provided to us. We have also reviewed and
analyzed certain publicly available business and financial information relating
to the Company and Purchaser for recent years and interim periods to date, as
well as certain internal financial and operating information relating to the
Company, including financial forecasts, analyses and projections prepared by or
on behalf of the Company and provided to us for purposes of our analysis. We
have met with management of the Company and Purchaser to review and discuss
[LOGO]
<PAGE>
such information and, among other matters, each of the Company's and Purchaser's
business, operations, assets, financial condition and future prospects. As you
know, we did not receive financial forecasts and projections of Purchaser.
We have reviewed and considered certain financial and stock market data
relating to the Company and Purchaser, and we have compared that data with
similar data for certain other companies, the securities of which are publicly
traded, that we believe may be relevant or comparable in certain respects to the
Company and Purchaser or one or more of their respective businesses or assets,
and we have reviewed and considered the financial terms of certain recent
acquisitions and business combination transactions in certain industries that we
believe to be reasonably comparable to the Transaction or otherwise relevant to
our inquiry. We have also taken into consideration that Purchaser directly and
indirectly through subsidiaries owns, through the Voting Trust, approximately
60.3% of the outstanding shares of common stock of the Company, and we have
reviewed and considered the financial terms of certain recent transactions in
which a majority shareholder of an entity has purchased the interests held by
the minority shareholders. In addition to the foregoing, we have performed such
other financial studies, analyses, and investigations and reviewed such other
information as we considered appropriate for purposes of this opinion.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all of the historical financial
and other information provided to or discussed with us or publicly available,
and we have not assumed any responsibility for independent verification of any
of such information. We have also assumed and relied upon the reasonableness and
accuracy of the financial projections, forecasts and analyses provided to us,
and we have assumed that such projections, forecasts and analyses were
reasonably prepared in good faith and on bases reflecting the best currently
available judgments and estimates of the Company's management. We express no
opinion with respect to such projections, forecasts and analyses or the
assumptions upon which they are based. We are not actuaries and our advisory
services did not include actuarial determinations or evaluations by us or an
attempt to evaluate actuarial assumptions. In addition, we have not reviewed any
of the books and records of the Company or Purchaser, or assumed any
responsibility for conducting a physical inspection of the properties or
facilities of the Company or Purchaser, or for making or obtaining an
independent valuation or appraisal of the assets or liabilities or adequacy of
the reserves of the Company or Purchaser, and no such independent valuation or
appraisal was provided to us. We also have (i) assumed that, in all respects
material to our analysis, the disposition by Purchaser, the Company and their
affiliates of their respective interests in Donaldson, Lufkin & Jenrette, Inc.
("DLJ") will be consummated substantially on the terms and conditions publicly
announced by the Company and described to us and (ii) assumed that the
transactions described in the Merger Agreement will be consummated without
waiver or modification of any of the material terms or conditions contained
therein by any party thereto. Our opinion is necessarily based on economic and
market conditions and other circumstances as they exist and can be evaluated by
us as of the date hereof. We are not expressing any opinion herein as to the
prices at which any securities of the Company or Purchaser will actually trade
at any time.
It should be noted that in the context of our engagement by the Special
Committee of the Board of Directors of the Company, we were not authorized to
and did not solicit third party indications of interest in acquiring all or any
part of the Company, or investigate any alternative transactions that may be
available to the Company.
In the ordinary course of our business, we may actively trade the debt and
equity securities of the Company and Purchaser for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
B-2
<PAGE>
We are acting as financial advisor to the Special Committee of the Board of
Directors of Company in connection with the proposed Transaction and will
receive a fee for our services, including rendering this opinion, a significant
portion of which is contingent upon the consummation of the Transaction. In
addition, we have performed investment banking services for the Special
Committee in connection with the disposition of DLJ.
Our opinion addresses only the fairness from a financial point of view to
the holders of the Shares (other than Purchaser or any of its affiliates) of the
Consideration to be received by such holders pursuant to the Transaction, and we
do not express any views on any other terms of the Transaction. Specifically,
our opinion does not address the Special Committee's or the Company's underlying
business decision to recommend the transactions contemplated by the Merger
Agreement. In addition, our opinion does not address the solvency of the Company
or Purchaser following consummation of the Transaction or at any time.
It is understood that this letter is for the benefit and use of the Special
Committee of the Board of Directors of the Company in its consideration of the
Transaction and, except for inclusion in its entirety in any proxy statement or
Schedule 13E-3 statement required to be circulated to shareholders of the
Company relating to the Merger or tender offer recommendation statement on
Schedule 14D-9 from the Company to holders of Shares relating to the
Transaction, may not be used for any other purpose or quoted, referred to,
disseminated or reproduced at any time or in any manner without our prior
written consent. This opinion does not constitute a recommendation to any holder
of Shares with respect to whether such holder should tender Shares pursuant to
the Tender Offer or as to how such holder should vote with respect to the
Merger, and should not be relied upon by any holder as such.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that as of the date hereof,
the Consideration to be received by the holders of the Shares (other than
Purchaser or any of its affiliates) pursuant to the Tender Offer and the Merger
is fair to such holders from a financial point of view.
Very truly yours,
WASSERSTEIN PERELLA & CO., INC.
[LOGO]
B-3
<PAGE>
ANNEX C
EXCERPTS FROM THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE RELATING TO
THE RIGHTS OF DISSENTING STOCKHOLDERS PURSUANT TO SECTION 262
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g)), Section 252, Section 254, Section 257, Section 258, Section 263
or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to Section
Section 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
<PAGE>
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsection (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such stockholder's shares. A proxy or vote against
the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation shall notify
each stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to Section 228
or Section 253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of stock
of such constituent corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section; provided that, if the notice is given on or after the effective
date of the merger or consolidation, such notice shall be given by the
surviving or resulting corporation to all such holders of any class or
series of stock of a constituent corporation that are entitled to appraisal
rights. Such notice may, and, if given on or after the effective date of the
merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of the effective
date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the
merger or consolidation notifying each of the holders of any class or series
of stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to all
such holders on or within 10 days
C-2
<PAGE>
after such effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice, such
second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or assistant
secretary or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholder entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be not
more than 10 days prior to the date the notice is given; provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day
on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pending of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the
C-3
<PAGE>
accomplishment or expectation of the merger or consolidation, together with a
fair rate of interest, if any, to be paid upon the amount determined to be the
fair value. In determining such fair value, the Court shall take into account
all relevant factors. In determining the fair rate of interest, the Court may
consider all relevant factors, including the rate of interest which the
surviving or resulting corporation would have had to pay to borrow money during
the pendency of the proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the appraisal
proceeding, the Court may, in its discretion, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any stockholder whose
name appears on the list filed by the surviving or resulting corporation
pursuant to subsection (f) of this section and who has submitted such
stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of such
stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of the subsection or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding
in the Court of Chancery shall be dismissed as to any stockholder without the
approval of the Court, and such approval may be conditioned upon such terms as
the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
C-4
<PAGE>
Copies of the Letter of Transmittal faxed to the Exchange Agent will not be
accepted. Other documents besides the Letter of Transmittal can be faxed to the
Exchange Agent at the numbers listed below. Letters of Transmittal and
certificates for shares of AXA Financial common stock should be sent or
delivered by each stockholder of AXA Financial or his or her broker, dealer,
commercial bank, trust company or other nominee to the Exchange Agent at one of
its addresses set forth below:
THE EXCHANGE AGENT FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND DELIVERY:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Corporate Actions Dept. 40 Campanelli Drive c/o Securities Transfer and
P.O. Box 43026 Braintree, MA 02184 Reporting Services Inc.
Providence, RI 02940-3026 100 William Street--Galleria
New York, NY 10038
</TABLE>
<TABLE>
<S> <C>
FACSIMILE TELEPHONE NUMBERS: FACSIMILE CONFIRMATION NUMBER:
(781) 575-4826 (781) 575-4816
(781) 575-4827
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth below. Requests for
additional copies of this offer and the Letter of Transmittal may be directed to
the Information Agent or the Exchange Agent. Stockholders may also contact their
brokers, dealers, commercial banks, trust companies or other nominees for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
17 State Street, 10th Floor
New York, New York 10004
Bank and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (866) 678-2293
THE DEALER MANAGER FOR THE OFFER IS:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(212) 902-1000 (Call Collect)
(800) 323-5678 (Call Toll Free)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
AXA maintains liability insurance for its directors and officers, including
insurance against liabilities under the Securities Act of 1933, as amended.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following Exhibits are filed herewith unless otherwise
indicated:
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION
---------- ------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of October 17, 2000
among AXA, AXA Merger Corp. and AXA Financial, Inc. (inluded
as Annex A of the Prospectus filed herein)
3.1 AXA STATUTS, as amended
4.1 Deposit Agreement dated as of June 24, 1996, among AXA and
The Bank of New York, and all owners from time to time of
American Depositary Receipts issued thereunder
5.1 Opinion of Linklaters, French counsel of AXA, regarding the
validity of the ordinary shares of AXA being registered
under this Registration Statement
8.1 Opinion of Linklaters, French counsel of AXA, regarding
certain French tax consequences of the offer and the merger
8.2 Opinion of Cravath, Swaine & Moore, regarding certain United
States tax consequences of the offer and the merger
9.1 Voting Agreement dated as of October 17, 2000 by certain
Trustees under the Voting Trust Agreement, filed herewith as
Exhibit 9.2, to and for the benefit of AXA Financial, Inc.
9.2 Voting Trust Agreement dated as of May 12, 1992 by and among
AXA and the designated Voting Trustees, as amended by
Amendment No. 1 dated as of January 22, 1997
10.1 Standstill and Registration Rights Agreement dated as of
July 18, 1991 between The Equitable Companies Incoporated,
The Equitable Life Assurance Society of the United States
and AXA, as amended by Amendment No. 1 dated as of
November 27, 1991 and Amendment No. 2 dated as of March 5,
1992
10.2 Cooperation Agreement dated as of July 18, 1991 among The
Equitable Life Assurance Society of the United States, The
Equitable Companies Incorporated and AXA, as amended by
Amendment No. 1 dated as of November 27, 1991
10.3 Letter Agreement dated as of May 12, 1992 between AXA, The
Equitable Companies Incorporated and The Equitable Life
Assurance Society of the United States
10.4 Letter Agreement dated as of May 12, 1992 between AXA and
the Superintendent of Insurance of the State of New York
Insurance Department
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION
---------- ------------------------------------------------------------
<C> <S>
10.5 Continuity Agreement dated September 29, 2000 between AXA
Financial, Inc. and Michael Hegarty
10.6 Continuity Agreement dated September 29, 2000 between AXA
Financial, Inc. and Edward Miller
10.7 Continuity Agreement dated September 29, 2000 between AXA
Financial, Inc. and Stanley Tulin
23.1 Consent of Linklaters (included in Exhibits 5.1 and 8.1)
23.2 Consent of Cravath, Swaine & Moore (included in Exhibit 8.2)
23.3 Consent of PriceWaterhouseCoopers
23.4 Consent of Befec--Price Waterhouse
24.1 Power of Attorney (included on the signature page hereto)
(1)99.1 Recommendation Statement on Schedule 14D-9 of AXA Financial,
Inc. dated November 21, 2000
99.2 Letter of Transmittal
99.3 Notice of Guaranteed Delivery
99.4 Important Information Cover Sheet
99.5 Letter from the Dealer Manager to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
99.6 Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
(2)99.7 Form of letter to stockholders from Edward D. Miller,
President and Chief Executive Officer of AXA Financial, Inc.
99.8 Section 262 of the Delaware General Corporation law
(included as Annex C of the Prospectus filed herein)
99.9 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
99.10 IRS Form W-8 Certificate of Foreign Status
99.11 IRS Form W-8 BEN Certificate of Foreign Status of Beneficial
Ownership for United States Tax Withholding
99.12 Commitment Letter dated October 18, 2000 among AXA and Bank
of America International Limited, Chase Manhattan Plc, SG
Investment Banking and UBS Warburg Ltd. (collectively, the
"Arrangers")
99.13 Summary Terms and Conditions for Credit Facility dated
October 18, 2000 among AXA and the Arrangers
99.14 Opinion of Wasserstein Perella & Co., Inc. to the Special
Committee of the Board of Directors of AXA Financial, Inc.
dated October 17, 2000 (included as Annex B of the
Prospectus filed herein)
99.15 Materials presented by Wasserstein Perella & Co., Inc. to
the Special Committee of the Board of Directors of AXA
Financial, Inc. on October 17, 2000
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION
---------- ------------------------------------------------------------
<C> <S>
99.16 Financial Analyses of Goldman, Sachs & Co. delivered to AXA
99.17 Form of Summary Advertisement
99.18 Letter of BNP Paribas and Lazard Freres delivered to the
Finance Committee of the Supervisory Board of AXA on October
16, 2000
99.19 Consent of Wasserstein Perella & Co., Inc.
99.20 Consent of Goldman, Sachs & Co.
99.21 Consent of BNP Paribas
99.22 Consent of Lazard Freres
(3)99.23 Press Release issued by AXA on August 30, 2000
(4)99.24 Press Release issued by AXA Financial, Inc. on August 30,
2000
(5)99.25 Presentation to analysts on August 30, 2000
(6)99.26 Presentation to investors dated September 2000
(7)99.27 Press Release issued by AXA on October 18, 2000
(8)99.28 Press Release issued by AXA Financial, Inc. on October 18,
2000
99.29 Complaint of Fred Buff against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and
AXA Group, filed in the Court of Chancery in the State of
Delaware on August 30, 2000
99.30 Complaint of Sarah Wolhendler against Claude Bebear,
John S. Chalsty, Francoise Colloc'h, Henri de Castries,
Claus Michael Dill, Joseph L. Dionne, Jean-Rene Fourtou,
Donald J. Greene, Anthony J. Hamilton, John T. Hartley,
John H.F. Haskell, Jr., Michael Hegarty, Nina Henderson,
W. Edwin Jarmain, Edward D. Miller,
Didier Pineau-Valencienne, George the State of Delaware on
August 30, 2000
99.31 Complaint of Jerome and Selma Stone against AXA Financial,
Inc., Edward D. Miller, Claude Bebear,
Francoise Colloc'h, Henri de Castries, Jean Steele Chalsty,
Jean-Rene Fourtou, Didier Pineau-Valencienne,
Anthony J. Hamilton, Michael Hegarty, Claus-Michael Dill,
Joseph L. Dionne, John T. Hartley, George J. Sella, Jr.,
Peter J. Tobin, David H. Williams, Donald the State of
Delaware on August 30, 2000
99.32 Complaint of Louis Deranieri against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and
AXA Group, filed in the Court of Chancery in the State of
Delaware on August 30, 2000
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION
---------- ------------------------------------------------------------
<C> <S>
99.33 Complaint of Maxine Phillips against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and
AXA Group, filed in the Court of Chancery in the State of
Delaware on August 30, 2000
99.34 Complaint of Ruth Ravnitsky against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene, William Edwin Jarmain,
John H.F. Haskell, Jr. and AXA Group, filed in the Court of
Chancery in the State of Delaware on August 30, 2000
99.35 Complaint of Richard Kager against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and
AXA Group, filed in the Court of Chancery in the State of
Delaware on August 30, 2000
99.36 Complaint of Mortimer S. Cohen against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and AXA
Group, filed in the Court of Chancery in the State of
Delaware on August 31, 2000
99.37 Complaint of Lee Koneche and Scott Spiegel against
AXA Financial, Inc., Edward D. Miller, Claude Bebear,
Francoise Colloc'h, Henri de Castries,
Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and AXA
Group, filed in the Court of Chancery in the State of
Delaware on August 31, 2000
99.38 Complaint of Denver Employees Retirement Plan against AXA
Financial, Inc., Edward D. Miller, Claude Bebear, Francoise
Colloc'h, Henri de Castries, Jean Steele Chalsty, Jean-Rene
Fourtou, Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michel Dill, Joseph L. Dionne, John
T. Martley, George J. Sella, Jr., Peter J. Tobin, David H.
Williams, Donald J. Greene, William Edwin Jarmain, John H.F.
Haskell, Jr. and AXA Group, filed in the Court of Chancery
in the State of Delaware on August 31, 2000
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION
---------- ------------------------------------------------------------
<C> <S>
99.39 Complaint of Harry M. Hoffman, IRA Acct. against AXA
Financial, Inc., Edward D. Miller, Claude Bebear,
Francoise Colloc'h, Henri de Castries,
Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and AXA Group,
filed in the Court of Chancery in the State of Delaware on
September 1, 2000
99.40 Complaint of Joseph Villari against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h, Henri
de Castries, Jean Steele Chalsty, Jean-Rene Fourtou, Didier
Pineau-Valencienne, Anthony J. Hamilton, Michael Hegarty,
Claus-Michael Dill, Joseph L. Dionne, John T. Hartley,
George J. Sella, Jr., Peter J. Tobin, David H. Williams,
Donald J. Greene, William Edwin Jarmain, John H.F. Haskell,
Jr. and AXA Group, filed in the Court of Chancery in the
State of Delaware on September 1, 2000
99.41 Complaint of Max Boimal against AXA Financial, Inc., Edward
D. Miller, Claude Bebear, Francoise Colloc'h, Henri de
Castries, Jean Steele Chalsty, Jean-Rene Fourtou, Didier
Pineau-Valencienne, Anthony J. Hamilton, Michael Hegarty,
Claus-Michael Dill, Joseph L. Dionne, John T. Hartley,
George J. Sella, Jr., Peter J. Tobin, David H. Williams,
Donald J. Greene, William Edwin Jarmain, John H.F. Haskell,
Jr. and AXA Group, filed in the Court of Chancery in the
State of Delaware on September 8, 2000
99.42 Complaint of Jay M. Gottlieb against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h, Henri
de Castries, Jean Steele Chalsty, Jean-Rene Fourtou, Didier
Pineau-Valencienne, Anthony J. Hamilton, Michael Hegarty,
Claus-Michael Dill, Joseph L. Dionne, John T. Hartley,
George J. Sella, Jr., Peter J. Tobin, David H. Williams,
Donald J. Greene, William Edwin Jarmain, John H.F. Haskell,
Jr. and AXA Group, filed in the Court of Chancery in the
State of Delaware on September 18, 2000
99.43 Complaint of Harbor Finance Partners, on behalf of itself
and all others similarly situated against AXA Financial,
Inc., AXA Group, Edward D. Miller, Claude Bebear, John S.
Chalsty, Francoise Colloc'h, Henri de Castries,
Claus-Michael Dill, Joseph L. Dionne, Jean-Rene Fourtou,
Donald J. Greene, Anthony J. Hamilton, John T. Hartley, John
H.F. Haskell, Jr., Michael Hegarty, Nina Henderson, W. Edwin
Jarmain, Didier Pineau-Valencienne, George J. Sella, Jr.,
Peter J. Tobin, and Dave H. Williams, filed in the Supreme
Court of the State of New York on September 1, 2000
</TABLE>
------------------------
(1) Incorporated by reference to the Schedule 14D-9C filed by AXA
Financial, Inc. on November 21, 2000.
(2) Incorporated by reference to Exhibit (a)(3) to the Schedule 14D-9C filed by
AXA Financial, Inc. on November 21, 2000.
(3) Incorporated by reference to Form 425 filed by AXA on August 30, 2000.
(4) Incorporated by reference to press release under cover of Schedule 14D-9C
filed by AXA Financial, Inc. on August 30, 2000.
(5) Incorporated by reference to Form 425 filed by AXA on August 30, 2000.
(6) Incorporated by reference to Form 425 filed by AXA on September 12, 2000.
II-5
<PAGE>
(7) Incorporated by reference to Form 425 filed by AXA on October 18, 2000.
(8) Incorporated by reference to press release under cover of Schedule 14D-9C
filed by the AXA Financial, Inc. on October 18, 2000.
ITEM 22. UNDERTAKINGS.
A. Undertaking pursuant to Rule 415:
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, as amended (the "Securities Act");
(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. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total U.S. dollar
value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective 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;
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Article 3-19 of Regulation S-X
under the Securities Act at the start of any delayed offering or throughout
a continuous offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Securities Act need not be furnished,
PROVIDED that the registrant includes in the prospectus, by means of a
post-effective amendment, financial statements required pursuant to this
paragraph (4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements.
(5) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) 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.
II-6
<PAGE>
(6) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c) under the Securities Act, the issuer undertakes
that such reoffering prospectus will contain the information called for by
the applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by the
other Items of the applicable form.
(7) That every prospectus: (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415 under the Securities Act, will be
filed as a part of an amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, 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
will be deemed to be the initial bona fide offering thereof.
(8) Insofar as indemnification for liabilities arising under the
Securities Act 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 Securities 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 or paid 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 Securities Act and will be
governed by the final adjudication of such issue.
(9) 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 F-4, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt
means; and (ii) to arrange or provide for a facility in the United States
for the purpose of responding to such requests. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(10) 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-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement or amendments to be signed on its
behalf by the undersigned, thereunto duly authorized, in Paris, France, on
November 21, 2000.
<TABLE>
<S> <C> <C>
AXA
By:
/s/ GERARD DE LA MARTINIERE
----------------------------------------------
Name: Gerard de La Martiniere
Title: Member of the Management Board,
Chief Financial Officer
</TABLE>
II-8
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gerard de La Martiniere, as
attorney-in-fact and agent, with full power of substitution and resubstitution,
to sign on his or her behalf, individually and in any and all capacities,
including the capacities stated below, any and all amendments (including
post-effective amendments) to this Registration Statement and any registration
statements filed by the registrant pursuant to Rule 462(b) of the Securities Act
of 1933 relating thereto and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting to said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his substitute, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ HENRI DE CASTRIES Chairman of the November 21, 2000
------------------------------------------- Management Board
Henri de Castries (Principal Executive
Officer)
/s/ GERARD DE LA MARTINIERE Member of the Management November 21, 2000
------------------------------------------- Board, Chief Financial
Gerard de La Martiniere Officer
/s/ JACQUES TABOUROT Group Financial November 21, 2000
------------------------------------------- Controller (Principal
Jacques Tabourot Accounting Officer)
/s/ FRANCOISE COLLOC'H Member of the Management November 21, 2000
------------------------------------------- Board
Francoise Colloc'h
/s/ CLAUDE TENDIL Vice Chairman of the November 21, 2000
------------------------------------------- Management Board
Claude Tendil
/s/ EDWARD MILLER Vice Chairman of the November 21, 2000
------------------------------------------- Management Board
Edward Miller (Authorized
Representative in the
United States)
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated as of October 17, 2000
among AXA, AXA Merger Corp. and AXA Financial, Inc. (inluded
as Annex A of the Prospectus filed herein)
3.1 AXA STATUTS, as amended
4.1 Deposit Agreement dated as of June 24, 1996, among AXA and
The Bank of New York, and all owners from time to time of
American Depositary Receipts issued thereunder
5.1 Opinion of Linklaters, French counsel of AXA, regarding the
validity of the ordinary shares of AXA being registered
under this Registration Statement
8.1 Opinion of Linklaters, French counsel of AXA, regarding
certain French tax consequences of the offer and the merger
8.2 Opinion of Cravath, Swaine & Moore, regarding certain United
States tax consequences of the offer and the merger
9.1 Voting Agreement dated as of October 17, 2000 by certain
Trustees under the Voting Trust Agreement, filed herewith as
Exhibit 9.2, to and for the benefit of AXA Financial, Inc.
9.2 Voting Trust Agreement dated as of May 12, 1992 by and among
AXA and the designated Voting Trustees, as amended by
Amendment No. 1 dated as of January 22, 1997
10.1 Standstill and Registration Rights Agreement dated as of
July 18, 1991 between The Equitable Companies Incoporated,
The Equitable Life Assurance Society of the United States
and AXA, as amended by Amendment No. 1 dated as of
November 27, 1991 and Amendment No. 2 dated as of March 5,
1992
10.2 Cooperation Agreement dated as of July 18, 1991 among The
Equitable Life Assurance Society of the United States, The
Equitable Companies Incorporated and AXA, as amended by
Amendment No. 1 dated as of November 27, 1991
10.3 Letter Agreement dated as of May 12, 1992 between AXA, The
Equitable Companies Incorporated and The Equitable Life
Assurance Society of the United States
10.4 Letter Agreement dated as of May 12, 1992 between AXA and
the Superintendent of Insurance of the State of New York
Insurance Department
10.5 Continuity Agreement dated September 29, 2000 between AXA
Financial, Inc. and Michael Hegarty
10.6 Continuity Agreement dated September 29, 2000 between AXA
Financial, Inc. and Edward Miller
10.7 Continuity Agreement dated September 29, 2000 between AXA
Financial, Inc. and Stanley Tulin
23.1 Consent of Linklaters (included in Exhibits 5.1 and 8.1)
23.2 Consent of Cravath, Swaine & Moore (included in Exhibit 8.2)
23.3 Consent of PriceWaterhouseCoopers
23.4 Consent of Befec--Price Waterhouse
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<C> <S>
24.1 Power of Attorney (included on the signature page hereto)
(1)99.1 Recommendation Statement on Schedule 14D-9 of AXA Financial,
Inc. dated November 21, 2000
99.2 Letter of Transmittal
99.3 Notice of Guaranteed Delivery
99.4 Important Information Cover Sheet
99.5 Letter from the Dealer Manager to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
99.6 Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
(2)99.7 Form of letter to stockholders from Edward D. Miller,
President and Chief Executive Officer of AXA Financial, Inc.
99.8 Section 262 of the Delaware General Corporation law
(included as Annex C of the Prospectus filed herein)
99.9 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
99.10 IRS Form W-8 Certificate of Foreign Status
99.11 IRS Form W-8 BEN Certificate of Foreign Status of Beneficial
Ownership for United States Tax Withholding
99.12 Commitment Letter dated October 18, 2000 among AXA and Bank
of America International Limited, Chase Manhattan Plc, SG
Investment Banking and UBS Warburg Ltd. (collectively, the
"Arrangers")
99.13 Summary Terms and Conditions for Credit Facility dated
October 18, 2000 among AXA and the Arrangers
99.14 Opinion of Wasserstein Perella & Co., Inc. to the Special
Committee of the Board of Directors of AXA Financial, Inc.
dated October 17, 2000 (included as Annex B of the
Prospectus filed herein)
99.15 Materials presented by Wasserstein Perella & Co., Inc. to
the Special Committee of the Board of Directors of AXA
Financial, Inc. on October 17, 2000
99.16 Financial Analyses of Goldman, Sachs & Co. delivered to AXA
99.17 Form of Summary Advertisement
99.18 Letter of BNP Paribas and Lazard Freres delivered to the
Finance Committee of the Supervisory Board of AXA on October
16, 2000
99.19 Consent of Wasserstein Perella & Co., Inc.
99.20 Consent of Goldman, Sachs & Co.
99.21 Consent of BNP Paribas
99.22 Consent of Lazard Freres
(3)99.23 Press Release issued by AXA on August 30, 2000
(4)99.24 Press Release issued by AXA Financial, Inc. on August 30,
2000
(5)99.25 Presentation to analysts on August 30, 2000
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<C> <S>
(6)99.26 Presentation to investors dated September 2000
(7)99.27 Press Release issued by AXA on October 18, 2000
(8)99.28 Press Release issued by AXA Financial, Inc. on October 18,
2000
99.29 Complaint of Fred Buff against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and
AXA Group, filed in the Court of Chancery in the State of
Delaware on August 30, 2000
99.30 Complaint of Sarah Wolhendler against Claude Bebear,
John S. Chalsty, Francoise Colloc'h, Henri de Castries,
Claus Michael Dill, Joseph L. Dionne, Jean-Rene Fourtou,
Donald J. Greene, Anthony J. Hamilton, John T. Hartley,
John H.F. Haskell, Jr., Michael Hegarty, Nina Henderson,
W. Edwin Jarmain, Edward D. Miller,
Didier Pineau-Valencienne, George J. Sella, Jr.,
Peter J. Tobin, Dave H. Williams, AXA Financial, Inc. and
AXA Group, filed in the Court of Chancery in the State of
Delaware on August 30, 2000
99.31 Complaint of Jerome and Selma Stone against AXA Financial,
Inc., Edward D. Miller, Claude Bebear,
Francoise Colloc'h, Henri de Castries, Jean Steele Chalsty,
Jean-Rene Fourtou, Didier Pineau-Valencienne,
Anthony J. Hamilton, Michael Hegarty, Claus-Michael Dill,
Joseph L. Dionne, John T. Hartley, George J. Sella, Jr.,
Peter J. Tobin, David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and
AXA Group, filed in the Court of Chancery in the State of
Delaware on August 30, 2000
99.32 Complaint of Louis Deranieri against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and
AXA Group, filed in the Court of Chancery in the State of
Delaware on August 30, 2000
99.33 Complaint of Maxine Phillips against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and
AXA Group, filed in the Court of Chancery in the State of
Delaware on August 30, 2000
99.34 Complaint of Ruth Ravnitsky against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene, William Edwin Jarmain,
John H.F. Haskell, Jr. and AXA Group, filed in the Court of
Chancery in the State of Delaware on August 30, 2000
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<C> <S>
99.35 Complaint of Richard Kager against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and
AXA Group, filed in the Court of Chancery in the State of
Delaware on August 30, 2000
99.36 Complaint of Mortimer S. Cohen against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h,
Henri de Castries, Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and AXA
Group, filed in the Court of Chancery in the State of
Delaware on August 31, 2000
99.37 Complaint of Lee Koneche and Scott Spiegel against
AXA Financial, Inc., Edward D. Miller, Claude Bebear,
Francoise Colloc'h, Henri de Castries,
Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and AXA Group,
filed in the Court of Chancery in the State of Delaware on
August 31, 2000
99.38 Complaint of Denver Employees Retirement Plan against AXA
Financial, Inc., Edward D. Miller, Claude Bebear, Francoise
Colloc'h, Henri de Castries, Jean Steele Chalsty, Jean-Rene
Fourtou, Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michel Dill, Joseph L. Dionne, John
T. Martley, George J. Sella, Jr., Peter J. Tobin, David H.
Williams, Donald J. Greene, William Edwin Jarmain, John H.F.
Haskell, Jr. and AXA Group, filed in the Court of Chancery
in the State of Delaware on August 31, 2000
99.39 Complaint of Harry M. Hoffman, IRA Acct. against AXA
Financial, Inc., Edward D. Miller, Claude Bebear,
Francoise Colloc'h, Henri de Castries,
Jean Steele Chalsty, Jean-Rene Fourtou,
Didier Pineau-Valencienne, Anthony J. Hamilton,
Michael Hegarty, Claus-Michael Dill, Joseph L. Dionne,
John T. Hartley, George J. Sella, Jr., Peter J. Tobin,
David H. Williams, Donald J. Greene,
William Edwin Jarmain, John H.F. Haskell, Jr. and AXA Group,
filed in the Court of Chancery in the State of Delaware on
September 1, 2000
99.40 Complaint of Joseph Villari against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h, Henri
de Castries, Jean Steele Chalsty, Jean-Rene Fourtou, Didier
Pineau-Valencienne, Anthony J. Hamilton, Michael Hegarty,
Claus-Michael Dill, Joseph L. Dionne, John T. Hartley,
George J. Sella, Jr., Peter J. Tobin, David H. Williams,
Donald J. Greene, William Edwin Jarmain, John H.F. Haskell,
Jr. and AXA Group, filed in the Court of Chancery in the
State of Delaware on September 1, 2000
99.41 Complaint of Max Boimal against AXA Financial, Inc., Edward
D. Miller, Claude Bebear, Francoise Colloc'h, Henri de
Castries, Jean Steele Chalsty, Jean-Rene Fourtou, Didier
Pineau-Valencienne, Anthony J. Hamilton, Michael Hegarty,
Claus-Michael Dill, Joseph L. Dionne, John T. Hartley,
George J. Sella, Jr., Peter J. Tobin, David H. Williams,
Donald J. Greene, William Edwin Jarmain, John H.F. Haskell,
Jr. and AXA Group, filed in the Court of Chancery in the
State of Delaware on September 8, 2000
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<C> <S>
99.42 Complaint of Jay M. Gottlieb against AXA Financial, Inc.,
Edward D. Miller, Claude Bebear, Francoise Colloc'h, Henri
de Castries, Jean Steele Chalsty, Jean-Rene Fourtou, Didier
Pineau-Valencienne, Anthony J. Hamilton, Michael Hegarty,
Claus-Michael Dill, Joseph L. Dionne, John T. Hartley,
George J. Sella, Jr., Peter J. Tobin, David H. Williams,
Donald J. Greene, William Edwin Jarmain, John H.F. Haskell,
Jr. and AXA Group, filed in the Court of Chancery in the
State of Delaware on September 18, 2000
99.43 Complaint of Harbor Finance Partners, on behalf of itself
and all others similarly situated against AXA Financial,
Inc., AXA Group, Edward D. Miller, Claude Bebear, John S.
Chalsty, Francoise Colloc'h, Henri de Castries,
Claus-Michael Dill, Joseph L. Dionne, Jean-Rene Fourtou,
Donald J. Greene, Anthony J. Hamilton, John T. Hartley, John
H.F. Haskell, Jr., Michael Hegarty, Nina Henderson, W. Edwin
Jarmain, Didier Pineau-Valencienne, George J. Sella, Jr.,
Peter J. Tobin, and Dave H. Williams, filed in the Supreme
Court of the State of New York on September 1, 2000
</TABLE>
------------------------
(1) Incorporated by reference to the Schedule 14D-9C filed by AXA
Financial, Inc. on November 21, 2000.
(2) Incorporated by reference to Exhibit (a)(3) to the Schedule 14D-9C filed by
AXA Financial, Inc. on November 21, 2000.
(3) Incorporated by reference to Form 425 filed by AXA on August 30, 2000.
(4) Incorporated by reference to press release under cover of Schedule 14D-9C
filed by AXA Financial, Inc. on August 30, 2000.
(5) Incorporated by reference to Form 425 filed by AXA on August 30, 2000.
(6) Incorporated by reference to Form 425 filed by AXA on September 12, 2000.
(7) Incorporated by reference to Form 425 filed by AXA on October 18, 2000.
(8) Incorporated by reference to press release under cover of Schedule 14D-9C
filed by the AXA Financial, Inc. on October 18, 2000.
6
