SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240,14a-11(c) orss.14a-12
Zions Bancorporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, If other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0- 11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
ZIONS BANCORPORATION
PROXY STATEMENT SUPPLEMENT
Dear Fellow Shareholders:
The board of Zions Bancorporation is currently soliciting proxies for a
special shareholders meeting at which you will be asked to consider and vote
upon a proposal to adopt a merger agreement providing for a merger of Zions with
First Security Corporation. A proxy statement/prospectus dated February 17, 2000
was mailed to you on or about that date. Subsequent to such mailing, First
Security has publicly announced information relating to its earnings and
revenues for the first quarter of 2000 and our financial advisor has withdrawn
its fairness opinion and advised Zions that it was no longer able to conclude
that the exchange ratio was fair, from a financial point of view, to Zions
shareholders. The purpose of this proxy statement supplement is to inform you of
that information and to update other disclosures in the proxy
statement/prospectus. In order to permit you to consider the information in this
supplement, our special shareholders meeting has been postponed to March 31,
2000.
Your vote is very important. We cannot complete the merger unless our
shareholders adopt the merger agreement at the shareholder meeting.
This proxy statement supplement includes information that supersedes
information contained or incorporated by reference in the proxy
statement/prospectus. You should read this proxy statement supplement in
conjunction with the proxy statement/prospectus. If you require an additional
copy of the proxy statement/prospectus, please call Zions at (801) 524-2395, or
D.F. King & Co., Inc. at (800) 714-3305.
/s/ Harris H. Simmons
Harris H. Simmons
President and Chief Executive Officer
Zions Bancorporation
If you have questions or need assistance in voting your shares, please call
toll free:
D.F. King & Co., Inc.
77 Water Street
New York, NY 10005
1-800-714-3305
The date of this proxy statement supplement is March 15, 2000, and it is
being mailed or otherwise delivered to Zions shareholders on or about such date.
MEETING POSTPONED
The Zions special shareholders meeting has been rescheduled to Friday,
March 31, 2000 at 1:00 p.m., in order to permit Zions shareholders to consider
the information contained in this proxy statement supplement. The meeting will
be held at the Doubletree Hotel, 255 South West Temple, Salt Lake City, Utah
84101.
OPINION OF ZIONS' FINANCIAL ADVISOR
After learning of the information which occasioned the press release
described below under "CHANGES TO INFORMATION IN THE PROXY STATEMENT/ PROSPECTUS
- - First Security Earnings Forecast," Zions consulted with First Security to try
to understand the causes for the revenue decline and net income forecast by
First Security for the first quarter of 2000. Goldman, Sachs & Co., financial
advisor to Zions, participated in those consultations with First Security. When
Zions believed that it had a sufficient understanding of these developments, it
requested Goldman Sachs to consider the impact of these developments, taken
together with all other relevant factors, on Goldman Sachs' fairness opinion.
Goldman Sachs orally advised Zions that, in light of changed circumstances
affecting certain of the assumptions underlying its fairness opinion, that
opinion could no longer be relied upon. In response to a request from Zions to
provide an updated opinion as to the fairness of the exchange ratio to Zions
shareholders, Goldman Sachs stated that it would only provide such an opinion if
Zions would consent to the use of earnings forecasts for both Zions and First
Security for the year 2000 on which Goldman Sachs could rely. Zions consulted
further with First Security, including engaging in discussions in which
representatives of First Security, Goldman Sachs and First Security's financial
advisor, J.P. Morgan, participated. Following that process, on March 9, 2000,
Zions requested Goldman Sachs to render an opinion as to the fairness of the
exchange ratio to the shareholders of Zions taking into account information
described in a letter from Zions to Goldman Sachs. On March 11, Goldman Sachs
advised Zions that it was no longer able to conclude that the exchange ratio was
fair, from a financial point of view, to Zions shareholders. Goldman Sachs
advised Zions that Zions should no longer rely on the February 17, 2000 opinion
expressed by Goldman Sachs to the Zions board or on the analyses described in
the proxy statement/prospectus in connection with that opinion or its June 6,
1999 opinion. A copy of Goldman Sachs' letter to the Zions board is attached as
Appendix A to this supplement, and shareholders are urged to read that letter
carefully. First Security has objected to the disclosure in this proxy statement
supplement of the March 9 Zions letter to Goldman Sachs, so we have not attached
it. See "CHANGES TO INFORMATION IN THE PROXY STATEMENT/ PROSPECTUS -
Confidentiality".
CHANGES TO INFORMATION IN THE PROXY STATEMENT/PROSPECTUS
First Security Earnings Forecast.
On March 3, 2000, First Security issued a press release reporting that
recently updated revenue and income projections indicate a decline in the first
quarter of 2000 from prior period
2
amounts. On a standalone basis, for the first quarter of 2000 First Security is
projecting a decline in revenue of 8% from the fourth quarter of 1999. First
Security reported that it is experiencing a revenue decline in certain business
lines, most notably mortgage banking, as well as margin compression due to the
rising interest rate environment. First Security stated in that announcement
that it believes that its revenue momentum and its funding mix have been
adversely affected by the delay in closing the merger with Zions. First Security
is also experiencing increased charge-offs in its indirect auto and consumer
lending, which it attributes to a temporary systems problem that occurred in
October 1999 when a system enhancement was being installed. This systems problem
has since been corrected, but higher charge-offs are expected to persist through
the first quarter, normalizing for the balance of the year. First Security
indicated that earnings for the quarter on a pre-merger basis will be down some
$.07 to $.09 per share from the reported earnings of $.33 in the fourth quarter
of 1999.
Zions and First Security have previously publicly reported First Security
net income and Zions net income and earnings per share based on Institutional
Brokerage Estimate System median estimates for each company. Based on such
estimates and on estimated cost savings to be achieved in the merger, Zions and
First Security have also publicly reported pro forma combined net income and
earnings per share estimates for 2000 and 2001. That information was disclosed
in a presentation by Zions and First Security to analysts at the time of the
first public announcement of the proposed merger, and the presentation was filed
on a Form 8-K on June 7, 1999, which Form 8-K is incorporated by reference in
the proxy statement/prospectus. Due to the information disclosed by First
Security as described above, Zions no longer believes those estimates are
achievable or likely, and we caution our shareholders not to place any reliance
on those estimates.
First Security Fourth Quarter Earnings Clarification.
On January 19, 2000, First Security announced its earnings for the fourth
quarter of 1999. Among other things, First Security announced that it had net
income of $66.3 million for the fourth quarter, down $1.0 million from the
fourth quarter of 1998, generating earnings per diluted share of $0.33 for the
quarter, which was down $0.02 or 5.7% from the fourth quarter of 1998. First
Security indicated that these decreases in net income and earnings per diluted
share were primarily due to merger related actions and expenses and certain
non-recurring items which reduced earnings per diluted share by approximately
$0.04 during the quarter. This implied a fourth quarter operating earnings per
diluted share of $0.37, or an increase of $0.02 per share from the fourth
quarter of 1998. However, First Security omitted to disclose that it had non-
recurring benefits which Zions believes increased earnings per diluted share for
the 1999 fourth quarter by an amount at least equal to the $0.04 in
non-recurring items that the First Security earnings release indicate had
reduced earnings per diluted share during that quarter.
Valuation of Cross-Ownership Position.
Zions owns 9,457,605 shares of First Security common stock, which shares
are held in Zions' available for sale securities portfolio. Due to the recent
decline in trading values of First Security common stock, and in the event that
the merger is not consummated, Zions will experience unrealized losses with
respect to its shares of First Security common stock when those
3
shares are marked to market at March 31, 2000. Zions currently estimates that,
if the $11.41 last sales price per share in ordinary trading on the Nasdaq
National Market of First Security common stock on March 14, 2000 is in effect on
March 31, 2000, then Zions will have unrealized losses after tax of
approximately $75 million.
Comprehensive Management Incentive Plan.
Under First Security's Comprehensive Management Incentive Plan, First
Security has issued options to acquire First Security common stock to its
officers and other employees. Under the terms of the plan, upon a change of
control, as that term is defined in the plan, each holder of an option will have
the right to elect during the 60-day period following the change of control to
exercise each outstanding option and receive in respect of that option a number
of shares of First Security common stock with a fair market value equal to the
difference between:
o the higher of the merger price and the highest reported sales
price during the 60-day look-back period before the date of
the change of control, and
o the exercise price.
These benefits are in addition to the benefits under the existing change of
control severance agreements in effect between First Security and a number of
its executive officers.
Under the terms of the plan, a change of control includes, among other
things, approval by the First Security stockholders of a merger involving First
Security, even if the merger is never consummated.
The number of shares of First Security common stock issued as a result of
the enhanced exercise rights will vary depending on the difference between the
highest trading price during the 60-day look-back period and the trading price
of First Security common stock at the date the First Security stockholders adopt
the merger agreement. If the difference is greater at the time of the vote, then
more shares will be issued; if the difference is smaller, then fewer shares will
be issued. Using information disclosed in First Security's 1998 Annual Report
and excluding any grants or exercises of options since December 31, 1998, and
based on the $11.41 last sales price per share of First Security common stock on
March 14, 2000 and the $26.25 last sales price per share of First Security
common stock on February 1, 2000, which as of the date of this supplement is the
highest sales price in the 60-day period preceding their scheduled stockholder
meeting, First Security would, upon the accelerated exercise of these options,
be obligated to issue approximately 10 million additional shares of First
Security common stock prior to the reverse stock split to be effected in
connection with the merger, representing approximately 2.5% of the outstanding
shares of First Security common stock expected to be outstanding after the
merger. Of the approximate $150 million value of these options, approximately
$30 million is due to the fact that the options have an exercise price below
$11.41 per share and the balance of approximately $120 million is due to the
60-day look-back feature.
4
Market Price of Common Stock.
As of the close of ordinary trading on the Nasdaq National Market on March
14, 2000, the last sales price per share of Zions common stock was $36.44 and of
First Security Common Stock was $11.41.
Confidentiality.
Section 6.05 of the merger agreement between Zions and First Security
contains a customary confidentiality agreement. First Security has not consented
to the use of confidential information with respect to First Security for
purposes of this supplement.
SOLICITATION OF PROXIES
Zions has retained D.F. King & Co., Inc. to assist Zions in connection with
its communications with its shareholders with respect to, and to provide other
services to Zions in connection with, the special meeting of Zions shareholders.
D.F. King will receive a fee of $20,000 plus $4 per shareholder contact for its
services and reimbursement of out-of-pocket expenses in connection therewith.
Zions has agreed to indemnify D.F. King against certain liabilities arising out
of or in connection with its agreement.
VOTING PROCEDURES
For Shareholders Who Have Already Voted.
We have enclosed a second proxy card (and a return envelope) for your use,
in case you wish to change your vote. If you have already voted your proxy and
you do not wish to change your vote, you do not need to return this second proxy
card. If we receive the enclosed proxy card, duly executed and dated, prior to
the date of the shareholders meeting, any proxy previously granted by you will
be, without further action on your part, revoked. In addition, any proxy granted
to Zions may be revoked before it is exercised by sending a written notice to
the person to whom you submitted your proxy stating that you would like to
revoke your proxy or by voting in person at the special meeting. All written
notices of revocation and other communications with respect to the revocation of
proxies should be addressed to Zions First National Bank, One South Main, Third
Floor, Salt Lake City, Utah 84111, Attention: Corporate Trust. A shareholder
whose shares are held in street name should follow the instructions of his or
her broker regarding revocation of proxies. All shares of Zions common stock
represented by valid proxies received pursuant to this solicitation, and not
revoked before they are exercised, will be voted in the manner specified
therein. If no specification is made, the proxies will be voted in favor of the
matters to be voted upon at the shareholders meeting, but no proxy that has been
voted against approval of adoption of the merger agreement will be voted in
favor of adjournment or postponement of the shareholders meeting for the purpose
of soliciting additional proxies.
5
For Shareholders Who Have Not Already Voted.
Enclosed for your convenience is a duplicate proxy card (and a return
envelope) for your use. You may use either the proxy card which was originally
sent to you, or you may use the second proxy card enclosed herewith. If we
receive the enclosed proxy card, duly executed and dated, prior to the
shareholders meeting, any proxy previously granted by you will be, without
further action, revoked. Any proxy granted to Zions may be revoked before it is
exercised by sending a written notice to the person to whom you submitted your
proxy stating that you would like to revoke your proxy, by submitting a properly
executed proxy of a later date or by voting in person at the special meeting.
All written notices of revocation and other communications with respect to the
revocation of proxies should be addressed to Zions First National Bank, One
South Main, Third Floor, Salt Lake City, Utah 84111, Attention: Corporate Trust.
All shares of Zions common stock represented by valid proxies received pursuant
to this solicitation, and not revoked before they are exercised, will be voted
in the manner specified therein. If no specification is made, the proxies will
be voted in favor of the matters to be voted upon at the shareholders meeting,
but no proxy that has been voted against approval of adoption of the merger
agreement will be voted in favor of adjournment or postponement of the
shareholders meeting for the purpose of soliciting additional proxies.
ADDITIONAL INFORMATION
The proxy statement/prospectus as supplemented by this supplement
incorporates by reference the information contained in the First Security
Current Report on Form 8-K filed on March 3, 2000 and a Zions Current Report on
Form 8-K filed on March 13, 2000 as well as other important business and
financial information about both companies that is not included in or delivered
with the proxy statement/prospectus or this proxy statement supplement. See
"Where You Can Find More Information" on page 85 of the proxy
statement/prospectus.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This supplement contains certain forward-looking statements with respect to
the financial condition, results of operations and business of each of First
Security and Zions. These statements may be made directly in this supplement
referring to First Security or Zions, or may be incorporated in this supplement
by reference to other documents and may include statements regarding the
projected performance of Zions and First Security for the period following the
completion of the merger. You can find many of these statements by looking for
words such as "believes", "expects", "anticipates", "estimates" or similar words
or expressions. These forward- looking statements involve substantial risks and
uncertainties. Some of the factors that may cause actual results to differ
materially from those contemplated by such forward-looking statements include,
but are not limited to, the following possibilities:
o general economic conditions, either nationally or locally in areas
in which Zions and First Security conduct their operations, may be
less favorable than we currently anticipate;
6
o conditions in securities markets may be less favorable than we
currently anticipate; or
o changes in the interest rate environment may reduce interest
margins.
Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such
statements. Zions shareholders are cautioned not to place undue reliance on such
statements, which speak only as of the date of this supplement or the date of
any document incorporated by reference.
All subsequent written and oral forward-looking statements attributable to
Zions or any person acting on its behalf are expressly qualified in their
entirety by the cautionary statements contained or referred to in this section.
Zions does not undertake any obligation to release publicly any revisions to
such forward-looking statements to reflect events or circumstances after the
date of this supplement or to reflect the occurrence of unanticipated events.
7
APPENDIX A
PERSONAL AND CONFIDENTIAL
March 11, 2000
Board of Directors
Zions Bancorporation
One South Main Street
Salt Lake City, Utah 84111
Dear Gentlemen and Madame:
In a March 3, 2000 press release, First Security Corporation ("First Security")
reported a decline in first quarter 2000 revenue and earnings projections from
prior period amounts. The decline anticipated by First Security indicated a
level of first quarter earnings inconsistent with the full year 2000 forecast by
First Security the reasonableness and realization of which we had previously
assumed, with your consent, for the purposes of the fairness opinion dated
February 17, 2000, which was included as Appendix D to the proxy
statement/prospectus of the same date. Subsequently, you requested that we
express a new opinion as to the fairness of the exchange ratio, from a financial
point of view, to your shareholders. We asked for and received revised
information from First Security and from you, and we met with you and First
Security to discuss, among other things, the forecast for First Security's year
2000 earnings. We also updated discussions we had previously held with members
of senior management of Zions Bancorporation and First Security regarding the
strategic rationale for, and the potential benefits of, the contemplated
transaction and the past and current business operations, financial condition
and future prospects of both companies. You consented to our use of a year 2000
forecast for First Security described in your letter to us dated March 9, 2000,
which you noted could differ in some respects from First Security's own
forecast, and you also consented to our use of a forecast developed by you for
your own year 2000 earnings.
Based upon the foregoing and the information previously made available to us,
Goldman, Sachs & Co. has determined that, in view of changes in the relevant
information and circumstances, we are no longer able to conclude that the
exchange ratio is fair, from a financial point of view, to the holders of the
outstanding shares of common stock, without par value, of Zions Bancorporation.
Consequently, you should no longer rely on the opinion expressed in our February
17, 2000 letter to you or on the analyses we presented to you in connection with
that opinion or in connection with our June 6, 1999 opinion.
We request that you take such steps as are necessary to ensure that the
foregoing information is included in the relevant disclosure documents and
filings.
Sincerely,
/s/ Goldman, Sachs & Co.
- ------------------------
GOLDMAN, SACHS & CO.
[X] Please mark
your vote as
this ZIONS BANCORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR SPECIAL MEETING OF SHAREHOLDERS--MARCH 31, 2000
The undersigned shareholder of Zions Bancorporation, a Utah
corporation (the "Company"), acknowledges receipt of the Notice of Special
Meeting of Shareholders and proxy statement/prospectus, dated February 16, 2000,
and the undersigned revokes all other proxies and appoints Harris H. Simmons and
Dale M. Gibbons, and each of them, the attorneys and proxies for the
undersigned, each with full power of substitution, to attend and act for the
undersigned at the Company's Special Meeting of Shareholders at 1:00 p.m.,
local time, March 31, 2000 and at any adjournments or postponements thereof and
in connection therewith to vote and represent all of the shares of the Company's
Common Stock covered by this proxy which the undersigned would be entitled to
vote.
1. Proposal 1. To adopt the Agreement and Plan of Merger, dated as of June
6, 1999, by and between the Company and First Security Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. Each of the
above-named proxies present at said meeting, either in person or by
substitute, shall have and exercise all the powers of said proxies
hereunder.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE CHOICES SPECIFIED BY THE
UNDERSIGNED. IF NO SPECIFICATIONS TO THE CONTRARY ARE INDICATED HEREON, THIS
PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR PROPOSAL 1 AND IN THE
DISCRETION OF THE PROXIES ON ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING. PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE POSTAGE PREPAID
ENVELOPE PROVIDED.
Dated:
-------------------------------
Signature(s)
-------------------------------
NOTE: Please sign exactly as your
name appears hereon. When signing
as attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If shares are held
jointly, each holder should sign.