SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March 7, 2003 (March 5, 2003)
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ENTERPRISE BANCORP, INC.
(exact name of registrant as specified in charter)
Massachusetts 0-21021 04-3308902
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
222 Merrimack Street 01852
Lowell, Massachusetts (Zip Code)
(address of principal office)
(508) 459-9000
(Registrant's telephone number, including area code)
Item 9. Regulation FD Disclosure.
On March 5, 2003, Massachusetts Governor Mitt Romney signed into law
legislation intended to close a projected $650 million state budget
deficit for the current fiscal year ending on June 30, 2003. The new
law includes, among other revenue enhancing provisions, changes to the
state's tax laws that are applied to banking organizations, such as
the Registrant, on a retroactive basis to include prior tax years back
to the year ended on December 31, 1999. This change in the law affects
the taxation of income earned by the Registrant's real estate
investment trust subsidiary, Enterprise Realty Trust, Inc. ("ERT"),
and as explained further below will result in the Registrant recording
a one-time income tax expense of $2.3 million, net of federal income
tax benefit. This expense will not effect the Registrant's earnings
for the year ended December 31, 2002, but will be included in the
Registrant's first quarter ending on March 31, 2003.
The Registrant is currently engaged in a dispute with the
Massachusetts Department of Revenue (the "DOR") as to whether income
earned by ERT and paid as dividends to the Registrant's banking
subsidiary, Enterprise Bank and Trust Company ("EBTC"), may be
substantially free of state income taxation based on ERT's
qualification as a real estate investment trust and EBTC's ability to
exclude 95% of all dividends received by it from subsidiaries,
including ERT, from state income taxation under applicable
Massachusetts tax law. The retroactive feature of the new law would
require the Registrant to pay the additional taxes that the DOR seeks
to collect for all tax years from 1999 through 2002.
The Registrant believes that it has complied fully with the applicable
Massachusetts tax laws in deducting 95% of the dividends received by
EBTC from ERT in calculating its taxable income for Massachusetts tax
purposes. The registrant also believes that ERT is a properly
qualified real estate investment trust and, as such, owes no taxes to
the Commonwealth of Massachusetts on any amounts that it has paid as
dividends to EBTC in prior years. Moreover, the Registrant has been
advised that the constitutionality of the retroactive changes to the
state's tax laws contained in the recently passed legislation is
questionable.
The $2.3 million one-time income tax expense referred to above
consists of $3.5 million of state income tax liability, net of $1.2
million in federal income tax benefit. The $3.5 million in state
income tax liability consists of the following:
(i) payment to the Commonwealth of Massachusetts of $1.2 million as
estimated state taxes due for the tax year ended December 31,
2002, which amount would be refunded if the Registrant prevails
in its current dispute with the DOR and if the retroactive
feature of the new legislation, as it applies to 2002, is held to
be unconstitutional; and
(ii) a liability for state income taxes to be paid of $2.3 million for
the tax years ended December 31, 2001, 2000 and 1999, which will
become payable to the Commonwealth of Massachusetts if the DOR
prevails in its current dispute with the Registrant or if the
retroactive feature of the new legislation withstands
constitutional challenge.
In addition, the Registrant will record, in 2003 and for the periods
thereafter, state income tax liability on ERT's taxable income.
[Remainder of Page Intentionally Blank]
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENTERPRISE BANCORP, INC.
Date: March 7, 2003 By: /s/John P. Clancy, Jr.
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John P. Clancy, Jr.
President and Treasurer
(Principal Financial Officer)