1
EXHIBIT 2.1
[US BANCORP LOGO(R)]
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
U.S. BANCORP
The merger transaction between the former U.S. Bancorp ("old U.S. Bancorp")
and Firstar Corporation ("Firstar") was completed on February 27, 2001, with the
combined company retaining the U.S. Bancorp name (hereinafter referred to as
"U.S. Bancorp"). Shareholders of the old U.S. Bancorp received 1.265 shares of
common stock of U.S. Bancorp for each share of old U.S. Bancorp stock they held
and Firstar shareholders received one share of common stock of U.S. Bancorp for
each share of Firstar stock they held.
The unaudited pro forma combined selected financial data of U.S. Bancorp
for the most recent five years ended December 31, 2000 is shown on page 2. Pages
3 through 7 present the unaudited pro forma combined financial information and
explanatory notes of U.S. Bancorp as of December 31, 2000 and for the years
ended December 31, 2000, 1999 and 1998. The unaudited pro forma combined
selected financial data, financial information and explanatory notes are
presented to show the impact of the merger on U.S. Bancorp's historical
financial positions and results of operations under the pooling-of-interests
method of accounting. Under this method, the recorded assets, liabilities,
shareholders' equity, income and expenses of both companies are combined and
reflected at their historical amounts. The unaudited pro forma combined selected
financial data of U.S. Bancorp gives effect to the merger as if the merger had
been consummated at the beginning of the earliest period presented. The
unaudited pro forma combined balance sheet of U.S. Bancorp as of December 31,
2000 assumes the merger was consummated on that date. The unaudited pro forma
combined statements of income of U.S. Bancorp give effect to the merger as if
the merger had been consummated at the beginning of the earliest period
presented.
The unaudited pro forma combined balance sheet of U.S. Bancorp as of
December 31, 2000 reflects the effect of an estimated non-recurring pre-tax
merger related charge of $800 million, as the underlying plans and actions have
been substantially finalized. See note 3 on page 7 for additional information
regarding this item. U.S. Bancorp presents net income, and the corresponding per
share calculations, excluding merger charges and other nonrecurring items
("adjusted net income") in order to enhance the understanding and assessment of
results of operations by highlighting net income attributable to normal,
recurring operations of the business. Adjusted net income should not be viewed
as a substitute for net income determined in accordance with GAAP. Furthermore,
U.S. Bancorp's definition of "merger related charges and other nonrecurring
items" may differ from that used by other companies. The table below shows net
income, calculated in accordance with GAAP, and the corresponding per share
calculations. It also presents adjusted net income and the corresponding per
share calculations.
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA) 2000 1999 1998 1997 1996
---------------------------------------- -------- -------- -------- -------- --------
IN ACCORDANCE WITH GAAP:
Net Income........................................... $2,875.6 $2,381.8 $2,132.9 $1,599.2 $1,918.6
Basic EPS............................................ 1.51 1.25 1.12 0.87 1.03
Diluted EPS.......................................... 1.50 1.23 1.10 0.85 1.01
EXCLUDING MERGER RELATED CHARGES AND OTHER
NONRECURRING ITEMS:
Adjusted net income.................................. $3,106.9 $2,799.0 $2,519.3 $2,124.0 $1,966.6
Adjusted basic EPS................................... 1.63 1.47 1.33 1.15 1.06
Adjusted diluted EPS................................. 1.62 1.45 1.31 1.13 1.04
-------- -------- -------- -------- --------
U.S. Bancorp expects to achieve substantial benefits as a result of the
merger, including reduced operating expenses. No assurances can be given with
respect to the ultimate level of financial benefits to be realized, if any. The
combined pro forma earnings do not reflect anticipated financial expenses or
benefits that may accrue as a result of the merger. The combined pro forma
information is not indicative of the results of future operations, nor does it
necessarily reflect what the historical results of U.S. Bancorp would have been
had Firstar and the old U.S. Bancorp been combined during the periods presented.
The combined pro forma information is based on historical financial information
that has been presented in prior filings of Firstar and the old U.S. Bancorp
with the Securities and Exchange Commission (the "SEC").
These pages are included as Item 7 in Form 8-K Current Report filed with
the SEC on March 12, 2001. Additional copies are available by requesting a copy
of this Form 8-K Current Report filed with the SEC (without exhibits) by
contacting Investor Relations, U.S. Bancorp at 601 Second Avenue South,
Minneapolis, Minnesota 55402-4302. Form 8-K Current Report is also available by
visiting the U.S. Bancorp web site at WWW.USBANCORP.COM and clicking on
Investor/Shareholder Information then SEC Filings.
2
U.S. BANCORP
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------ ------------ ------------ ----------- -----------
RESULTS OF OPERATIONS
Interest income (fte).................... $ 12,313,205 $ 10,794,708 $ 10,570,848 $ 9,923,799 $ 9,287,780
Interest expense......................... 6,028,340 4,794,566 4,863,367 4,391,372 3,989,361
------------ ------------ ------------ ----------- -----------
Net interest income (fte)................ 6,284,865 6,000,142 5,707,481 5,532,427 5,298,419
Noninterest income....................... 4,764,707 4,161,271 3,621,951 2,715,415 2,763,223
------------ ------------ ------------ ----------- -----------
Net revenue.............................. 11,049,572 10,161,413 9,329,432 8,247,842 8,061,642
Noninterest expense...................... 5,654,701 5,572,749 5,374,116 4,917,046 4,491,076
Provision for loan losses................ 892,443 718,301 543,790 664,427 447,300
------------ ------------ ------------ ----------- -----------
Pretax net income........................ 4,502,428 3,870,363 3,411,526 2,666,369 3,123,266
Net income............................... $ 2,875,619 $ 2,381,818 $ 2,132,850 $ 1,599,216 $ 1,918,571
PER SHARE DATA:
Basic EPS................................ $ 1.51 $ 1.25 $ 1.12 $ 0.87 $ 1.03
Diluted EPS.............................. $ 1.50 $ 1.23 $ 1.10 $ 0.85 $ 1.01
------------ ------------ ------------ ----------- -----------
AVERAGE BALANCES:
Loans.................................... $118,663,241 $109,833,950 $102,652,396 $95,313,976 $88,046,126
Loans held for sale...................... 1,250,453 1,427,454 1,162,187 383,909 376,723
Investment securities.................... 17,816,780 19,804,145 21,589,707 19,571,828 19,777,743
Short-term investments................... 4,084,827 3,208,424 2,634,722 1,902,944 1,971,141
------------ ------------ ------------ ----------- -----------
Total interest-earning assets............ 141,815,301 134,273,973 128,039,012 117,172,657 110,171,733
Total assets............................. 158,481,084 150,166,533 142,887,191 129,493,443 121,967,374
Non-interest bearing deposits............ 23,819,589 23,555,639 23,011,139 20,983,720 19,881,441
Interest-bearing deposits................ 79,605,369 76,364,563 75,927,767 72,338,107 69,905,470
------------ ------------ ------------ ----------- -----------
Total deposits........................... 103,424,958 99,920,202 98,938,906 93,321,827 89,786,911
Short-term borrowings.................... 12,586,294 11,706,562 11,102,227 11,791,480 12,212,361
Long-term debt........................... 23,930,059 21,759,999 17,132,551 10,442,536 6,477,070
Shareholders' equity..................... 14,365,417 13,220,687 12,383,542 10,882,200 10,658,612
------------ ------------ ------------ ----------- -----------
RATIOS:
Return on average assets................. 1.81% 1.59% 1.49% 1.23% 1.57%
Return on average common equity.......... 20.02% 18.02% 17.22% 14.70% 18.00%
Net interest margin...................... 4.43% 4.47% 4.46% 4.72% 4.81%
Noninterest expense to net revenue....... 51.18% 54.84% 57.60% 59.62% 55.71%
Average equity to average total assets... 9.06% 8.80% 8.67% 8.40% 8.74%
------------ ------------ ------------ ----------- -----------
EXCLUDING MERGER RELATED CHARGES AND
OTHER NONRECURRING ITEMS*
Adjusted net income...................... $ 3,106,920 $ 2,798,969 $ 2,519,307 $ 2,123,993 $ 1,966,561
Return on average assets................. 1.96% 1.86% 1.76% 1.64% 1.61%
Return on average common equity.......... 21.63% 21.17% 20.34% 19.66% 18.70%
Noninterest expense to net revenue....... 48.02% 49.60% 51.24% 51.94% 54.07%
------------ ------------ ------------ ----------- -----------
RECONCILIATION OF ADJUSTED NET INCOME TO
NET INCOME
Adjusted net income...................... $ 3,106,920 $ 2,798,969 $ 2,519,307 $ 2,123,993 $ 1,966,561
Merger-related and restructuring
charges................................ (348,695) (540,363) (631,692) (653,333) (248,818)
Merger-related and restructuring gains... 48,051 235,800
SAIF Assessment.......................... (27,907)
Applicable income taxes.................. 117,394 123,212 197,184 128,556 (7,065)
------------ ------------ ------------ ----------- -----------
Net income............................... $ 2,875,619 $ 2,381,818 $ 2,132,850 $ 1,599,216 $ 1,918,571
============ ============ ============ =========== ===========
- -------------------------
* Items in this section have been adjusted for merger related charges,
restructuring charges and the one-time SAIF assessment in 1996. The
presentation of adjusted net income and related ratios, excluding "merger
related charges and other nonrecurring items" as determined by Firstar and the
old U.S. Bancorp, is intended to enhance the understanding and assessment of
results of operations by highlighting net income attributable to normal,
recurring operations of the business. Adjusted net income should not be viewed
as a substitute for net income determined in accordance with GAAP.
Furthermore, Firstar's and the old U.S. Bancorp's definition of "merger
related charges and other nonrecurring items" may differ from that used by
other companies.
(fte)=fully taxable equivalent basis.
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3
U.S. BANCORP
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AT DECEMBER 31, 2000
(DOLLARS IN THOUSANDS)
FIRSTAR PRO FORMA PRO FORMA
CORPORATION U.S. BANCORP ADJUSTMENTS U.S. BANCORP
----------- ------------ ----------- ------------
ASSETS:
Cash and due from banks................... $ 4,332,584 $ 4,142,000 $ -- $ 8,474,584
Money market investments.................. 200,276 457,000 657,276
Trading securities........................ -- 753,000 753,000
Investment securities:
Available-for-sale................... 13,613,909 4,282,000 17,895,909
Held-to-maturity..................... 251,580 -- 251,580
----------- ----------- --------- ------------
Total investment securities........ 13,865,489 4,282,000 -- 18,147,489
Loans:
Commercial loans..................... 19,240,653 34,016,000 53,256,653
Real estate loans.................... 17,110,872 17,136,000 34,246,872
Retail loans......................... 17,354,315 17,939,000 35,293,315
----------- ----------- --------- ------------
Total loans........................ 53,705,840 69,091,000 -- 122,796,840
Allowance for loan losses................. 720,083 1,067,000 1,787,083
----------- ----------- --------- ------------
Net loans....................... 52,985,757 68,024,000 -- 121,009,757
Loans held for sale....................... 713,023 -- 713,023
Premises and equipment.................... 979,443 857,000 (103,000) 1,733,443
Intangible assets......................... 2,013,235 3,296,000 5,309,235
Other assets.............................. 2,495,085 5,525,000 8,020,085
----------- ----------- --------- ------------
Total assets....................... $77,584,892 $87,336,000 $(103,000) $164,817,892
=========== =========== ========= ============
LIABILITIES:
Deposits:
Noninterest-bearing deposits............ $10,979,702 $15,653,000 $ -- $ 26,632,702
Interest-bearing deposits............... 45,298,229 37,604,000 82,902,229
----------- ----------- --------- ------------
Total deposits..................... 56,277,931 53,257,000 -- 109,534,931
Short-term borrowings..................... 9,024,379 2,809,000 11,833,379
Long-term debt............................ 3,430,758 18,566,000 21,996,758
Trust preferred securities................ 445,835 950,000 1,395,835
Other liabilities......................... 1,877,659 3,114,000 424,000 5,415,659
----------- ----------- --------- ------------
Total liabilities.................. 71,056,562 78,696,000 424,000 150,176,562
SHAREHOLDERS' EQUITY:
Common stock.............................. 9,844 948,000 (938,823) 19,021
Surplus................................... 1,863,910 1,473,000 81,555 3,418,465
Retained earnings......................... 5,321,832 6,336,000 (527,000) 11,130,832
Treasury stock, at cost................... (747,836) (132,000) 857,268 (22,568)
Accumulated other comprehensive income.... 80,580 15,000 95,580
----------- ----------- --------- ------------
Total shareholders' equity......... 6,528,330 8,640,000 (527,000) 14,641,330
----------- ----------- --------- ------------
Total liabilities and shareholders'
equity.......................... $77,584,892 $87,336,000 $(103,000) $164,817,892
=========== =========== ========= ============
The accompanying notes are an integral part of the unaudited pro forma financial
information.
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4
U.S. BANCORP
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 2000
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
FIRSTAR PRO FORMA PRO FORMA
CORPORATION U.S. BANCORP ADJUSTMENTS U.S. BANCORP
----------- ------------ ----------- ------------
INTEREST INCOME:
Interest and fees on loans................... $4,475,880 $6,162,000 $ -- $10,637,880
Interest and fees on loans held for sale..... 98,510 -- 98,510
Interest on investment securities............ 895,315 284,700 1,180,015
Interest on money market investments......... 21,792 260,400 282,192
---------- ---------- --------- -----------
Total interest income................. 5,491,497 6,707,100 -- 12,198,597
INTEREST EXPENSE:
Interest on deposits......................... 1,950,936 1,667,900 3,618,836
Interest on short-term borrowings............ 548,128 233,600 781,728
Interest on long-term debt................... 293,476 1,334,300 1,627,776
---------- ---------- --------- -----------
Total interest expense................ 2,792,540 3,235,800 -- 6,028,340
---------- ---------- --------- -----------
Net interest income................ 2,698,957 3,471,300 -- 6,170,257
Provision for loan losses.................... 222,443 670,000 892,443
---------- ---------- --------- -----------
Net interest income after provision
for loan losses.................. 2,476,514 2,801,300 -- 5,277,814
NONINTEREST INCOME:
Trust income................................. 452,323 473,900 926,223
Mortgage banking income...................... 164,822 -- 164,822
Service charges on deposits.................. 215,465 469,300 684,765
Credit card and ATM income................... 180,239 723,200 903,439
Investment products fees and commissions..... 23,008 359,100 382,108
Investment banking revenue................... -- 356,300 356,300
Trading account profits and commissions...... -- 252,500 252,500
All other income............................. 469,330 617,100 1,086,430
Investment securities gains, net............. 1,120 7,000 8,120
---------- ---------- --------- -----------
Total noninterest income.............. 1,506,307 3,258,400 -- 4,764,707
NONINTEREST EXPENSE:
Salaries..................................... 726,840 1,677,000 2,403,840
Pension and other employee benefits.......... 90,977 279,000 369,977
Equipment expense............................ 140,776 167,400 308,176
Occupancy expense -- net..................... 159,995 236,900 396,895
Goodwill and other intangible assets......... 121,836 235,500 357,336
All other expense............................ 528,482 941,300 1,469,782
Merger related expenses...................... 287,395 61,300 348,695
---------- ---------- --------- -----------
Total noninterest expense............. 2,056,301 3,598,400 -- 5,654,701
---------- ---------- --------- -----------
INCOME BEFORE TAX............................ 1,926,520 2,461,300 -- 4,387,820
Income tax................................... 642,901 869,300 1,512,201
NET INCOME................................... $1,283,619 $1,592,000 $ -- 2,875,619
========== ========== ========= ===========
PER SHARE:
Basic earnings per common share.............. $ 1.33 $ 2.14 $ 1.51
Diluted earnings per common share............ 1.32 2.13 1.50
Average common shares -- basic (thousands)... 963,503 745,100 1,906,055
Average common shares -- diluted
(thousands)................................ 972,482 747,900 1,918,576
The accompanying notes are an integral part of the unaudited pro forma financial
information.
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5
U.S. BANCORP
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
FIRSTAR PRO FORMA PRO FORMA
CORPORATION U.S. BANCORP ADJUSTMENTS U.S. BANCORP
----------- ------------ ----------- ------------
INTEREST INCOME:
Interest and fees on loans.................... $3,968,923 $5,208,600 $ -- $9,177,523
Interest and fees on loans held for sale...... 102,685 -- 102,685
Interest on investment securities............. 921,807 307,900 1,229,707
Interest on trading securities................ 6,377 -- 6,377
Interest on money market investments.......... 21,920 160,200 182,120
---------- ---------- --------- ----------
Total interest income.................. 5,021,712 5,676,700 -- 10,698,412
INTEREST EXPENSE:
Interest on deposits.......................... 1,678,839 1,291,200 2,970,039
Interest on short-term borrowings............. 368,252 214,100 582,352
Interest on long-term debt.................... 331,475 910,700 1,242,175
---------- ---------- --------- ----------
Total interest expense................. 2,378,566 2,416,000 -- 4,794,566
---------- ---------- --------- ----------
Net interest income................. 2,643,146 3,260,700 -- 5,903,846
Provision for loan losses..................... 187,301 531,000 718,301
---------- ---------- --------- ----------
Net interest income after provision
for loan losses................... 2,455,845 2,729,700 -- 5,185,545
NONINTEREST INCOME:
Trust income.................................. 427,346 459,700 887,046
Mortgage banking income....................... 151,736 -- 151,736
Service charges on deposits................... 181,348 434,600 615,948
Credit card and ATM income.................... 151,274 603,100 754,374
Investment products fees and commissions...... 41,153 347,700 388,853
Investment banking revenue.................... -- 245,400 245,400
Trading account profits and commissions....... -- 215,900 215,900
All other income.............................. 434,952 453,600 888,552
Investment securities gains/(losses) - net.... 14,762 (1,300) 13,462
---------- ---------- --------- ----------
Total noninterest income............... 1,402,571 2,758,700 -- 4,161,271
NONINTEREST EXPENSE:
Salaries...................................... 862,092 1,460,900 2,322,992
Pension and other employee benefits........... 137,550 248,400 385,950
Equipment expense............................. 147,821 160,100 307,921
Occupancy expense -- net...................... 167,788 204,600 372,388
Goodwill and other intangible assets.......... 120,831 165,600 286,431
All other expense............................. 539,304 824,900 1,364,204
Merger related and restructuring expenses..... 470,463 62,400 532,863
---------- ---------- --------- ----------
Total noninterest expense.............. 2,445,849 3,126,900 -- 5,572,749
---------- ---------- --------- ----------
INCOME BEFORE TAX............................. 1,412,567 2,361,500 -- 3,774,067
Income tax.................................... 537,249 855,000 1,392,249
---------- ---------- --------- ----------
NET INCOME.................................... $ 875,318 $1,506,500 $ -- $2,381,818
========== ========== ========= ==========
PER SHARE:
Basic earnings per common share............... $ 0.89 $ 2.07 $ 1.25
Diluted earnings per common share............. 0.87 2.06 1.23
Average common shares -- basic (thousands).... 987,488 727,531 1,907,815
Average common shares -- diluted
(thousands)................................. 1,002,754 732,991 1,929,988
The accompanying notes are an integral part of the unaudited pro forma financial
information.
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U.S. BANCORP
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
FIRSTAR PRO FORMA PRO FORMA
CORPORATION U.S. BANCORP ADJUSTMENTS U. S. BANCORP
----------- ------------ ----------- -------------
INTEREST INCOME:
Interest and fees on loans................... $3,928,140 $4,921,800 $ -- $8,849,940
Interest and fees on loans held for sale..... 84,844 -- 84,844
Interest on investment securities............ 1,002,273 366,400 1,368,673
Interest on trading securities............... 8,894 -- 8,894
Interest on money market investments......... 28,037 119,200 147,237
---------- ---------- --------- ----------
Total interest income................. 5,052,188 5,407,400 -- 10,459,588
INTEREST EXPENSE:
Interest on deposits......................... 1,843,674 1,391,000 3,234,674
Interest on short-term borrowings............ 381,985 212,700 594,685
Interest on long-term debt................... 290,908 743,100 1,034,008
---------- ---------- --------- ----------
Total interest expense................ 2,516,567 2,346,800 -- 4,863,367
---------- ---------- --------- ----------
Net interest income................ 2,535,621 3,060,600 -- 5,596,221
Provision for loan losses.................... 164,790 379,000 543,790
---------- ---------- --------- ----------
Net interest income after provision
for loan losses.................. 2,370,831 2,681,600 -- 5,052,431
NONINTEREST INCOME:
Trust income................................. 375,258 413,000 788,258
Mortgage banking income...................... 202,590 -- 202,590
Service charges on deposits.................. 177,762 406,000 583,762
Credit card and ATM income................... 130,535 574,800 705,335
Investment products fees and commissions..... 44,862 229,700 274,562
Investment banking revenue................... -- 100,400 100,400
Trading account profits and commissions...... -- 118,100 118,100
All other income............................. 417,814 402,000 819,814
Investment securities gains.................. 16,530 12,600 29,130
---------- ---------- --------- ----------
Total noninterest income.............. 1,365,351 2,256,600 -- 3,621,951
NONINTEREST EXPENSE:
Salaries..................................... 953,309 1,210,900 2,164,209
Pension and other employee benefits.......... 172,990 222,300 395,290
Equipment expense............................ 160,737 153,400 314,137
Occupancy expense -- net..................... 169,467 187,400 356,867
Goodwill and other intangible assets......... 114,983 143,700 258,683
All other expense............................ 581,038 710,100 1,291,138
Merger and restructuring expenses............ 377,292 216,500 593,792
---------- ---------- --------- ----------
Total noninterest expense............. 2,529,816 2,844,300 -- 5,374,116
---------- ---------- --------- ----------
INCOME BEFORE TAX............................ 1,206,366 2,093,900 -- 3,300,266
Income tax................................... 400,916 766,500 1,167,416
---------- ---------- --------- ----------
NET INCOME................................... $ 805,450 $1,327,400 $ -- $2,132,850
========== ========== ========= ==========
PER SHARE:
Basic earnings per common share.............. $ 0.83 $ 1.81 $ 1.12
Diluted earnings per common share............ 0.81 1.78 1.10
Average common shares -- basic (thousands)... 970,420 733,898 1,898,801
Average common shares -- diluted
(thousands)................................ 989,085 744,178 1,930,470
The accompanying notes are an integral part of the unaudited pro forma financial
information.
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7
U.S. BANCORP
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
NOTE 1 -- BASIS OF PRESENTATION
The merger transaction between the former U.S. Bancorp ("old U.S. Bancorp")
and Firstar Corporation ("Firstar") was completed on February 27, 2001, with
combined company retaining the U.S. Bancorp name (hereinafter referred to as
"U.S. Bancorp").
The unaudited pro forma combined financial information of U.S. Bancorp has
been prepared under the pooling-of-interests method of accounting and is based
on the historical consolidated financial statements of the two companies. A
review of each company's respective accounting policies is being completed. As a
result of this review, it will be necessary to restate certain amounts in the
financial statements of U.S. Bancorp to conform to those accounting policies
that will be followed. Any such restatements are not expected to be material,
and therefore are not reflected in the unaudited pro forma combined financial
information of U.S. Bancorp.
NOTE 2 -- SHAREHOLDER'S EQUITY
Under the terms of the merger agreement, Firstar shareholders received one
share, and the old U.S. Bancorp shareholders 1.265 shares, of common stock of
U.S. Bancorp for each share of Firstar and old U.S. Bancorp common stock, held
at February 27, 2001, respectively. Old U.S. Bancorp had 752,921,723 shares of
common stock outstanding at February 27, 2001, which was exchanged for
approximately 952,445,980 shares of U.S. Bancorp's common stock. U.S. Bancorp
currently has approximately 1,904,056,390 shares outstanding.
The common stock line item in the unaudited pro forma combined balance
sheet of U.S. Bancorp has been adjusted to reflect the fact that, in connection
with the merger, the par value of shares of U.S. Bancorp was reduced from $1.25
per share to $0.01 per share.
The pro forma treasury stock adjustment reflects the cancellation of shares
held by Firstar, the old U.S. Bancorp or any of their wholly-owned subsidiaries
(except for shares held in trust accounts, managed accounts and the like, or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties (trust account shares) or shares held by Firstar or the old U.S. Bancorp
or any of their subsidiaries in respect of a debt previously contracted (DPC
shares)).
NOTE 3 -- MERGER RELATED CHARGES
In connection with the merger, management estimates U.S. Bancorp will incur
pre-tax merger related charges of approximately $800 to $900 million. These are
currently estimated to include $186 million in employee related costs, $312
million for conversions of systems and consolidation of operations, $103 million
in occupancy and equipment charges (elimination of duplicate facilities and
write-off of equipment) and $199 million in other merger related costs
(including investment banking fees, legal, balance sheet restructuring charges
and other costs). The remaining $100 million of merger related charges
(primarily conversion of systems and consolidation of operations costs) that may
be incurred will be evaluated by management on a cost/benefit analysis basis.
These merger related costs may be incurred if future cost savings or future
revenue enhancements can be derived.
Estimated pre-tax merger related charges of $800 million have been
reflected in the unaudited pro forma combined balance sheet of U.S. Bancorp as
of December 31, 2000, as the underlying plan and actions have been finalized.
However, they are not reflected in the unaudited pro forma combined income
statements of U.S. Bancorp as they are not expected to have a continuing impact
on the operations of U.S. Bancorp.
The estimated pre-tax merger related charge, in connection with this
merger, to be included in the first quarter ending March 31, 2001 is $500
million. This charge includes approximately $180 million of employee related
costs, $9 million of occupancy and equipment charges, $48 million of conversion
costs and $263 million of other merger related charges. It is anticipated that
gains to be recognized in future quarters related to certain divestitures made
in connection with the merger will reduce the other merger related costs to the
estimated $199 million.
7