SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report: April 10, 1998
(Date of earliest event reported)
NationsBank Corporation
(Exact name of registrant as specified in its charter)
North Carolina
(State or other jurisdiction of incorporation)
1-6523 56-0906609
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(Commission File Number) (IRS Employer Identification Number)
NationsBank Corporate Center
Charlotte, North Carolina
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(Address of principal executive offices)
28255
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(Zip Code)
Registrant's telephone number, including area code: (704) 386-5000
INFORMATION TO BE INCLUDED IN THE REPORT
The Current Report on Form 8-K dated April 10, 1998 and filed with the
Securities and Exchange Commission on April 17, 1998, is amended to include the
following:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The following consolidated financial statements of BankAmerica
are incorporated herein by reference to Exhibit 99.1 filed herewith:
1. Consolidated Balance Sheet as of December 31, 1997 and 1996.
2. Consolidated Statement of Operations for the years ended December
31, 1997, 1996 and 1995.
3. Consolidated Statement of Cash Flows for the years ended December
31, 1997, 1996 and 1995.
4. Consolidated Statement of Changes in Stockholders' Equity for the
years ended December 31, 1997, 1996 and 1995.
5. Notes to Consolidated Financial Statements.
The Other Events in Item 5 of this Form 8-K should be read in
connection with these consolidated financial statements.
The report of Ernst & Young LLP, independent auditors, on the
consolidated financial statements of BankAmerica as of December 31, 1997 and
1996 and for the three years then ended is filed herewith as part of Exhibit
99.1 and the related consent is filed herewith as Exhibit 99.2. Both the
opinion and consent are incorporated herein by reference.
(b) Pro Forma Financial Information.
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Balance Sheet as of
December 31, 1997 combines the historical consolidated balance sheets of
NationsBank and BankAmerica as if the Reorganization had been effective on
December 31, 1997, after giving effect to certain adjustments described in the
attached Notes to the Unaudited Pro Forma Condensed Financial Information.
NationsBank's acquisition of Boatmen's Bancshares, Inc. ("Boatmen's") was
completed on January 7, 1997 and is reflected in NationsBank's December 31,
1997 historical balance sheet. NationsBank's historical financial statements,
restated to give retroactive effect of the merger of NationsBank with Barnett
Banks, Inc. ("Barnett") on January 9, 1998, are included in NationsBank's
Current Report on Form 8-K filed with the Securities and Exchange Commission
("SEC") on April 15, 1998. BankAmerica's historical financial statements are
incorporated by reference in its Annual Report on Form 10-K for the year ended
December 31, 1997 as filed with the SEC on March 16, 1998. The unaudited Pro
Forma Condensed Financial Information should be read in conjunction with the
historical financial statements of NationsBank and BankAmerica.
The Unaudited Pro Forma Condensed Statements of Income for the years
ended December 31, 1997, 1996 and 1995 present the combined results of
operations of NationsBank and BankAmerica as if the Reorganization had been
effective at January 1, 1995, after giving effect to certain adjustments
described in the attached Notes to the Unaudited Pro Forma Condensed Financial
Information.
The unaudited Pro Forma Condensed Financial Information and
accompanying notes reflect the application of the pooling of interests method of
accounting for the Reorganization. Under this method of accounting, the recorded
assets, liabilities, shareholders' equity, income and expenses of NationsBank
and BankAmerica are combined and reflected at their historical amounts.
The Boatmen's transaction was accounted for using the purchase method
of accounting. Accordingly, the results of operations of Boatmen's have been
included in the NationsBank historical financial statements from the date of
acquisition. Under the purchase method of accounting, the purchase price was
allocated to assets acquired and liabilities assumed based on their estimated
fair values at the closing date of the transaction.
The combined company expects to achieve certain merger benefits in the
form of operating cost savings which may be significant. The pro forma earnings,
which do not reflect any direct costs or potential savings which are expected to
result from the consolidation of operations of NationsBank and BankAmerica, may
not be indicative of the results of future operations. The unaudited pro forma
earnings do not reflect any direct costs or potential savings from the
consolidation of operations of Barnett. No assurances can be given with respect
to the ultimate level of expense savings.
PRO FORMA CONDENSED BALANCE SHEET
(Unaudited)
At December 31, 1997
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NationsBank
Pro Forma BankAmerica
NationsBank BankAmerica Adjustments Combined
----------- ----------- ----------- ----------
(Dollars in Millions)
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ASSETS
Cash and cash equivalents $ 13,781 $ 14,280 $ -- $ 28,061
Time deposits placed 2,501 5,862 -- 8,363
Investment securities 50,604 16,453 -- 67,057
Federal funds sold and securities purchased
under agreements to resell 10,024 9,879 -- 19,903
Trading account assets 23,682 26,480 -- 50,162
Loans, leases and factored accounts receivable,
net of unearned income 176,778 168,104 -- 344,882
Allowance for credit losses (3,277) (3,500) -- (6,777)
---------- ---------- ------- ----------
Loans, leases and factored accounts receivable,
net of unearned income and allowance
for credit losses 173,501 164,604 -- 338,105
---------- ---------- ------- ----------
Premises and equipment, net 4,424 3,880 -- 8,304
Customers' acceptance liability 1,330 3,561 -- 4,891
Intangible assets 11,863 5,925 -- 17,788
Other assets 18,844 9,235 -- 28,079
----------- --------- --------- ---------
Total assets $ 310,554 $ 260,159 $ -- $ 570,713
========== ========= ========= =========
LIABILITIES
Deposits $ 173,643 $ 172,037 $ -- $ 345,680
Borrowed funds 54,383 25,798 -- 80,181
Trading account liabilities 15,207 15,316 -- 30,523
Acceptances outstanding 1,330 3,563 -- 4,893
Accrued expenses and other liabilities 9,649 7,813 800(2) 18,262
Trust preferred securities 2,705 1,873 -- 4,578
Long-term debt 28,890 13,922 -- 42,812
--------- --------- -------- --------
Total liabilities 285,807 240,322 800 526,929
SHAREHOLDERS' EQUITY
Preferred stock 94 614 -- 708
Common stock 9,779 1,210 4,150 (4) 15,139
Additional paid-in capital -- 7,974 (7,974)(4) --
Retained earnings 14,592 13,726 (800)(2) 27,518
Common stock in treasury, at cost -- (3,824) 3,824 (4) --
Other, including loan to ESOP trust 282 137 -- 419
--------- --------- -------- ---------
Total shareholders' equity 24,747 19,837 (800) 43,784
--------- --------- --------- ---------
Total liabilities and shareholders' equity $ 310,554 $ 260,159 $ -- $ 570,713
========= ========= ========= =========
PRO FORMA CONDENSED INCOME STATEMENT
(Unaudited)
For the Year Ended December 31, 1997
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NationsBank
Pro Forma BankAmerica
NationsBank BankAmerica Adjustments Combined
----------- ----------- ----------- ----------
(Dollars in Millions, Except Per Share Amounts)
---------------------------------------------
INTEREST INCOME
Interest and fees on loans and leases $ 15,270 $ 13,932 $ -- $ 29,202
Interest and dividends on securities 2,140 1,123 -- 3,263
Federal funds sold and securities purchased under
agreements to resell 699 817 -- 1,516
Trading account securities 1,352 1,230 -- 2,582
Other interest income 226 415 -- 641
---------- -------- ------- ----------
Total interest income 19,687 17,517 -- 37,204
INTEREST EXPENSE
Deposits 4,891 5,793 -- 10,684
Borrowed funds 2,435 1,676 -- 4,111
Trading account liabilities 678 297 -- 975
Long-term debt 1,966 1,166 -- 3,132
--------- ------- ------ ---------
Total interest expense 9,970 8,932 -- 18,902
--------- ------- ------ ---------
NET INTEREST INCOME 9,717 8,585 -- 18,302
Provision for credit losses 954 950 -- 1,904
--------- ------- ------ ---------
NET CREDIT INCOME 8,763 7,635 -- 16,398
Gains on sales of securities 155 116 -- 271
Noninterest income 5,929 5,952 -- 11,881
Foreclosed properties expense (income) 9 (22) -- (13)
Merger and restructuring charge 374 -- -- 374
Noninterest expense 9,234 8,399 -- 17,633
--------- -------- ----- ---------
INCOME BEFORE INCOME TAXES 5,230 5,326 -- 10,556
Income tax expense 1,898 2,116 -- 4,014
--------- -------- ----- ---------
NET INCOME BEFORE PREFERRED DIVIDENDS 3,332 3,210 -- 6,542
Preferred dividends 11 100 -- 111
--------- -------- ----- ---------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 3,321 $ 3,110 $ -- $ 6,431
========= ========= ======= =========
Basic earnings per share $ 3.53 $ 4.45 $ 3.71
========= ========= =========
Diluted earnings per share $ 3.44 $ 4.32 $ 3.61
========= ========= =========
Average common shares - Basic 941,992 699,189 1,733,194
========= ========= =========
Average common shares - Diluted 967,672 719,777 1,782,172
========= ========= =========
PRO FORMA CONDENSED INCOME STATEMENT
(Unaudited)
For the Year Ended December 31, 1996
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NationsBank
Pro Forma BankAmerica
NationsBank BankAmerica Adjustments Combined
----------- ----------- ----------- ----------
(Dollars in Millions, Except Per Share Amounts)
---------------------------------------------
INTEREST INCOME
Interest and fees on loans and leases $ 13,121 $ 13,412 $ -- $ 26,533
Interest and dividends on securities 1,618 1,160 -- 2,778
Federal funds sold and securities purchased under
agreements to resell 689 682 -- 1,371
Trading account securities 1,228 1,001 -- 2,229
Other interest income 176 453 -- 629
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Total interest income 16,832 16,708 -- 33,540
INTEREST EXPENSES
Deposits 4,246 5,359 -- 9,605
Borrowed funds 2,274 1,430 -- 3,704
Trading account liabilities 653 227 -- 880
Long-term debt 1,435 1,063 -- 2,498
--------- ------- ------ ---------
Total interest expense 8,608 8,079 -- 16,687
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NET INTEREST INCOME 8,224 8,629 -- 16,853
Provision for credit losses 760 885 -- 1,645
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NET CREDIT INCOME 7,464 7,744 -- 15,208
Gains on sales of securities 86 61 -- 147
Noninterest income 4,408 5,302 -- 9,710
Foreclosed properties expense 21 1 -- 22
Merger and restructuring charge 118 280 -- 398
Noninterest expense 7,283 8,053 -- 15,336
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INCOME BEFORE INCOME TAXES 4,536 4,773 -- 9,309
Income tax expense 1,597 1,900 -- 3,497
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NET INCOME PREFERRED DIVIDENDS 2,939 2,873 -- 5,812
Preferred dividends 17 185 -- 202
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NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 2,922 $ 2,688 $ -- $ 5,610
========= ========= ======== =========
Basic earnings per share $ 3.56 $ 3.72 $ 3.42
========= ========= =========
Diluted earnings per share $ 3.50 $ 3.65 $ 3.36
========= ========= =========
Average common shares - Basic 820,945 722,373 1,638,382
========= ========= =========
Average common shares - Diluted 837,706 736,055 1,670,626
========= ========= =========
PRO FORMA CONDENSED INCOME STATEMENT
(Unaudited)
For the Year Ended December 31, 1995
--------------------------------------------------------------
NationsBank
Pro Forma BankAmerica
NationsBank BankAmerica Adjustments Combined
----------- ----------- ----------- ----------
(Dollars in Millions, Except Per Share Amounts)
---------------------------------------------
INTEREST INCOME
Interest and fees on loans and leases $ 12,134 $ 12,760 $ -- $ 24,894
Interest and dividends on securities 1,844 1,276 -- 3,120
Federal funds sold and securities purchased under
agreements to resell 942 650 -- 1,592
Trading account securities 1,100 741 -- 1,841
Other interest income 166 466 -- 632
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Total interest income 16,186 15,893 -- 32,079
INTEREST EXPENSES
Deposits 4,274 4,923 -- 9,197
Borrowed funds 2,858 1,160 -- 4,018
Trading account liabilities 896 182 -- 1,078
Long-term debt 964 1,113 -- 2,077
--------- ------- ------ ---------
Total interest expenses 8,992 7,378 -- 16,370
--------- ------- ------ ---------
NET INTEREST INCOME 7,194 8,515 -- 15,709
Provision for credit losses 505 440 -- 945
--------- ------- ------ ---------
NET CREDIT INCOME 6,689 8,075 -- 14,764
Gains on sales of securities 34 34 -- 68
Noninterest income 3,787 4,459 -- 8,246
Foreclosed properties expense 30 18 -- 48
Merger and restructuring charge -- -- -- --
Noninterest expense 6,670 7,983 -- 14,653
--------- -------- ----- ---------
INCOME BEFORE INCOME TAXES 3,810 4,567 -- 8,377
Income tax expense 1,327 1,903 -- 3,230
--------- -------- ----- ---------
NET INCOME PREFERRED DIVIDENDS 2,483 2,664 -- 5,147
Preferred dividends 24 227 -- 251
--------- -------- ----- ---------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 2,459 $ 2,437 $ -- $ 4,896
========= ========= ===== =========
Basic earnings per share $ 3.18 $ 3.28 $ 3.03
========= ========= =========
Diluted earnings per share $ 3.10 $ 3.24 $ 2.98
========= ========= =========
Average common shares - Basic 773,799 741,963 1,613,404
========= ========= =========
Average common shares - Diluted 800,104 751,112 1,650,062
========= ========= =========
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION
(Shares in Thousands)
NOTE 1 - BASIS OF PRESENTATION
On April 10, 1998, NationsBank entered into an agreement and plan of
Reorganization with BankAmerica. The Reorganization will create a new
Delaware holding company called BankAmerica Corporation which will be
headquartered in Charlotte, North Carolina. Each outstanding share of
BankAmerica common stock will be converted into 1.1316 shares of the new holding
company's common stock and each share of NationsBank's common stock will be
converted into one share of the new company's common stock.
The unaudited Pro Forma Condensed Financial Information has been
prepared assuming that the Reorganization will be accounted for under the
pooling of interests method and is based on the historical consolidated
financial statements of NationsBank and BankAmerica. Certain amounts in the
historical financial statements of BankAmerica have been reclassified to
conform with NationsBank's historical financial statement presentation.
The pro forma adjustments represent management's best estimates based
on available information at this time. Actual adjustments will differ from those
reflected in the unaudited Pro Forma Condensed Financial Information.
NationsBank and BankAmerica are still in the process of reviewing their
respective accounting policies relative to those followed by the other entity.
As a result of this review, it may be necessary to restate certain amounts in
NationsBank's or BankAmerica's financial statements to conform to those
accounting policies that are most appropriate. In management's opinion, any such
restatements will not be material.
On January 9, 1998, NationsBank completed its merger with Barnett
Banks, Inc. (Barnett), headquartered in Jacksonville, Florida, resulting in the
issuance of approximately 233 million shares of NationsBank's common stock. The
transaction was accounted for under the pooling of interests method and
accordingly, the historical financial statements of NationsBank reflect the
merger with Barnett for all periods presented.
On January 7, 1997, NationsBank completed the acquisition of Boatmen's
Bancshares, Inc. (Boatmen's), headquartered in St. Louis, Missouri, resulting in
the issuance of approximately 195 million shares of NationsBank's common stock
valued at $9.4 billion and aggregate cash payments of $371 million to Boatmen's
shareholders. At the acquisition date, Boatmen's total assets and deposits were
approximately $41.2 billion and $32.0 billion, respectively. The acquisition was
accounted for under the purchase method of accounting and, accordingly, is
included in NationsBank's historical financial statements from the date of
acquisition.
The unaudited Pro Forma Condensed Financial Information should be read
in conjunction with the historical consolidated financial statements and the
related notes thereto of each of NationsBank and BankAmerica. NationsBank's
historical financial statements, restated to give retroactive effect of the
merger of NationsBank with Barnett, are included in NationsBank's Current Report
on Form 8-K filed with the SEC on April 15, 1998. BankAmerica's historical
financial statements are incorporated by reference in its Annual Report on Form
10-K for the year ended December 31, 1997 as filed with the SEC on March 16,
1998. The unaudited Pro Forma Condensed Financial Statements should be read in
conjunction with the historical financial statements of NationsBank and
BankAmerica.
NOTE 2 - MERGER AND RESTRUCTURING ITEMS
In connection with the Reorganization, the combined company expects to
incur pre-tax merger and restructuring items of approximately $1.3 billion
($800 million after tax), which will include severance and change in control
expenses, conversion and related costs and occupancy and equipment expenses
(primarily lease exit costs and the elimination of duplicate facilities and
other capitalized assets), exit costs related to contract terminations and other
Reorganization costs (including legal and investment banking fees). The pro
forma adjustments represent management's best estimates based on available
information at this time. Actual adjustments will differ from those reflected
in the unaudited Pro Forma Condensed Financial Information.
NOTE 3 - DIVESTITURES
The combined company anticipates that, to comply with what the Federal
Reserve Board, the Department of Justice and certain state authorities may
require in connection with their review of the Reorganization, certain branches
of NationsBank and BankAmerica will need to be divested in various markets where
each of NationsBank and BankAmerica have a combined share of deposits. The
impact of anticipated branch divestitures on the combined company's financial
condition and results of operations is not expected to be material.
NOTE 4 - SHAREHOLDERS' EQUITY
In conjunction with the Reorganization, a new holding company will be
established called BankAmerica Corporation. Each outstanding share of
BankAmerica common stock will be converted into 1.1316 shares of the new holding
company's common stock and each share of NationsBank's common stock will be
converted into one share of the new company's common stock. NationsBank and
BankAmerica had 943,933 and 688,057 shares of common stock outstanding as of
December 31, 1997, respectively. The common stock in the Unaudited Pro Forma
Condensed Balance Sheet has been adjusted to reflect the reclassification of
BankAmerica's additional paid-in capital and treasury stock to conform to
NationsBank's presentation. Unaudited pro forma retained earnings reflects the
estimated adjustment for anticipated merger and restructuring costs as
described above.
NOTE 5 - OPERATING COST SAVINGS
The combined company expects to achieve a certain level of cost savings
through the optimization of delivery systems, reduction of corporate overhead,
elimination of redundant staff functions, consolidation of business lines, data
processing and back office operations, infrastructure and vendor leverage and
the elimination of certain duplicate or excess facilities. No adjustment has
been included in the unaudited Pro Forma Condensed Financial Information for the
anticipated operating cost savings. There can be no assurance that anticipated
operating cost savings will be achieved in the expected amounts or at the times
anticipated.
(c) Exhibits.
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
99.1 Consolidated Financial
Statements of BankAmerica
Corporation and Report of
Ernst & Young LLP.
99.2 Consent of Ernst & Young LLP.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NationsBank Corporation
Registrant
Date: April 24, 1998 /s/ Marc D. Oken
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Marc D. Oken
Executive Vice President
and Chief Accounting Officer