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 19, 1999
----------------------------
FIRST UNION CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 1-10000 56-0898180
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One First Union Center
Charlotte, North Carolina 28288-0013
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704)374-6565
----------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
Item 5. Other Events.
On March 19, 1999, First Union Corporation (the "Corporation") issued a
news release (the "News Release"). A copy of the News Release is being filed as
Exhibit (99) to this report. The News Release is incorporated herein by
reference.
The News Release contains, among other things, certain forward-looking
statements with respect to the goals, plans, objectives, intentions,
expectations, financial condition, results of operations, future performance and
business of the Corporation, including, without limitation, (i) statements
relating to the Corporation's goals and expectations with respect to (a)
earnings per share, (b) return on equity, and (c) return on assets, and (ii)
statements preceded by, followed by or that include the words "believes",
"expects", "anticipates", "estimates" or similar expressions. These
forward-looking statements involve certain risks and uncertainties that are
subject to change based on various important factors (some of which are beyond
the Corporation's control). The following factors, among others, could cause the
Corporation?s financial performance to differ materially from the goals, plans,
objectives, intentions, and expectations expressed in such forward-looking
statements: (1) the strength of the United States economy in general and the
strength of the local economies in which the Corporation conducts operations and
the strength of international markets in which the Corporation conducts
operations; (2) the effects of, and changes in, trade, monetary and fiscal
policies and laws, including interest rate policies of the Board of Governors of
the Federal Reserve System; (3) inflation, interest rate, market and monetary
fluctuations (including global markets and international monetary fluctuations);
(4) the timely development and acceptance of new products and services of the
Corporation and the perceived overall value of these products and services by
users, including their features, pricing and quality compared to competitors'
products and services, and vice versa; (5) the willingness of users to
substitute competitors' products and services for the Corporation's products and
services; (6) the success of the Corporation in gaining regulatory approval of
its products and services, when required; (7) the impact of changes in financial
services' laws and regulations (including laws concerning taxes, banking,
securities and insurance); (8) technnological changes, including the impact of
the Year 2000 computer systems problem; (9) changes in consumer spending and
saving habits; (10) the impact of acquisitions on the Corporation, including the
success of the Corporation in fully realizing or realizing within the expected
time frame expected cost savings and/or revenue enhancements; (11) the impact of
changes in accounting policies by the Securities and Exchange Commission; and
(12) the success of the Corporation at managing the risks involved in the
foregoing. Additional information with respect to factors that may cause actual
results to differ materially from those contemplated by such forward-looking
statements is included in the reports filed by the Corporation with the
Securities and Exchange Commission.
The Corporation cautions that the foregoing list of important factors is
not exclusive, and neither such list nor any such forward-looking statement
takes into account the impact that any future acquisitions may have on the
Corporation and any such forward-looking statement. In addition, the Corporation
does not intend to update any forward-looking statement, whether written or
oral, relating to the matters discussed in the News Release or herein.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
(99) The News Release.
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.
FIRST UNION CORPORATION
Date: March 19, 1999 By: /s/ Kent S. Hathaway
-------------------------
Name: Kent S. Hathaway
Title: Senior Vice President
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
(99) The News Release.
Friday Media Contact: Mary Eshet
March 19, 1999 704-383-7777 (office)
704-366-6492 (home)
Investor Contact: Alice Lehman
704-374-4139 (office)
FIRST UNION DESCRIBES RESTRUCTURING PLAN AND REAFFIRMS EARNINGS
OUTLOOK FOR 1999
CHARLOTTE - First Union Corporation (NYSE:FTU) today reaffirmed its outlook for
earnings of approximately $4.00 per share for 1999, excluding merger-related and
restructuring charges and non-recurring gains. The restructuring plan is
expected to produce pre-tax cost savings of approximately $400 million for 1999.
Operating expenses for the year are estimated at $8.2 billion, 3 percent higher
than in 1998.
Management has taken decisive action to reduce operating expenses and to
position the organization for strong current as well as future performance. Over
the past four years the company has invested heavily in the establishment of new
revenue-producing products, services and distribution channels. Expenses in
non-core businesses and non-revenue producing functions will be reduced through
the restructuring in order to continue significant investment in high growth
businesses such as Capital Markets, Capital Management and the retail delivery
network. As a result, the company does not expect the restructuring plan to
adversely affect its revenue growth.
1999 EARNINGS OUTLOOK
First Union expects income excluding merger-related and restructuring charges
and non-recurring gains of approximately $4.00 per share for the year.
Operating earnings, which exclude merger-related and restructuring charges, are
expected to be in the range of $.99 to $1.01 per share in the first quarter.
Excluding both non-recurring gains of $.12 and merger-related and restructuring
charges of $.25, first quarter earnings per share are expected to be in the
range of $.87 to $.89. Earnings per share for subsequent quarters of the year,
which are expected to be significantly stronger than in the first quarter, will
be fueled by the positive impact of the restructuring plan on operating
expenses; momentum in Capital Markets and Capital Management revenues;
increasing net interest income from loan growth; and the cumulative positive
effect of First Union's share repurchase program.
--MORE--
FIRST UNION DESCRIBES RESTRUCTURING PLAN - PAGE 2
Excluding both merger-related and restructuring charges and non-recurring gains,
income of $4.00 per share for 1999 would produce a return on shareholders equity
of 23 percent and a return on assets of 1.68 percent, both of which would be the
highest in the company's history and substantially higher than current industry
averages.
The company expects to take merger-related and restructuring charges of
approximately $380 million pretax ($250 million after tax, or $.25 per share) in
the first quarter. The components of the restructuring charges include $200
million related to personnel, $60 million for equipment, $50 million for real
estate, $23 million related to exiting the indirect auto finance business and
$17 million for contract terminations and other actions, as well as
approximately $30 million of final charges related to the CoreStates merger.
Varying tax rates apply to the restructuring charges.
The restructuring charges will be largely offset by year-end by non-recurring
gains totaling approximately $375 million pretax ($250 million after tax, or
$.25 per share). The gains include an estimated $180 million pretax ($120
million after tax, or $.12 per share) on the previously announced sale of First
Union's interest in Electronic Payment Systems in the first quarter, as well as
an estimated $120 million pretax ($80 million after tax, or $.08 per share) from
the sale of factoring assets expected to occur in the second quarter and an
estimated $75 million pretax ($50 million after tax, or $.05 per share) from the
sale of other assets later in the year.
The restructuring plan includes a workforce reduction of approximately 5,850
positions or 7 percent of First Union's current workforce of about 79,000
employees.
First Union Corporation is a leading provider of financial services to more than
16 million retail and corporate customers throughout the East Coast and the
nation. First Union is the nation's sixth largest bank holding company, based on
assets of $237 billion as of December 31, 1998. The company operates full
service banking offices in Connecticut, Delaware, Florida, Georgia, Maryland,
New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee,
Virginia, and Washington D.C.
This news release contains various forward-looking statements. A discussion of
various factors, including factors beyond the company's control, that could
cause First Union's results to differ materially from those expressed in such
forward-looking statements is included in First Union's Current Reports on Form
8-K, dated March 19, 1999 and January 26, 1999, filed with the Securities and
Exchange Commission.