Exhibit 99(a)
BANK ONE CORPORATION
PRO FORMA FINANCIAL INFORMATION
On April 10, 1998, First Chicago NBD Corporation (the "Corporation" or "FCNBD")
and BANC ONE CORPORATION ("ONE") entered into an Agreement and Plan of
Reorganization as subsequently amended (the "Agreement"), pursuant to which,
subject to the conditions and upon the terms stated therein, the Corporation and
ONE will each merge into a new company, BANK ONE CORPORATION ("BANK ONE"), which
was organized to effect the merger (such mergers, collectively, the "Merger").
In accordance with the Agreement, each share of the common stock, of ONE ("ONE
Common Stock") outstanding immediately prior to the effective time of the Merger
(the "Effective Time") will at the Effective Time be converted into one share of
the common stock of BANK ONE ("BANK ONE Common Stock"), and each share of the
common stock of the Corporation ("FCN Common Stock") outstanding immediately
prior to the Effective Time will at the Effective Time be converted into the
right to receive 1.62 shares of BANK ONE Common Stock. In addition, each share
of the Corporation's Preferred Stock with Cumulative and Adjustable Dividends,
Series B, and Preferred Stock with Cumulative and Adjustable Dividends, Series
C, in each case outstanding immediately prior to the Effective Time, will be
converted into the right to receive one share of a series of corresponding
preferred stock of BANK ONE with substantially the same terms.
Consummation of the transactions contemplated by the Agreement is subject to the
terms and conditions contained in the Agreement, including among other things,
the receipt of approval of the Merger by the respective shareholders of the
Corporation and ONE at meetings of the shareholders of the Corporation and ONE
that are scheduled to take place on September 15, 1998.
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It is anticipated that the Merger will be accounted for as a pooling-of-
interests. The Corporation's stock repurchase program has been rescinded. The
following pro forma financial information giving effect to the Merger, accounted
for as a pooling-of-interests, includes: (i) the unaudited pro forma condensed
combined balance sheet as of June 30, 1998, and (ii) the unaudited pro forma
condensed combined statements of income for the six months ended June 30, 1998
and 1997. The pro forma condensed combined financial statements should be read
in conjunction with the historical consolidated financial statements and notes
thereto of the Corporation and ONE.
The pro forma financial information noted above gives effect to ONE's
acquisition of First Commerce Corporation which was consummated on June 12,
1998. Previously presented unaudited pro forma financial information for the
years ended December 31, 1997, 1996 and 1995 have not been restated to give
effect to ONE's acquisition of First Commerce Corporation as the acquisition is
not material to ONE.
The pro forma financial statements and the notes thereto included in this
Current Report on Form 8-K, and the exhibits hereto, contain certain estimates
and projections regarding the Corporation, ONE and the combined company
following the Merger, including without limitation estimates and projections
relating to the pro forma business and assets of the combined company, the cost
savings, revenue increases, and restructuring charges expected as a result of
the Merger and the expected impact of the transaction on earnings per share of
the constituent corporations. These estimates and projections constitute
forward-looking statements (within the meaning of the Private Securities
Litigation Reform Act of 1995). Forward-looking statements involve risks and
uncertainties which may cause actual results to differ materially from those in
such statements.
Factors that could cause actual results to differ from those discussed in the
forward-looking statements include, but are not limited to, risks and
uncertainties related to the consummation and execution of the contemplated
transaction (including integration
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activities), as well as: (i) the strength of the U.S. economy in general and the
strength of the local economies in which operations are conducted; (ii) 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; (iii) inflation, interest rate, market and monetary
fluctuations; (iv) the timely development of and acceptance of new products and
services and perceived overall value of these products and services by users;
(v) changes in consumer spending, borrowing and saving habits; (vi)
technological changes (including "Year 2000" data systems compliance issues);
(vii) acquisitions and integration of acquired businesses; (viii) the ability to
increase market share and control expenses; (ix) the effect of changes in laws
and regulations (including laws and regulations concerning taxes, banking,
securities and insurance) with which the Corporation, ONE and the combined
company after the Merger, and their respective subsidiaries and competitors,
must comply; (x) the effect of changes in accounting policies and practices, as
may be adopted by the regulatory agencies as well as the Financial Accounting
Standards Board; (xi) changes in the organization, compensation and benefit
plans of the Corporation, ONE and the combined company after the Merger, and
their respective subsidiaries; (xii) the costs and effects of litigation and of
unexpected or adverse outcomes in such litigation; and (xiii) the success of the
Corporation, ONE and the combined company after the Merger at managing the risks
involved in the foregoing.
Such forward-looking statements speak only as of the date on which such
statements are made, and the Corporation undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made to reflect the occurrence of unanticipated events.
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BANK ONE CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1998
(UNAUDITED)
The following pro forma condensed combined balance sheet as of June 30, 1998, is
presented to show the impact on the Corporation's historical financial condition
of the merger with ONE. The Merger has been reflected under the pooling-of-
interests method of accounting.
BANK ONE CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1998
(in millions) Corporation ONE Pro forma Pro forma
(as reported) (as reported) adjustments BANK ONE
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Assets
Cash and due from banks-noninterest bearing............. $ 8,049 $ 8,174 $ 16,223
Short-term investments.................................. 13,570 765 14,335
Trading account assets.................................. 4,128 1,214 5,342
Investment securities:
Securities held to maturity........................ - 691 691
Securities available for sale...................... 12,604 18,357 30,961
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Total securities........................................ 12,604 19,048 31,652
Loans, net of allowance for credit losses............... 70,191 82,683 152,874
Other assets/*/......................................... 11,239 12,135 23,374
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Total assets............................................ $119,781 $124,019 $243,800
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Liabilities
Deposits:
Noninterest bearing................................ 19,800 21,482 41,282
Interest bearing................................... 49,728 63,472 113,200
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Total deposits.......................................... 69,528 84,954 154,482
Short term borrowings................................... 22,541 11,807 34,348
Long term debt.......................................... 10,591 11,656 22,247
Other liabilities....................................... 8,807 4,028 837 13,672
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Total liabilities....................................... 111,467 112,445 837 224,749
Stockholders' Equity
Preferred stock......................................... 190 - 190
Common stock............................................ 320 3,521 (320) 5,852
2,331
Surplus................................................. 1,948 6,772 (1,948) 4,634
(2,138)
Retained earnings....................................... 7,977 1,170 (837) 8,310
Other................................................... (46) 111 - 65
Less: Treasury stock.................................... (2,075) - 2,075 -
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Stockholders' equity............................... 8,314 11,574 (837) 19,051
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Total liabilities and stockholders' equity......... $119,781 $124,019 $ - $243,800
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/*/Includes loans held for sale.
See accompanying notes to pro forma financial information.
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BANK ONE CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
(UNAUDITED)
The following unaudited pro forma condensed combined statements of income are
presented to show the impact on the Corporation's historical results of
operations of the proposed merger with ONE. Such statements assume that the
companies had been combined for each period presented.
BANK ONE CORPORATION
Pro Forma Condensed Combined Statement of Income
For the Six Months Ended June 30, 1998
(in millions, except per share data)
UNAUDITED Corporation ONE Pro Forma
(as reported) (as reported) BANK ONE
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Interest Income
Loans (including fees)........................ $2,961 $4,273 $ 7,234
Securities, including trading................. 440 664 1,104
Other......................................... 374 29 403
---------------- ---------------- ----------------
Total......................................... 3,775 4,966 8,741
Interest Expense
Deposits...................................... 1,120 1,393 2,513
Borrowings.................................... 910 726 1,636
---------------- ---------------- ----------------
Total......................................... 2,030 2,119 4,149
Net Interest Income........................... 1,745 2,847 4,592
Provision for credit losses................... 385 406 791
---------------- ---------------- ----------------
Net Interest Income After
Provision for Credit Losses.................. 1,360 2,441 3,801
Noninterest Income
Credit card fee revenue....................... 468 948 1,416
Deposit fees.................................. 231 394 625
Other......................................... 882 1,121 2,003
---------------- ---------------- ----------------
Total......................................... 1,581 2,463 4,044
Noninterest Expense
Salaries and employee benefits................ 917 1,346 2,263
Other operating expense....................... 842 2,043 2,885
---------------- ---------------- ----------------
Total......................................... 1,759 3,389 5,148
Income Before Income Taxes.................... 1,182 1,515 2,697
Applicable income taxes....................... 391 479 870
---------------- ---------------- ----------------
Net Income.................................... $ 791 $1,036 $ 1,827
---------------- ---------------- ----------------
Common Share Data
Net income
Basic......................................... $ 2.73 $ 1.47 $ 1.56
Diluted....................................... $ 2.68 $ 1.45 $ 1.53
Weighted Average Shares
Basic......................................... 287.8 701.1 1,167.3
Diluted....................................... 292.8 716.0 1,190.4
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See accompanying notes to pro forma financial information.
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BANK ONE CORPORATION
Pro Forma Condensed Combined Statement of Income
For the Six Months Ended June 30, 1997
(in millions, except per share data)
UNAUDITED Corporation ONE Pro Forma
(as reported) (as reported) BANK ONE
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Interest Income
Loans (including fees)........................ $2,885 $4,363 $ 7,248
Securities, including trading................. 357 654 1,011
Other......................................... 352 23 375
--------------------- --------------------- ---------------------
Total......................................... 3,594 5,040 8,634
Interest Expense
Deposits...................................... 1,043 1,387 2,430
Borrowings.................................... 750 741 1,491
--------------------- --------------------- ---------------------
Total......................................... 1,793 2,128 3,921
Net Interest Income........................... 1,801 2,912 4,713
Provision for credit losses................... 367 696 1,063
--------------------- --------------------- ---------------------
Net Interest Income After
Provision for Credit Losses.............. 1,434 2,216 3,650
Noninterest Income
Credit card fee revenue....................... 441 655 1,096
Deposit fees.................................. 221 369 590
Other......................................... 661 697 1,358
--------------------- --------------------- ---------------------
Total......................................... 1,323 1,721 3,044
Noninterest Expense
Salaries and employee benefits................ 851 1,219 2,070
Other operating expense....................... 774 1,978 2,752
--------------------- --------------------- ---------------------
Total......................................... 1,625 3,197 4,822
Income Before Income Taxes.................... 1,132 740 1,872
Applicable income taxes....................... 374 280 654
--------------------- --------------------- ---------------------
Net Income.................................... $ 758 $ 460 $ 1,218
--------------------- --------------------- ---------------------
Common Share Data
Net income
Basic......................................... $ 2.41 $ 0.66 $ 1.01
Diluted....................................... $ 2.37 $ 0.65 $ 0.99
Weighted Average Shares
Basic......................................... 309.4 676.2 1,177.5
Diluted....................................... 315.9 712.4 1,224.1
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See accompanying notes to pro forma financial information.
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BANK ONE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The pro forma information presented is not necessarily indicative of the results
of operations or the combined financial position that would have resulted had
the Merger been consummated at the beginning of the periods indicated, nor is it
necessarily indicative of the results of operations in future periods or the
future financial position of the combined entities. It is anticipated that the
Merger will be consummated in the fourth quarter of 1998. Certain
reclassifications have been included in the unaudited pro forma condensed
combined balance sheet and statements of income to conform statement
presentations.
Note 2. Accounting Policies
The Corporation is still in the process of reviewing its accounting policies in
light of those employed by ONE. As a result of this review, certain conforming
accounting adjustments may be necessary. The nature and extent of such
adjustments have not been determined but are not expected to be significant.
Note 3. Merger-Related Effects
In connection with the Merger, the managements of the Corporation and ONE
estimate that a one-time restructuring charge of approximately $1.25 billion
($837 million after-tax) will be incurred at the time of the consummation of the
Merger. The estimated details of this overall charge have been summarized into
the following components: $800 million in personnel-related items, $350 million
related to facilities and equipment costs, and $100 million of other merger-
related transaction costs. Actions incorporated in the business combination and
restructuring plan are principally targeted for implementation over a 12-18
month period following the effective date of the Merger, currently contemplated
for the
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fourth quarter of 1998. There can be no assurance that the actual restructuring
charge and the details thereof will not differ materially from the foregoing
estimates.
Personnel-related items consist primarily of severance and benefits cost for
separated employees and costs associated with change in control provisions of
the Corporation's stock plans (currently estimated at $200 million). The benefit
package to be made available to certain affected employees has been approved by
management and communicated on a corporate-wide basis. Facilities and equipment
costs include the net cost associated with the closing and divestiture of
identified banking facilities, and from the consolidation of headquarters and
operational facilities. Other merger-related transaction costs include
investment banking fees, registration and listing fees, and various accounting,
legal and other related costs.
These amounts, including the related tax effects, have been reflected in the
Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 1998 and are
not reflected in the Unaudited Pro Forma Condensed Combined Statements of Income
due to their nonrecurring nature.
Note 4. Pro Forma Adjustments
Pro forma adjustments to common shares and surplus at June 30, 1998, reflect the
Merger accounted for as a pooling-of-interests, through the exchange of 466.1
million shares of BANC ONE common stock (using the common exchange ratio of
1.62) for the 287.7 million outstanding common shares of the Corporation.
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The pro forma entry is displayed below (in millions):
Dr. Common Stock (FCNBD) $ 320
Dr. Surplus (FCNBD) 1,948
Cr. Treasury Stock (FCNBD) $2,075
Cr. Common Stock (ONE) 2,331
Dr. Xxxxxxx (ONE) 2,138
Based on management's current estimate of merger- and restructure-related
charges, the following adjustment was made to the pro forma condensed combined
balance sheet as of June 30, 1998.
Dr. Retained Earnings $ 837
Dr. Other Liabilities-Taxes Payable 413
Cr. Other Liabilities-Merger Reserve $1,250
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