SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A-2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report: April 10, 1998
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(Date of earliest event reported)
NationsBank Corporation
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(Exact name of registrant as specified in its charter)
North Carolina
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(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
(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 ("SEC") on April 17, 1998, as amended by the
Current Report on Form 8-K/A-1 dated April 10, 1998 and filed with the SEC on
April 24, 1998, is amended to amend and restate Item 7 in its entirety as
follows:
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.
Certain unaudited financial information regarding BankAmerica,
including a Consolidated Balance Sheet as of March 31, 1998, and Consolidated
Statement of Operations, Consolidated Statement of Cash Flows, and Consolidated
Statement of Changes in Stockholders' Equity for the three months ended March
31, 1998 and March 31, 1997, is incorporated herein by reference to Exhibit
99.3.
(b) Pro Forma Financial Information.
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Balance Sheet as of March
31, 1998 combines the historical consolidated balance sheets of NationsBank
Corporation ("NationsBank") and BankAmerica Corporation ("BankAmerica") as if
the Reorganization had been effective on March 31, 1998, after giving effect to
certain adjustments described in the attached Notes to the Unaudited Pro Forma
Condensed Financial Information. 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 SEC on April 16, 1998. In addition,
NationsBank's historical interim financial statements for the three months ended
March 31, 1998 are included in NationsBank's Form 10-Q filed with the SEC on May
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 and its Form 10-Q for the three months
ended March 31, 1998 as filed with the SEC on May 14, 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 three
months ended March 31, 1998 and 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 to the Unaudited Pro Forma Financial Information 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.
NationsBank's acquisition of Boatmen's Bancshares, Inc. ("Boatmen's")
on January 7, 1997, 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 for the years
ended December 31, 1997, 1996 and 1995 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
NATIONSBANK/BANKAMERICA
(UNAUDITED)
AT MARCH 31, 1998
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NATIONSBANK
PRO FORMA BANKAMERICA
NATIONSBANK BANKAMERICA ADJUSTMENTS COMBINED
----------- ----------- ----------- --------
(DOLLARS IN MILLIONS)
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ASSETS
Cash and cash equivalents $ 13,421 $ 14,699 $ (614) (5) $ 27,506
Time deposits placed 1,841 5,737 - 7,578
Investment securities 51,299 15,973 - 67,272
Federal funds sold and securities purchased
under agreements to resell 10,914 12,927 - 23,841
Trading account assets 23,751 30,675 - 54,426
Loans, leases and factored accounts receivable,
net of unearned income 179,486 165,520 - 345,006
Allowance for credit losses (3,245) (3,517) - (6,762)
------ ------ ----- ------
Loans, leases and factored accounts receivable,
net of unearned income and allowance
for credit losses 176,241 162,003 - 338,244
Premises and equipment, net 4,272 3,831 - 8,103
Customers' acceptance liability 1,089 3,374 - 4,463
Intangible assets 11,757 6,032 - 17,789
Other assets 19,918 10,185 - 30,103
------ ------ ----- ------
Total assets $ 314,503 $ 265,436 $ (614) $ 579,325
------------ --------- --------- ------- ---------
LIABILITIES
Deposits $ 170,046 $ 173,890 $ - $ 343,936
Borrowed funds 57,956 28,422 - 86,378
Trading account liabilities 17,991 13,013 - 31,004
Acceptances outstanding 1,089 3,374 - 4,463
Accrued expenses and other liabilities 9,949 10,630 800 (2) 21,379
Trust preferred securities 2,705 2,212 - 4,917
Long-term debt 29,547 14,011 - 43,558
------ ------ ------ -------
Total liabilities 289,283 245,552 800 535,635
SHAREHOLDERS' EQUITY
Preferred stock 91 614 (614) (5) 91
Common stock 10,202 1,210 3,702 (4) 15,114
Additional paid-in capital - 7,994 (7,994) (4) -
Retained earnings 14,724 14,292 (800) (2) 28,216
Common stock in treasury, at cost (4,292) 4,292 (4) -
Other, including loan to ESOP trust 203 66 - 269
----- ----- ---- -----
Total shareholders' equity 25,220 19,884 (1,414) 43,690
------ ------- ------- ------
Total liablities and shareholders' equity $ 314,503 $ 265,436 $ (614) $ 579,325
========= ========= ======= =========
PRO FORMA CONDENSED INCOME STATEMENT
NATIONSBANK/BANKAMERICA
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1998
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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 $ 3,775 $ 3,388 $ - $ 7,163
Interest and dividends on securities 842 283 - 1,125
Federal funds sold and securities purchased under
agreements to resell 176 241 - 417
Trading account securities 356 383 - 739
Other interest income 120 108 - 228
----- ----- ----- -----
Total interest income 5,269 4,403 - 9,672
INTEREST EXPENSE
Deposits 1,203 1,489 - 2,692
Borrowed funds 821 491 - 1,312
Trading account liabilities 194 80 - 274
Long-term debt 521 287 - 808
----- ----- ----- -----
Total interest expense 2,739 2,347 - 5,086
----- ----- ----- -----
NET INTEREST INCOME 2,530 2,056 - 4,586
Provision for credit losses 265 245 - 510
----- ----- ----- -----
NET CREDIT INCOME 2,265 1,811 - 4,076
Gains on sales of securities 152 61 - 213
Noninterest income 1,776 1,752 - 3,528
Foreclosed properties expense (income) 5 (7) - (2)
Merger and restructuring items 900 - - 900
Noninterest expense 2,452 2,256 - 4,708
----- ----- ----- -----
INCOME BEFORE INCOME TAXES 836 1,375 - 2,211
Income tax expense 339 540 - 879
----- ----- ----- -----
NET INCOME BEFORE PREFERRED DIVIDENDS 497 835 - 1,332
Preferred dividends 2 10 - 12
----- ----- ----- -----
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 495 $ 825 $ - $ 1,320
======= ======= ===== =========
Basic earnings per share $ 0.52 $ 1.21 $ 0.77
======= ====== =========
Diluted earnings per share $ 0.51 $ 1.17 $ 0.75
======= ======= =========
Average common shares - Basic (thousands) 949,641 684,737 1,724,489
======= ======= =========
Average common shares - Diluted (thousands) 973,561 706,481 1,773,015
======= ======= =========
PRO FORMA CONDENSED INCOME STATEMENT
NATIONSBANK/BANKAMERICA
(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)
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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 26 - 181
Noninterest income 5,929 6,042 - 11,971
Foreclosed properties expense (income) 9 (22) - (13)
Merger and restructuring items 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 (thousands) 941,992 699,189 1,733,194
======= ======= =========
Average common shares - Diluted (thousands) 967,672 719,777 1,782,172
======= ======= =========
PRO FORMA CONDENSED INCOME STATEMENT
NATIONSBANK/BANKAMERICA
(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)
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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
----- ----- ---- -----
Total interest income 16,832 16,708 - 33,540
INTEREST EXPENSE
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
----- ----- ---- ------
NET INTEREST INCOME 8,224 8,629 - 16,853
Provision for credit losses 760 885 - 1,645
----- ----- ---- ------
NET CREDIT INCOME 7,464 7,744 - 15,208
Gains on sales of securities 86 27 - 113
Noninterest income 4,408 5,336 - 9,744
Foreclosed properties expense 21 1 - 22
Merger and restructuring items 118 280 - 398
Noninterest expense 7,283 8,053 - 15,336
----- ----- ---- ------
INCOME BEFORE INCOME TAXES 4,536 4,773 - 9,309
Income tax expense 1,597 1,900 - 3,497
----- ----- ---- -----
NET INCOME BEFORE PREFERRED DIVIDENDS 2,939 2,873 - 5,812
Preferred dividends 17 185 - 202
----- ----- ---- -----
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 (thousands) 820,945 722,373 1,638,382
======= ======= =========
Average common shares - Diluted (thousands) 837,706 736,055 1,670,626
======= ======= =========
PRO FORMA CONDENSED INCOME STATEMENT
NATIONSBANK/BANKAMERICA
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
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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 $ 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
----- ----- ---- -----
Total interest income 16,186 15,893 - 32,079
INTEREST EXPENSE
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 expense 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 24 - 58
Noninterest income 3,787 4,469 - 8,256
Foreclosed properties expense 30 18 - 48
Merger and restructuring items - - - -
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 BEFORE 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 (thousands) 773,799 741,963 1,613,404
======= ======= =========
Average common shares - Diluted (thousands) 800,104 751,112 1,650,062
======= ======= =========
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION
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 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 of accounting 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,
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 of accounting 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,
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 16, 1998. In addition, NationsBank's
historical interim financial statements for the three months ended March 31,
1998 are included in NationsBank's Form 10-Q filed with the SEC on May 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 and its Form 10-Q for the three months ended
March 31, 1998 as filed with the SEC on May 14, 1998.
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 955 million and 683 million shares of common stock outstanding
as of March 31, 1998, 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 - Preferred Stock Redemption
In April 1998, the Board of Directors of BankAmerica authorized the
redemption of its Series A and Series B Cumulative Adjustable Preferred Stock
(the "Preferred Stock"). All 5,178,000 shares of the Series A Preferred Stock
and 3,546,100 shares of the Series B Preferred Stock will be redeemed at $50.00
per share and $100.00 per share, respectively, on June 29, 1998. The Preferred
Stock has certain voting rights in only specific limited situations and is not
convertible into shares of BankAmerica common stock.
Note 6 - 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.*
99.3 Unaudited Interim Financial
Statements of BankAmerica as of
March 31, 1998 and for the three
months ended March 31, 1998 and
March 31, 1997, incorporated by
reference to pages 2 through 15
of BankAmerica's Quarterly Report
on Form 10-Q, dated May 14, 1998.
* Previously filed.
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: May 18, 1998 /s/ Marc D. Oken
Marc D. Oken
Executive Vice President
and Chief Accounting Officer