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EXHIBIT 99.0
CHEMICAL BANKING CORPORATION
AND THE CHASE MANHATTAN CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(IN MILLIONS)
The following unaudited pro forma combined balance sheet combines the historical
consolidated balance sheets of Chemical Banking Corporation (the "Corporation")
and The Chase Manhattan Corporation ("Chase") giving effect to the merger of the
Corporation and Chase (the "Merger"), which will occur on March 31, 1996 and
will be accounted for as a pooling of interests, as if the Merger had been
effective on December 31, 1995. Certain previously reported balance sheet
amounts for the Corporation and Chase have been reclassified to conform with the
current presentation. The information set forth below should be read in
conjunction with the notes to the pro forma combined financial statements which
describe the pro forma adjustments. The effect of the estimated $1.5 billion
restructuring charge ($925 million net of tax) initially expected to be taken in
connection with the Merger, as well as the effect of anticipated cost savings in
connection with the Merger, have not been reflected in the pro forma combined
balance sheet and statements of income. Since the date of the Merger
announcement, the Corporation has continued to evaluate the costs anticipated to
be incurred in connection with the Merger, as well as the cost savings from the
Merger, and currently anticipates that the merger-related restructuring charge,
as well as the cost savings, will each be higher than originally announced. The
pro forma financial data are not necessarily indicative of the actual financial
position that would have occurred had the Merger been consummated on December
31, 1995 or that may be obtained in the future.
97
CHEMICAL BANKING CORPORATION AND THE CHASE MANHATTAN CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
See Notes to Unaudited Pro Forma Combined Financial Statements.
98
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CHEMICAL BANKING CORPORATION
AND THE CHASE MANHATTAN CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
The following unaudited pro forma combined statements of income, for the years
ended December 31, 1995, 1994 and 1993 combine the historical consolidated
statements of income of the Corporation and Chase giving effect to the Merger,
which will occur on March 31, 1996 and will be accounted for as a pooling of
interests, as if the Merger had been effective as of the beginning of the
periods indicated after giving effect to the pro forma adjustments described in
the notes to the pro forma combined financial statements. Certain previously
reported income statement amounts for the Corporation and Chase have been
reclassified to conform to the new presentation. The effect of the estimated
$1.5 billion restructuring charge ($925 million net of tax) initially expected
to be taken in connection with the Merger, as well as the effect of anticipated
cost savings in connection with the Merger, have not been reflected in the pro
forma combined balance sheet and statements of income. Since the date of the
Merger announcement, the Corporation has continued to evaluate the costs
anticipated to be incurred in connection with the Merger, as well as the cost
savings from the Merger, and currently anticipates that the merger-related
restructuring charge, as well as the cost savings, will each be higher than
originally announced. The pro forma financial data are not necessarily
indicative of the results that actually would have occurred had the Merger
been consummated on the dates indicated or that may be obtained in the future.
99
CHEMICAL BANKING CORPORATION AND THE CHASE MANHATTAN CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
See Notes to Unaudited Pro Forma Combined Financial Statements.
100
CHEMICAL BANKING CORPORATION AND THE CHASE MANHATTAN CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
See Notes to Unaudited Pro Forma Combined Financial Statements.
101
CHEMICAL BANKING CORPORATION AND THE CHASE MANHATTAN CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
See Notes to Unaudited Pro Forma Combined Financial Statements.
102
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(a) The Corporation and Chase are reviewing their accounting policies and as a
result of this review, it may be necessary to restate either the
Corporation's or Chase's financial statements to conform to those
accounting policies that are determined to be most appropriate by the
combined company. While certain restatements of prior periods have been
included in the pro forma combined financial statements included herein,
further restatements may be necessary upon the completion of this review
process.
(b) Transactions between the Corporation and Chase are not material in relation
to the pro forma combined financial statements and therefore intercompany
balances have not been eliminated from the pro forma combined amounts.
(c) The pro forma financial information presented does not give effect to the
planned net repurchase of the Corporation's Common Stock and of Chase's
Common Stock (after giving effect to the issuance of shares by both the
Corporation and Chase under various employee benefit plans) prior to the
consummation of the Merger pursuant to their respective previously
announced buyback programs.
(d) The Corporation and Chase intend to review their combined securities
portfolio to determine the classification of such securities as either
available-for-sale or held-to-maturity in connection with the combined
company's anticipated interest rate risk position. As a result of this
review, certain reclassifications of the combined company's securities
might take place. Any such reclassifications will be accounted for in
accordance with SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities."
(e) Chase's historical financial data reflect the capitalization of computer
software costs. To conform to the Corporation's accounting policy, Chase's
historical financial data have been adjusted on a pro forma basis to
recognize immediately as expense those computer software costs that are
capitalized.
The pro forma adjustment to the balance sheet reflects the unamortized
capitalized computer software costs of $110 million ($68 million net of
tax) as of December 31, 1995. The pro forma adjustment to the statement of
income for each period reflects the net impact of (i) charging to expense
computer software costs that were capitalized during each respective period
less (ii) the elimination of the previously recorded amortization of
capitalized computer software costs.
(f) Chase elected at the time of its adoption of SFAS No. 106 (effective January
1, 1993) to amortize the transition liability for accumulated postretirement
benefits over 20 years, while the Corporation upon its adoption of SFAS No.
106 (effective January 1, 1993) elected to expense its entire transition
liability. To conform with the Corporation's adoption of SFAS No. 106,
Chase's historical financial data have been adjusted on a pro forma basis to
reverse the amortization of Chase's transition liability reflected as a
component of OPEB expense under SFAS 106. Chase's transition liability of
approximately $270 million ($167 million after-tax), net of the $41 million
($25 million after-tax) reversal of amortization expense, has been reflected
in retained earnings on the pro forma consolidated balance sheet. Both the
pre-tax and tax effect are included in the caption "Accounts Payable,
Accrued Expenses and Other Liabilities" on the pro forma balance sheet.
(g) The Merger will be accounted for on a pooling of interests accounting basis
and, accordingly, the related pro forma adjustments to the common stock,
capital surplus and retained earnings accounts at December 31, 1995 reflect
(i) an exchange of 184.5 million shares of the Corporation's common stock
(using the exchange ratio of 1.04) for the 177.4 million shares of Chase
common stock outstanding at December 31, 1995; (ii) the exchange of each
outstanding share of Chase preferred stock into one share of the
Corporation's preferred stock; and (iii) the cancellation and retirement of
all remaining shares of Chase common stock held in Chase's treasury.
Reference is made to the Form 8-K, which the Corporation has filed with the
Securities and Exchange Commission on October 26, 1995, for more
information regarding the Merger.
For the income per share calculations, the pro forma combined average
common shares outstanding (primary and assuming full dilution) reflects the
exchange of the Corporation's common stock (using the exchange ratio of
1.04) for the outstanding shares of Chase common stock.
103