UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ------------------------
COMMISSION FILE NUMBER 1-9718
THE PNC FINANCIAL SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1435979
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE PNC PLAZA
249 FIFTH AVENUE
PITTSBURGH, PENNSYLVANIA 15222-2707
(Address of principal executive offices)
(Zip Code)
(412) 762-1553
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
By filing this amendment ("Amendment No. 1"), the undersigned
registrant hereby amends its Annual Report on Form 10-K for the year
ended December 31, 1999 ("1999 Form 10-K") to include, as permitted by
Rule 15d-21 under the Securities Exchange Act of 1934 as amended
("Exchange Act") the financial statements and exhibits required by Form
11-K with respect to The PNC Financial Services Group, Inc. Incentive
Savings Plan, as amended, and the PNC Retirement Savings Plan, as
amended. The 1999 Form 10-K is not being amended hereby for any other
purpose.
In accordance with Rule 12b-15 of the Exchange Act, Item 14 of Part IV
of the 1999 Form 10-K is hereby amended and restated to read in its
entirety as follows:
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following report of independent auditors of The PNC Financial
Services Group, Inc. ("Corporation") and consolidated financial
information of the Corporation, included in the 1999 Annual Report to
Shareholders at the page indicated, are incorporated herein by
reference.
PAGE OF
FINANCIAL STATEMENTS ANNUAL REPORT
---------------------------------------------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors 59
Consolidated Statement of Income for the three years ended December 31, 1999 60
Consolidated Balance Sheet as of December 31, 1999 and 1998 61
Consolidated Statement of Shareholders' Equity for the three years ended
December 31, 1999 62
Consolidated Statement of Cash Flows for the three years ended December 31, 1999 63
Notes to Consolidated Financial Statements 64-83
Selected Quarterly Financial Data 84
As permitted by Rule 15d-21 of the Exchange Act, the following
financial statements of The PNC Financial Services Group, Inc.
Incentive Savings Plan, as amended, and the PNC Retirement Savings
Plan, as amended, and reports of independent auditors thereon are
filed with Amendment No. 1 of the 1999 Form 10-K at the page indicated.
PAGE OF
FINANCIAL STATEMENTS AMENDMENT NO. 1
---------------------------------------------------------------------------------------------------------------------
The PNC Financial Services Group, Inc. Incentive Savings Plan
Report of Independent Auditors 6
Statements of Net Assets Available for Benefits 7
Statements of Changes in Net Assets Available for Benefits 8
Notes to Financial Statements 9
Schedule of Assets Held for Investment Purposes at End of Year 20
Schedule of Reportable Transactions 21
The PNC Retirement Savings Plan
Report of Independent Auditors 24
Statements of Net Assets Available for Benefits 25
Statements of Changes in Net Assets Available for Benefits 26
Notes to Financial Statements 27
Schedule of Assets Held for Investment Purposes at End of Year 33
Schedule of Reportable Transactions 34
FINANCIAL STATEMENT SCHEDULES
---------------------------------------------------------------------------------------------------------------------
No financial statement schedules are being filed.
-2-
REPORTS ON FORM 8-K
---------------------------------------------------------------------------------------------------------------------
The following reports on Form 8-K were filed during the quarter ended
December 31, 1999.
Form 8-K dated as of October 20, 1999, filing an earnings release
reporting the Corporation's consolidated financial results for the
three and nine months ended September 30, 1999, and information on the
Corporation's businesses for the nine months ended September 30, 1999
and 1998.
Form 8-K dated October 26, 1999, reporting on entering into an
underwriting agreement with respect to the public offering of
$400,000,000 of 7.50% subordinated notes due 2009 and on the form of
the notes and related guarantee.
EXHIBITS
---------------------------------------------------------------------------------------------------------------------
The exhibits listed on the Exhibit Index on pages 36 and 37 of this
Amendment No. 1 of the 1999 Form 10-K are filed herewith or are
incorporated herein by reference.
-3-
Audited Financial Statements
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Years ended December 31, 1999 and 1998
with Report of Independent Auditors
-4-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Audited Financial Statements
Years ended December 31, 1999 and 1998
CONTENTS
Report of Independent Auditors ................................................6
Audited Financial Statements
Statements of Net Assets Available for Benefits ...............................7
Statements of Changes in Net Assets Available for Benefits ....................8
Notes to Financial Statements .................................................9
Schedules
Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at
End of Year ................................................................20
Schedule H, Line 4j--Schedule of Reportable Transactions .....................21
-5-
Report of Independent Auditors
Administrative Committee
The PNC Financial Services Group, Inc.
Incentive Savings Plan
We have audited the accompanying statements of net assets available for benefits
of The PNC Financial Services Group, Inc. Incentive Savings Plan as of December
31, 1999 and 1998, and the related statements of changes in net assets available
for benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes at end of year as of December 31, 1999, and
reportable transactions for the year ended December 31, 1999, are presented for
purposes of additional analysis and are not a required part of the financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst Young LLP
June 2, 2000
Pittsburgh, Pennsylvania
-6-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Statements of Net Assets Available for Benefits
(In Thousands)
DECEMBER 31
1999 1998
---------------------------
Investments at fair value:
Participant-directed:
Investments in Master Trust $462,989 $376,329
Other participant-directed investments (participant loans) 29,706 32,084
Nonparticipant-directed:
The PNC Financial Services Group, Inc. common stock 460,203 601,431
Other nonparticipant-directed investments -- 17
---------------------------
Total investments 952,898 1,009,861
Receivables:
Accrued income 12 15
---------------------------
Total assets 952,910 1,009,876
ESOP note payable (16,833) (31,833)
Accrued interest payable -- (1,172)
---------------------------
Net assets available for benefits $936,077 $976,871
===========================
See accompanying Notes to Financial Statements.
-7-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Statements of Changes in Net Assets Available for Benefits
(In Thousands)
YEAR ENDED DECEMBER 31
1999 1998
---------------------------
Net assets available for benefits at beginning of year $976,871 $1,044,955
Additions:
Interest and dividends 30,471 30,805
Contributions:
Employer 19,389 10,415
Employee 43,426 35,625
Rollover 3,697 1,838
Net realized and unrealized depreciation (45,967) (3,420)
Other, net (2,528) (354)
Transfer to affiliate plan (3,458) --
Net assets received in mergers 6,520 624
---------------------------
Total additions 51,550 75,533
Deductions:
Payments to participants or beneficiaries (90,389) (140,954)
Interest expense (1,691) (2,448)
Administrative expense (264) (215)
---------------------------
Net assets available for benefits at end of year $936,077 $976,871
===========================
See accompanying Notes to Financial Statements.
-8-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Notes to Financial Statements
December 31, 1999
(In Thousands, except for share information)
1. SIGNIFICANT ACCOUNTING POLICIES
VALUATION
Marketable securities are stated at fair value. Securities are valued at the
last public sale price of the securities listed on the New York Stock Exchange.
If no sales were reported, and in the case of securities traded over the
counter, the last bid price at the close of business is used. The value of any
security not listed or quoted on any exchange is determined by the last closing
bid price, reference to the bid price of any published quotations in common use,
or by the quotation of a reputable broker.
The fair value of the participation units in the short-term investment funds and
registered investment companies is based on quoted redemption values on the last
business day of the Plan year. Loans are valued at the amount of principal
outstanding.
The PNC Financial Services Group, Inc. Incentive Savings Plan's assets are
concentrated in the stock and bond markets. Realization of the respective values
is subject to the results of these markets.
USE OF ESTIMATES
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from such estimates.
The presentation of certain prior-year amounts have been conformed with the
current-year presentation.
2. DESCRIPTION OF THE PLAN
The following description of The PNC Financial Services Group, Inc. Incentive
Savings Plan ("the Plan") provides only general information. Participants should
refer to the plan prospectus for a more complete description of the Plan's
provisions.
The PNC Financial Services Group, Inc. ("PNC") is the sponsor of the Plan. The
Plan covers substantially all eligible employees of PNC and certain
subsidiaries.
-9-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
The Plan allows participants to contribute from 1% to 15% of their eligible
compensation on a pretax 401(k) basis. PNC matches 100 percent of employee
contributions up to 6% of eligible compensation, subject to Internal Revenue
Code limitations. Participants are fully vested in their balances, including the
employer contributions. Prior to July 1, 1998, plan income was allocated to
participants based on an average participant investment balance on a quarterly
basis. Effective July 1, 1998, participants' accounts are valued on a daily
basis.
Participants age 55 (age 50 effective April 1, 1999) or older can choose to have
their matching contribution made in PNC common stock or in cash to invest in the
other funds. These participants can also convert previous matching contributions
made in PNC common stock to other funds.
The Plan has a loan feature that allows participants to borrow against their
balance in accordance with the loan policies established by the Administrative
Committee of the Plan. Such borrowings are reflected in the Loan Fund. Under
certain circumstances, the Plan permits withdrawals by participants.
Although it has not expressed an intent to do so, PNC has the right under the
Plan to discontinue contributions at any time and to terminate the Plan subject
to the provisions of the Employee Retirement Income Security Act of 1974.
The Plan includes a leveraged employee stock ownership plan ("ESOP"). In January
1990, the ESOP borrowed $140,000 from PNC Bank, N.A., a wholly-owned subsidiary
of PNC, and purchased approximately 7,350,000 shares of PNC common stock through
open market purchases. In December 1998, the balance of the remaining ESOP note
was refinanced and the new note extended to 2002. The unallocated shares of PNC
common stock are pledged as security on the ESOP note. The ESOP shares are used
to match a portion of PNC's matching contributions to the Plan and an affiliated
plan, the PNC Retirement Savings Plan (RSP), subject to certain limitations.
During 1999, $3,458 was transferred to the RSP to fund matching contributions.
PNC is obligated to make annual contributions sufficient to fund principal and
interest payments on the ESOP note net of investment income and realized gains
and losses in the unallocated ESOP fund. Shares of PNC common stock released to
the Plan and RSP were 586,647 and 62,865 in 1999, respectively, and 630,410 and
67,393 in 1998, respectively.
-10-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
The effective interest rate on the ESOP fixed rate note was 4.91% in 1999.
Principal payments are due on an annual basis and interest payments are due
quarterly. The following is a schedule of debt maturities:
2000 $8,000
2001 8,600
2002 233
-------
$16,833
=======
PNC has the ability to prepay the remaining outstanding debt balance at any
time.
At December 31, 1999, the ESOP held 714,459 unallocated shares of PNC common
stock with a market value of $31,793. These assets will be used to match future
participant contributions.
Effective May 16, 1998, participants in the former Midland Services Inc. 401(k)
Plan became eligible to participate in the Plan. Assets of approximately $5,800
from the Midland Services Inc. 401(k) Plan were merged into the Plan during
January 1999. Effective October 1, 1998, participants in the former Arcand
Company Retirement Savings Plan became eligible to participate in the Plan.
Assets of approximately $701 from the Arcand Company Retirement Savings Plan
were merged into the Plan during June, 1999.
3. TRANSACTIONS WITH PARTIES-IN-INTEREST
PNC Bank, N.A. is the Plan's trustee. Investments under the Plan are participant
directed. Investment options include various portfolios of the BlackRock Funds,
which are registered investment companies (mutual funds) from which PNC
affiliates, including BlackRock, Inc. and PFPC Worldwide, Inc., receive
compensation for providing services, such as investment advisory, custodial and
transfer agency services, to the mutual funds. Prior to February 12, 1998, PNC
paid administrative costs incurred by the Plan. Effective February 12, 1998,
certain plan administrative expenses are paid by the Plan.
4. INVESTMENTS
Certain of the Plan's investments are in a Master Trust, which was established
on July 1, 1998 for the investment of assets of the Plan and the RSP. Each
participating retirement plan has an undivided interest in the Master Trust. At
December 31, 1999 and 1998, the Plan's interest in the net assets of the Master
Trust was approximately 97%. Investment income and expenses are allocated to the
Plan based upon its pro rata share in the net assets of the Master Trust.
-11-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
The following table presents the fair value of investments in the Master Trust.
DECEMBER 31
1999 1998
--------------------------
Investments at fair value:
PNC Balanced Profile Fund $10,770 $2,255
PNC Aggressive Profile Fund 258,150 225,803
PNC Conservative Profile Fund 3,825 1,782
BlackRock Money Market Portfolio 69,672 69,040
BlackRock Large Cap Value Equity Portfolio 9,972 3,193
BlackRock Index Equity Portfolio 48,696 13,942
BlackRock Small Cap Value Equity Portfolio 3,023 1,279
BlackRock International Equity Portfolio 3,999 489
BlackRock Small Cap Growth Equity Portfolio 11,262 1,772
BlackRock Core Bond Portfolio 57,376 66,678
--------------------------
$476,745 $386,233
==========================
-12-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
The following table presents income recorded by the Master Trust for the year
ended December 31, 1999 and the period July 1, 1998 through December 31, 1998.
JULY 1, 1998
YEAR ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------------------
Net appreciation (depreciation) in fair value of investments:
PNC Balanced Profile Fund $1,277 $250
PNC Aggressive Profile Fund 56,906 1,278
PNC Conservative Profile Fund 238 56
BlackRock Large Cap Value Equity Portfolio (898) 117
BlackRock Index Equity Portfolio 6,186 1,451
BlackRock Small Cap Value Equity Portfolio (59) 76
BlackRock International Equity Portfolio 344 26
BlackRock Small Cap Growth Equity Portfolio 2,881 317
BlackRock Core Bond Portfolio (4,350) (733)
------------------------------
62,525 2,838
Interest and dividend income 12,180 4,600
------------------------------
$74,705 $7,438
==============================
-13-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
DECEMBER 31, 1999
------------------------------------------------------
PNC ALLOCATED PNC UNALLOCATED
PNC STOCK FUND ESOP FUND ESOP FUND
------------------------------------------------------
Investments at fair value:
The PNC Financial Services Group, Inc. common
stock $241,282 $187,128 $31,793
------------------------------------------------
Total investments 241,282 187,128 31,793
Accrued income -- -- 12
------------------------------------------------
Total assets 241,282 187,128 31,805
ESOP note payable -- -- (16,833)
------------------------------------------------
Net assets available for benefits $241,282 $187,128 $14,972
================================================
-14-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
NONPARTICIPANT-DIRECTED INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
------------------------------------------------------
PNC ALLOCATED PNC UNALLOCATED
PNC STOCK FUND ESOP FUND ESOP FUND
------------------------------------------------------
Investments at fair value:
The PNC Financial Services Group, Inc. common
stock $298,133 $226,643 $76,655
Interest-bearing cash -- 17 --
------------------------------------------------
Total investments 298,133 226,660 76,655
Accrued income -- -- 7
Due to (from) fund/other assets (liabilities) -- 1,198 (1,198)
------------------------------------------------
Total assets 298,133 227,858 75,464
ESOP note payable -- -- (31,833)
Accrued interest payable -- -- (1,172)
------------------------------------------------
Net assets available for benefits $298,133 $227,858 $42,459
================================================
-15-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
NONPARTICIPANT-DIRECTED INVESTMENTS (CONTINUED)
PNC ALLOCATED PNC UNALLOCATED
PNC STOCK FUND ESOP FUND ESOP FUND
---------------------------------------------------------
Net assets available for benefits at
January 1, 1999 $298,133 $227,858 $42,459
Additions:
Interest and dividends 9,734 7,179 1,793
Contributions:
Employer 9,729 -- 8,647
Employee 8,448 -- --
Rollover 527 -- --
Deductions:
Distributions to participants or beneficiaries (22,872) (17,183) --
Administrative expense (79) (63) --
Net transfers (6,526) (8,595) --
ESOP activity:
Interest expense -- -- (1,690)
Transfer to affiliated plan -- -- (3,458)
Other ESOP activity -- 22,665 (26,865)
Net realized and unrealized depreciation (55,812) (44,733) (5,914)
--------------------------------------------------
Net assets available for benefits at
December 31, 1999 $241,282 $187,128 $14,972
==================================================
-16-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
NONPARTICIPANT-DIRECTED INVESTMENTS (CONTINUED)
PNC ALLOCATED PNC UNALLOCATED
PNC STOCK FUND ESOP FUND ESOP FUND
---------------------------------------------------------
Net assets available for benefits at
January 1, 1998 $350,583 $233,946 $66,271
Additions:
Interest and dividends 9,437 6,444 3,103
Contributions:
Employer 2,187 -- 7,341
Employee 8,111 -- --
Rollover 582 -- --
Deductions:
Distributions to participants or beneficiaries (49,523) (26,277) --
Administrative expense (72) (54) --
Net transfers (4,177) (1,060) --
ESOP activity:
Interest expense -- -- (2,448)
Other ESOP activity -- 26,607 (26,607)
Net realized and unrealized depreciation (17,040) (11,982) (6,384)
Other (1,955) 234 1,183
--------------------------------------------------
Net assets available for benefits at
December 31, 1998 $298,133 $227,858 $42,459
==================================================
-17-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
Notes to Financial Statements (continued)
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated June 21, 1995, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the Code) and, therefore, the related trust is exempt
from taxation. Once qualified, the Plan is required to operate in conformity
with the Code to maintain its qualification. The Plan has been amended since the
date of the determination letter. The plan administrator believes that the Plan
is being operated in compliance with the applicable requirements of the Code
and, therefore, believes that the Plan is qualified and the related trust is
tax-exempt.
-18-
Schedules
-19-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
EIN 25-1435979 Plan 001
Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes
at End of Year
December 31, 1999
IDENTITY OF ISSUER, BORROWER, DESCRIPTION OF
OR SIMILAR ENTITY INVESTMENT COST FAIR VALUE
- ---------------------------------------------------------------------------------------------------------------------
THE PNC FINANCIAL SERVICES GROUP, INC. STOCK
FUND
Common Stock
- ------------
*The PNC Financial Services Group, Inc. 5,421,918 shares $158,490,571 $241,275,375
Preferred Stock
- ---------------
*The PNC Financial Services Group, Inc. 85 shares 1,097 6,601
------------------------------------
Total 158,491,668 241,281,976
ESOP ACCOUNT
Common Stock
- ------------
*The PNC Financial Services Group, Inc.:
Allocated Account 4,205,113 shares 114,461,223 187,127,546
Unallocated Account 714,459 shares 13,493,719 31,793,425
------------------------------------
Total ESOP Account 127,954,942 218,920,971
LOAN FUND
Participant Loans 6% to 12.4% -- 29,706,000
- -----------------
------------------------------------
Total $286,446,610 $489,908,947
====================================
Party-in-interest.
-20-
The PNC Financial Services Group, Inc.
Incentive Savings Plan
EIN 25-1435979 Plan 001
Schedule H, Line 4j--Schedule of Reportable Transactions
Year ended December 31, 1999
FAIR VALUE
COST OF ASSETS ON NET
PURCHASE SELLING OF TRANSACTION GAIN
DESCRIPTION OF ASSETS PRICE PRICE ASSETS DATE (LOSS)
- ----------------------------------------------------------------------------------------------------------------------
Category (iii)--Series of securities transactions
- -------------------------------------------------
The PNC Financial Services Group, Inc. Common Stock
- ---------------------------------------------------
1,580,519 shares $83,185,745 $ -- $83,185,745 $83,185,745 $ --
1,671,741 shares -- 79,023,455 90,274,559 79,023,455 (11,251,104)
There were no category (i), (ii) or (iv) reportable transactions during 1999.
-21-
Audited Financial Statements
PNC Retirement Savings Plan
Six-month period ended December 31, 1999
and year ended June 30, 1999
with Report of Independent Auditors
-22-
PNC Retirement Savings Plan
Audited Financial Statements
Six-month period ended December 31, 1999
and year ended June 30, 1999
CONTENTS
Report of Independent Auditors ...............................................24
Audited Financial Statements
Statements of Net Assets Available for Benefits ..............................25
Statements of Changes in Net Assets Available for Benefits ...................26
Notes to Financial Statements ................................................27
Schedules
Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at
End of Year ................................................................33
Schedule H, Line 4j--Schedule of Reportable Transactions .....................34
-23-
Report of Independent Auditors
Administrative Committee
PNC Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the PNC Retirement Savings Plan as of December 31, 1999 and June 30, 1999,
and the related statements of changes in net assets available for benefits for
the six-month period ended December 31, 1999 and the year ended June 30, 1999.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1999 and June 30, 1999, and the changes in its net assets available
for benefits for the six-month period ended December 31, 1999 and the year ended
June 30, 1999, in conformity with accounting principles generally accepted in
the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes at end of year as of December 31, 1999, and
reportable transactions for the six-month period then ended, are presented for
purpose of additional analysis and are not a required part of the financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
June 2, 2000
Pittsburgh, Pennsylvania
-24-
PNC Retirement Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31, 1999 JUNE 30, 1999
---------------------------------------
Investments at fair value:
Participant-directed:
Investments in Master Trust $16,445,204 $13,380,447
Other participant-directed investments (participant loans) 1,731,292 1,357,933
Nonparticipant-directed:
The PNC Financial Services Group, Inc. common stock 14,164,125 14,901,614
----------------------------------
Total investments 32,340,621 29,639,994
Receivables:
Employer contributions 1,921,934 4,471,071
----------------------------------
Net assets available for benefits $34,262,555 $34,111,065
==================================
See accompanying Notes to Financial Statements.
-25-
PNC Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
SIX-MONTH PERIOD ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
------------------------------------------
Net assets available for benefits at beginning of period $34,111,065 $25,330,993
Additions:
Interest and dividends 542,828 768,070
Contributions:
Employer 1,923,587 4,474,352
Employee 1,834,663 4,534,126
Rollover 285,365 414,958
Net realized and unrealized (depreciation) appreciation (2,885,414) 1,764,141
Other, net 241,598 87,723
-----------------------------------
Total additions 1,942,627 12,043,370
Deductions:
Payments to participants or beneficiaries (1,741,642) (3,227,114)
Administrative expense (49,495) (36,184)
-----------------------------------
Net assets available for benefits at end of period $34,262,555 $34,111,065
===================================
See accompanying Notes to Financial Statements.
-26-
PNC Retirement Savings Plan
Notes to Financial Statements
December 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
VALUATION
Marketable securities are stated at fair value. Securities are valued at the
last public sale price of the securities listed on the New York Stock Exchange.
If no sales were reported, and in the case of securities traded over the
counter, the last bid price at the close of business is used. The value of any
security not listed or quoted on any exchange is determined by the last closing
bid price, reference to the bid price of any published quotations in common use,
or by the quotation of a reputable broker.
The fair values of the participation units in the short-term investment funds
and registered investment companies are based on quoted redemption values on the
last business day of the plan year. Loans are valued at the amount of principal
outstanding.
The PNC Retirement Savings Plan's assets are concentrated in the stock and bond
markets. Realization of the respective values is subject to the results of these
markets.
USE OF ESTIMATES
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
2. DESCRIPTION OF THE PLAN
The following description of the PNC Retirement Savings Plan ("the Plan")
provides only general information. Participants should refer to the plan
prospectus for a more complete description of the Plan's provisions.
The PNC Financial Services Group, Inc. ("PNC") is the sponsor of the Plan. The
Plan covers all eligible employees of the following PNC subsidiaries: PNC
Mortgage Corp. of America and PNC Mortgage Securities Corp.
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PNC Retirement Savings Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
The Plan allows participants to contribute from 1% to 12% of their eligible
compensation as defined in the Plan on a pretax 401(k) basis subject to Internal
Revenue Code limitations. PNC will match 100% of employee contributions up to 6%
of eligible compensation (as defined in the Plan) and will contribute 2% of base
compensation (as defined in the Plan) if certain criteria as specified in the
Plan are met. Effective for plan years beginning after July 1, 1997, the 6%
matching contributions may be funded by The PNC Financial Services Group, Inc.
Incentive Savings Plan ("ISP") subject to certain limitations. If applicable,
participants in the Plan are participants in the ISP with respect to such
matching contributions. For the year ended June 30, 1999, $3,458,000 was
transferred from the ISP to fund matching contributions. This amount has been
reflected in contributions. In addition, PNC may make discretionary
contributions to the Plan. No discretionary contributions were made for the
six-month period ended December 31, 1999 and the year ended June 30, 1999.
Participants are fully vested in their balances, including employer
contributions. Plan income is allocated to participants on a daily basis with
the pricing of mutual funds. Income from the BlackRock Money Market Portfolio
and the BlackRock Core Bond Portfolio is allocated monthly. Capital gain income
is allocated once the gain is declared by the actual fund.
Participants age 55 (age 50 effective April 1, 1999) or older can choose to have
their matching contribution made in PNC common stock or in cash to invest in the
other funds. These participants can also convert previous matching contributions
made in PNC common stock to other funds.
The Plan has a loan feature that allows participants to borrow against their
balance in accordance with the loan policies established by the Administrative
Committee of the Plan. Such borrowings are reflected as participant loans. Under
certain circumstances, the Plan permits withdrawals by participants.
Effective July 1, 1999, the Plan changed from a fiscal year end to a calendar
year end plan.
Although it has not expressed an intent to do so, PNC has the right under the
Plan to discontinue contributions and to terminate the Plan subject to the
provisions of the Employee Retirement Income Security Act of 1974.
3. TRANSACTIONS WITH PARTIES-IN-INTEREST
PNC Bank, N.A., a wholly-owned subsidiary of PNC, is the Plan's trustee.
Investments under the Plan are participant directed. Investment options include
various portfolios of the BlackRock Funds, which are registered investment
companies (mutual funds) from which PNC affiliates, including BlackRock, Inc.
and PFPC Worldwide, Inc., receive compensation for providing services, such as
investment advisory, custodial and transfer agency services. Prior to February
12, 1998, PNC paid administrative costs incurred by the Plan. Effective February
12, 1998, certain plan administrative expenses are paid by the Plan.
-28-
PNC Retirement Savings Plan
Notes to Financial Statements (continued)
4. INVESTMENTS
The Plan's investments are in a Master Trust, which was established on July 1,
1998 for the investment of assets of the Plan and the ISP. Each participating
retirement plan has an undivided interest in the Master Trust. At December 31,
1999 and June 30, 1999, the Plan's interest in the net assets of the Master
Trust was approximately 3%. Investment income and expenses are allocated to the
Plan based upon its pro rata share in the net assets of the Master Trust.
The following table presents the fair value of investments in the Master Trust:
DECEMBER 31, 1999 JUNE 30, 1999
----------------------------------
Investments at fair value:
PNC Balanced Profile Fund $10,769,799 $8,197,084
PNC Aggressive Profile Fund 258,150,112 234,294,096
PNC Conservative Profile Fund 3,825,578 3,200,009
BlackRock Money Market Portfolio 69,672,280 73,852,185
BlackRock Large Cap Value Equity Portfolio 9,972,207 8,262,453
BlackRock Index Equity Portfolio 48,695,782 39,303,946
BlackRock Small Cap Value Equity Portfolio 3,023,188 2,826,162
BlackRock International Equity Portfolio 3,998,410 1,892,505
BlackRock Small Cap Growth Equity Portfolio 11,261,458 4,189,205
BlackRock Core Bond Portfolio 57,376,399 62,258,512
----------------------------------
$476,745,213 $438,276,157
==================================
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PNC Retirement Savings Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
The following table presents income recorded by the Master Trust for the
six-month period ended December 31, 1999 and the year ended June 30, 1999:
SIX-MONTH PERIOD ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
------------------------------------------
Net appreciation (depreciation) in fair value of investments:
PNC Balanced Profile Fund $897,960 $624,180
PNC Aggressive Profile Fund 31,899,339 28,587,957
PNC Conservative Profile Fund 163,903 129,809
BlackRock Large Cap Value Equity Portfolio (1,597,019) 813,124
BlackRock Index Equity Portfolio 3,248,375 4,354,541
BlackRock Small Cap Value Equity Portfolio (155,321) 167,711
BlackRock International Equity Portfolio 258,572 111,748
BlackRock Small Cap Growth Equity Portfolio 2,603,585 585,121
BlackRock Core Bond Portfolio (1,689,638) (3,337,855)
----------------------------------
35,629,756 32,036,336
Interest and dividend income 5,503,754 11,006,536
----------------------------------
$41,133,510 $43,042,872
==================================
NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
DECEMBER 31, 1999 JUNE 30, 1999
-------------------------------------
Net assets:
The PNC Financial Services Group, Inc. common stock $14,164,125 $14,901,614
Employer matching contribution 1,921,934 4,471,071
---------------------------------
Net assets available for benefits $16,086,059 $19,372,685
=================================
-30-
PNC Retirement Savings Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
NONPARTICIPANT-DIRECTED INVESTMENTS (CONTINUED)
SIX-MONTH PERIOD ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
-----------------------------------------
Net assets available for benefits at beginning of period $19,372,685 $14,270,357
Contributions 2,365,440 5,745,836
Interest and dividends 263,035 446,369
Net realized and unrealized appreciation (4,082,528) 771,392
Transfers from participant-directed investments (986,657) (384,255)
Payments to participants or beneficiaries (821,917) (1,456,948)
Administrative expense (23,999) (20,066)
----------------------------------
Net assets available for benefits at end of period $16,086,059 $19,372,685
==================================
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated May 28, 1998, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code ("the Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan has been
amended since the date of the determination letter. The Plan administrator
believes that the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax-exempt.
6. SUBSEQUENT EVENTS
Effective January 1, 2000, the Employer Matching Contribution will be made as of
each pay period rather than annually and the Employer Basic Contribution will
change from 2% of the participant's base compensation, as defined in the Plan,
to 1-1/2%.
-31-
Schedules
-32-
PNC Retirement Savings Plan
Plan 003
EIN 25-1674164
Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes
at End of Year
December 31, 1999
IDENTITY OF ISSUE, BORROWER, OR SIMILAR DESCRIPTION OF
ENTITY INVESTMENT COST FAIR VALUE
- --------------------------------------------------------------------------------------------------------------------
Common Stock
- ------------
*The PNC Financial Services Group, Inc. 318,295 shares $11,910,408 $14,164,125
Participant Loans
- -----------------
Installment loans 6% to 11.5% -- 1,731,292
*Party-in-interest
-33-
PNC Retirement Savings Plan
Plan 003
EIN 25-1674164
Schedule H, Line 4j--Schedule of Reportable Transactions
Six-month period ended December 31, 1999
CURRENT
VALUE OF ASSET
ON
PURCHASE PRICE TRANSACTION NET
DESCRIPTION OF ASSET SELLING PRICE COST OF ASSET DATE LOSS
- ---------------------------------------------------------------------------------------------------------------------------------
Category (i)--Individual transaction in excess of 5%
- ----------------------------------------------------
The PNC Financial Services Group, Inc.
Common Stock
62,692 shares $3,448,051 $3,448,051 $3,448,051
Category (iii)--Series of securities transactions
- -------------------------------------------------
The PNC Financial Services Group, Inc.
Common Stock
87,290 shares 4,736,203 4,736,203 4,736,203
26,590 shares $1,391,163 1,589,927 1,391,163 $(198,764)
There were no category (ii) or (iv) reportable transactions during the six-month
period ended December 31, 1999.
-34-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, The PNC Financial Services Group, Inc. has duly caused this
Amendment No. 1 to the 1999 Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE PNC FINANCIAL SERVICES GROUP, INC.
(Registrant)
By /s/ Robert L. Haunschild
------------------------
Robert L. Haunschild
Senior Vice President and
Chief Financial Officer
Date: June 27, 2000
-35-
EXHIBIT INDEX
Exhibit No. Description Method of Filing +
- ------------ ---------------------------------------------------------------------------------------------------------------------
3.1 Articles of Incorporation of the Corporation, as amended and Incorporated herein by reference to Exhibit 3.1
restated as of March 14, 2000. of the Corporation's Annual Report on Form
10-K for the year ended December 31, 1999
("1999 Form 10-K").
3.2 By-Laws of the Corporation, as amended. Incorporated herein by reference to Exhibit
99.2 of the Corporation's Current Report on
Form 8-K dated January 15, 1998.
4.1 There are no instruments with respect to long-term debt of the
Corporation and its subsidiaries that involve securities
authorized under the instrument in an amount exceeding 10
percent of the total assets of the Corporation and its
subsidiaries on a consolidated basis. The Corporation agrees to
provide the SEC with a copy of instruments defining the rights
of holders of long-term debt of the Corporation and its
subsidiaries upon request.
4.2 Terms of $1.80 Cumulative Convertible Preferred Stock, Series A. Incorporated herein by reference to Exhibit 3.1
of the 1999 Form 10-K.
4.3 Terms of $1.80 Cumulative Convertible Preferred Stock, Series B. Incorporated herein by reference to Exhibit 3.1
of the 1999 Form 10-K.
4.4 Terms of $1.60 Cumulative Convertible Preferred Stock, Series C. Incorporated herein by reference to Exhibit 3.1
of the 1999 Form 10-K.
4.5 Terms of $1.80 Cumulative Convertible Preferred Stock, Series D. Incorporated herein by reference to Exhibit 3.1
of the 1999 Form 10-K.
4.6 Terms of Fixed/Adjustable Rate Noncumulative Preferred Stock, Incorporated herein by reference to Exhibit 3.1
Series F. of the 1999 Form 10-K.
10.1 The Corporation's Supplemental Executive Retirement Plan, as Incorporated herein by reference to Exhibit
amended as of January 1, 1999. 10.1 of the 1999 Form 10-K. *
10.2 The Corporation's ERISA Excess Pension Plan, as amended as of Incorporated herein by reference to Exhibit
January 1, 1999. 10.2 of the 1999 Form 10-K. *
10.3 The Corporation's Key Executive Equity Program, as amended as of Incorporated herein by reference to Exhibit
January 1, 1999. 10.3 of the 1999 Form 10-K. *
10.4 The Corporation's Supplemental Incentive Savings Plan, as amended Incorporated herein by reference to Exhibit
as of January 1, 1999. 10.4 of the 1999 Form 10-K. *
10.5 The Corporation's 1997 Long-Term Incentive Award Plan. Incorporated herein by reference to Exhibit 4.3
to Post-Effective Amendment No. 1 to the
Corporation's Registration Statement No.
33-54960 on Form S-8 filed with the SEC on
April 25, 1997.*
10.6 Form of Nonstatutory Stock Option Agreement under 1997 Award Plan. Incorporated herein by reference to Exhibit
10.6 of the Corporation's Annual Report on
Form 10-K for the year ended December 31,
1997 ("1997 Form 10-K"). *
10.7 Form of Nonstatutory Stock Option Agreement under 1997 Award Incorporated herein by reference to Exhibit
Plan for options granted on or after February 17, 1999. 10.8 of the Corporation's Annual Report on
Form 10-K for the year ended December 31,
1998. *
10.8 Form of Addendum to Nonstatutory Stock Option Agreement Incorporated herein by reference to Exhibit
relating to Reload Nonstatutory Stock Options. 10.8 of the Corporation's 1997 Form 10-K. *
10.9 Form of Reload Nonstatutory Stock Option Agreement. Incorporated herein by reference to Exhibit
10.9 of the Corporation's 1997 Form 10-K. *
-36-
10.10 The Corporation's 1996 Executive Incentive Award Plan. Incorporated herein by reference to Exhibit 10.2
of the Corporation's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996. *
10.11 PNC Bank Corp. and Affiliates Deferred Compensation Plan, as Incorporated herein by reference to Exhibit 10.11
amended as of January 1, 1999. of the 1999 Form 10-K. *
10.12 Form of Change in Control Severance Agreement. Incorporated herein by reference to Exhibit 10.17
of the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1996 ("1996
Form 10-K"). *
10.13 1992 Director Share Incentive Plan. Incorporated herein by reference to Exhibit 10.13
of the 1999 Form 10-K. *
10.14 The Corporation's Directors Deferred Compensation Plan. Incorporated herein by reference to Exhibit 10.1
of the Corporation's Quarterly Report on Form
10-Q for the Quarter ended September 30, 1996. *
10.15 The Corporation's Outside Directors Deferred Stock Unit Plan Incorporated herein by reference to Exhibit 10.15
of the 1999 Form 10-K. *
10.16 Amended and Restated Trust Agreement between the Corporation, Incorporated herein by reference to Exhibit 10.18
as Settlor, and Hershey Trust Company, as successor of the Corporation's 1996 Form 10-K. *
Trustee to NationsBank, N.A., Trustee.
12.1 Computation of Ratio of Earnings to Fixed Charges. Incorporated herein by reference to Exhibit 12.1
of the 1999 Form 10-K.
12.2 Computation of Ratio of Earnings to Fixed Charges and Incorporated herein by reference to Exhibit 12.2
Preferred Dividends. of the 1999 Form 10-K.
13 Excerpts from the Corporation's Annual Report to Shareholders Incorporated herein by reference to Exhibit 13 of
for the year ended December 31, 1999. Such Annual Report, the 1999 Form 10-K.
except for the portions thereof that are expressly
incorporated by reference in the 1999 Form 10-K, is
furnished for information of the SEC only and is not
deemed to be "filed" as part of the 1999 Form 10-K.
21 Schedule of Certain Subsidiaries of the Corporation. Incorporated herein by reference to Exhibit 21 of
the 1999 Form 10-K.
23 Consent of Ernst & Young LLP, independent auditors for the Incorporated herein by reference to Exhibit 23 of
Corporation. the 1999 Form 10-K.
23.1 Consent of Ernst & Young LLP, independent auditors for the Filed herewith.
Corporation
24 Powers of Attorney. Incorporated herein by reference to Exhibit 24 of
the 1999 Form 10-K.
27 Financial Data Schedule. Incorporated herein by reference to Exhibit 27 of
the 1999 Form 10-K.
- ----------------------------------------------------------------------
+ Incorporated document references to filings by the Corporation are to SEC
File No. 1-9718.
* Denotes management contract or compensatory plan.
-37-