SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 7, 2008
WASHINGTON MUTUAL, INC.
(Exact name of Registrant as specified in its charter)
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Washington
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1-14667
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91-1653725
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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1301 SECOND AVENUE
SEATTLE, WASHINGTON 98101
(Address of principal executive offices and Zip Code)
Registrant’s telephone number, including area code: (206) 461-2000
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 2.02
Results of Operations and Financial Condition
On
April 8, 2008, the Company issued a press release that included
abbreviated preliminary financial information
for the quarter ended March 31, 2008.
The press release is included as Exhibit 99.1 to
this report. The information included in the press release is
considered to be “furnished” under the Securities Exchange
Act of 1934. As indicated in the press release, the Company expects to announce full first quarter
earnings results on April 15, 2008.
SECTION 8 — OTHER EVENTS
Item 8.01 Other Events
Furnished pursuant to this Current Report on Form 8-K as Exhibit 99.1 is a press release
issued by the Company on April 8, 2008 to announce the
Company’s equity financing and other information.
CAUTIONARY STATEMENTS
This document (including the exhibits furnished herewith) contains forward-looking
statements, which are not historical facts and pertain to future operating results. These
forward-looking statements are within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include, but are not limited to, statements about our
plans, objectives, expectations and intentions and other statements contained in this document that
are not historical facts. When used in this presentation, the words “expects,” “anticipates,”
“intends,” “plans,” “believes,” “seeks,” “estimates,” or words of similar meaning, or future or
conditional verbs, such as “will,” “would,” “should,” “could,” or “may” are generally intended to
identify forward-looking statements. These forward-looking statements are inherently subject to
significant business, economic and competitive uncertainties and contingencies, many of which are
beyond our control. In addition, these forward-looking statements are subject to assumptions with
respect to future business strategies and decisions that are subject to change. Actual results may
differ materially from the results discussed in these forward-looking statements for the reasons,
among others, discussed under the heading “Factors That May Affect Future Results” in Washington
Mutual’s 2007 Annual Report on Form 10-K which include:
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Economic conditions that negatively affect housing prices and the job market that
have resulted, and may continue to result, in a deterioration in credit quality of the
Company’s loan portfolio.
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Access to market-based liquidity sources that may be negatively impacted if market
conditions persist or if further ratings downgrades occur and could lead to increased
funding costs and reduced gain on sale.
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The need to raise additional capital due to significant additional losses which
could have a dilutive effect on existing shareholders and could affect the ability to
pay dividends.
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Changes in interest rates.
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Features of certain of the Company’s loan products that may result in increased
credit risk.
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Estimates used by the Company to determine the fair value of certain of our assets
that may prove to be imprecise and result in significant changes in valuation.
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Risks related to the Company’s credit card operations that could adversely affect
the credit card portfolio and our ability to continue growing the credit card
business.
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Operational risk which may result in incurring financial and reputational losses.
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Failure to comply with laws and regulations.
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Changes in the regulation of financial services companies, housing
government-sponsored enterprises and credit card lenders.
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General business, economic and market conditions and continued deterioration in
these conditions.
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Damage to the Company’s professional reputation and business as a result of
allegations and negative public opinion as well as pending and threatened litigation.
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Significant competition from banking and nonbanking companies.
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There are other factors not described in the Company’s 2007 Form 10-K which are beyond the
Company’s ability to anticipate or control that could cause results to differ.
SECTION 9 — FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01 Financial Statements and Exhibits.
(c)
Exhibits
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99.1
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Washington Mutual, Inc. Press Release dated April 8, 2008
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: April 8, 2008
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WASHINGTON MUTUAL, INC.
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By:
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/s/ Stewart M. Landefeld
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Stewart M. Landefeld
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Executive Vice President
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Exhibit Index
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Exhibit
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No.
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Description
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99.1
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Washington Mutual, Inc. Press Release dated April 8, 2008
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Exhibit 99.1
WaMu to Strengthen Capital Position, Raising $7 Billion
Anchored by a TPG Capital Investment
TPG Founding Partner David Bonderman to Join WaMu Board
Company Expects First Quarter Net Loss of Approximately $1.1 Billion
Board Intends to Reduce Quarterly Dividend Rate to
$0.01 Per Common Share
SEATTLE — Washington Mutual, Inc. (NYSE:WM) announced today that it entered into definitive
agreements to raise an aggregate $7 billion through direct sale
of equity securities to an investment vehicle managed by TPG Capital
(TPG), and to other investors, including many of WaMu’s top institutional shareholders. TPG’s investment vehicle, as anchor investor, will
purchase $2 billion in newly-issued WaMu Securities. With the
proceeds of the offering, the company’s capital ratios are expected to remain well above its
targeted levels during the period of elevated credit costs in its loan portfolios in 2008 and 2009.
At the same time, the company will continue to grow its leading,
national banking
franchise.
“We’re very pleased that TPG and these major investors have expressed their confidence in WaMu’s
underlying value and its growth potential,” said WaMu Chairman and CEO Kerry Killinger. “This
substantial new capital— along with the other steps we are announcing today— will position us for
a return to profitability as these elevated credit costs subside. With the support of these
investors, we have every confidence in our ability to deal with today’s market conditions and
restore shareholder value.”
WaMu’s board of directors intends to appoint TPG Founding Partner David Bonderman to the board. In
addition, Larry Kellner, chairman and chief executive officer of
Continental Airlines and former executive vice president and chief financial officer of American
Savings Bank, will become a board observer at TPG’s request.
“In TPG we have found a great partner with a terrific investment track record,” said Killinger. “We
are particularly pleased that David will rejoin our board. He has a long history with the company
— having previously served as a WaMu director — and we are privileged to once again benefit from
his insight and experience.”
Bonderman is a founder and principal of TPG and TPG Asia (formerly Newbridge Capital). Before
founding TPG in 1992, Bonderman was Chief Operating Officer of the Robert M. Bass Group, Inc. (now
Keystone, Inc.) in Fort Worth. Prior to that, he was a partner in the law firm of Arnold & Porter
in Washington, D.C. Bonderman serves as director on several public company boards, including
Burger King Holdings, Inc.; CoStar Group, Inc.; Gemalto NV.; and Ryanair Holdings, plc, of which he
is Chairman. He served as a director on WaMu’s board from 1996 to 2002.
In addition to raising capital, the company announced the following actions:
Dividend
To further strengthen the company’s capital position, the board of directors intends to reduce the
quarterly dividend rate to $0.01 per common share from its most recent quarterly dividend rate of
$0.15 per common share, which will preserve approximately $490 million of capital annually.
Advancing its Retail-focused Business Strategies
Last year, WaMu took steps to realign its home lending business primarily into its core retail
banking network and to reduce the size of its other home lending operations. Today, the company
announced plans to further its retail-focused strategy by:
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Investing in and growing its retail bank branch and call center
production;
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closing all of its freestanding home loan offices; and
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exiting wholesale lending — its loan broker channel.
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The
company expects the closures of its freestanding home loan offices
and wholesale channel to be completed by the end of the second quarter.
First Quarter 2008 Results
WaMu also today announced preliminary, abbreviated results for the 2008 first quarter, as follows:
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a net loss of approximately $1.1 billion, or $1.40 per diluted share;
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a provision for loan losses for the quarter of approximately $3.5 billion and expected
first quarter net charge-offs of approximately $1.4 billion;
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a 19 basis point increase in net interest margin for the quarter from the prior
quarter to approximately 3.05 percent reflecting significantly lower wholesale borrowing
costs following the 200 basis point reduction in the Federal Funds rate;
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an increase in total deposits of approximately $6 billion, including an approximate $8
billion increase in retail deposits; and
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a 15 percent increase in total noninterest income to approximately $1.6 billion from
the prior quarter.
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WaMu expects to announce full first quarter earnings results on April 15, 2008.
Terms of the Capital Raising Transaction
In the
capital raising transaction, the company will sell approximately 176 million shares of its common stock at a
purchase price of $8.75 per share. In addition, the company agreed to
issue an aggregate of approximately 55,000 shares
of contingently convertible, perpetual non-cumulative preferred stock at a purchase price and liquidation
preference of $100,000 per share. After receipt of certain approvals, including approval of the
company’s shareholders, the convertible preferred stock will automatically convert into the
Company’s common stock at an initial exercise price of $8.75 per share, subject to adjustment.
In
addition, certain investors who agreed to transfer restrictions on
their shares will receive warrants, which, upon obtaining certain approvals, will
become exercisable for common stock based on a post-closing reference
price. The warrants have a term of five years.
The
company intends to call a special shareholders’ meeting to
increase the number of common shares available for issuance under its
articles of incorporation
and to approve conversion of the preferred stock into common stock. Further details about the private offering and the terms of the securities will be available in the
company’s Form 8-K to be filed with the SEC.
In addition to reporting first quarter results, the company’s annual shareholders’ meeting will be
held on April 15, 2008 and a conference call to discuss the company’s financial results will be
held on Wed., April 16, 2008, at 10:00 a.m. ET. The call will be hosted by Kerry Killinger,
chairman and chief executive officer and Tom Casey, executive vice president and chief financial
officer. The conference call is available by telephone or on the Internet. The dial-in number for
the live conference call is 888-391-7808. Participants
calling from outside the United States may dial 630-395-0029. The passcode “WaMu” is required to
access the call. Via the Internet, the conference call is available on the Investor Relations
portion of the company’s web site at www.wamu.com/ir. A recording of the conference call will be
available one hour following the end of the call through midnight ET on Friday, April 25. The
recorded message will be available at 866-360-3314. Callers from outside the United States may dial
203-369-0168.
Advisors
Goldman,
Sachs & Co. and Lehman Brothers served as placement agents and Simpson
Thacher & Bartlett LLP served as legal advisors to Washington
Mutal in the transaction. Credit Suisse and Cleary Gottlieb Steen
& Hamilton LLP acted as financial and legal advisors to TPG.
About TPG Capital
TPG Capital is the global buyout group of TPG, a leading private investment firm founded in 1992
with more than $50 billion of assets under management and offices in San Francisco, London, Hong
Kong, New York, Minneapolis, Fort Worth, Melbourne, Menlo Park, Moscow, Mumbai, Beijing, Shanghai,
Singapore and Tokyo. TPG Capital has extensive experience with global public and private
investments executed through leveraged buyouts, recapitalizations, spinouts, joint ventures and
restructurings. TPG Capital’s investments span a variety of industries including financial
services, technology, industrials, retail, consumer, travel and entertainment, media and
communications and healthcare. Please visit www.tpg.com.
About WaMu
WaMu, through its subsidiaries, is one of the nation’s leading consumer and small business banks.
On Dec. 31, 2007, WaMu and its subsidiaries had assets of $327.91 billion. The company has a
history dating back to 1889 and its subsidiary banks currently
operate approximately 2,500 consumer and small business banking stores throughout the nation.
WaMu’s news releases are available at www.wamu.com.
Cautionary Statements
This document contains forward-looking statements, which are not historical facts and pertain to
future operating results. These forward-looking statements are within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not
limited to, statements about our plans, objectives, expectations and intentions and other
statements contained in this document that are not historical facts. When used in this
presentation, the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” or words of similar meaning, or future or conditional verbs, such as “will,” “would,”
“should,” “could,” or “may” are generally intended to identify forward-looking statements. These
forward-looking statements are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control. In addition, these
forward-looking statements are subject to assumptions with respect to future business strategies
and decisions that are subject to change. Actual results may differ materially from the results
discussed in these forward-looking statements for the reasons, among others, discussed under the
heading “Factors That May Affect Future Results” in Washington Mutual’s 2007 Annual Report on Form
10-K.