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): March 5, 2003
Brookline Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-23695 04-3402944
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(State or other jurisdiction (SEC File Number) (I.R.S. Employer
of incorporation) Identification No.)
Registrant's telephone number, including area code: (617) 730-3500
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Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events
Tax Liability Emanating from Change in Massachusetts Law
160 Associates, Inc. ("Associates"), a wholly-owned subsidiary of Brookline
Bank which, in turn, is a wholly-owned subsidiary of Brookline Bancorp, Inc.
(the "Company"), owns 99.9% of Brookline Preferred Capital Corporation ("BPCC"),
a real estate investment trust ("REIT").
In 2002, Associates received from the Department of Revenue of the
Commonwealth of Massachusetts ("DOR") Notices of Assessments for state excise
taxes of $3,930,000 and interest of $811,000. The assessments were based on a
desk review of the financial excise returns filed by Associates for its 1999,
2000 and 2001 tax years.
The DOR contends that dividend distributions from a REIT are not deductible
in determining Massachusetts taxable income. Associates believes that the
Massachusetts statute that provides for a dividend received deduction equal to
95% of certain dividend distributions applies to the distributions made by BPCC
to Associates. Accordingly, the Company made no provision in its consolidated
financial statements for the amounts assessed or additional amounts that might
be assessed in the future.
On March 5, 2003, the Governor of the Commonwealth of Massachusetts signed
a law that denies a dividend received deduction for dividend distributions from
a REIT in determining Massachusetts taxable income. The law not only disallows
dividend received deductions for the year 2003 and thereafter, but also
disallows dividend received deductions retroactively to tax years beginning in
1999. While Associates intends to challenge the constitutionality of the
retroactive legislation and to continue to appeal the Notices of Assessment
mentioned above, the Company is obliged under U. S. generally accepted
accounting principles to provide for the taxes and interest resulting from the
new law at the time of its enactment. Accordingly, the Company's net income for
the quarter ending March 31, 2003 will be reduced by approximately $5,500,000,
or $0.10 per share, related to the resulting liabilities of Associates for its
tax years 1999 through 2002. The inability of Associates to deduct dividends it
receives from its REIT in 2003 will result in a reduction in the Company's
consolidated net income in 2003 in the range of $1.0 million, or $0.02 per
share. The amounts mentioned herein are net of federal and state tax benefits.
State excise taxes and interest payments are deductible for federal income tax
purposes and interest payments are deductible for state tax purposes.
Repurchase of Company Common Stock
On February 21, 2003, the Company filed with the Office of Thrift
Supervision ("OTS") a notice of its intention to repurchase up to five percent
(or up to 2,937,532 shares) of its common stock. Without non-objection by the
OTS to the filed notice, the Company would be prohibited from repurchasing its
common stock until the one year anniversary date of its reorganization and stock
offering completed on July 8, 2002. The Company anticipates shortly a response
from the OTS to this notice.
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This filing contains statements about future events that constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Projections about future events are subject to
risk and uncertainties that could cause actual results to differ materially.
Factors that might cause such differences include, but are not limited to,
general economic conditions, changes in interest rates, regulatory
considerations and competition.
SIGNATURES
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.
BROOKLINE BANCORP INC.
DATE: March 6, 2003 By:/s/ Richard P. Chapman, Jr.
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Richard P. Chapman, Jr.
Chief Executive Officer