Capital One 2004 Annual Report Download - page 105

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Note 13
Cumulative Other Comprehensive Income
The following table presents the cumulative balances of the components of other comprehensive income, net of
tax, of $8.7 million, $11.7 million and $27.8 million as of December 31, 2004, 2003, and 2002, respectively:
As of December 31
2004 2003 2002
Unrealized (losses) gains on securities $ (16,377) $ 34,735 $ 55,588
Foreign currency translation adjustments 158,882 93,640 22,350
Unrealized gains (losses) on cash flow hedging instruments 2,254 (45,217) (93,504)
Total cumulative other comprehensive income (loss) $144,759 $ 83,158 $(15,566)
During 2004, 2003 and 2002, the Company reclassified $118.0 million, $110.5 million and $101.5 million,
respectively of net losses, after tax, on derivative instruments from cumulative other comprehensive income into
earnings.
During 2004, 2003 and 2002, the Company reclassified $2.6 million, $8.3 million and $4.2 million, respectively
of net gains on sales of securities, after tax, from cumulative other comprehensive income into earnings.
Note 14
Goodwill
The following table provides a summary of goodwill.
Auto
Finance
Global
Financial
Services Total
Balance at December 31, 2003 $218,957 $136,978 $355,935
Impairment Loss — (3,848) (3,848)
Foreign Currency Translation — 70 70
Balance at December 31, 2004 $218,957 $133,200 $352,157
In March 2004, the company recognized a $3.8 million impairment loss on goodwill related to certain
international operations. This impairment was recorded in other non-interest expense in the consolidated income
statement.
Note 15
Regulatory Matters
Effective October 1, 2004, the Corporation registered as a bank holding company (“BHC”) with the Federal
Reserve Bank of Richmond and became subject to the requirements of the Bank Holding Company Act of 1956,
as amended. As a result of becoming a BHC, the Bank has amended its Virginia charter which removes
restrictions on its activities and therefore permits the Bank to engage in a full range of lending, deposit-taking
and other activities permissible under Virginia and federal banking laws and regulations. The Corporation also
filed a notice with the Federal Reserve Bank of Richmond to retain its non-banking subsidiaries, including the
Savings Bank and COAF, upon its conversion to a BHC.
The Company and the Bank are subject to capital adequacy guidelines adopted by the Federal Reserve Board (the
“Federal Reserve”) while and the Savings Bank is subject to capital adequacy guidelines adopted by the Office of
Thrift Supervision (the “OTS”) (collectively, the “regulators”). The capital adequacy guidelines require the
Company, the Bank and the Savings Bank to maintain specific capital levels based upon quantitative measures of
their assets, liabilities and off-balance sheet items. In addition, the Bank and Savings Bank must also adhere to
the regulatory framework for prompt corrective action.
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