Capital One 2007 Annual Report Download - page 97

75
The total consideration of $13.2 billion, which includes the value of outstanding stock options, was settled through the issuance of
103.8 million shares of the Companys common stock and payment of $5.2 billion in cash. Under the terms of the transaction, each
share of North Fork common stock was exchanged for $28.14 in cash or 0.3692 shares of the Companys common stock or a
combination of common stock and cash based on the aforementioned conversion rates, based on the average of the closing prices on
the NYSE of the Companys common stock during the five trading days ending the day before the completion of the merger, which
was $76.24.
Costs to acquire North Fork:
Capital One common stock issued $ 7,914,463
Cash consideration paid 5,200,500
Fair value of employee stock options 83,633
Investment banking, legal, and consulting fees 31,547
Total consideration paid for North Fork $ 13,230,143
In 2007, the Company recorded certain refinements to its initial estimates of the fair value of the assets and liabilities related to the
North Fork acquisition. These adjustments included goodwill impairment of $650.0 million associated with the shutdown of
GreenPoint, and other adjustments of $140.0 million resulting in a $790.0 million decrease to goodwill.
The following unaudited pro forma condensed statements of income assume that the Company and North Fork were combined at the
beginning of 2006.
Year Ended
December 31,
2006
Net interest income $ 6,398,022
Non-interest income 7,122,589
Provision for loan and lease losses 1,513,438
Non-interest expense 7,892,706
Income taxes 1,406,669
Income from continuing operations, net of tax 2,707,798
Income from discontinued operations, net of tax 121,338
Net income $ 2,829,136
Basic earnings per share:
Income from continuing operations, net of tax $ 6.69
Income from discontinued operations, net of tax 0.30
Net income $ 6.99
Diluted earnings per share:
Income from continuing operations, net of tax $ 6.55
Income from discontinued operations, net of tax 0.30
Net income $ 6.85
(1) Pro forma adjustments include the following adjustments: accretion for loan fair value discount, reduction of interest income for amounts used to fund the acquisition,
amortization for interest-bearing deposits fair value premium, accretion for subordinated notes fair value premium, addition of interest expense for borrowings used to fund
the acquisition, and related amortization for intangibles acquired, net of Hibernias and North Forks historical intangible amortization expense.
Hibernia Corporation
On November 16, 2005, the Company acquired 100% of the outstanding common stock of Hibernia Corporation (Hibernia), a
financial holding company with operations in Louisiana and Texas. Hibernia offers a variety of banking products and services,
including consumer, commercial and small business loans and demand and term deposit accounts.
The acquisition was accounted for under the purchase method of accounting, and, as such, the assets and liabilities of Hibernia were
recorded at their respective fair values as of November 16, 2005. The results of Hibernias operations were included in the Companys
Consolidated Statement of Income commencing November 16, 2005.
The total consideration of $5.0 billion, which includes the value of outstanding stock options, was settled through the issuance of
32.9 million shares of the Companys common stock and payment of $2.2 billion in cash. Under the terms of the transaction, each
share of Hibernia common stock was exchanged for $30.46 in cash or 0.3792 shares of the Companys common stock or a
combination of common stock and cash based on the aforementioned conversion rates, based on the average of the closing prices on