JP Morgan Chase 2005 Annual Report Download - page 61

JPMorgan Chase & Co. /2005 Annual Report 59
Revenue from VIEs and QSPEs
Year ended December 31,(a)
(in millions) VIEs(b) QSPEs Total
2005 $ 222 $ 1,645 $ 1,867
2004 154 1,438 1,592
2003 79 979 1,058
(a) 2004 results include six months of the combined Firm’s results and six months of heritage
JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only.
(b) Includes VIE-related revenue (i.e., revenue associated with consolidated and significant
nonconsolidated VIEs).
Off-balance sheet lending-related financial
instruments and guarantees
JPMorgan Chase utilizes lending-related financial instruments (e.g., commitments
and guarantees) to meet the financing needs of its customers. The contractual
amount of these financial instruments represents the maximum possible credit
risk should the counterparty draw down the commitment or the Firm fulfill its
obligation under the guarantee, and the counterparty subsequently fails to
perform according to the terms of the contract. Most of these commitments
and guarantees expire without a default occurring or without being drawn.
As a result, the total contractual amount of these instruments is not, in the
Firm’s view, representative of its actual future credit exposure or funding
requirements. Further, certain commitments, primarily related to consumer
financings, are cancelable, upon notice, at the option of the Firm. For a further
discussion of lending-related commitments and guarantees and the Firm’s
accounting for them, see Credit risk management on pages 63–72 and Note
27 on pages 124–125 of this Annual Report.
Contractual cash obligations
In the normal course of business, the Firm enters into various contractual
obligations that may require future cash payments. Commitments for future cash
expenditures primarily include contracts to purchase future services and capital
expenditures related to real estate–related obligations and equipment.
The accompanying table summarizes, by remaining maturity, JPMorgan Chase’s
off–balance sheet lending-related financial instruments and significant
contractual cash obligations at December 31, 2005. Contractual purchases
and capital expenditures in the table below reflect the minimum contractual
obligation under legally enforceable contracts with contract terms that are
both fixed and determinable. Excluded from the following table are a number of
obligations to be settled in cash, primarily in under one year. These obligations
are reflected on the Firm’s Consolidated balance sheets and include Federal
funds purchased and securities sold under repurchase agreements; Other
borrowed funds; purchases of Debt and equity instruments; Derivative payables;
and certain purchases of instruments that resulted in settlement failures. For a
discussion regarding Long-term debt and trust preferred capital securities, see
Note 17 on pages 117–118 of this Annual Report. For a discussion regarding
operating leases, see Note 25 on page 122 of this Annual Report.
Off–balance sheet lending-related financial instruments and guarantees
2005
By remaining maturity at December 31, Under 1–3 3–5 Over 2004
(in millions) 1 year years years 5 years Total Total
Lending-related
Consumer $597,047 $ 4,177 $ 3,971 $ 50,401 $ 655,596 $ 601,196
Wholesale:
Other unfunded commitments to extend credit(a)(b) 78,912 47,930 64,244 17,383 208,469 185,822
Asset purchase agreements(c) 9,501 17,785 2,947 862 31,095 39,330
Standby letters of credit and guarantees(a)(d) 24,836 19,588 27,935 4,840 77,199 78,084
Other letters of credit(a) 6,128 586 247 40 7,001 6,163
Total wholesale 119,377 85,889 95,373 23,125 323,764 309,399
Total lending-related $716,424 $90,066 $ 99,344 $ 73,526 $ 979,360 $ 910,595
Other guarantees
Securities lending guarantees(e) $244,316 $ — $ — $ — $ 244,316 $ 220,783
Derivatives qualifying as guarantees(f) 25,158 14,153 2,264 20,184 61,759 53,312
Contractual cash obligations
By remaining maturity at December 31, (in millions)
Time deposits of $100,000 and over $111,359 $ 2,917 $ 805 $ 692 $ 115,773 $ 115,343
Long-term debt 16,323 41,137 19,107 31,790 108,357 95,422
Trust preferred capital debt securities — — — 11,529 11,529 10,296
FIN 46R long-term beneficial interests(g) 106 80 24 2,144 2,354 6,393
Operating leases(h) 993 1,849 1,558 5,334 9,734 9,853
Contractual purchases and capital expenditures 1,145 777 255 147 2,324 2,742
Obligations under affinity and co-brand programs 1,164 2,032 1,891 1,790 6,877 4,402
Other liabilities(i) 762 1,636 1,172 8,076 11,646 10,966
Total $131,852 $50,428 $ 24,812 $ 61,502 $ 268,594 $ 255,417
(a) Represents contractual amount net of risk participations totaling $29.3 billion and $26.4 billion at December 31, 2005 and 2004, respectively.
(b) Includes unused advised lines of credit totaling $28.3 billion and $22.8 billion at December 31, 2005 and 2004, respectively, which are not legally binding. In regulatory filings with the FRB,
unused advised lines are not reportable.
(c) The maturity is based upon the weighted average life of the underlying assets in the SPE, primarily multi-seller asset-backed commercial paper conduits.
(d) Includes unused commitments to issue standby letters of credit of $37.5 billion and $38.4 billion at December 31, 2005 and 2004, respectively.
(e) Collateral held by the Firm in support of securities lending indemnification agreements was $245.0 billion and $221.6 billion at December 31, 2005 and 2004, respectively.
(f) Represents notional amounts of derivative guarantees. For a further discussion of guarantees, see Note 27 on pages 124–125 of this Annual Report.
(g) Included on the Consolidated balance sheets in Beneficial interests issued by consolidated VIEs.
(h) Excludes benefit of noncancelable sublease rentals of $1.3 billion and $689 million at December 31, 2005 and 2004, respectively.
(i) Includes deferred annuity contracts and expected funding for pension and other postretirement benefits for 2006. Funding requirements for pension and postretirement benefits after 2006 are
excluded due to the significant variability in the assumptions required to project the timing of future cash payments.