JP Morgan Chase 2006 Annual Report Download - page 127

JPMorgan Chase & Co. / 2006 Annual Report 125
Note 20 – Preferred stock
JPMorgan Chase is authorized to issue 200 million shares of preferred
stock, in one or more series, with a par value of $1 per share. There was no
outstanding preferred stock at December 31, 2006. Outstanding preferred
stock at December 31, 2005, was 280,433 shares. On March 31, 2006,
JPMorgan Chase redeemed all 280,433 shares of its 6.63% Series H cumu-
lative preferred stock.
Dividends on shares of the Series H preferred stock
were payable quarterly.
The weighted-average contractual interest rate for total Long-term debt was
4.89% and 4.62% as of December 31, 2006 and 2005, respectively. In order
to modify exposure to interest rate and currency exchange rate movements,
JPMorgan Chase utilizes derivative instruments, primarily interest rate and
cross-currency interest rate swaps, in conjunction with some of its debt issues.
The use of these instruments modifies the Firm’s interest expense on the asso-
ciated debt. The modified weighted-average interest rate for total long-term
debt, including the effects of related derivative instruments, was 4.99% and
4.65% as of December 31, 2006 and 2005, respectively.
JPMorgan Chase & Co. (Parent Company) has guaranteed certain debt of its
sub sidiaries, including both long-term debt and structured notes sold as part of the
Firm’s trading activities. These guarantees rank on a parity with all of the Firm’s
other unsecured and unsubordinated indebtedness. Guaranteed liabilities totaled
$30 million and $170 million at December 31, 2006 and 2005, respectively.
Junior subordinated deferrable interest debentures held by trusts
that issued guaranteed capital debt securities
At December 31, 2006, the Firm had established 22 wholly owned Delaware
statutory business trusts (“issuer trusts”) that had issued guaranteed capital
debt securities.
The junior subordinated deferrable interest debentures issued by the Firm to
the issuer trusts, totaling $12.2 billion and $11.5 billion at December 31,
2006 and 2005, respectively, were reflected in the Firm’s Consolidated bal-
ance sheets in the Liabilities section under the caption “Junior subordinated
deferrable interest debentures held by trusts that issued guaranteed capital
debt securities” (i.e., trust preferred capital debt securities). The Firm also
records the common capital securities issued by the issuer trusts in Other
assets in its Consolidated balance sheets at December 31, 2006 and 2005.
The debentures issued to the issuer trusts by the Firm, less the common capital securities of the issuer trusts, qualify as Tier 1 capital. The following is a summary of the
outstanding capital debt securities, including unamortized original issue discount, issued by each trust and the junior subordinated deferrable interest debenture issued
by JPMorgan Chase to each trust as of December 31, 2006:
Amount of Principal Stated maturity
capital debt amount of of capital
securities debenture securities Earliest Interest rate of Interest
issued issued Issue and redemption capital securities payment/
December 31, 2006 (in millions) by trust(a) to trust(b) date debentures date and debentures distribution dates
Bank One Capital III $ 474 $ 623 2000 2030 Any time 8.75% Semiannually
Bank One Capital VI 525 555 2001 2031 Any time 7.20% Quarterly
Chase Capital II 495 511 1997 2027 2007 LIBOR + 0.50% Quarterly
Chase Capital III 297 306 1997 2027 2007 LIBOR + 0.55% Quarterly
Chase Capital VI 249 256 1998 2028 Any time LIBOR + 0.625% Quarterly
First Chicago NBD Capital I 248 256 1997 2027 2007 LIBOR + 0.55% Quarterly
First Chicago NBD Institutional Capital A 499 549 1996 2026 Any time 7.95% Semiannually
First Chicago NBD Institutional Capital B 250 273 1996 2026 Any time 7.75% Semiannually
First USA Capital Trust I 3 3 1996 2027 2007 9.33% Semiannually
JPM Capital Trust I 750 773 1996 2027 2007 7.54% Semiannually
JPM Capital Trust II 400 412 1997 2027 2007 7.95% Semiannually
J.P. Morgan Chase Capital X 1,000 1,012 2002 2032 2007 7.00% Quarterly
J.P. Morgan Chase Capital XI 1,075 982 2003 2033 2008 5.88% Quarterly
J.P. Morgan Chase Capital XII 400 386 2003 2033 2008 6.25% Quarterly
JPMorgan Chase Capital XIII 472 487 2004 2034 2014 LIBOR + 0.95% Quarterly
JPMorgan Chase Capital XIV 600 579 2004 2034 2009 6.20% Quarterly
JPMorgan Chase Capital XV 994 983 2005 2035 Any time 5.88% Semiannually
JPMorgan Chase Capital XVI 500 488 2005 2035 2010 6.35% Quarterly
JPMorgan Chase Capital XVII 496 467 2005 2035 Any time 5.85% Semiannually
JPMorgan Chase Capital XVIII 748 749 2006 2036 Any time 6.95% Semiannually
JPMorgan Chase Capital XIX 562 563 2006 2036 2011 6.63% Quarterly
JPMorgan Chase Capital XX 995 996 2006 2036 Any time 6.55% Semiannually
Total $ 12,032 $ 12,209
(a) Represents the amount of capital securities issued to the public by each trust, including unamortized original issue discount.
(b) Represents the principal amount of JPMorgan Chase debentures issued to each trust, including unamortized original issue discount. The principal amount of debentures issued to the trusts includes the
impact of hedging and purchase accounting fair value adjustments that were recorded on the Firm’s Consolidated financial statements.