PNC Bank 2005 Annual Report Download - page 112

112
Statement Of Cash Flows
Year ended December 31 - in millions 2005
2004 2003
OPERATING ACTIVITIES
Net income $1,325 $1,197 $1,001
Adjustments to reconcile net
income to net cash provided
(used) by operating activities:
Equity in undistributed net
(earnings) loss of
subsidiaries (580) (141) (106)
Other 130 (18) 55
Net cash provided by operating
activities 875
1,038 950
INVESTING ACTIVITIES
Net capital returned from
(contributed to) subsidiaries (271)
495 98
Securities available for sale
Sales and maturities 2,912 1,638 1,927
Purchases (2,822) (1,991) (1,759)
Cash paid for acquisitions (447) (290)
Other 239 (12)
Net cash provided (used) by
investing activities (389)
(148) 254
FINANCING ACTIVITIES
Borrowings from non-bank
subsidiary 150 1,100 145
Repayments on borrowings from
non-bank subsidiary (150) (1,318) (669)
Acquisition of treasury stock (112) (251) (557)
Cash dividends paid to
shareholders (575) (566) (546)
Issuance of stock 203 144 124
Issuance of subordinated debt 300
Net cash used in financing
activities (484)
(891) (1,203)
Increase (decrease) in cash and due
from banks 2 (1) 1
Cash and due from banks at
beginning of year 1
2 1
Cash and due from banks at
end of year $3
$1 $2
NOTE 26 SUBSEQUENT EVENT
On February 15, 2006, we announced that BlackRock and
Merrill Lynch had entered into a definitive agreement pursuant
to which Merrill Lynch will contribute its investment
management business to BlackRock in exchange for newly
issued BlackRock common and preferred stock. Upon the
closing of this transaction, which we expect to occur on or
around September 30, 2006, Merrill Lynch will own an
approximate 49% economic interest in BlackRock.
As of December 31, 2005, we owned approximately 70% of
BlackRock. Upon closing of this transaction, the carrying value
of our investment in BlackRock will increase and, as a result,
we will recognize an after-tax gain. We will deconsolidate
BlackRock from PNC’ s financial statements as required under
generally accepted accounting principles and account for our
investment in BlackRock under the equity method of
accounting. We will continue to own approximately 44.5
million shares of BlackRock common stock, representing an
ownership interest of approximately 34% of the larger
company, and will have two seats on BlackRock’ s Board of
Directors including one director on the Executive Committee.
This transaction must be approved by BlackRock shareholders
and is subject to obtaining appropriate regulatory and other
approvals. We currently control more than 80% of the voting
interest in BlackRock and will vote our interest in support of
the transaction.
Additional information on this transaction is included in our
Current Reports on Form 8-K filed February 15, 2006 and
February 22, 2006 and in BlackRock’ s Current Reports on
Form 8-K filed February 15, 2006 and February 22, 2006.