JP Morgan Chase 2003 Annual Report Download - page 114

Notes to consolidated financial statements
J.P. M organ Chase & Co.
112 J.P. Morgan Chase & Co./ 2003 Annual Report
Common stock
JPM organ Chase is authorized to issue 4.5 billion shares of
common stock, with a $1 par value per share. Common shares
issued (new ly issued or distributed from treasury) by JPM organ
Chase during 2003, 2002 and 2001 w ere as follow s:
December 31, (in millions) 2003 2002 2001
Issued – balance at January 1 2,023.6 1,996.9 1,940.1
Newly issued:
Employee benefits and compensation plans 20.9 25.9 55.0
Employee stock purchase plans 0.7 0.8 0.5
Purchase accounting acquisitions and other ——1.8
Total newly issued 21.6 26.7 57.3
Cancelled shares (0.8) —(0.5)
Tot al issued - balance at Decem ber 31 2,044.4 2,023.6 1,996.9
Treasury – balance at January 1 (24.9) (23.5) (11.6)
Purchase of treasury stock ——(21.9)
Forfeitures to treasury (3.0) (3.9) (5.8)
Issued from treasury:
Employee benefits and compensation plans 25.8 2.1 15.6
Employee stock purchase plans 0.3 0.4 0.2
Total issued from treasury 26.1 2.5 15.8
Tot al treasury – balance at December 31 (1.8) (24.9) (23.5)
Out standing 2,042.6 1,998.7 1,973.4
Note 21
The Firm did not repurchase shares of its common stock during
2003 or 2002. During 2001, the Firm repurchased 21.9 million
shares of common stock under a plan w hich began on July 19,
2001.
As of December 31, 2003, approximately 462 million unissued
shares of common stock w ere reserved for issuance under
various employee incentive, option and stock purchase plans.
Earnings per share
SFAS 128 requires the presentation of basic and diluted earnings
per share (“ EPS” ) in the income statement. Basic EPS is computed
by dividing net income applicable to common stock by the
w eighted-average number of common shares outstanding for
the period. Diluted EPS is computed using the same method as
basic EPS, but, in the denominator, common shares outstanding
reflect the potential dilution that could occur if convertible secu-
rities or other contracts to issue common stock w ere converted
or exercised into common stock. Net income available for com-
mon stock is the same computation for basic EPS and diluted
EPS as JPM organ Chase had no convertible securities, and,
therefore, no adjustments to net income available for common
stock w ere necessary.
Note 22
Basic and diluted earnings per share w ere as follow s for the
dates indicated:
Year ended December 31,
(in millions, except per share data) 2003 2002 2001
Basic earnings per share
Net income $6,719 $1,663 $ 1,694
Less: Preferred stock dividends 51 51 66
Net income applicable to common stock $6,668 $1,612 $ 1,628
Weighted-average basic shares outstanding 2,008.6 1,984.3 1,972.4
Net income per share $3.32 $0.81 $ 0.83
Diluted earnings per share
Net income applicable to common stock $6,668 $1,612 $ 1,628
Weighted-average basic shares outstanding 2,008.6 1,984.3 1,972.4
Add: Broad-based options 4.1 2.8 6.6
Key employee options 42.4 22.0 44.6
Weighted-average diluted shares outstanding 2,055.1 2,009.1 2,023.6
Net income per share(a) $3.24 $0.80 $ 0.80
(a) Options issued under employee benefit plans to purchase 335 million, 362 million and
190 million shares of common stock were outstanding for the years ended 2003, 2002 and
2001, respectively, but were not included in the computation of diluted EPS because the
options’ exercise prices were greater than the average market price of the common shares.
Comprehensive income
Comprehensive income is composed of Net income and Other
comprehensive income, w hich includes the after-tax change in
unrealized gains and losses on AFS securities, cash flow hedging
activities and foreign currency translation adjustments (including
the impact of related derivatives).
The follow ing table presents Other comprehensive income
(“ OCI” ) balances:
Accumulated
Year ended Unrealized Cash other
December 31, gains (losses) Translation flow comprehensive
(in millions) on AFS securities(a) adjustments hedges income (loss)
Balance December 31, 2000 $ (244) $ 3 NA $ (241)
Net change 109 (5) $ (305) (201)
Balance December 31, 2001 (135) (2) (305) (442)
Net change 866 (4) 807 1,669
Balance December 31, 2002 731 (6) 502 1,227
Net change (712)(b) —(c) (545) (1,257)
Balance December 31, 2003 $ 19 $ (6)(d) $(43) $ (30)
(a) Represents the after-tax difference between the fair value and amortized cost
of the AFS securities portfolio and retained interest in securitizations recorded in Other assets.
(b) The net change during 2003 was primarily driven by increasing rates and the recognition
of gains on sales of AFS securities.
(c) Includes $580 million of after-tax gains on foreign currency translation from operations
for which the functional currency is other than the U.S. dollar, which were offset by
$580 million of after-tax losses on hedges.
(d) Includes after-tax gains and losses on foreign currency translation, including related hedge
results from operations for which the functional currency is other than the U.S. dollar.
NA- Not applicable as SFAS 133 was adopted effective January 1, 2001.
Note 23