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90 JPMorgan Chase & Co. /2005 Annual Report
Consolidated statements of cash flows
JPMorgan Chase & Co.
Year ended December 31, (in millions)(a) 2005 2004 2003
Operating activities
Net income $ 8,483 $ 4,466 $ 6,719
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Provision for credit losses 3,483 2,544 1,540
Depreciation and amortization 4,318 3,835 3,101
Deferred tax (benefit) provision (1,791) (827) 1,428
Investment securities (gains) losses 1,336 (338) (1,446)
Private equity unrealized (gains) losses 55 (766) (77)
Gain on dispositions of businesses (1,254) (17) (68)
Net change in:
Trading assets (3,845) (48,703) (2,671)
Securities borrowed (27,290) (4,816) (7,691)
Accrued interest and accounts receivable (1,934) (2,391) 1,809
Other assets (9) (17,588) (9,848)
Trading liabilities (12,578) 29,764 15,769
Accounts payable, accrued expenses and other liabilities 5,532 13,277 5,973
Other operating adjustments 1,267 (245) 63
Net cash (used in) provided by operating activities (24,227) (21,805) 14,601
Investing activities
Net change in:
Deposits with banks 104 (4,196) (1,233)
Federal funds sold and securities purchased under resale agreements (32,469) (13,101) (11,059)
Other change in loans (148,894) (136,851) (171,779)
Held-to-maturity securities:
Proceeds 33 66 221
Available-for-sale securities:
Proceeds from maturities 31,053 45,197 10,548
Proceeds from sales 82,902 134,534 315,738
Purchases (81,749) (173,745) (301,854)
Proceeds due to the sale and securitization of loans 126,310 108,637 170,870
Net cash (used) received in business acquisitions or dispositions (1,039) 13,864 (575)
All other investing activities, net 4,796 2,519 1,541
Net cash (used in) provided by investing activities (18,953) (23,076) 12,418
Financing activities
Net change in:
Deposits 31,415 52,082 21,851
Federal funds purchased and securities sold under repurchase agreements (1,862) 7,065 (56,017)
Commercial paper and other borrowed funds 2,618 (4,343) 555
Proceeds from the issuance of long-term debt and capital debt securities 43,721 25,344 17,195
Repayments of long-term debt and capital debt securities (26,883) (16,039) (8,316)
Proceeds from the issuance of stock and stock-related awards 682 848 1,213
Redemption of preferred stock (200) (670) —
Treasury stock purchased (3,412) (738) —
Cash dividends paid (4,878) (3,927) (2,865)
All other financing activities, net 3,868 (26) 133
Net cash provided by (used in) financing activities 45,069 59,596 (26,251)
Effect of exchange rate changes on cash and due from banks (387) 185 282
Net increase (decrease) in cash and due from banks 1,502 14,900 1,050
Cash and due from banks at the beginning of the year 35,168 20,268 19,218
Cash and due from banks at the end of the year $ 36,670 $ 35,168 $ 20,268
Cash interest paid $ 24,583 $ 13,384 $ 10,976
Cash income taxes paid $ 4,758 $ 1,477 $ 1,337
Note: In 2004, the fair values of noncash assets acquired and liabilities assumed in the Merger with Bank One were $320.9 billion and $277.0 billion, respectively, and approximately 1,469 million
shares of common stock, valued at approximately $57.3 billion, were issued in connection with the merger with Bank One.
(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.
The Notes to consolidated financial statements are an integral part of these statements.