JP Morgan Chase 2005 Annual Report Download - page 95

JPMorgan Chase & Co. /2005 Annual Report 93
Condensed statement of net assets acquired
The following condensed statement of net assets acquired reflects the fair
value of Bank One net assets as of July 1, 2004.
(in millions) July 1, 2004
Assets
Cash and cash equivalents $ 14,669
Securities 70,512
Interests in purchased receivables 30,184
Loans, net of allowance for loan losses 129,650
Goodwill and other intangible assets 42,825
All other assets 47,739
Total assets $ 335,579
Liabilities
Deposits $ 164,848
Short-term borrowings 9,811
All other liabilities 61,494
Long-term debt 40,880
Total liabilities 277,033
Net assets acquired $ 58,546
Acquired, identifiable intangible assets
Components of the fair value of acquired, identifiable intangible assets as of
July 1, 2004, were as follows:
Fair value Weighted average Useful life
(in millions) life (in years) (in years)
Core deposit intangibles $ 3,650 5.1 Up to 10
Purchased credit card relationships 3,340 4.6 Up to 10
Other credit card–related intangibles 295 4.6 Up to 10
Other customer relationship intangibles 870 4.6–10.5 Up to 20
Subtotal 8,155 5.1 Up to 20
Indefinite-lived asset management
intangibles 510 NA NA
Total $ 8,665
Unaudited pro forma condensed combined financial
information
The following unaudited pro forma condensed combined financial information
presents the results of operations of the Firm had the Merger taken place at
January 1, 2003.
Year ended December 31, (in millions, except per share) 2004 2003
Noninterest revenue $ 31,175 $ 28,966
Net interest income 21,366 21,715
Total net revenue 52,541 50,681
Provision for credit losses 2,727 3,570
Noninterest expense 40,504 33,136
Income before income tax expense 9,310 13,975
Net income $ 6,544 $ 9,330
Net income per common share:
Basic $ 1.85 $ 2.66
Diluted 1.81 2.61
Average common shares outstanding:
Basic 3,510 3,495
Diluted 3,593 3,553
Other business events
Collegiate Funding Services
On March 1, 2006, JPMorgan Chase acquired, for approximately $663 million,
Collegiate Funding Services, a leader in student loan servicing and consolida-
tion. This acquisition will enable the Firm to create a comprehensive education
finance business.
BrownCo
On November 30, 2005, JPMorgan Chase sold BrownCo, an on-line deep-
discount brokerage business, to E*TRADE Financial for a cash purchase price
of $1.6 billion. JPMorgan Chase recognized an after-tax gain of $752 million.
BrownCo’s results of operations are reported in the Asset & Wealth Management
business segment; however, the gain on the sale, which is recorded in
Other income in the Consolidated statements of income, is reported in the
Corporate business segment.
Sears Canada credit card business
On November 15, 2005, JPMorgan Chase purchased Sears Canada Inc.’s
credit card operation, including both the private-label card accounts and the
co-branded Sears MasterCard®accounts. The credit card operation includes
approximately 10 million accounts with $2.2 billion (CAD$2.5 billion) in
managed loans. Sears Canada and JPMorgan Chase entered into an ongoing
arrangement under which JPMorgan Chase will offer private-label and co-
branded credit cards to both new and existing customers of Sears Canada.
Chase Merchant Services, Paymentech integration
On October 5, 2005, JPMorgan Chase and First Data Corp. completed the
integration of the companies’ jointly owned Chase Merchant Services and
Paymentech merchant businesses, to be operated under the name of Chase
Paymentech Solutions, LLC.The joint venture is the largest financial transaction
processor in the U.S. for businesses accepting credit card payments via traditional
point of sale, Internet, catalog and recurring billing. As a result of the integration
into a joint venture, Paymentech has been deconsolidated and JPMorgan Chase’s
ownership interest in this joint venture is accounted for in accordance with the
equity method of accounting.
Neovest Holdings, Inc.
On September 1, 2005, JPMorgan Chase completed its acquisition of Neovest
Holdings, Inc., a provider of high-performance trading technology and direct
market access.This transaction will enable the Investment Bank to offer a
leading, broker-neutral trading platform across asset classes to institutional
investors, asset managers and hedge funds.
Vastera
On April 1, 2005, JPMorgan Chase acquired Vastera, a provider of global
trade management solutions, for approximately $129 million.Vastera’s business
was combined with the Logistics and Trade Services businesses of TSS’
Treasury Services unit. Vastera automates trade management processes asso-
ciated with the physical movement of goods internationally; the acquisition
enables TS to offer management of information and processes in support of
physical goods movement, together with financial settlement.