JP Morgan Chase 2008 Annual Report Download - page 227

JPMorgan Chase & Co./ 2008 Annual Report 225
Note 36 – Parent company
Parent company – statements of income
Year ended December 31, (in millions) 2008 2007 2006
Income
Dividends from bank and bank
holding company subsidiaries $ 3,085 $ 5,834 $ 2,935
Dividends from nonbank subsidiaries(a) 1,687 2,463 1,999
Interest income from subsidiaries 4,539 5,082 3,612
Other interest income 212 263 273
Other income from subsidiaries, primarily fees:
Bank and bank holding company 244 182 220
Nonbank 95 960 739
Other income (loss) (1,038) (131) (206)
Total income 8,824 14,653 9,572
Expense
Interest expense to subsidiaries(a) 1,302 1,239 1,025
Other interest expense 6,879 6,427 4,536
Compensation expense 43 125 519
Other noninterest expense(b) 732 329 295
Total expense 8,956 8,120 6,375
Income (loss) before income tax benefit
and undistributed net income of subsidiaries (132) 6,533 3,197
Income tax benefit(b) 2,582 589 982
Equity in undistributed net income
of subsidiaries(b) 3,155 8,243 10,265
Net income $ 5,605 $ 15,365 $14,444
Parent company – balance sheets
December 31, (in millions) 2008 2007
Assets
Cash and due from banks $35$ 110
Deposits with banking subsidiaries 60,551 52,972
Trading assets 12,487 9,563
Available-for-sale securities 1,587 43
Loans 1,525 1,423
Advances to, and receivables from, subsidiaries:
Bank and bank holding company 33,293 28,705
Nonbank 131,032 52,895
Investments (at equity) in subsidiaries:
Bank and bank holding company 153,140 128,711
Nonbank(a) 27,968 25,710
Goodwill and other intangibles 1,616 850
Other assets 12,934 13,241
Total assets $ 436,168 $ 314,223
Liabilities and stockholders’ equity
Borrowings from, and payables to,
subsidiaries(a) $ 44,467 $ 23,938
Other borrowed funds, primarily commercial
paper 39,560 52,440
Other liabilities 9,363 8,043
Long-term debt(c) 175,894 106,581
Total liabilities 269,284 191,002
Stockholders’ equity 166,884 123,221
Total liabilities and stockholders’ equity $436,168 $314,223
Parent company – statements of cash flows
Year ended December 31, (in millions) 2008 2007 2006
Operating activities
Net income $ 5,605 $ 15,365 $14,444
Less: Net income of subsidiaries(a)(b) 7,927 16,540 15,199
Parent company net loss (2,322) (1,175) (755)
Add: Cash dividends from subsidiaries(a) 4,648 8,061 4,934
Other, net 1,920 3,496 (185)
Net cash provided by operating
activities 4,246 10,382 3,994
Investing activities
Net change in:
Deposits with banking subsidiaries (7,579) (34,213) (9,307)
Securities purchased under resale
agreements, primarily with nonbank
subsidiaries ——24
Loans (102) (452) (633)
Advances to subsidiaries (82,725) (24,553) (3,032)
Investments (at equity)
in subsidiaries(a)(b) (26,212) (4,135) 579
Other, net —— (1)
Available-for-sale securities:
Purchases (1,475) (104) —
Proceeds from sales and maturities —318 29
Net cash used in investing
activities (118,093) (63,139) (12,341)
Financing activities
Net change in borrowings
from subsidiaries(a) 20,529 4,755 2,672
Net change in other borrowed funds (12,880) 31,429 5,336
Proceeds from the issuance of
long-term debt(d) 89,791 38,986 18,153
Repayments of long-term debt (22,972) (11,662) (10,557)
Excess tax benefits related to
stock-based compensation 148 365 302
Proceeds from issuance of common
stock 11,969 1,467 1,659
Proceeds from issuance of preferred
stock and warrant to the U.S. Treasury 25,000 ——
Proceeds from issuance of preferred
stock(e) 8,098 ——
Redemption of preferred stock —— (139)
Repurchases of treasury stock —(8,178) (3,938)
Cash dividends paid (5,911) (5,051) (4,846)
Net cash provided by financing
activities 113,772 52,111 8,642
Net (decrease) increase in cash and due
from banks (75) (646) 295
Cash and due from banks
at the beginning of the year, primarily
with bank subsidiaries 110 756 461
Cash and due from banks at the end
of the year, primarily with bank
subsidiaries $ 35 $ 110 $ 756
Cash interest paid $ 7,485 $ 7,470 $ 5,485
Cash income taxes paid 156 5,074 3,599
(a) Subsidiaries include trusts that issued guaranteed capital debt securities (“issuer trusts”).
As a result of FIN 46R, the Parent Company deconsolidated these trusts in 2003. The
Parent Company received dividends of $15 million, $18 million and $23 million from the
issuer trusts in 2008, 2007 and 2006, respectively. For further discussion on these issuer
trusts, see Note 23 on page 204 of this Annual Report.
(b) Amounts for 2007 have been revised to reflect the push down of certain litigation expense,
which had previously been recorded at the parent company level, to the bank subsidiary
level. There was no change to net income as the increase in Parent Company profitability
was offset by a decrease in the net income of subsidiaries.
(c) At December 31, 2008, debt that contractually matures in 2009 through 2013 totaled
$25.8 billion, $28.6 billion, $29.3 billion, $25.3 billion and $11.8 billion, respectively.
(d) Includes $39.8 billion of Bear Stearns’ long-term debt assumed by JPMorgan Chase & Co.
(e) Includes the conversion of Bear Stearns’ preferred stock into JPMorgan Chase preferred
stock.