JP Morgan Chase 2008 Annual Report Download - page 76

Management’s discussion and analysis
74 JPMorgan Chase & Co./ 2008 Annual Report
2007 compared with 2006
Net income was $1.9 billion, compared with $842 million in the prior
year, benefiting from strong Private Equity gains, partially offset by
higher expense. Prior-year results also included Income from discon-
tinued operations of $795 million, which included a one-time gain of
$622 million from the sale of selected corporate trust businesses.
Net income for Private Equity was $2.2 billion, compared with $627
million in the prior year. Total net revenue was $4.0 billion, an
increase of $2.8 billion. The increase was driven by Private Equity
gains of $4.1 billion, compared with $1.3 billion, reflecting a higher
level of gains and the change in classification of carried interest to
compensation expense. Total noninterest expense was $589 million,
an increase of $422 million from the prior year. The increase was
driven by higher compensation expense, reflecting the change in the
classification of carried interest.
Net loss for Corporate was $150 million, compared with a net loss of
$391 million in the prior year. Corporate total net revenue was $452
million, an increase of $1.6 billion. Revenue benefited from net security
gains compared with net security losses in the prior year and improved
net interest spread. Total noninterest expense was $959 million, an
increase of $284 million from the prior year. The increase reflected high-
er net litigation expense, driven by credit card-related litigation and the
absence of prior-year insurance recoveries related to certain material liti-
gation, partially offset by lower compensation expense.
Net loss for merger costs related to the Bank One and the Bank of
New York transactions were $130 million, compared with a loss of
$189 million in the prior year. Merger costs were $209 million, com-
pared with $305 million in the prior year.
Selected metrics
Year ended December 31,
(in millions, except headcount) 2008 2007 2006
Total net revenue
Private equity(a) $ (963) $ 3,967 $ 1,142
Corporate 1,032 452 (1,128)
Total net revenue $ 69 $ 4,419 $ 14
Net income (loss)
Private equity(a) $ (690) $ 2,165 $ 627
Corporate(b)(c) 1,458 (150) (391)
Merger-related items(d) (2,117) (130) (189)
Income (loss) from continuing
operations (1,349) 1,885 47
Income from discontinued
operations (after-tax)(e) —— 795
Income before extraordinary gain (1,349) 1,885 842
Extraordinary gain 1,906 ——
Total net income $ 557 $ 1,885 $ 842
Headcount 23,376 22,512 23,242
(a) The Firm adopted SFAS 157 in the first quarter of 2007. See Note 4 on pages
141–155 of this Annual Report for additional information.
(b) Included a release of credit card litigation reserves in 2008 and insurance recoveries
related to settlement of the Enron and WorldCom class action litigations and for cer-
tain other material legal proceedings of $512 million for full year 2006.
(c) Includes tax benefits recognized upon resolution of tax audits.
(d) Includes an accounting conformity loan loss reserve provision related to the
Washington Mutual transaction in 2008. 2008 also reflects items related to the Bear
Stearns merger, which included Bear Stearns’ losses, merger costs, Bear Stearns asset
management liquidation costs and Bear Stearns private client services broker reten-
tion expense. Prior periods represent costs related to the Bank One transaction in
2004 and the Bank of New York transaction in 2006.
(e) Included a $622 million gain from the sale of selected corporate trust business in
2006.