JP Morgan Chase 2010 Annual Report Download - page 169

JPMorgan Chase & Co./2010 Annual Report 169
Unaudited pro forma condensed combined financial
information reflecting the Bear Stearns merger and
Washington Mutual transaction
The following unaudited pro forma condensed combined finan-
cial information presents the 2008 results of operations of the
Firm as they may have appeared, if the Bear Stearns merger and
the Washington Mutual transaction had been completed on
January 1, 2008.
Year ended December 31,
(in millions, except per share data)
200
8
Total net revenue
$
68,149
Loss
before extraordinary gain
(14,090
)
Net
loss
(12,184
)
Net loss per common share data:
Basic earnings per share
Loss
bef
ore extraordinary gain
$
(4.26
)
Net
loss
(3.72
)
Diluted earnings per share
(a)
Loss
before extraordinary gain
(4.26
)
Net
loss
(3.72
)
Average common shares issued and ou
t
standing
Basic
3,510.5
Diluted
3,510.
5
(a) Common equivalent shares have been excluded from the pro forma compu-
tation of diluted loss per share for the year ended December 31, 2008, as
the effect would be antidilutive.
The unaudited pro forma combined financial information is pre-
sented for illustrative purposes only and does not indicate the
financial results of the combined company had the companies
actually been combined as of January 1, 2008, nor is it indicative
of the results of operations in future periods. Included in the
unaudited pro forma combined financial information for the year
ended December 31, 2008, were pro forma adjustments to reflect
the results of operations of Bear Stearns and Washington Mu-
tual’s banking operations, considering the purchase accounting,
valuation and accounting conformity adjustments. For the Wash-
ington Mutual transaction, the amortization of purchase account-
ing adjustments to report interest-earning assets acquired and
interest-bearing liabilities assumed at current interest rates is
reflected for the year ended December 31, 2008. Valuation
adjustments and the adjustment to conform allowance method-
ologies in the Washington Mutual transaction, and valuation and
accounting conformity adjustments related to the Bear Stearns
merger are reflected in the results for the year ended December
31, 2008.
Internal reorganization related to the Bear Stearns
merger
On June 30, 2008, JPMorgan Chase fully and unconditionally
guaranteed each series of outstanding preferred stock of Bear
Stearns, as well as all of Bear Stearns’ outstanding U.S. Securities
and Exchange Commission (“SEC”) registered U.S. debt securities
and obligations relating to trust preferred capital debt securities.
Subsequently, on July 15, 2008, JPMorgan Chase completed an
internal merger transaction, which resulted in each series of
outstanding preferred stock of Bear Stearns being automatically
exchanged into newly-issued shares of JPMorgan Chase preferred
stock having substantially identical terms. In addition, pursuant to
internal transactions in July 2008 and the first quarter of 2009,
JPMorgan Chase assumed or guaranteed the remaining out-
standing securities of Bear Stearns and its subsidiaries, in each
case in accordance with the indentures and other agreements
governing those securities. As discussed below, all of the above
series of preferred stock, and the depositary shares representing
such preferred stock, were redeemed on August 20, 2010.
Other business events
Redemption of Series E, F and G cumulative preferred
stock
On August 20, 2010, JPMorgan Chase redeemed at stated
redemption value, all outstanding shares of its Series E 6.15%
Cumulative Preferred Stock; Series F 5.72% Cumulative Preferred
Stock; and Series G 5.49% Cumulative Preferred Stock. For a
further discussion of preferred stock, see Note 23 on pages 267–
268 of this Annual Report.
RBS Sempra transaction
On July 1, 2010, JPMorgan Chase completed the acquisition of
RBS Sempra Commodities’ global oil, global metals and European
power and gas businesses. The Firm acquired approximately $1.7
billion of net assets which included $3.3 billion of debt which was
immediately repaid. This acquisition almost doubled the number
of clients the Firm’s commodities business can serve and will
enable the Firm to offer clients more products in more regions of
the world.
Purchase of remaining interest in J.P. Morgan Cazenove
On January 4, 2010, JPMorgan Chase purchased the remaining
interest in J.P. Morgan Cazenove, an investment banking busi-
ness partnership formed in 2005, which resulted in an adjustment
to the Firm’s capital surplus of approximately $1.3 billion.