KeyBank 2008 Annual Report Download - page 29

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27
MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES
Figure 5 presents certain 2008 earnings data and performance ratios,
excluding (credits) charges related to the leveraged lease tax litigation and
goodwill impairment charges summarized below (non-GAAP). Figure 5
also reconciles the GAAP performance measures to the corresponding non-
GAAP measures and provides a basis for period-to-period comparisons.
Non-GAAP financial measures have inherent limitations, are not required
to be uniformly applied and are not audited. Non-GAAP financial
measures should not be considered in isolation, or as a substitute for
analyses of results as reported under GAAP.
Twelve
Months
Three Months Ended Ended
dollars in millions, except per share amounts 12-31-08 9-30-08 6-30-08 3-31-08 12-31-08
NET (LOSS) INCOME
Net (loss) income (GAAP) $(524) $(36) $(1,126) $218 $(1,468)
(Credits) charges related to leveraged lease tax litigation, after tax (120) 30 1,011 38 959
Charges related to goodwill impairment, after tax 420 4 — — 424
Net (loss) income, excluding (credits) charges related to leveraged
lease tax litigation and goodwill impairment (non-GAAP) $(224) $ (2) $ (115) $256 $ (85)
Preferred dividends and amortization of discount on
Series B Preferred Stock $30 $12 — — $42
Net (loss) income applicable to common shares (GAAP) $(554) $(48) $(1,126) $218 $(1,510)
Net (loss) income applicable to common shares, excluding
(credits) charges related to leveraged lease tax litigation
and goodwill impairment (non-GAAP) (254) (14) (115) 256 (127)
PER COMMON SHARE
Net (loss) income — assuming dilution (GAAP) $(1.13) $(.10) $(2.70) $.54 $(3.36)
Net (loss) income, excluding (credits) charges related to leveraged
lease tax litigation and goodwill impairment — assuming dilution
(non-GAAP) (.52) (.03) (.28) .64 (.28)
PERFORMANCE RATIOS
Return on average total assets:
(a)
Average total assets $107,735 $103,156 $103,290 $103,356 $104,390
Return on average total assets (GAAP) (1.93)% (.14)% (4.38)% .85% (1.41)%
Return on average total assets, excluding (credits) charges
related to leveraged lease tax litigation and goodwill
impairment (non-GAAP) (.83) (.01) (.45) 1.00 (.08)
Return on average common equity:
(a)
Average common equity $7,971 $8,077 $8,489 $8,445 $8,244
Returnon average common equity (GAAP) (27.65)% (2.36)% (53.35)% 10.38% (18.32)%
Return on average common equity, excluding (credits) charges
related to leveraged lease tax litigation and goodwill
impairment (non-GAAP) (12.68) (.69) (5.45) 12.19 (1.54)
Return on average total equity:
(a)
Average total equity $9,888 $8,734 $8,617 $8,445 $8,923
Return on average total equity (GAAP) (21.08)% (1.64)% (52.56)% 10.38% (16.45)%
Return on average total equity, excluding (credits) charges
related to leveraged lease tax litigation and goodwill
impairment (non-GAAP) (9.01) (.09) (5.37) 12.19 (.95)
NET INTEREST INCOME AND MARGIN
Net interest income:
Net interest income (GAAP) $639 $699 $358 $713 $2,409
Charges related to leveraged lease tax litigation, pre-tax 18 — 359 3 380
Net interest income, excluding charges related to leveraged
lease tax litigation (non-GAAP) $657 $699 $717 $716 $2,789
Net interest income/margin (TE):
Net interest income (loss) (TE) (as reported) $646 $705 $(100) $704 $1,955
Charges related to leveraged lease tax litigation, pre-tax (TE) 18 — 838 34 890
Net interest income, excluding charges related to leveraged
lease tax litigation (TE) (adjusted basis) $664 $705 $ 738 $738 $2,845
Net interest margin (TE) (as reported)
(a)
2.76% 3.13% (.44)% 3.14% 2.16%
Impact of charges related to leveraged lease tax litigation,
pre-tax (TE)
(a)
.08 — 3.76 .15 .98
Net interest margin, excluding charges related to leveraged
lease tax litigation (TE) (adjusted basis)
(a)
2.84% 3.13% 3.32% 3.29% 3.14%
(a)
Income statement amount has been annualized in calculation of percentage.
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles
FIGURE 5. GAAP TO NON-GAAP RECONCILIATIONS