TD Bank 2003 Annual Report Download - page 86

TD BANK FINANCIAL GROUP ANNUAL REPORT 2003 • Financial Results84
(a) Acquisition of branches from Laurentian Bank of
Canada
On October 31, 2003, the Bank completed the acquisition of
57 branches outside the Province of Quebec from the Laurentian
Bank of Canada. The all-cash purchase price reflects the value
of assets acquired, less liabilities assumed. Intangible assets
arising from the acquisition of $126 million are being amortized
on a straight-line basis over the expected period of benefit of
five years.
(b) Sale of mutual fund record keeping and
custody business
During fiscal 2002, the Bank sold its mutual fund record keeping
and custody business and recorded a pre-tax gain of $40 million.
(c) Acquisition of Stafford and LETCO
On March 1, 2002, the Bank completed the acquisition of the
securities and trading technology platform and listed equity
options market-making businesses of the Stafford group of firms
(Stafford) and the LETCO group (LETCO). The purchase price con-
sisted of an initial cash payment of approximately $428 million.
The acquisition was accounted for by the purchase method and
the results of Stafford and LETCO’s operations have been includ-
ed in the Consolidated Statement of Operations from March 1,
2002. As discussed in Note 5, the goodwill arising from the
acquisition was written off in the second quarter of fiscal 2003.
(d) Acquisition of TD Waterhouse shares
On November 26, 2001, the Bank completed the acquisition of
the outstanding common shares of TD Waterhouse Group, Inc.
(TD Waterhouse) that it did not own for total consideration of
approximately $605 million. Goodwill arising from the acquisition
was $233 million. On November 1, 2001, the Bank issued
approximately 11 million common shares for cash proceeds of
$400 million to partially fund the transaction.
(e) Acquisition of R.J. Thompson Holdings, Inc.
On November 1, 2001, TD Waterhouse acquired R.J. Thompson
Holdings, Inc. (RJT), a direct access brokerage firm, for total cash
consideration of $122 million. Goodwill arising from the acquisi-
tion was $120 million. The results of RJT have been included in
the Consolidated Statement of Operations from November 1,
2001. In addition, contingent purchase price payments of up to
$24 million were payable upon achievement of certain results. In
the fourth quarter of 2002, $8 million was paid relating to the
contingent purchase price payments and in the first quarter of
2003 an additional $14 million was paid to satisfy the remaining
contingent purchase price payments required under the purchase
agreement. These payments relate to finite life intangible assets
which are amortized on a straight-line basis over the expected
period of benefit of three years.
(f) Acquisition of Newcrest Holdings Inc.
The Bank acquired all of the outstanding Class A and Class B
common shares of Newcrest Holdings Inc. (Newcrest), a holding
company for the securities dealer Newcrest Capital Inc., effective
November 1, 2000. The total consideration in respect of this
purchase amounted to $225 million, paid in Bank common shares
of $181 million and cash of $44 million. The acquisition was
accounted for by the purchase method and the results of
Newcrest’s operations have been included in the Consolidated
Statement of Operations from November 1, 2000. Until October
31, 2001, goodwill arising from the transaction of $160 million
was amortized on a straight-line basis over the expected period
of benefit of 10 years. Beginning November 1, 2001, the remain-
ing goodwill is tested for impairment as discussed in Note 1.
(g) Sale of investment real estate
During fiscal 2001, the Bank sold certain investment real estate
for a pre-tax gain on sale of $350 million, net of deferrals.
(millions of dollars)
Income (loss) before pro-
vision for income taxes and
2003 Total revenue non-controlling interest Net income (loss) Total assets
Canada $ 7,381 $ 1,094 $ 761 $191,817
International12,659 396 315 81,715
Total $10,040 $ 1,490 $1,076 $273,532
2002
Canada $ 7,593 $ 1,072 $ 785 $171,562
International12,636 (1,520) (852) 106,478
Tot al $10,229 $ (448) $ (67) $278,040
2001
Canada $ 7,692 $ 365 $ 604 $171,587
International13,146 899 788 116,251
Tot al $10,838 $ 1,264 $1,392 $287,838
1Includes United States total revenue of $1,588 million
(2002 – $1,553 million; 2001 – $1,660 million).
Results by geographic distribution
The Bank earns revenue in Canada and in international locations.
Reporting is based on the geographic location of the unit respon-
sible for recording the revenues or assets.
During the second quarter of fiscal 2003, the Bank announced a
restructuring of the international unit of its wealth management
business. Declining volumes in the discount brokerage business
worldwide have resulted in excess capacity, which impacted the
Bank's ability to profitably run a global brokerage model. The
Bank recognized a total of $26 million of pre-tax restructuring
costs, with $21 million recognized in the second quarter and
$5 million recognized in the third quarter of fiscal 2003. The
restructuring was completed by the end of the third quarter of
fiscal 2003. Of the $26 million in pre-tax restructuring costs,
$7 million relates to lease termination costs and other premises
related expenses and the remainder of the restructuring costs
of $19 million relates to write downs of software and systems
development costs.
NOTE 22 Acquisitions and dispositions
NOTE 23 Restructuring costs