TD Bank 2003 Annual Report Download - page 87

TD BANK FINANCIAL GROUP ANNUAL REPORT 2003 • Financial Results 85
2003 2002
Human Real
(millions of dollars) Resources Estate Technology Other Total Tot a l
Balance at beginning of year $6 $29 $ 1 $ – $36 $337
Restructuring costs arising during the year
Wholesale Banking131 10 4 27 72 –
Wealth Management –7 19 – 26 –
Amount utilized during the year
Personal and Commercial Banking –27 1 – 28 165
Wholesale Banking 34 4 3 21 62 15
Wealth Management –6 19 – 25121
Balance at end of year $3 $ 9 $ 1 $ 6 $19 $36
Basic and diluted earnings (loss) per common share at October 31 are as follows:
(millions of dollars) 2003 2002 2001
Basic earnings (loss) per common share
Net income (loss) $1,076 $ (67) $1,392
Preferred dividends 87 93 92
Net income (loss) applicable to common shares 989 (160) 1,300
Average number of common shares outstanding (millions) 649.8 641.0 627.0
Basic earnings (loss) per common share $ 1.52 $ (.25) $ 2.07
Diluted earnings (loss) per common share
Net income (loss) applicable to common shares $ 989 $ (160) $1,300
Average number of common shares outstanding (millions) 649.8 641.0 627.0
Stock options potentially exercisable as determined under
the treasury stock method14.1 5.9 8.5
Average number of common shares outstanding – diluted 653.9 646.9 635.5
Diluted earnings (loss) per common share2$ 1.51 $ (.25) $ 2.05
During the second quarter of fiscal 2003, the Bank also
announced a restructuring of its U.S. equity options business in
Wholesale Banking. Dramatic volume and margin declines had a
significantly negative impact on this business. Consequently, the
Bank determined that it was necessary to shift its strategy and
focus solely on the equity options group centered in Chicago.
As a result, the Bank recognized a total of $72 million of pre-tax
restructuring costs in the second quarter of fiscal 2003. Of the
$72 million in pre-tax restructuring costs, $31 million relates to
severance and employee support costs, $10 million relates to
lease termination costs and other premises related expenses
and the remainder of the restructuring costs of $31 million
relates to other expenses and revenue reserves directly related
to the restructuring. The $31 million in severance and employee
support costs reflects the cost of eliminating approximately
104 positions in the U.S. and 24 positions in Europe. The Bank
expects the restructuring to be substantially complete by the
end of fiscal 2004.
During the fourth quarter of fiscal 2001, Wholesale Banking
announced a restructuring of its operations and as a result
recorded pre-tax restructuring costs of $130 million. The
restructuring costs related primarily to employee severance.
The restructuring was substantially completed by the end of
the fourth quarter of fiscal 2002.
In the third quarter of fiscal 2001, TD Waterhouse announced
a restructuring of its operations and pre-tax costs of $54 million
were charged to income, primarily for employee severance and
real estate rationalization. The restructuring was completed by
the end of the third quarter of fiscal 2002.
At the time of acquisition of Newcrest in 2001, the Bank deter-
mined it was necessary to restructure the combined operations.
Pre-tax restructuring costs of $55 million were charged to income
in the first quarter of fiscal 2001, primarily for employee sever-
ance. The restructuring was completed by the end of the second
quarter of fiscal 2001.
In 2000, following the acquisition of CT, the Bank determined
that it was necessary to restructure the combined operations.
Pre-tax restructuring costs of $475 million were recorded in the
second quarter of fiscal 2000. The restructuring costs related pri-
marily to severance and employee support costs, branch closures,
rationalization of regional and head office space requirements,
lease termination, and other expenses. The restructuring was
completed by the end of the fourth quarter of fiscal 2003.
As at October 31, 2003, the total unutilized balance of
restructuring costs of $19 million shown below is included in
other liabilities in the Consolidated Balance Sheet.
1Excluded from the computation of diluted earnings (loss) per common share
were weighted average options outstanding of 10,908,010 with a weighted
exercise price of $39.40 (2002 – 7,944,584 at $40.14; 2001 – 2,586,705 at
$41.69) as the options’ exercise prices were greater than the average mar-
ket price of the Bank’s common shares.
2For 2002, the effect of stock options potentially exercisable on earnings
(loss) per common share was anti-dilutive, therefore basic and diluted
earnings (loss) per common share are the same.
NOTE 24 Earnings (loss) per common share
1Includes $6 million of revenue reserves directly related to the restructuring.