TD Bank 2006 Annual Report Download - page 111

TD BANK FINANCIAL GROUP ANNUAL REPORT 2006 Financial Results 107
(a) VFC Inc.
Effective May 15, 2006, the Bank owned all of the issued and
outstanding common shares of VFC Inc. (VFC), a leading provider
of automotive purchase financing and consumer instalment
loans. The acquisition of VFC’s issued and outstanding common
shares resulted in a total purchase consideration of $328 million,
comprising cash paid, common shares of the Bank issued and
acquisition costs in the amounts of $256 million, $70 million and
$2 million, respectively. The acquisition was accounted for by the
purchase method. VFC’s results are reported in the Canadian
Personal and Commercial Banking segment.
The acquisition of VFC contributed $36 million of cash and
cash equivalents, $435 million of loans, $64 million of identifi-
able intangibles, $8 million of other assets, $325 million of
secured debt and $93 million of other liabilities to the Bank’s
Consolidated Balance Sheet. The excess of the total purchase
consideration over the fair value of the identifiable net assets
acquired has been allocated entirely to goodwill. VFC’s results
for the period from acquisition to October 31, 2006 have been
consolidated with the Bank’s results.
(b) TD Banknorth
On March 1, 2005, the Bank acquired 51% of the outstanding
shares of TD Banknorth for total consideration of $5,100 million,
paid in cash and common shares in the amount of $3,112 million
and $1,988 million, respectively. The acquisition was accounted
for by the purchase method. The fiscal periods of the Bank and
TD Banknorth are not coterminus. TD Banknorth’s results from
the March 1, 2005 acquisition date to September 30, 2005 were
consolidated with the Bank’s results for the year ended October
31, 2005. TD Banknorth’s results for the twelve months ended
September 30, 2006 were consolidated with the Bank’s results
for the year ended October 31, 2006. TD Banknorth is reported
as a separate segment referred to as U.S. Personal and
Commercial Banking.
During March 2005, TD Banknorth completed a share repur-
chase of 15.3 million shares. As a result of this share repurchase,
the Bank increased its ownership of TD Banknorth by 4.5%
resulting in a 55.5% share ownership.
The following table presents 100% of assets and liabilities of
TD Banknorth as of the date of acquisition. The assets and liabili-
ties are carried 55.5% at fair value and 44.5% at historical cost.
ACQUISITIONS AND DISPOSITIONS
NOTE 25
Acquisition of TD Banknorth Assets and Liabilities
(millions of Canadian dollars)
Fair value of assets acquired
Cash and cash equivalents $ 928
Securities 6,335
Loans 24,581
Intangible assets
Core deposit intangibles 420
Other identifiable intangibles 137
Other assets 1,683
$34,084
Less liabilities assumed
Deposits 28,919
Obligations related to securities sold under
repurchase agreements 1,430
Other liabilities 198
Future tax liability on intangible assets 189
Subordinated notes, debentures and other debt 670
$31,406
Less cash used in share repurchase program by TD Banknorth 603
Fair value of identifiable net assets acquired $2,075
Non-controlling interest11,617
458
Goodwill 4,642
Total purchase consideration $ 5,100
1Includes $881 million of historical cost of goodwill and intangibles
allocated to non-controlling interest ($831 million of goodwill; $50 million
of intangibles).
For the twelve months ended1
(millions of Canadian dollars) October 31, 2005
Net interest income $6,469
Provision for credit losses (78)
Other income 5,976
Non-interest expenses (9,307)
Income before provision for income taxes 3,060
Provision for income taxes (707)
Income before non-controlling interest 2,353
Non-controlling interest (137)
Net income available to common shares $ 2,216
Earnings per share ($)
Basic $ 3.14
Diluted 3.11
1Combines the results of the Bank for the twelve months ended
October 31, 2005 with the results of TD Banknorth for the twelve
months ended September 30, 2005.
Unaudited Proforma Combined Results of Operations
The following unaudited supplemental pro forma information
has been prepared to give effect to the acquisition of 55.5%
of TD Banknorth as if it had occurred November 1, 2004. This
calculation combines the Bank’s results of operations with
TD Banknorth’sreported earnings adjusted for core deposit and
other intangibles amortization, merger-related costs, capital
tax and incremental deposit interest costs.