US Bank 2002 Annual Report Download - page 85

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Net income and earnings per share adjusted for the exclusion of amortization expense (net of tax) and asset impairments
related to goodwill are as follows:
Year Ended December 31 (Dollars in Millions, Except Per Share Data) 2002 2001 2000
Reported net income ******************************************************************* $3,289.2 $1,706.5 $2,875.6
Goodwill amortization, net of tax ****************************************************** — 242.8 230.1
Asset impairments, net of tax ******************************************************** 37.2 — —
Adjusted net income***************************************************************** $3,326.4 $1,949.3 $3,105.7
Earnings per share
Reported net income **************************************************************** $ 1.72 $ .89 $ 1.51
Goodwill amortization, net of tax ****************************************************** — .12 .12
Asset impairments, net of tax ******************************************************** .02 — —
Adjusted net income ************************************************************* $ 1.74 $ 1.01 $ 1.63
Diluted earnings per share
Reported net income **************************************************************** $ 1.71 $ .88 $ 1.50
Goodwill amortization, net of tax ****************************************************** — .13 .12
Asset impairments, net of tax ******************************************************** .02 — —
Adjusted net income ************************************************************* $ 1.73 $ 1.01 $ 1.62
Applying the provisions of SFAS 141 to recent after-tax income for the year ending December 31, 2002, by
acquisitions and the provisions of SFAS 142 to purchase $205.6 million, or $.11 per diluted share.
acquisitions completed prior to July 1, 2001, increased
The following table reflects the changes in the carrying value of goodwill for the year ended December 31, 2002:
Private Client,
Wholesale Consumer Trust and Asset Payment Capital Consolidated
(Dollars in Millions) Banking Banking Management Services Markets Company
Balance at December 31, 2001 ******** $1,348 $1,706 $289 $1,811 $305 $5,459
Goodwill acquired********************* 43 433 447 2 — 925
Impairment losses ******************** (59)————(59)
Balance at December 31, 2002 ******** $1,332 $2,139 $736 $1,813 $305 $6,325
Goodwill acquired in 2002 in Wholesale Banking Banking. Also included in the goodwill acquired in
included $25 million from an earn-out provision related to Consumer Banking was $17 million related to the purchase
the acquisition of Oliver-Allen Corporation. The Company of Leader in April of 2002. Private Client, Trust and Asset
recorded $427 million of goodwill related to the Bay View Management acquired $444 million of goodwill related to
acquisition in November of 2002, $15 million related to the acquisition of State Street Bank Corporate Trust in
Wholesale Banking and $412 million related to Consumer December of 2002.
Amortizable intangible assets consisted of the following:
Estimated Amortization Balance
December 31 (Dollars in Millions) Life (b) Method (c) 2002 2001
Goodwill (a) *************************************************** — — $6,325 $5,459
Merchant processing contracts ********************************** 8 years AC 596 680
Core deposit benefits ****************************************** 10 years/6 years SL/AC 505 530
Mortgage servicing rights *************************************** 5 years AC 642 360
Trust relationships ********************************************* 15 years/10 years SL/AC 371 169
Other identified intangibles************************************** 8 years/8 years SL/AC 207 214
Total ****************************************************** $8,646 $7,412
(a) The Company adopted SFAS 142 on January 1, 2002, resulting in the elimination of amortization of goodwill and other indefinite lived intangible assets. Prior to adoption, goodwill
was amortized over periods ranging up to 25 years.
(b) Estimated life represents the amortization period for assets subject to the straight line method and the weighted average amortization period for intangibles subject to accelerated
methods. If more than one amortization method is used for a category, the estimated life for each method is calculated and reported separately.
(c) Amortization methods: SL = straight line method
AC = accelerated methods generally based on cash flows
U.S. Bancorp 83