US Bank 2004 Annual Report Download - page 74
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Please find page 74 of the 2004 US Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.from banks, federal funds sold and securities purchased In December 2004, the Financial Accounting Standards
under agreements to resell. Board issued Statement of Financial Accounting Standards
No. 123 (revised 2004) (‘‘SFAS 123R’’), ‘‘Share-Based
Stock-Based Compensation The Company grants stock Payment’’ a revision of SFAS 123. SFAS 123R requires
awards including restricted stock and options to purchase companies to measure the cost of employee services in
common stock of the Company. Stock option grants are for exchange for an award of equity instruments based on the
a fixed number of shares to employees and directors with grant-date fair value of the award. This statement eliminates
an exercise price equal to the fair value of the shares at the the use of the alternative intrinsic value method of
date of grant. The Company recognizes stock-based accounting that was allowed when SFAS 123 was originally
compensation in its results of operations utilizing the fair issued. The provisions of this statement are effective in the
value method under Statement of Financial Accounting first interim reporting period beginning after June 15, 2005.
Standard No. 123, ‘‘Accounting for Stock-based Because the Company retroactively adopted the fair value
Compensation’’ (‘‘SFAS 123’’). Stock-based compensation is method in 2003, the revised statement will not have a
recognized using an accelerated method of amortization for significant impact on the Company’s financial statements.
awards with graded vesting features and on a straight-line
basis for awards with cliff vesting. The amortization of Loan Commitments On March 9, 2004, the Securities and
stock-based compensation reflects estimated forfeitures Exchange Commission staff issued Staff Accounting Bulletin
adjusted for actual forfeiture experience. As compensation No. 105 (‘‘SAB 105’’), ‘‘Application of Accounting
expense is recognized, a deferred tax asset is recorded that Principles to Loan Commitments,’’ which provides guidance
represents an estimate of the future tax deduction from regarding loan commitments accounted for as derivative
exercise or release of restrictions. At the time stock options instruments and is effective for commitments entered into
are exercised, cancelled or expire, the Company may be after March 31, 2004. The guidance clarifies that expected
required to recognize an adjustment to tax expense. future cash flows related to the servicing of the loan may be
recognized only when the servicing asset has been
Per Share Calculations Earnings per share is calculated by contractually separated from the underlying loan by sale
dividing net income by the weighted average number of with servicing retained. The adoption of SAB 105 did not
common shares outstanding during the year. Diluted have a material impact on the Company’s financial
earnings per share is calculated by adjusting income and statements.
outstanding shares, assuming conversion of all potentially
dilutive securities, using the treasury stock method. All per Business Combinations
share amounts have been restated for stock splits.
On June 29, 2004, the Company purchased the remaining
Accounting Changes 50 percent ownership interest of EuroConex Technologies
Ltd (‘‘EuroConex’’) from the Bank of Ireland. In addition,
Stock-Based Compensation In December 2002, the during the second and fourth quarter of 2004, the
Financial Accounting Standards Board issued Statement of Company completed three separate transactions to acquire
Financial Accounting Standards No. 148 (‘‘SFAS 148’’), merchant processing businesses in Poland, the United
‘‘Accounting for Stock-Based Compensation — Transition Kingdom and Norway. In connection with these
and Disclosure,’’ an amendment of SFAS 123. SFAS 148 transactions, EuroConex and its affiliates provide debit and
provides alternative methods of transition for a voluntary credit card processing services to merchants, directly and
change to the fair value based method of accounting for through alliances with banking partners in these European
stock-based employee compensation. In previous years, the markets. These transactions represented total assets acquired
Company accounted for stock-based employee of $377 million and total liabilities assumed of $115 million
compensation under the intrinsic based method and at the closing date. Included in total assets were contract
provided disclosure of the impact of the fair value based and other intangibles with a fair value of $163 million and
method on reported income. For its 2003 financial goodwill of $105 million. The goodwill reflected the
statements, the Company elected to adopt the fair value strategic value of these businesses to the Company’s
method using the retroactive restatement approach. All European merchant processing business and anticipated
prior periods presented have been restated to reflect the economies of scale that will result from these transactions.
compensation cost that would have been recognized had the On December 31, 2002, the Company acquired the
recognition provisions of SFAS 123 been applied to all corporate trust business of State Street Bank and
awards granted to employees after January 1, 1995, that Trust Company (‘‘State Street Corporate Trust’’) in a cash
remained unvested at the beginning of the first period transaction valued at $720 million. State Street Corporate
presented. Trust was a leading provider, particularly in the Northeast,
72 U.S. BANCORP
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