TD Bank Financial Group 147th Annual Report 2002 Close Window Button
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Management's discussion and analysis of operating performance


Reconciliation of operating cash basis results to reported results

How the Bank reports

The Bank prepares its financial statements in accordance with Canadian generally accepted accounting principles (GAAP) and are presented on pages 43 to 79 of this annual report. The Bank refers to results prepared in accordance with GAAP as the “reported basis”.

In addition to presenting the Bank’s results on a reported basis, the Bank also utilizes the “operating cash basis” to measure overall Bank performance against targeted goals. The definition of operating cash basis begins with the reported GAAP results and then excludes the impact of special items. For fiscal 2002, the only special item excluded was a gain on sale of the Bank’s mutual fund record keeping and custody business. Prior year results excluded special items resulting from restructuring costs related to acquisitions and significant business restructuring initiatives (TD Securities in the fourth quarter 2001, TD Waterhouse in the third quarter 2001, Newcrest in the first quarter 2001 and Canada Trust in the second quarter 2000), the effects of future tax rate reductions on future tax balances in the first and third quarter 2001, and the effect of real estate gains and general allowance increases in the first and second quarter 2001. The Bank views these restructuring costs and special items as transactions that are not part of the Bank’s normal daily business operations and are therefore not indicative of underlying trends. In addition, the Bank also excludes non-cash charges related to goodwill and identified intangible amortization from business combinations. Excluding the non-cash amortization charges for goodwill and intangibles ensures comparable treatment between periods and treats goodwill and identified intangibles in a similar manner. Consequently, the Bank believes that the operating cash basis provides the reader with an understanding of the Bank’s results that can be consistently tracked from period to period.

As explained, operating cash basis results are different from reported results determined in accordance with GAAP. The term “operating cash basis results” is not a defined term under GAAP, and therefore may not be comparable to similar terms used by other issuers. The table below provides a reconciliation between the Bank’s operating cash basis results and its reported results.

Reconciliation of operating cash basis results to reported results

(millions of dollars)




Net interest income (TEB)







Provision for credit losses







Other income







Non-interest expenses excluding non-cash goodwill/intangible amortization and restructuring costs







Income before provision for income taxes and non-controlling interest in subsidiaries







Provision for income taxes (TEB)







Non-controlling interest in net income of subsidiaries







Net income – operating cash basis







Preferred dividends







Net income applicable to common shares – operating cash basis







Special increase in general provision, net of income taxes






Gain on sale of mutual fund record keeping and custody business, net of income taxes





Gains on sale of investment real estate, net of income taxes






Restructuring costs, net of income taxes







Income tax expense from income tax rate changes






Net income applicable to common shares – cash basis







Non-cash goodwill amortization, net of income taxes







Non-cash intangible amortization, net of income taxes







Net income (loss) applicable to common shares – reported basis









Basic net income per common share – operating cash basis







Diluted net income per common share – operating cash basis







Basic net income (loss) per common share – reported basis







Diluted net income (loss) per common share – reported basis







Certain comparative amounts have been reclassified to conform with current year presentation.

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