Expenses include non-interest expenses, such as salaries, occupancy and equipment costs, and other operating expenses.
See supplementary information page 37, table 7
In 2002, total operating cash basis expenses decreased by $171 million or 2% from 2001 to $6,754 million, primarily as a result of lower incentive compensation expenses at TD Securities. TD Wealth Management also contributed to the decrease in the salaries and employee benefits, evidencing the results of its discount brokerage restructuring initiatives. For fiscal 2003, the Bank will apply the fair value method of accounting for stock options. For details see Note 23 on page 79 of the Bank’s consolidated financial statements
Operating cash basis expenses exclude non-cash goodwill and purchase-related intangible amortization and restructuring costs related to acquisitions and significant business restructuring initiatives. During the fourth quarter of fiscal 2001, TD Securities announced a restructuring of its operations, which resulted in pre-tax restructuring costs of $130 million, primarily related to employee severance. In fiscal 2001, the Bank incurred pre-tax restructuring costs of $54 million related to TD Waterhouse and $55 million related to the acquisition of Newcrest. In fiscal 2000, the Bank incurred pre-tax restructuring costs of $475 million related to the acquisition of Canada Trust. On a reported basis, expenses decreased by $902 million from 2001 to $7,752 million. In fiscal 2002, the impact of non-cash goodwill and purchase-related intangible amortization on the Bank’s reported expenses was $998 million compared with $1,490 million last year. Beginning in fiscal 2002, the Bank discontinued the amortization of goodwill as a result of the adoption of the new accounting standard on goodwill and intangible assets.
In 2001, total operating cash basis expenses increased by $618 million or 10% to $6,925 million from 2000. The increase in operating cash basis expenses related to higher performance-driven compensation tied to TD Securities’ strong results in 2001, an increase in the number of employees needed to support the retail branch conversions and higher business activity at TD Canada Trust. Reported expenses increased by $527 million or 6% to $8,654 million in 2001. In fiscal 2001, the impact of non-cash goodwill and purchase-related intangible amortization on the Bank’s reported expenses was $1,490 million, compared with $1,345 million in 2000. The increase in 2001 reflects a full year of goodwill and intangible amortization from the Canada Trust acquisition, compared with only nine months in 2000. On an after-tax basis, however, the increase in goodwill and intangible amortization was offset by future income tax benefits related to federal and provincial tax rate reductions. As a result, the after-tax impact of goodwill and intangible amortization for 2001 was $629 million compared with $722 million in 2000.