Service cost - benefits earned $16 $18 $49 $54 Interest cost on
projected benefit obligation 28 27 84 79 Actual return on plan
assets (38) 21 (232) (108) Plan amendments - - 7 7 Adjustments to
recognize the long-term nature of plan cost Difference between
costs arising in the period and costs recognized in the period in
respect of: Return on plan assets(1) 4 (53) 130 12 Actuarial
losses(2) 3 6 8 16 Plan amendments(3) 2 2 (1) (1)
-------------------------------------------------------------------------
Total $15 $21 45 $59
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) For the three months ended July 31, 2007, includes expected
return on plan assets of $34 million (three months ended July 31,
2006 - $32 million) less actual return on plan assets of $38
million (three months ended July 31, 2006 - $(21) million). For the
nine months ended July 31, 2007, includes expected return on plan
assets of $102 million (nine months ended July 31, 2006 - $96
million) less actual return on plan assets of $232 million (nine
months ended July 31, 2006 - $108 million). (2) For the three
months ended July 31, 2007, includes loss recognized of $3 million
(three months ended July 31, 2006 - $6 million) less actuarial
losses on projected benefit obligation of nil (three months ended
July 31, 2006 - nil). For the nine months ended July 31, 2007,
includes loss recognized of $8 million (nine months ended July 31,
2006 - $16 million) less actuarial losses on projected benefit
obligation of nil (nine months ended July 31, 2006 - nil). (3) For
the three months ended July 31, 2007, includes amortization of
costs for plan amendments of $2 million (three months ended July
31, 2006 - $2 million) less actual cost amendments of nil (three
months ended July 31, 2006 - nil). For the nine months ended July
31, 2007, includes amortization of costs for plan amendments of $6
million (nine months ended July 31, 2006 - $6 million) less actual
cost amendments of $7 million (nine months ended July 31, 2006 - $7
million). Other Pension Plans' Expense
-------------------------------------------------------------------------
For the three For the nine months ended months ended
--------------------------------------- July 31 July 31 July 31
July 31 (millions of Canadian dollars) 2007 2006 2007 2006
-------------------------------------------------------------------------
CT defined benefit pension plan $1 $2 $3 $4 TD Banknorth defined
benefit pension plans 1 2 3 6 Supplemental employee retirement
plans 8 9 25 25
-------------------------------------------------------------------------
Total $10 $13 $31 $35
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Principal Non-Pension Post-Retirement Benefit Plans Expense
-------------------------------------------------------------------------
For the three For the nine months ended months ended
--------------------------------------- July 31 July 31 July 31
July 31 (millions of Canadian dollars) 2007 2006 2007 2006
-------------------------------------------------------------------------
Elements of non-pension plan expense before adjustments to
recognize the long-term nature of the cost: Service cost - benefits
earned $3 $3 $9 $9 Interest cost on projected benefit obligation 5
5 16 15 Plan amendments - - - (65) Adjustments to recognize the
long-term nature of plan cost Difference between costs arising in
the period and costs recognized in the period in respect of:
Actuarial losses 1 2 4 6 Plan amendments (1) (1) (4) 61
-------------------------------------------------------------------------
Total $8 $9 $25 $26
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash Flows The Bank's contributions to its pension plans and its
principal non- pension post-retirement benefit plans were as
follows: Pension Plan Contributions
-------------------------------------------------------------------------
For the three For the nine months ended months ended
--------------------------------------- July 31 July 31 July 31
July 31 (millions of Canadian dollars) 2007 2006 2007 2006
-------------------------------------------------------------------------
Principal pension plan $37 $16 $69 $46 CT defined benefit pension
plan 1 1 3 2 TD Banknorth defined benefit pension plans - - 47 33
Supplemental employee retirement plans 3 2 9 6 Non-pension
post-retirement benefit plans 2 2 6 6
-------------------------------------------------------------------------
Total $43 $21 $134 $93
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at July 31, 2007, the Bank expects to contribute an additional
$15 million to its principal pension plan, nil to its CT defined
benefit pension plan, $46 million to its TD Banknorth defined
benefit pension plans, $3 million to its supplemental employee
retirement plans and $2 million to its non-pension post-retirement
benefit plans by the end of the year. However, future contribution
amounts may change upon the Bank's review of the current
contribution levels during the year. Note 11: EARNINGS PER SHARE
-------------------------------------------------------------------------
The Bank's basic and diluted earnings per share at July 31 are as
follows: Basic and Diluted Earnings per Share
-------------------------------------------------------------------------
For the three For the nine months ended months ended
--------------------------------------- July 31 July 31 July 31
July 31 (millions of Canadian dollars) 2007 2006 2007 2006
-------------------------------------------------------------------------
Basic Earnings per Share Net income available to common shares ($
millions) $1,101 $790 $2,888 $3,824 Average number of common shares
outstanding (millions) 719.5 719.1 719.0 715.8 Basic earnings per
share ($) $1.53 $1.10 $4.02 $5.34
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Diluted Earnings per Share Net income available to common shares ($
millions) $1,101 $790 $2,888 $3,824 Average number of common shares
outstanding (millions) 719.5 719.1 719.0 715.8 Stock options
potentially exercisable as determined under the treasury stock
method(1) 7.4 5.6 6.9 6.3
-------------------------------------------------------------------------
Average number of common shares outstanding - diluted (millions)
726.9 724.7 725.9 722.1
-------------------------------------------------------------------------
Diluted earnings per share ($) $1.51 $1.09 $3.98 $5.30
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) For the nine months ended July 31, 2007, the computation of
diluted earnings per common share excluded weighted-average options
outstanding of 116 (nine months ended July 31, 2006 - 953 thousand)
with a weighted-exercise price of $68.40 (nine months ended July
31, 2006 - $60.02) as the options' price was greater than the
average market price of the Bank's common shares. Note 12:
SEGMENTED INFORMATION
-------------------------------------------------------------------------
The Bank's operations and activities are organized around the
following businesses: Canadian Personal and Commercial Banking,
Wealth Management, U.S. Personal and Commercial Banking and
Wholesale Banking. Results for these segments for the three and
nine months ended July 31 are presented in the following tables:
Results by Business Segment
-------------------------------------------------------------------------
Canadian Personal U.S. Personal (millions of and Commercial Wealth
and Commercial Canadian dollars) Banking Management Banking(1)
-------------------------------------------------------------------------
For the three July 31 July 31 July 31 July 31 July 31 July 31
months ended 2007 2006 2007 2006 2007 2006
-------------------------------------------------------------------------
Net interest income $1,388 $1,260 $80 $68 $338 $342 Other income
713 669 507 424 145 142
-------------------------------------------------------------------------
Total revenue 2,101 1,929 587 492 483 484 Provision for (reversal
of) credit losses 151 104 - - 33 10 Non-interest expenses 1,050
1,039 395 344 275 284 Dilution gain (loss), net - - - - - -
-------------------------------------------------------------------------
Income (loss) before provision for (benefit of) income taxes 900
786 192 148 175 190 Provision for (benefit of) income taxes 303 262
66 51 57 65 Non-controlling interests in subsidiaries, net of
income taxes - - - - 9 57 Equity in net income of an associated
company, net of income taxes - - 59 55 - -
-------------------------------------------------------------------------
Net income (loss) $597 $524 $185 $152 $109 $68
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total assets (billions of Canadian dollars) - balance sheet $146.8
$140.7 $14.7 $12.4 $61.2 $43.8 - securitized 47.6 37.3 - - - -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(millions of Wholesale Canadian dollars) Banking(2) Corporate(2)
Total
-------------------------------------------------------------------------
For the three July 31 July 31 July 31 July 31 July 31 July 31
months ended 2007 2006 2007 2006 2007 2006
-------------------------------------------------------------------------
Net interest income $218 $127 $(241) $(174) $1,783 $1,623 Other
income 474 456 29 (26) 1,868 1,665
-------------------------------------------------------------------------
Total revenue 692 583 (212) (200) 3,651 3,288 Provision for
(reversal of) credit losses 8 15 (21) (20) 171 109 Non-interest
expenses 326 303 139 177 2,185 2,147 Dilution gain (loss), net - -
- - - -
-------------------------------------------------------------------------
Income (loss) before provision for (benefit of) income taxes 358
265 (330) (357) 1,295 1,032 Provision for (benefit of) income taxes
105 86 (283) (229) 248 235 Non-controlling interests in
subsidiaries, net of income taxes - - 4 (5) 13 52 Equity in net
income of an associated company, net of income taxes - - 10 (4) 69
51
-------------------------------------------------------------------------
Net income (loss) $253 $179 $(41) $(127) $1,103 $796
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total assets (billions of Canadian dollars) - balance sheet $162.7
$160.1 $18.5 $28.8 $403.9 $385.8 - securitized - - (15.9) (12.1)
31.7 25.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Results by Business Segment
-------------------------------------------------------------------------
Canadian Personal U.S. Personal (millions of and Commercial Wealth
and Commercial Canadian dollars) Banking Management Banking(1)
-------------------------------------------------------------------------
For the nine July 31 July 31 July 31 July 31 July 31 July 31 months
ended 2007 2006 2007 2006 2007 2006
-------------------------------------------------------------------------
Net interest income $3,993 $3,584 $235 $308 $1,030 $953 Other
income 2,104 1,920 1,497 1,448 443 349
-------------------------------------------------------------------------
Total revenue 6,097 5,504 1,732 1,756 1,473 1,302 Provision for
(reversal of) credit losses 432 281 - - 85 25 Non-interest expenses
3,142 3,018 1,152 1,218 958 793 Dilution gain, net - - - - - -
-------------------------------------------------------------------------
Income (loss) before provision for (benefit of) income taxes 2,523
2,205 580 538 430 484 Provision for (benefit of) income taxes 842
740 198 190 143 167 Non-controlling interests in subsidiaries, net
of income taxes - - - - 91 144 Equity in net income of an
associated company, net of income taxes - - 186 94 - -
-------------------------------------------------------------------------
Net income (loss) $1,681 $1,465 568 $442 196 $173
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(millions of Wholesale Canadian dollars) Banking(2) Corporate(2)
Total
-------------------------------------------------------------------------
For the nine July 31 July 31 July 31 July 31 July 31 July 31 months
ended 2007 2006 2007 2006 2007 2006
-------------------------------------------------------------------------
Net interest income $565 $341 $(707) $(529) $5,116 $4,657 Other
income 1,404 1,437 81 (1) 5,529 5,153
-------------------------------------------------------------------------
Total revenue 1,969 1,778 (626) (530) 10,645 9,810 Provision for
(reversal of) credit losses 44 55 (55) (122) 506 239 Non-interest
expenses 987 1,019 409 492 6,648 6,540 Dilution gain, net - - -
1,559 - 1,559
-------------------------------------------------------------------------
Income (loss) before provision for (benefit of) income taxes 938
704 (980) 659 3,491 4,590 Provision for (benefit of) income taxes
271 221 (754) (619) 700 699 Non-controlling interests in
subsidiaries, net of income taxes - - (4) (8) 87 136 Equity in net
income of an associated company, net of income taxes - - 13 (8) 199
86
-------------------------------------------------------------------------
Net income (loss) $667 $483 $(209) $1,278 $2,903 $3,841
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Commencing May 1, 2007, the results of TD Bank U.S.A. Inc.
(previously reported in the Corporate segment for the period from
the second quarter 2006 to the second quarter 2007 and in Wealth
Management segment prior to the second quarter of 2006) are
included in the U.S. Personal and Commercial Banking segment
prospectively. Prior periods have not been restated as the impact
is not material. (2) The taxable equivalent basis (TEB) increase to
net interest income and provision for income taxes reflected in the
Wholesale Banking segment results is reversed in the Corporate
segment. Note 13: DERIVATIVES
-------------------------------------------------------------------------
Hedge accounting results for the three and nine months ended July
31, 2007 are as follows: Hedge Accounting Results
-------------------------------------------------------------------------
For the three For the nine months ended months ended
--------------------------------------- July 31 July 31 July 31
July 31 (millions of Canadian dollars) 2007 2006 2007 2006
-------------------------------------------------------------------------
Fair value hedges Gain arising from hedge ineffectiveness $4.9 $-
$4.7 $-
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash flow hedges (Loss)/Gain arising from hedge ineffectiveness
$(0.9) $- $2.6 $-
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Portions of derivative gains (losses) that were excluded from the
assessment of hedge effectiveness for fair value and cash flow
hedging activities are included in the Consolidated Statement of
Income and are not significant for the three and nine months ended
July 31, 2007. During the three and nine months ended July 31,
2007, there were no firm commitments that no longer qualified as
hedges. Over the next 12 months, the Bank expects an estimated $67
million in net losses reported in other comprehensive income as at
July 31, 2007 to be reclassified to net income. The maximum length
of time over which the Bank is hedging its exposure to the
variability in future cash flows for anticipated transactions is 18
years. During the three and nine months ended July 31, 2007, there
were no forecasted transactions that failed to occur. Note 14:
ACQUISITIONS AND DISPOSITIONS
-------------------------------------------------------------------------
(a) TD Banknorth Interchange Financial Services Corporation
------------------------------------------ TD Banknorth completed
its acquisition of Interchange Financial Services Corporation
(Interchange) on January 1, 2007 for a total cash consideration of
$545 million (US$468.1 million), financed primarily through TD
Banknorth's sale of 13 million of its common shares to the Bank for
$472 million (US$405 million). The acquisition of Interchange by TD
Banknorth contributed the following assets and liabilities of
Interchange to the Bank's Interim Consolidated Balance Sheet at the
date of acquisition: $1,283 million of personal/business loans and
mortgages, $495 million of goodwill and intangibles, $123 million
of other assets, $1,332 million of deposits and $97 million of
other liabilities. TD Banknorth consolidates the financial results
of Interchange. As the Bank consolidates TD Banknorth on a one
month lag, Interchange's results for the three months ended June
30, 2007 have been included in the Bank's results for the three
months ended July 31, 2007. Going-private transaction
------------------------- On April 20, 2007, the Bank completed its
privatization of TD Banknorth. Under this transaction, the Bank
acquired all of the outstanding common shares of TD Banknorth that
it did not already own for US$32.33 per TD Banknorth share for a
total cash consideration of $3.7 billion (US$3.3 billion). The
acquisition has been accounted for by the purchase method. On
closing, TD Banknorth became a wholly-owned subsidiary of the Bank
and TD Banknorth's shares were delisted from the New York Stock
Exchange. As a result of the transaction, there was a net increase
in goodwill and intangibles on the Bank's Consolidated Balance
Sheet at the date of completion of the transaction of approximately
$1.5 billion. The allocation of the purchase price is subject to
finalization. In the normal course of the Bank's financial
reporting, TD Banknorth is consolidated on a one month lag basis.
However, $43 million before-tax restructuring, privatization and
merger-related costs incurred in April 2007 were included in the
Bank's results for the three months ended April 30, 2007 because in
aggregate they represent material TD Banknorth events for the
period ended April 30, 2007. As disclosed in the definitive proxy
statement of TD Banknorth dated March 16, 2007 with respect to the
transaction, the Bank and TD Banknorth had entered into a
memorandum of understanding providing for the proposed settlement
of the six lawsuits comprising the action In re TD Banknorth
Shareholders Litigation, C.A. # 2557-NC (Del. Ch., New Castle
County). Among other things, the proposed settlement provided for
the establishment by the Bank of a settlement fund in an aggregate
amount of approximately $2.95 million. The proposed settlement was
subject to a number of conditions, including final approval by the
Delaware Court of Chancery. On July 19, 2007, the Delaware Court of
Chancery disapproved the proposed settlement. Accordingly, the
settlement will not be completed and former stockholders of TD
Banknorth will not receive the proposed settlement amount of
approximately US$0.03 per share. Completion of the transaction,
which occurred on April 20, 2007, is not affected by the decision
of the court. The Bank continues to believe that these lawsuits are
without merit and will defend them vigorously. (b) TD Ameritrade
------------- TD Ameritrade announced two common stock repurchase
programs in 2006 for an aggregate of 32 million shares. As a result
of TD Ameritrade's share repurchase activity, the Bank's direct
ownership position in TD Ameritrade increased above the ownership
cap of 39.9% under the Stockholders Agreement. In accordance with
the Bank's previously announced intention, the Bank sold three
million shares of TD Ameritrade during the three months ended July
31, 2007 to bring its direct ownership position as at July 31, 2007
to 39.9%, from 40.3% as at April 30, 2007. The Bank recognized a
gain of $6 million on this sale. Moreover, as a result of
consolidation of financial statements of Lillooet Limited
(Lillooet) in these Interim Consolidated Financial Statements, TD
Ameritrade shares held by Lillooet have been included in the Bank's
reported investment in TD Ameritrade. The Bank has recognized
income of TD Ameritrade related to the TD Ameritrade shares owned
by Lillooet for the period ended June 30, 2007. Note 15: TD
BANKNORTH RESTRUCTURING, PRIVATIZATION AND MERGER-RELATED CHARGES
-------------------------------------------------------------------------
As a result of the privatization of TD Banknorth and related
restructuring initiatives undertaken within both TD Banknorth and
TD Bank USA during the three months ended April 30, 2007, the Bank
incurred a total of $67 million before-tax restructuring charges of
which $59 million related to TD Banknorth and $8 million related to
TD Bank USA. The restructuring charges primarily consisted of
employee severance costs, the costs of amending certain executive
employment and award agreements and the write-down of long-lived
assets due to impairment. In the Interim Consolidated Statement of
Income, the restructuring charges are included in restructuring
costs. TD Banknorth also incurred privatization costs of $11
million before tax, which primarily consisted of legal and
investment banking fees, and merger-related costs of $8 million in
connection with the integration of Hudson and Interchange with TD
Banknorth. In the Interim Consolidated Statement of Income, the
privatization and merger-related charges are included in other
non-interest expenses. Note 16: CONTINGENCIES
-------------------------------------------------------------------------
The two principal legal actions regarding Enron to which the Bank
is a party are the securities class action and the bankruptcy
proceeding. In 2006, the Bank settled the bankruptcy court claims
in this matter for approximately $145 million (US$130 million). As
at July 31, 2007, the total contingent litigation reserve for
Enron-related claims was approximately $441 million (US$413
million). It is possible that additional reserves above the current
level could be required. Additional reserves, if required, cannot
be reasonably determined for many reasons, including that other
settlements are not generally appropriate for comparison purposes,
the lack of consistency in other settlements and the difficulty in
predicting the future actions of other parties to the litigation.
The Bank and its subsidiaries are involved in various other legal
actions in the ordinary course of business, many of which are
loan-related. In management's opinion, the ultimate disposition of
these actions, individually or in the aggregate, will not have a
material adverse effect on the financial condition of the Bank.
Note 17: ACCUMULATED OTHER COMPREHENSIVE INCOME
-------------------------------------------------------------------------
Accumulated other comprehensive income (loss) includes the
after-tax change in unrealized gains and losses on
available-for-sale securities, cash flow hedging activities and
foreign currency translation adjustments. Accumulated Other
Comprehensive Income, net of income taxes
-------------------------------------------------------------------------
As at (millions of Canadian dollars) July 31, 2007
-------------------------------------------------------------------------
Unrealized gain on available-for-sale securities, net of cash flow
hedges $175 Unrealized foreign currency translation losses on
investments in subsidiaries, net of hedging activities (1,469)
Losses on derivatives designated as cash flow hedges (149)
-------------------------------------------------------------------------
Accumulated other comprehensive income balance as at July 31, 2007
$(1,443)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
SHAREHOLDER AND INVESTOR INFORMATION Shareholder Services For
shareholder inquiries relating to missing dividends, lost share
certificates, estate questions, address changes to the share
register, dividend bank account changes or the dividend
re-investment program, please contact our transfer agent: CIBC
Mellon Trust Company, P.O. Box 7010, Adelaide Street Postal
Station, Toronto, Ontario, M5C 2W9, 1-800-387-0825 or 416-643-5500
(http://www.cibcmellon.com/ or ). For all other shareholder
inquiries, please contact TD Shareholder Relations at 416-944-6367
or 1-866-756-8936 or email . Internet website: http://www.td.com/
Internet e-mail: Designation of Eligible Dividends The
Toronto-Dominion Bank for the purposes of the Income Tax Act,
Canada and any similar provincial legislation advises that the
dividend declared for the quarter ending October 31, 2007 and all
future dividends will be eligible dividends unless indicated
otherwise. General Information Contact Corporate & Public
Affairs: (416) 982-8578 Products and services: Contact TD Canada
Trust, 24 hours a day, seven days a week: 1-866-567-8888 French:
1-866-233-2323 Cantonese/Mandarin: 1-800-328-3698 Telephone device
for the deaf: 1-800-361-1180 On-line Investor Presentation: Full
quarterly report and a presentation to investors and analysts
(available on August 23, 2007) are accessible from the home page of
the TD Bank Financial Group website,
http://www.td.com/investor/calendar.jsp. Quarterly Earnings
Conference Call: Instant replay of the teleconference is available
from August 23, 2007 until September 23, 2007. Please call
1-877-289-8525 toll free, in Toronto (416) 640-1917, passcode
21240750 (pound key). Webcast of Call: A live audio and video
internet webcast of TD Bank Financial Group's quarterly earnings
conference call with investors and analysts is scheduled on August
23, 2007 at 3:00 p.m. ET. The call is webcast via the TD Bank
Financial Group website at http://www.td.com/investor. In addition,
recordings of the presentations are archived on TD's website and
will be available for replay for a period of at least one month.
Annual Meeting Thursday, April 3, 2008 Hyatt Regency Calgary
Calgary, Alberta About TD Bank Financial Group The Toronto-Dominion
Bank and its subsidiaries are collectively known as TD Bank
Financial Group. TD Bank Financial Group serves more than 14
million customers in four key businesses operating in a number of
locations in key financial centres around the globe: Canadian
Personal and Commercial Banking, including TD Canada Trust; Wealth
Management, including TD Waterhouse and an investment in TD
Ameritrade; U.S. Personal and Commercial Banking through TD
Banknorth; and Wholesale Banking, including TD Securities. TD Bank
Financial Group also ranks among the world's leading on-line
financial services firms, with more than 4.5 million on-line
customers. TD Bank Financial Group had CDN$404 billion in assets,
as of July 31, 2007. The Toronto-Dominion Bank trades on the
Toronto and New York Stock Exchanges under the symbol "TD", as well
as on the Tokyo Stock Exchange. DATASOURCE: TD Bank Financial Group
CONTACT: PRNewswire - - 08/23/2007
Copyright