Summary
JPMorgan Chase & Co. (JPM) has filed an 8-K report on August 3, 2006, to announce that previously issued financial statements for the fiscal years ended December 31, 2005, 2004, and 2003, as well as quarterly periods in 2005 and the first quarter of 2006, should no longer be relied upon. This is due to a restatement of the Consolidated Statements of Cash Flows for these periods. The restatement specifically impacts the classification of cash flows related to certain residential mortgages and other loans originated or purchased with the intent to sell. These cash flows were incorrectly classified as investing activities instead of operating activities, as required by accounting standards. Importantly, the company states that this misclassification does not affect its Consolidated Statements of Income, Consolidated Balance Sheets, or Consolidated Statements of Changes in Stockholders' Equity. Consequently, historical revenues, net income, earnings per share, total assets, and regulatory capital remain unchanged.
Key Highlights
- 1JPMorgan Chase is restating its Consolidated Statements of Cash Flows for fiscal years 2005, 2004, 2003 and quarterly periods in 2005 and Q1 2006.
- 2The restatement is due to a misclassification of cash flows from certain residential mortgages and other loans held for sale.
- 3These cash flows were incorrectly classified as investing activities but should have been classified as operating activities.
- 4The company confirms that the restatement does NOT impact revenues, net income, earnings per share, total assets, or regulatory capital.
- 5Key financial statements like the Income Statement and Balance Sheet are unaffected.
- 6Management recommended the restatement, and the Audit Committee has concurred.
- 7The independent registered public accounting firm, PricewaterhouseCoopers LLP, has been involved in discussions regarding these matters.