Capital One 1998 Annual Report Download - page 49

47 Capital One Financial Corporation
In April 1996, the Bank established a deposit note program
under which the Bank from time to time may issue up to
$2,000,000 of deposit notes with maturities from thirty days to
thirty years.
In January 1997, Capital One Capital I, a subsidiary of the Bank
created as a Delaware statutory business trust, issued $100,000
aggregate amount of Floating Rate Junior Subordinated Capital
Income Securities that mature on February 1, 2027. The securities
represent a preferred beneficial interest in the assets of the trust.
The net proceeds of the offering of $97,428 were lent to the Bank
for general corporate purposes. As of December 31, 1998, the
interest rate on these securities was 6.77%.
Interest-bearing deposits and senior notes as of December 31,
1998, mature as follows (all other borrowings mature in 1999):
Interest-Bearing
Deposits Senior Notes Total
1999 $1,262,224 $ 799,371 $2,061,595
2000 264,687 780,082 1,044,769
2001 208,628 898,924 1,107,552
2002 36,652 111,682 148,334
2003 227,788 469,854 697,642
Thereafter 679,480 679,480
Total $1,999,979 $3,739,393 $5,739,372
Note F
Associate Benefit and Stock Plans
The Company sponsors a contributory Associate Savings Plan in
which substantially all full-time and certain part-time associates
are eligible to participate. The Company matches a portion of asso-
ciate contributions and makes discretionary contributions based
upon the Company meeting a certain earnings per share target. The
Company’s contributions to this plan were $16,357, $10,264 and
$9,048 for the years ended December 31, 1998, 1997 and 1996,
respectively.
The Company has three stock-based compensation plans. The
Company applies Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees” (“APB 25”) and
related Interpretations in accounting for its stock-based compensa-
tion plans. In accordance with APB 25, no compensation cost has
been recognized for the Company’s fixed stock options, since the
exercise price equals the market price of the underlying stock on
the measurement date of grant, nor for the Associate Stock
Purchase Plan (the “Purchase Plan”), which is considered to be
noncompensatory.
For the performance-based option plans discussed below, com-
pensation cost is measured as the difference between the exercise
price and the target stock price required for vesting and is recog-
nized over the estimated vesting period.
In August 1997, the Company entered into a three-year,
$350,000 equivalent unsecured revolving credit arrangement (the
“UK/Canada Facility”) to finance the Company’s expansion in the
United Kingdom and Canada. The UK/Canada Facility is comprised
of two tranches: a Tranche A facility in the amount of £156,458
($249,800 equivalent based on the exchange rate at closing) and a
Tranche B facility in the amount of C$139,609 ($100,200 equiva-
lent based on the exchange rate at closing). An amount of £34,574
or C$76,910 ($55,200 equivalent based on the exchange rates at
closing) may be transferred between the Tranche A facility and the
Tranche B facility, respectively, upon the request of the Company.
All borrowings under the UK/Canada Facility are based on varying
terms of LIBOR. The Corporation serves as the guarantor of all bor-
rowings under the UK/Canada Facility. The facility is structured as
a three-year commitment and will be available for general corporate
purposes. The commitment terminates on August 29, 2000; how-
ever, it may be extended for two additional one-year periods. As of
December 31, 1998, the Company had a total of $166,345 out-
standing under the UK/Canada Facility. There were no outstandings
under the UK/Canada Facility as of December 31, 1997.
In April 1997, the Bank increased the aggregate amount of
bank notes available under its bank note program. Under the pro-
gram, the Bank from time to time may issue up to $8,000,000 of
senior bank notes at fixed rates or variable rates tied to LIBOR with
maturities from thirty days to thirty years. The bank note program
also permits the issuance of up to $200,000 of subordinated bank
notes (none issued as of December 31, 1998 and 1997) with
maturities from five to thirty years.
In October 1997, the Bank established a program for the
issuance of debt instruments to be offered outside of the United
States. Under this program, the Bank from time to time may issue
instruments in the aggregate principal amount of $1,000,000
equivalent outstanding at any one time ($5,000 and none out-
standing as of December 31, 1998 and 1997, respectively). Instru-
ments under this program may be denominated in any currency or
currencies.
The Corporation has two shelf registration statements under
which the Corporation from time to time may offer and sell (i)
senior or subordinated debt securities, consisting of debentures,
notes and/or other unsecured evidences, (ii) preferred stock, which
may be issued in the form of depository shares evidenced by depos-
itory receipts and (iii) common stock. The amount of securities reg-
istered is limited to a $625,000 aggregate public offering price or
its equivalent (based on the applicable exchange rate at the time of
sale) in one or more foreign currencies, currency units or composite
currencies as shall be designated by the Corporation. The Corpora-
tion issued $200,000 of ten-year fixed rate senior notes in July
1998 and $125,000 of seven-year fixed rate senior notes in
December 1996. The remaining amount of securities available for
issuance under the Corporation’s shelf registrations is $300,000.