Capital One 2002 Annual Report Download - page 37

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In April 2002, the Corporation completed a public offering of mandatory
convertible debt securities (the “Upper Decs®”), that resulted in net proceeds
of approximately $725.0 million. The net proceeds were used for general
corporate purposes. Each Upper Dec®initially consists of and represents (i) a
senior note due May 17, 2007 with a principal amount of $50, on which the
Company will pay interest quarterly at the initial annual rate of 6.25%, and
(ii) a forward purchase contract pursuant to which the holder has agreed to
purchase, for $50, shares of the Company’s common stock on May 17, 2005
(or earlier under certain conditions), with such number of shares to be
determined based upon the average closing price per share of the Company’s
common stock for 20 consecutive trading days ending on the third trading
day immediately preceding the stock purchase date at a minimum per share
price of $63.91 and a maximum per share price of $78.61.
In January 2002, the Corporation issued $300.0 million of five-year senior
notes with a coupon rate of 8.75%.
The Company continues to expand its retail deposit gathering efforts through
both direct and broker marketing channels. The Company uses its IBS
capabilities to test and market a variety of retail deposit origination strategies,
including via the Internet, as well as to develop customized account
management programs. As of December 31, 2002, the Company had $17.3
billion in interest-bearing deposits of which $7.2 billion represents large
denomination certificates of $100 thousand or more, with original maturities
up to ten years. The use of these deposits to fund the Company’s asset growth
may be limited based upon whether such deposits originated at the Bank or
the Savings Bank.
Table 11 shows the maturities of domestic time certificates of deposit in
denominations of $100 thousand or greater (large denomination CDs) as of
December 31, 2002.
The Multicurrency Facility is available for general Company purposes of the
Bank’s business in the United Kingdom. The Corporation and the Bank
serve as guarantors of all borrowings by Capital One Bank (Europe) plc
under the Multicurrency Facility. Internationally, the Company has funding
programs designed for foreign investors or to raise funds in foreign currencies
allowing the Company to borrow from U.S. and non-U.S. lenders, including
foreign currency funding options under the Credit Facility discussed above.
The Company funds its foreign assets by directly or synthetically borrowing
or securitizing in the local currency to mitigate the financial statement effect
of currency translations.
In April 2002, COAF entered into a $2.2 billion collateralized revolving
warehouse credit facility collateralized by a security interest in certain
consumer loan assets. The collateralized revolving warehouse credit facility
has several participants each with a separate renewal date. The facility does
not have a final maturity date. Instead, each participant may elect to renew
the commitment for another set period of time. All participants have renewal
dates occurring in 2003. Interest on the facility is based on commercial paper
rates. At December 31, 2002, $894.0 million was outstanding under the
facility.
As of December 31, 2002, the Corporation had two effective shelf
registration statements under which the Corporation from time to time may
offer and sell senior or subordinated debt securities, preferred stock, common
stock, common equity units and stock purchase contracts.
On November 11, 2002, the Corporation issued shares of its common stock
having an aggregate value of $54.9 million to certain former shareholders of
AmeriFee Corporation (“AmeriFee”) in connection with the termination of
the stock purchase agreement relating to the Corporation’s acquisition of
AmeriFee. Of this amount, $43.9 million of the Corporation’s common
stock was issued through its shelf registration statement and $11.0 million
was issued in an unregistered offering. Table 11: Maturities of Domestic Large Denomination
Certificates -- $100,000 or More.
December 31, 2002
(dollars in thousands) Balance Percent
Three months or less $ 636,008 8.87%
Over 3 through 6 months 649,391 9.06
Over 6 through 12 months 1,369,984 19.11
Over 12 months through 10 years 4,514,784 62.96
Total $ 7,170,167 100.00%