Capital One 2004 Annual Report Download - page 102

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Note 8
Cumulative Participating Junior Preferred Stock
On November 16, 1995, the Board of Directors of the Company declared a dividend distribution of one Right for
each outstanding share of common stock. As amended, each Right entitles a registered holder to purchase from
the Company 1/300th of a share of the Company’s authorized Cumulative Participating Junior Preferred Stock
(the “Junior Preferred Shares”) at a price of $200 per 1/300th of a share, subject to adjustment. The Company has
reserved one million shares of its authorized preferred stock for the Junior Preferred Shares. Because of the
nature of the Junior Preferred Shares’ dividend and liquidation rights, the value of the 1/300th interest in a Junior
Preferred Share purchasable upon exercise of each Right should approximate the value of one share of common
stock. Initially, the Rights are not exercisable and trade automatically with the common stock. However, the
Rights generally become exercisable and separate certificates representing the Rights will be distributed, if any
person or group acquires 15% or more of the Company’s outstanding common stock or a tender offer or
exchange offer is announced for the Company’s common stock. Upon such event, provisions would also be made
so that each holder of a Right, other than the acquiring person or group, may exercise the Right and buy common
stock with a market value of twice the $200 exercise price. The Rights expire on November 29, 2005, unless
earlier redeemed by the Company at $0.01 per Right prior to the time any person or group acquires 15% of the
outstanding common stock. Until the Rights become exercisable, the Rights have no dilutive effect on earnings
per share.
Note 9
Retirement Plans
Associate Savings Plan
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 makes contributions to each eligible employee’s
account, matches a portion of associate contributions and makes discretionary contributions based upon the
Company meeting a certain earnings per share target. The Company’s contributions to this plan amounted to
$71.7 million, $71.1 million and $62.7 million for the years ended December 31, 2004, 2003 and 2002,
respectively.
Other Postretirement Benefits
The Company sponsors postretirement benefit plans to provide health care and life insurance to retired
employees. Net periodic postretirement benefit expense was $6.7 million, $9.4 million and $6.8 million in 2004,
2003 and 2002, respectively. The liabilities recognized on the Consolidated Balance Sheets for the Company’s
defined postretirement benefit plan at December 31, 2004 and 2003 were $33.5 million and $26.8 million,
respectively.
Note 10
Other Non-Interest Expense
Year Ended December 31
2004 2003 2002
Professional services $ 415,169 $ 373,404 $308,593
Collections 530,909 493,057 360,437
Fraud losses 55,981 49,176 78,733
Bankcard association assessments 122,934 107,493 107,185
Other 184,836 167,418 132,567
Total $1,309,829 $1,190,548 $987,515
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