Capital One 2006 Annual Report Download - page 131

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113
Year Ended December 31
Statements of Income 2006 2005 2004
Interest from temporary investments $ 323,870
$ 201,196 $ 84,982
Interest expense (265,585) (152,531) (152,656)
Dividends, principally from bank subsidiaries 1,950,000
1,170,000 1,000,013
Non-interest income 4,807
371 11,929
Non-interest expense (129,491) (27,065) (12,891)
Income before income taxes and equity in undistributed earnings of
subsidiaries 1,883,601
1,191,971 931,377
Income tax (expense) benefit 67,653
(5,032) 37,971
Equity in undistributed earnings of subsidiaries 463,239
622,208 574,134
Net income $ 2,414,493 $ 1,809,147 $ 1,543,482
Year Ended December 31
Statements of Cash Flows 2006 2005 2004
Operating Activities:
Net income $ 2,414,493
$ 1,809,147 $ 1,543,482
Adjustments to reconcile net income to net cash provided by operating
activities:
Equity in undistributed earnings of subsidiaries (463,239) (622,208) (574,134)
Loss on repurchase of senior notes
12,444
Amortization of discount of senior notes 1,347
2,818 12,671
Stock plan compensation expense 212,317
149,496 127,174
Decrease in other assets 19,159
212,019 77,122
(Decrease) increase in other liabilities (448,363) 43,452 (7,088)
Net cash provided by operating activities 1,735,714
1,607,168 1,179,227
Investing Activities:
Decrease (increase) in investment in subsidiaries 68,953
(911,348) (80,379)
Purchases of securities available for sale (52,686)
(Increase) decrease in loans to subsidiaries (1,065,622) 115,952 (1,975,131)
Net cash used for acquisitions (5,010,821) (2,261,757)
Net cash used in investing activities (6,060,176) (3,057,153) (2,055,510)
Financing Activities:
Increase (decrease) in borrowings from subsidiaries 1,379,497
(81,463) 381,205
Issuance of senior notes 3,185,588
1,262,035
Maturities of senior notes (225,000) (162,500)
Repurchases of senior notes
(597,196)
Dividends paid (32,324) (27,504) (25,618)
Purchases of treasury stock (21,615) (40,049) (17,232)
Net proceeds from issuances of common stock 36,751
770,311 23,910
Proceeds from share based payment activities 238,355
312,176 497,003
Net cash provided by financing activities 4,561,252
1,435,810 859,268
Increase (decrease) in cash and cash equivalents 236,790
(14,175) (17,015)
Cash and cash equivalents at beginning of year 2,683
16,858 33,873
Cash and cash equivalents at end of year $ 239,473
$ 2,683 $ 16,858
Note 28
Subsequent Events
Junior Subordinated Capital Income Securities
On February 5, 2007, the Company and Capital One Capital IV, a subsidiary of the Company created as a Delaware statutory
business trust, issued $500.0 million aggregate principal amount of 6.745% Capital Securities. The securities represent a
preferred beneficial interest in the assets of the trust. The proceeds from the sale of the Capital Securities were invested in
Capital Efficient Notes (CENts) due 2082. In connection with the closing of the Capital Securities offering, the Company
entered into a Replacement Capital Covenant, whereby the Company agreed it would not redeem or repurchase the CENts