Capital One 2008 Annual Report Download - page 138

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On January 25, 2007, the Company announced a $3.0 billion share repurchase program. On March 12, 2007, the Company entered
into a $1.5 billion accelerated share repurchase (ASR) agreement with Credit Suisse, New York Branch (CSNY). Under the ASR
agreement, the Company purchased $1.5 billion of its $.01 par value common stock at an initial price of $73.57 per share, the closing
price of the Companys common stock on the New York Stock Exchange on April 2, 2007, the effective date of the agreement. The
ASR program was accounted for as an initial treasury stock transaction and a forward stock purchase contract. The initial repurchase
of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares
outstanding for basic and diluted EPS on the effective date of the agreement. The forward stock purchase contract was classified as an
equity instrument and was deemed to have a fair value of $0 at the effective date.
An ASR combines the immediate share retirement benefits of a tender offer with the market impact and pricing benefits of an open
stock repurchase program. The ASR agreement provided that the Company or CSNY would be obligated to make certain additional
payments upon final settlement of the ASR agreement. Most significantly, the Company would receive from, or be required to pay,
CSNY a purchase price adjustment based on the daily volume weighted average market price of the Companys common stock over a
period beginning after the effective date of the agreement through on or around August 22, 2007. These additional payments were to
be satisfied in shares of the Companys common stock. On August 27, 2007, the ASR program terminated with the delivery of
343,512 shares back to CSNY for a net share retirement of 20,045,233 shares.
The arrangements were intended to comply with Rules 10b5-1(c)(1)(i) and 10b-18 of the Securities Exchange Act of 1934, as
amended.
In addition to the $1.5 billion ASR, the Company repurchased $1.5 billion of shares in open market repurchases during the year ended
December 31, 2007. The impact of the share repurchases, including the ASR, on basic and diluted EPS for the year ended
December 31, 2007 was $0.21 and $0.20, respectively. The impact on basic and diluted EPS from continuing operations for the year
ended December 31, 2007 was $0.34 and $0.33, respectively.
Other Comprehensive Income
The following table presents the cumulative balances of the components of other comprehensive income, net of deferred tax of $521.7
million, $4.9 million, and $14.3 million as of December 31, 2008, 2007 and 2006, respectively:
As of December 31
2008 2007 2006
Net unrealized (losses) gains on securities(1) ......................................................................
.
$ (796,088) $ 9,279 $ (47,134)
Net unrecognized elements of defined benefit plans .........................................................
.
(42,586) 32,846 3,439
Foreign currency translation adjustments ..........................................................................
.
(227,650) 375,258 291,759
Unrealized (losses) gains on cash flow hedging instruments.............................................
.
(154,311) (102,135) 18,116
Initial application of the measurement date provisions of FAS 158 ..................................
.
(1,161)  
Total cumulative other comprehensive income .................................................................
.
$ (1,221,796) $ 315,248 $ 266,180
(1) Includes net unrealized gains (losses) on securities available for sale, retained subordinated tranches and pension securities.
During 2008, 2007 and 2006, the Company reclassified $9.0 million, $34.7 million and $10.1 million, respectively, of net gains, after
tax, on derivative instruments from cumulative other comprehensive income into earnings.
During 2008, 2007 and 2006, the Company reclassified $11.1 million, $28.3 million, and $(81.9) million, respectively, of net gains
(losses) on sales of securities, after tax, from cumulative other comprehensive income into earnings.