MetLife 2003 Annual Report Download - page 75

METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Approximately $5 million of net losses reported in accumulated other comprehensive income at December 31, 2003 are expected to be reclassified
during the year ending December 31, 2004 into net investment losses as the derivatives and underlying investments mature or expire according to their
original terms.
For the years ended December 31, 2003, 2002 and 2001, scheduled periodic settlement payments on derivative instruments recognized as net
investment gains and losses were immaterial. Net investment losses from changes in fair value of $18 million and $11 million and gains of $5 million
related to derivatives not qualifying as accounting hedges were recognized for the years ended December 31, 2003, 2002 and 2001, respectively.
7. Debt
Debt consisted of the following:
December 31,
2003 2002
(Dollars in millions)
Senior notes, interest rates ranging from 3.91% to 7.25%, maturity dates ranging from 2005 to 2033 ****** $4,256 $2,539
Surplus notes, interest rates ranging from 7.00% to 7.88%, maturity dates ranging from 2005 to 2025 ***** 940 1,632
Fixed rate notes, interest rates ranging from 1.69% to 12.00%, maturity dates ranging from 2005 to 2009 ** 110 83
Capital lease obligations *********************************************************************** 74 21
Other notes with varying interest rates *********************************************************** 323 150
Total long-term debt ************************************************************************** 5,703 4,425
Total short-term debt ************************************************************************** 3,642 1,161
Total ******************************************************************************* $9,345 $5,586
The Company maintains committed and unsecured credit facilities aggregating $2,478 million ($1,000 million expiring in 2004, $1,303 million
expiring in 2005 and $175 million expiring in 2006). If these facilities were drawn upon, they would bear interest at rates stated in the agreements. The
facilities are primarily used for general corporate purposes and as back-up lines of credit for the borrowers’ commercial paper program. At December 31,
2003, the Company had drawn approximately $49 million under the facilities expiring in 2005 at interest rates ranging from 4.08% to 5.48% and
approximately another $50 million under the facility expiring in 2006 at an interest rate of 1.69%. In April 2003, the Company replaced an expiring
$1 billion five-year credit facility with a $1 billion 364-day credit facility and the Holding Company was added as a borrower. In May 2003, the Company
replaced an expiring $140 million three-year credit facility, with a $175 million three-year credit facility which expires in 2006. At December 31, 2003, the
Company had approximately $828 million in letters of credit from various banks.
Payments of interest and principal on the surplus notes, subordinated to all other indebtedness, may be made only with the prior approval of the
insurance department of the state of domicile. On November 1, 2003, the Company redeemed the $300 million of 7.45% surplus notes outstanding
scheduled to mature on November 1, 2023 at a redemption price of $311 million.
The aggregate maturities of long-term debt for the Company are $134 million in 2004, $1,436 million in 2005, $662 million in 2006, $39 million in
2007, $44 million in 2008 and $3,388 million thereafter.
Short-term debt of the Company consisted of commercial paper with a weighted average interest rate of 1.1% and a weighted average maturity of
31 days at December 31, 2003. Short-term debt of the Company consisted of commercial paper with a weighted average interest rate of 1.5% and a
weighted average maturity of 74 days at December 31, 2002. The Company also has other collateralized borrowings with a weighted average coupon
rate of 5.07% and a weighted average maturity of 30 days at December 31, 2003. Such securities had a weighted average coupon rate of 5.83% and a
weighted average maturity of 34 days at December 31, 2002.
Interest expense related to the Company’s indebtedness included in other expenses was $420 million, $288 million and $252 million for the years
ended December 31, 2003, 2002 and 2001, respectively.
8. Shares Subject to Mandatory Redemption and Company-Obligated Mandatorily Redeemable Securities of Subsidiary Trusts
MetLife Capital Trust I. In connection with MetLife, Inc.’s, initial public offering in April 2000, the Holding Company and MetLife Capital Trust I
(the ‘‘Trust’’) issued equity security units (the ‘‘units’’). Each unit originally consisted of (i) a contract to purchase, for $50, shares of the Holding Company’s
common stock (the ‘‘purchase contracts’’) on May 15, 2003; and (ii) a capital security of the Trust, with a stated liquidation amount of $50.
In accordance with the terms of the units, the Trust was dissolved on February 5, 2003, and $1,006 million aggregate principal amount of
8.00% debentures of the Holding Company (the ‘‘MetLife debentures’’), the sole assets of the Trust, were distributed to the owners of the Trust’s capital
securities in exchange for their capital securities. The MetLife debentures were remarketed on behalf of the debenture owners on February 12, 2003 and
the interest rate on the MetLife debentures was reset as of February 15, 2003 to 3.911% per annum for a yield to maturity of 2.876%. As a result of the
remarketing, the debenture owners received $21 million ($0.03 per diluted common share) in excess of the carrying value of the capital securities. This
excess was recorded by the Company as a charge to additional paid-in capital and, for the purpose of calculating earnings per share, is subtracted from
net income to arrive at net income available to common shareholders.
On May 15, 2003, the purchase contracts associated with the units were settled. In exchange for $1,006 million, the Company issued 2.97 shares
of MetLife, Inc. common stock per purchase contract, or approximately 59.8 million shares of treasury stock. The excess of the Company’s cost of the
treasury stock ($1,662 million) over the contract price of the stock issued to the purchase contract holders ($1,006 million) was $656 million, which was
recorded as a direct reduction to retained earnings.
Interest expense on the capital securities is included in other expenses and was $10 million, $81 million and $81 million for the years ended
December 31, 2003, 2002 and 2001, respectively.
GenAmerica Capital I. In June 1997, GenAmerica Corporation (‘‘GenAmerica’’) issued $125 million of 8.525% capital securities through a wholly-
owned subsidiary trust, GenAmerica Capital I. GenAmerica has fully and unconditionally guaranteed, on a subordinated basis, the obligation of the trust
under the capital securities and is obligated to mandatorily redeem the securities on June 30, 2027. GenAmerica may prepay the securities any time after
June 30, 2007. Capital securities outstanding were $119 million, net of unamortized discounts of $6 million, at both December 31, 2003 and 2002.
MetLife, Inc.
F-30