MetLife 2010 Annual Report Download - page 200

series of Debt Securities and the postponement of settlement to a later date, the average market value used to calculate the settlement rate
for a particular series will not be recalculated, although certain corporate events may require adjustments to the settlement rate. After
settlement of all the Purchase Contracts, MetLife, Inc. will receive proceeds of $3,000 million and issue between 67.8 million and 84.7 million
shares of its common stock, subject to certain adjustments. The holder of an Equity Unit may, at its option, settle the related Purchase
Contracts before the applicable settlement date. However, upon early settlement, the holder will receive the Minimum Settlement Rate.
Distributions on the Purchase Contracts will be made quarterly at an average annual rate of 3.02%. The value of the Purchase Contracts at
issuance of $247 million was calculated as the present value of the future contract payments and was recorded in other liabilities with an
offsetting decrease in additional paid-in capital. The other liabilities balance will be reduced as contract payments are made. For the year
ended December 31, 2010, no contract payments were made.
Debt Securities
The Debt Securities are senior, unsecured notes of MetLife, Inc. which, in the aggregate, pay quarterly distributions at an initial average
annual rate of 1.98% and are included in long-term debt (see Note 11 for further discussion of terms). The Debt Securities will be initially
pledged as collateral to secure the obligations of each Equity Unit holder under the related Purchase Contracts. Each series of the Debt
Securities will be subject to a remarketing and sold on behalf of participating holders to investors. The proceeds of a remarketing, net of any
related fees, will be applied on behalf of participating holders who so elect to settle any obligation of the holder to pay cash under the related
Purchase Contract on the applicable settlement dates. The initially-scheduled remarketing dates are October 10, 2012 for the Series C Debt
Securities, September 11, 2013 for the Series D Debt Securities and October 8, 2014 for the Series E Debt Securities, subject to delay if
there are one or more unsuccessful remarketings. If the initial attempted remarketing of a series is unsuccessful, up to two additional
remarketing attempts will occur. At the remarketing date, the remarketing agent may reset the interest rate on the Debt Securities, subject to a
reset cap for each of the first two attempted remarketings of each series. If a remarketing is successful, the reset rate will apply to all
outstanding Debt Securities of the applicable tranche of the remarketed series, whether or not the holder participated in the remarketing and
will become effective on the settlement date of such remarketing. If the first remarketing attempt with respect to a series is unsuccessful, the
applicable Purchase Contract settlement date will be delayed for three calendar months, at which time a second remarketing attempt will
occur in connection with settlement. If the second remarketing attempt is unsuccessful, one additional delay may occur on the same basis. If
both additional remarketing attempts are unsuccessful, a “final failed remarketing” will have occurred, and the interest rate on such series of
Debt Securities will not be reset and the holder may put such series of Debt Securities to MetLife, Inc. at a price equal to its principal amount
plus accrued and unpaid interest, if any, and apply the principal amount against the holder’s obligations under the related Purchase Contract.
Earnings Per Common Share
The treasury stock method is used to determine the potential dilution of the Purchase Contracts on earnings per common share. There
was no dilution associated with the Purchase Contracts for the year ended December 31, 2010.
Acquisition of The Travelers Insurance Company
In connection with financing the acquisition of The Travelers Insurance Company on July 1, 2005, the Holding Company distributed and
sold 82.8 million 6.375% common equity units for $2,070 million in proceeds in a registered public offering on June 21, 2005. The common
equity units consisted of interests in trust preferred securities issued by MetLife Capital Trusts II and III, and stock purchase contracts issued
by the Holding Company. The only assets of MetLife Capital Trusts II and III were junior subordinated debt securities issued by the Holding
Company. The common equity units ceased to exist upon the closing of the remarketing of the underlying debt instruments and the settlement
of the stock purchase contracts in August 2008 and February 2009. See Notes 13 and 18.
15. Income Tax
The provision for income tax from continuing operations was as follows:
2010 2009 2008
Years Ended December 31,
(In millions)
Current:
Federal..................................................... $ 141 $ (231) $ (35)
Stateandlocal................................................ 21 12 10
Foreign..................................................... 203 236 623
Subtotal................................................... 365 17 598
Deferred:
Federal..................................................... 670 (2,135) 1,056
Stateandlocal................................................ (7) 26 (6)
Foreign..................................................... 153 77 (68)
Subtotal................................................... 816 (2,032) 982
Provisionforincometaxexpense(benefit)................................ $1,181 $(2,015) $1,580
F-111MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)