MetLife 2011 Annual Report Download - page 197

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
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, 2011, $102
million of contract payments were 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 toa
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.
15. Income Tax
The provision for income tax from continuing operations was as follows:
Years Ended December 31,
2011 2010 2009
(In millions)
Current:
Federal ..................................................................... $ (198) $ 123 $ (237)
State and local ............................................................... (1) 21 12
Foreign ..................................................................... 614 203 227
Subtotal ................................................................... 415 347 2
Deferred:
Federal ..................................................................... 2,258 672 (2,130)
State and local ............................................................... (3) (7) 26
Foreign ..................................................................... 405 153 77
Subtotal ................................................................... 2,660 818 (2,027)
Provision for income tax expense (benefit) ....................................... $3,075 $1,165 $(2,025)
The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported for continuing operations was as
follows:
Years Ended December 31,
2011 2010 2009
(In millions)
Tax provision at U.S. statutory rate .................................................. $3,509 $1,369 $(1,526)
Tax effect of:
Tax-exempt investment income .................................................. (246) (242) (288)
State and local income tax ...................................................... (4) 9 17
Prior year tax ................................................................. (4) 59 (26)
Tax credits ................................................................... (138) (82) (87)
Foreign tax rate differential ....................................................... (53) 29 (138)
Change in valuation allowance ................................................... 16 7 20
Other, net ................................................................... (5) 16 3
Provision for income tax expense (benefit) ........................................ $3,075 $1,165 $(2,025)
MetLife, Inc. 193