SunTrust 2006 Annual Report Download - page 114

SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
Aggregate maturities for the next five years on long-term debt are: 2007 – $870.0 million; 2008 –
$2,837.9 million; 2009 –$1,763.3 million; 2010 – $372.1 million; 2011 – $4,273.7 million; and
thereafter - $8,875.9 million. Restrictive provisions of several long-term debt agreements prevent the
Company from creating liens on, disposing of, or issuing (except to related parties) voting stock of
subsidiaries. Further, there are restrictions on mergers, consolidations, certain leases, sales or transfers
of assets, minimum shareholders’ equity, and maximum borrowings by the Company. As of
December 31, 2006, the Company was in compliance with all covenants and provisions of long-term
debt agreements. The junior subordinated debentures held by various trusts included in the Company’s
long-term debt that qualified as Tier 1 capital was $2,382.2 million and $1,883.3 million as of
December 31, 2006 and 2005, respectively. As currently defined by federal bank regulators, long-term
debt of $3,404.5 million and $3,712.2 million as of December 31, 2006 and 2005, respectively, qualified
as Tier 2 capital.
In connection with FIN 46(R), the Company does not consolidate certain wholly-owned trusts which
have been formed for the sole purpose of issuing trust preferred securities. The proceeds from the trust
preferred securities issuances were invested in junior subordinated debentures of the Parent Company
and Bank Parent Company. The obligations of these debentures constitute a full and unconditional
guarantee by the Parent Company and Bank Parent Company of the trust preferred securities.
Capital Restructuring – 4th Quarter 2006
SunTrust executed a capital restructuring program which included the issuance and extinguishment of
certain long-term debt. SunTrust Preferred Capital I, a Delaware statutory trust, issued $500.0 million in
Fixed to Floating Rate Normal Preferred Purchase Securities to outside investors. The trust loaned the
proceeds from the issuance to SunTrust, who issued $500.0 million in 5.588% junior subordinated
debentures to the trust. The debentures have a 36 year initial maturity, but are remarketable after 5
years. In addition to the debentures, SunTrust also issued a Stock Purchase Contract to SunTrust
Preferred Capital I which guarantees the sale of $500.0 million in preferred stock in 5 years. The
Company reduced Additional Paid in Capital (“APIC”) by $6.0 million for the present value of the
contract payments made to the Trust on the Stock Purchase Contract. In addition APIC was reduced by
$3.4 million for the costs related to the issuance of the Stock Purchase Contract.
SunTrust Capital VIII, a Delaware statutory trust, issued $1 billion in 6.10% Enhanced Trust Preferred
Securities to outside investors. The trust loaned the proceeds from the issuance to SunTrust, who issued
$1.0 billion in 6.10% junior subordinated debentures to the trust. In conjunction with this transaction,
SunTrust called $1.0 billion in existing trust preferred junior subordinated debentures and realized a loss
of $11.7 million on the extinguishment.
SunTrust issued global debt with a 5 year maturity in the amount of 1.0 billion Euros. Simultaneously,
SunTrust entered into a 1.0 billion Euro cross currency swap in order to hedge currency exchange risk.
The global debt included in the Company’s long-term debt was $1.3 billion as of December 31, 2006.
Note 13 - Earnings Per Share
Net income is the same in the calculation of basic and diluted EPS. There were no antidilutive shares for
the year ending December 31, 2006. Equivalent shares of 0.3 million and 5.3 million related to stock
options for the years ended December 31, 2005, and 2004, respectively, were excluded from the
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