SunTrust 2006 Annual Report Download - page 116

SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
Preferred Stock
On September 12, 2006, the Company issued depositary shares representing ownership interests in
5,000 shares of Perpetual Preferred Stock, Series A, no par value and $100,000 liquidation preference
per share (the “Series A Preferred Stock”). The Series A Preferred Stock has no stated maturity and will
not be subject to any sinking fund or other obligation of the Company. Dividends on the Series A
Preferred Stock, if declared, will accrue and be payable quarterly at a rate per annum equal to the greater
of three-month LIBOR plus 0.53 percent, or 4.00 percent. Dividends on the shares initially will be
cumulative. During the cumulative period, the Company will have an obligation to pay any unpaid
dividends. However, dividends on the shares will automatically become non-cumulative immediately
upon the effective date of an amendment to the Company’s articles of incorporation to eliminate the
requirement that the Company’s preferred stock dividend be cumulative, and such amendment will be
voted upon by the Company’s shareholders at their next annual meeting to be held on April 17, 2007.
During the non-cumulative dividend period, the Company will have no obligation to pay dividends that
were undeclared and unpaid during the cumulative dividend period.
Shares of the Series A Preferred Stock have priority over the Company’s common stock with regard to
the payment of dividends. As such, the Company may not pay dividends on or repurchase, redeem, or
otherwise acquire for consideration shares of its common stock unless dividends for the Series A
Preferred Stock have been declared for that period, and sufficient funds have been set aside to make
payment.
On or after September 15, 2011, the Series A Preferred Stock will be redeemable at the Company’s
option at a redemption price equal to $100,000 per share, plus any declared and unpaid dividends.
Except in certain limited circumstances, the Series A Preferred Stock does not have any voting rights.
The Company incurred $7.7 million of issuance costs paid to external parties in this transaction, which
were recorded as a reduction in net proceeds and charged to additional paid in capital.
On November 14, 2006, the Board declared a fourth quarter cash dividend totaling $1,545.78 per
preferred share which was paid on December 15, 2006 to shareholders of record at the close of business
on December 1, 2006.
Accelerated Share Repurchase Agreement
On October 24, 2006, the Company repurchased 9,926,589 shares of its common stock under an
Accelerated Share Repurchase agreement. The Company paid $870.7 million, net of settlement costs,
for the repurchased shares. This payment increased Treasury Stock by $771.8 million based on an
average share price of $77.75 per common share repurchased and decreased additional paid in capital
$98.9 million representing the difference between the payment and the market value of common shares
repurchased.
Under the terms of the agreement, the Company will not be required to make any additional payments to
the counterparty. However, the Company could receive additional shares under the agreement. The
number of additional shares received, if any, will depend upon the volume weighted average price of
SunTrust common stock over a period concluding on March 8, 2007 subject to a maximum 2,647,093
additional shares. If the Company receives additional shares, Treasury Stock will be further increased
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