TD Bank 2002 Annual Report Download - page 59

57
FINANCIAL RESULTS
(millions of dollars) 2002 2001
Trust units issued by TD Capital Trust
900,000 Capital Trust Securities – Series 2009 $ 900 $ 900
Trust units issued by TD Capital Trust II
350,000 Capital Trust Securities – Series 2012 350 –
Common shares and retained earnings of TD Waterhouse Group, Inc. –372
$ 1,250 $ 1,272
NOTE 9Non-controlling interest in subsidiaries
TD Capital Trust Securities – Series 2009
The TD Capital Trust Securities (TD CaTS) are issued by
TD Capital Trust, whose voting securities are owned 100% by
the Bank. Holders of TD CaTS are eligible to receive semi-annual
non-cumulative fixed cash distributions of $38 per TD CaTS.
Should the trust fail to pay the semi-annual distributions in full,
the Bank’s ability to declare dividends on Bank common and
preferred shares will be restricted.
Between June 30, 2005 and December 31, 2009, the trust
has the option of redeeming the outstanding TD CaTS for the
greater of: (a) $1,000 together with unpaid distributions to
the date of redemption and (b) a price calculated to provide an
annual yield equal to the yield of a Government of Canada bond
maturing on December 31, 2009 at that time plus .375%
together with unpaid distributions to the date of redemption. In
the event of an unfavourable change in tax or capital treatment
as it applies to the trust prior to June 30, 2005, the trust may
redeem the outstanding TD CaTS for a redemption price as calcu-
lated above. On or after December 31, 2009, the redemption
price would be $1,000 together with unpaid distributions to the
date of redemption. Such redemption rights are subject to the
approval of the Superintendent of Financial Institutions Canada.
On or after June 30, 2010, each TD CaTS may, at the option
of the holder, be converted semi-annually into one Non-cumula-
tive Class A Redeemable First Preferred Share of the Bank.
By giving at least 60 days of notice prior to the date of conver-
sion to all holders who have given a conversion notice, the Bank
may redeem or find substitute purchasers at the purchase price
of $1,000 per TD CaTS together with unpaid distributions to the
date of conversion.
Each TD CaTS may be automatically exchanged into one
preferred share of the Bank without consent of the holder in the
following circumstances: (a) proceedings are commenced for
the winding-up of the Bank; (b) the Superintendent of Financial
Institutions Canada takes control of the Bank; (c) the Bank has
Tier 1 capitalization of less than 5% or a Total Capital ratio of
less than 8%; or (d) the Bank has failed to comply with a direc-
tion of the Superintendent of Financial Institutions Canada to
increase its capital or provide additional liquidity.
The distribution rate on the trust securities is 7.60% per annum.
TD Capital Trust Securities – Series 2012
The TD Capital Trust Securities (TD CaTS II) are issued by
TD Capital Trust II, whose voting securities are owned 100%
by the Bank. Holders of TD CaTS II are eligible to receive semi-
annual non-cumulative fixed cash distributions of $33.96 per
TD CaTS II. Should the trust fail to pay the semi-annual distribu-
tions in full, the Bank’s ability to declare dividends on Bank
common and preferred shares will be restricted. The proceeds
from the issuance were invested in Bank deposits.
Between December 31, 2007 and December 31, 2012, the
trust has the option of redeeming the outstanding TD CaTS II for
the greater of: (a) $1,000 together with unpaid distributions to
the date of redemption and (b) a price calculated to provide an
annual yield equal to the yield of a Government of Canada bond
maturing on December 31, 2012 at that time plus .38% together
with unpaid distributions to the date of redemption. In the event
of an unfavourable change in tax or capital treatment as it applies
to the trust prior to December 31, 2012, the trust may redeem
the outstanding TD CaTS II for a redemption price as calculated
above. On or after December 31, 2012, the redemption price
would be $1,000 together with unpaid distributions to the date
of redemption. Such redemption rights are subject to the
approval of the Superintendent of Financial Institutions Canada.
At any time, each TD CaTS II may, at the option of the holder,
be converted into 40 Non-cumulative Class A Redeemable First
Preferred Shares, Series A2 of the Bank.
Prior to the conversion, provided the holder has not withheld
consent, the Bank may find substitute purchasers at a purchase
price not less than 90% of the closing price of the TD CaTS II.
Each TD CaTS II may be automatically exchanged into 40 Non-
cumulative Class A Redeemable First Preferred Shares, Series A3
of the Bank without consent of the holder in the following events:
(a) proceedings are commenced for the winding-up of the Bank;
(b) the Superintendent of Financial Institutions Canada takes
control of the Bank; (c) either the Superintendent of Financial
Institutions Canada or the Board of Directors gives notice that the
Bank has Tier 1 capitalization of less than 5% or a Total Capital
ratio of less than 8%; or (d) the Bank has failed to comply with a
direction of the Superintendent of Financial Institutions Canada
to increase its capital or provide additional liquidity.
The distribution rate on the trust securities is 6.792% per
annum. No Non-cumulative Class A Redeemable First Preferred
Shares, Series A2 or Series A3 have been issued as at October
31, 2002. If issued, these shares would have dividend rates of
4.40% and 5.15% respectively.