TD Bank 2007 Annual Report Download - page 101

TD BANK FINANCIAL GROUP ANNUAL REPORT 2007 Financial Results 97
NOTE 13 SHARE CAPITAL
up of the Bank; (b) the Superintendent of Financial Institutions
Canada takes control of the Bank; (c) the Bank has Tier 1 capital-
ization of less than 5% or a total capital ratio of less than 8%; or
(d) the Bank fails 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 TD CaTS is 7.60% per annum. The
Bank has not issued any non-cumulative Class A redeemable First
Preferred Share, Series A1 as at October 31, 2007. If issued, these
shares would have a dividend rate of 7.60%.
TD CAPITAL TRUST II SECURITIES – SERIES 2012–1
TD Capital Trust II Securities – Series 2012–1 (TD CaTS II), are
issued by TD Capital Trust II (Trust II), whose voting securities are
100% owned by the Bank. Trust II is a variable interest entity. As
the Bank is not the primary beneficiary of Trust II, the Bank does
not consolidate it. The senior deposit note of $350 million that
was issued to Trust II is reflected in deposits on the Consolidated
Balance Sheet. For regulatory purposes, the $350 million of
TD CaTS II issued by Trust II is considered as part of the Bank’s
available capital.
Holders of TD CaTS II are eligible to receive semi-annual
non-cumulative fixed cash distributions of $33.96 per TD CaTS II.
Should Trust II fail to pay the semi-annual distributions in full, the
Bank’s ability to declare dividends on Bank common and preferred
shares would be restricted. The proceeds from the issuance were
invested in Bank deposits. Between December 31, 2007 and
December 31, 2012, Trust II has the option of redeeming the
outstanding TD CaTS II for the greater of: (a) $1,000 per TD CaTS
together with unpaid distributions to the date of redemption and
(b) a price calculated to provide an annual yield equal to the yield
COMMON SHARES
The Bank is authorized by its shareholders to issue an unlimited
number of common shares, without par value, for unlimited con-
sideration. The common shares are not redeemable or convertible.
Dividends are typically declared by the Board of Directors of the
Bank on a quarterly basis and the amount may vary from quarter
to quarter.
Shares Issued and Outstanding
(millions of shares and millions of Canadian dollars) 2007 2006 2005
Number
of shares Amount
Number
of shares Amount
Number
of shares Amount
Common:
Balance at beginning of year 717.4 $ 6,334 711.8 $ 5,872 655.9 $ 3,373
Issued on exercise of options 3.8 173 3.4 119 4.3 125
Issued as a result of dividend reinvestment plan 1.2 85 5.4 328 7.3 380
Impact of shares (acquired) sold in Wholesale Banking 0.4 30 (0.3)(20) – 6
Issued on the acquisition of TD Banknorth – – – – 44.3 1,988
Issued on the acquisition of VFC – – 1.1 70 – –
Purchased for cancellation (5.0)(45)(4.0)(35) – –
Balance at end of year – common 717.8 $ 6,577 717.4 $ 6,334 711.8 $ 5,872
Preferred (Class A – Series O):
Issued during the year –$ – 17.0 $ 425 –$ –
Balance at end of year – preferred 17.0 $ 425 17.0 $ 425 –$ –
of a Government of Canada bond maturing on December 31,
2012 at that time plus 0.38% 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 Trust II prior
to December 31, 2012, Trust II 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
per TD CaTS II 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. At any time before the
conversion is completed, the Bank may find substitute purchasers
for the TD CaTS II at the purchase price of not less than 90%
of the closing price of such TD CaTS II on the last trading day
immediately before the date fixed for purchase. The Bank has
not issued any non-cumulative Class A redeemable First Preferred
Shares, Series A2 as at October 31, 2007.
Each TD CaTS II may be automatically exchanged into 40 non-
cumulative Class A redeemable First Preferred Shares, Series A3
of the Bank without the 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 capital-
ization of less than 5% or a total capital ratio of less than 8%;
(d) the Board of Directors of the Bank advises the Superintendent
that the Bank has Tier 1 capitalization of less than 5% or a total
capital ratio of less than 8%; or (e) the Bank fails to comply with
a direction of the Superintendent of Financial Institutions Canada
to increase its capital or provide additional liquidity.
PREFERRED SHARES
Class A First Preferred Shares, Series O
On November 1, 2005, the Bank issued 17 million Class A First
Preferred Shares, Series O shares for gross cash consideration of
$425 million.
On or after November 1, 2010, the Bank may redeem all, or
from time to time, part of the outstanding Series O shares by
payment in cash of $26.00 per share if redeemed on or prior to
October 30, 2011; $25.75 if redeemed after October 30, 2011
and on or prior to October 30, 2012; $25.50 if redeemed after
October 30, 2012 and on or prior to October 30, 2013; $25.25
if redeemed after October 30, 2013 and on or prior to October
30, 2014; and $25.00 if redeemed thereafter, together with the
unpaid dividends to the date of redemption.
The Series O shares pay a quarterly non-cumulative dividend of
$0.303125 per share.
Class A First Preferred Shares, Series P
Subsequent to year-end, on November 1, 2007, the Bank issued
10 million Class A First Preferred Shares, Series P shares for gross
cash consideration of $250 million.
On or after November 1, 2012, the Bank may redeem all,
or from time to time, part of the outstanding Series P shares by
payment in cash of $26.00 per share if redeemed on or prior to
October 30, 2013; $25.75 if redeemed after October 30, 2013
and on or prior to October 30, 2014; $25.50 if redeemed after
October 30, 2014 and on or prior to October 30, 2015; $25.25 if
redeemed after October 30, 2015 and on or prior to October 30,
2016; and $25.00 if redeemed thereafter, together with the
unpaid dividends to the date of redemption.
NORMAL COURSE ISSUER BID
On December 20, 2006, the Bank commenced a normal course
issuer bid, effective for up to one year, to repurchase for