Travelers 2005 Annual Report Download - page 113

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legal requirements, regulatory constraints and other factors as the Board of Directors deems relevant.
Dividends would be paid by the Company only if declared by its Board of Directors out of funds legally
available, subject to any other restrictions that may be applicable to the Company.
In 2005 and 2004, the Company acquired 0.8million and 0.4 million shares, respectively, of common
stock from employees as treasury stock primarily to cover payroll withholding taxes in connection with the
vesting of restricted stock awards and exercises of stock options. In 2003, TPC repurchased approximately
1.1 million shares (as adjusted for the merger) of common stock at a total cost of $40 million, representing
the acquisition of shares under a repurchase program that had been approved by TPC’s board of directors.
TPC’s repurchase program was terminated upon completion of the merger.
Upon completion of the merger on April 1, 2004, the Company acquired all obligations related to
SPC’s outstanding debt, which had a carrying value of $3.68 billion at the time of the merger. In
accordance with purchase accounting, the carrying value of the SPC debt acquired was adjusted to market
value as of April 1, 2004 using the effective interest rate method, which resulted in a $301 million
adjustment to increase the amount of the Company’s consolidated debt outstanding. That fair value
adjustmentis being amortized over the remaining life of the respective debt instruments acquired. That
amortization, which totaled $54million in 2005 and $55 millionin 2004, reduced reported interest expense.