Unum 2009 Annual Report Download - page 129

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Unum 2009 Annual Report
Adjustable Conversion-Rate Equity Security Units
In 2004, Unum Group issued 12.0 million 8.25% adjustable conversion-rate equity security units (units) in a private offering for
$300.0 million. We subsequently registered the privately placed securities for resale by the private investors. Each unit had a stated amount
of $25 and consisted of (a) a contract pursuant to which the holder agrees to purchase, for $25, shares of Unum Group common stock on
May 15, 2007 and which entitled the holder to contract adjustment payments at the annual rate of 3.165 percent, payable quarterly, and
(b) a 1/40 or 2.5 percent ownership interest in a senior note issued by Unum Group due May 15, 2009 with a principal amount of $1,000, on
which we paid interest at the initial annual rate of 5.085 percent, payable quarterly. The scheduled remarketing of the senior note element
of these units occurred in February 2007, as stipulated by the terms of the original offering, and we reset the interest rate on $300.0 million
of senior notes due May 15, 2009 to 5.859%. We purchased $150.0 million of the senior notes in the remarketing which were subsequently
retired. In May 2007, we settled the purchase contract element of the units by issuing 17.7 million shares of common stock. We received
proceeds of approximately $300.0 million from the transaction.
Junior Subordinated Debt Securities
In 1998, Provident Financing Trust I (the trust) issued $300.0 million of 7.405% capital securities in a public offering. These capital
securities, which mature in 2038, are fully and unconditionally guaranteed by Unum Group, have a liquidation value of $1,000 per capital
security, and have a mandatory redemption feature under certain circumstances. Unum Group issued 7.405% junior subordinated deferrable
interest debentures to the trust in connection with the capital securities offering. The debentures mature in 2038. The sole assets of the
trust are the junior subordinated debt securities. In 2007, $23.5 million of these debentures were redeemed.
Short-term Debt
In 2009, we purchased and retired the remaining $132.2 million of our outstanding 5.859% notes and repaid $58.3 million of reverse
repurchase agreements outstanding at December 31, 2008. In 2008, we purchased and retired $17.8 million of our outstanding 5.859%
notes and $175.0 million of our 5.997% notes.
Interest and Debt Expense
Interest paid on long-term and short-term debt and related securities during 2009, 2008, and 2007 was $122.0 million, $157.3 million,
and $184.1 million, respectively.
The cost related to early retirement of debt during 2008 and 2007 decreased income approximately $0.4 million and $58.8 million,
respectively, before tax, or $0.3 million and $38.3 million, respectively, after tax.
Shelf Registration
We have a shelf registration, which became effective in December 2008, with the Securities and Exchange Commission to issue
various types of securities, including common stock, preferred stock, debt securities, depository shares, stock purchase contracts, units and
warrants, or preferred securities of wholly-owned finance trusts. The shelf registration enables us to raise funds from the offering of any
individual security covered by the shelf registration as well as any combination thereof, subject to market conditions and our capital needs.