Prudential 2007 Annual Report Download - page 192

MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Prudential Financial’s Common Stock was issued to eligible policyholders in Prudential Insurance’s demutualization and sold to
investors in Prudential Financial’s initial public offering. The Common Stock began trading on the New York Stock Exchange under the
symbol “PRU” on December 13, 2001. The following table presents the high and low closing prices for the Common Stock on the New
York Stock Exchange during the periods indicated and the dividends declared per share during such periods:
High Low Dividends
2007:
Fourth Quarter ...................................................................................... $101.09 $89.46 $1.15
Third Quarter ...................................................................................... 98.71 84.28 —
Second Quarter ..................................................................................... 103.17 90.21 —
First Quarter ....................................................................................... 93.10 85.69 —
2006:
Fourth Quarter ...................................................................................... $ 86.84 $76.03 $0.95
Third Quarter ...................................................................................... 79.06 71.47 —
Second Quarter ..................................................................................... 78.89 74.43 —
First Quarter ....................................................................................... 77.48 73.19 —
On January 31, 2008, there were 2,505,853 registered holders of record for the Common Stock and 444 million shares outstanding.
The Class B Stock was issued to institutional investors (two subsidiaries of American International Group, Inc. and Pacific Life Corp.)
in a private placement pursuant to Section 4(2) of the Securities Act of 1933 on the date of demutualization. There is no established public
trading market for the Class B Stock. During the fourth quarter of 2007 and 2006, Prudential Financial paid an annual dividend of $9.625
per share of Class B Stock. On January 31, 2008, there were three holders of record for the Class B Stock and 2 million shares outstanding.
Prudential Financial’s Board of Directors currently intends to continue to declare and pay annual dividends on the Common Stock and
Class B Stock. Future dividend decisions will be based on, and affected by, a number of factors including the financial performance of the
Financial Services Businesses and Closed Block Business; our overall financial condition, results of operations, cash requirements and
future prospects; regulatory restrictions on the payment of dividends by Prudential Financial’s subsidiaries; and such other factors as the
Board of Directors may deem relevant. Dividends payable by Prudential Financial are limited to the amount that would be legally available
for payment under New Jersey corporate law. For additional information on dividends and related regulatory restrictions, see
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 13
to the Consolidated Financial Statements.
In November 2005, Prudential Financial issued in a private placement $2.0 billion of floating rate convertible senior notes, convertible
by the holders at any time after issuance into cash and shares of the Company’s Common Stock. The Company used substantially all of the
offering proceeds to purchase an investment grade fixed income investment portfolio as well as to repurchase, under the Company’s 2005
share repurchase authorization, shares of its Common Stock. In April 2007, Prudential Financial announced its intention to call all such
outstanding floating rate convertible senior notes for redemption on May 21, 2007. Prior to the redemption, substantially all holders elected
to convert their senior notes as provided under their terms. The senior notes required net settlement in shares; therefore, upon conversion,
the holders received cash equal to the par amount of the senior notes surrendered for conversion plus accrued interest and shares of
Prudential Financial Common Stock for the portion of the settlement amount in excess of the par amount. The settlement amount in excess
of the par amount was based upon the excess of the closing market price of Prudential Financial Common Stock for a 10-day period
defined under the terms of the senior notes, or $100.80 per share, over the initial conversion price of $90 per share. Accordingly, at
conversion the Company issued 2,367,887 shares of Common Stock from treasury. The conversion had no impact on the Company’s
results of operations and resulted in a net increase to shareholders’ equity of $44 million, reflecting the tax benefit associated with the
conversion of the senior notes. The payment of principal and accrued interest was funded primarily through the liquidation of the
investment grade fixed income investment portfolio purchased with the proceeds from the original issuance of these notes.
In December 2006, Prudential Financial issued in a private placement $2.0 billion of floating rate convertible senior notes, convertible
by the holders at any time after issuance into cash and shares of the Company’s Common Stock. The Company used the majority of the
offering proceeds initially to invest in an investment grade fixed income investment portfolio, while the remainder of the proceeds were
used for general corporate purposes and to repurchase shares of its Common Stock under the 2006 share repurchase authorization. On
December 12, 2007, $117 million of senior notes were repurchased by Prudential Financial at the request of the holders and prior to this
event we liquidated the investment portfolio. The remaining proceeds are invested in short-term instruments and may be used to fund
operations in lieu of other short-term borrowings in future periods.
In December 2007, Prudential Financial issued in a private placement $3.0 billion of floating rate convertible senior notes, convertible
by the holders at any time after issuance into cash and shares of the Company’s Common Stock. The Company used the majority of the
offering proceeds to fund operating needs of our subsidiaries, to purchase short-term investment grade fixed income investments and for
general corporate purposes, as well as to repurchase shares of its Common Stock under the 2007 share repurchase authorization.
For additional information about our convertible senior notes see Note 12 to the Consolidated Financial Statements.
190 Prudential Financial 2007 Annual Report