TD Bank 2006 Annual Report Download - page 92

TD BANK FINANCIAL GROUP ANNUAL REPORT 2006 Financial Results
88
Shares Issued and Outstanding
(millions of shares and millions of Canadian dollars) 2006 2005 2004
Number Number Number
of shares Amount of shares Amount of shares Amount
Common:
Balance at beginning of year 711.8 $5,872 655.9 $3,373 656.3 $3,179
Issued on exercise of options 3.4 119 4.3 125 4.4 99
Issued as a result of dividend reinvestment plan 5.4 328 7.3 380 3.8 174
Impact of shares (acquired) sold in Wholesale Banking (.3) (20) – 6 (1.0) (41)
Issued on the acquisition of TD Banknorth – – 44.3 1,988 – –
Issued on the acquisition of VFC 1.1 70 – – – –
Purchased for cancellation (4.0) (35) – – (7.6) (38)
Balance at end of year – common 717.4 $6,334 711.8 $5,872 655.9 $3,373
Preferred (Class A – Series O):
Issued during the year 17.0 $ 425 ––– –
Balance at end of year – preferred 17.0 $ 425 ––– –
COMMON SHARES
The Bank is authorized by its shareholders to issue an unlimited
number of common shares, without par value, for unlimited
consideration. 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.
PREFERRED SHARES
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 prior
to October 30, 2011; $25.75 if redeemed on or after October 30,
2011 and prior to October 30, 2012; $25.50 if redeemed on or
after October 30, 2012 and prior to October 30, 2013; $25.25 if
redeemed on or after October 30, 2013 and 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 dividend of $.303125
per share.
NORMAL COURSE ISSUER BID
On September 18, 2006, the Bank commenced a normal course
issuer bid, effective for up to one year, to repurchase for cancella-
tion, up to four million common shares, representing approxi-
mately 0.6% of the Bank’s outstanding common shares as at
September 8, 2006. This bid was completed in October, 2006
after the purchase of four million shares at a cost of $264 million.
Therewereno purchases made under the Bank’s previous normal
course issuer bid which expired in February, 2006.
On October 19, 2006, the Bank announced a new normal course
issuer bid, subject to regulatory approval, to repurchase for cancel-
lation up to five million common shares, representing approximately
0.7% of the Bank’s then outstanding common shares.
DIVIDEND REINVESTMENT PLAN
The Bank offers a dividend reinvestment plan for its common
shareholders. Participation in the plan is optional and under the
terms of the plan, cash dividends on common shares are used to
purchase additional common shares. At the option of the Bank,
the common shares may be issued from the Bank’s treasury at an
average market price based on the last five trading days before
the date of the dividend payment, with a discount of between
0% to 5% at the Bank’sdiscretion, or from the open market at
market price. During the year, a total of 5 million common shares
were issued from the Bank’s treasury at a discount of 1.0% and
an additional .4 million wereissued with no discount under the
dividend reinvestment plan. In 2005, 7.3 million common shares
were issued from the Bank’s treasury at a discount of 1%.
DIVIDEND RESTRICTIONS
The Bank is prohibited by the Bank Act from declaring dividends
on its preferred or common shares if thereare reasonable grounds
for believing that the Bank is, or the payment would cause the
Bank to be, in contravention of the capital adequacy and liquidity
regulations of the Bank Act or directions of the Superintendent of
Financial Institutions Canada. The Superintendent of Financial
Institutions Canada administers a restriction under the Bank Act
on the Bank’s ability to pay dividends and interest distributions on
common and preferred shares which assesses the ongoing mainte-
nance by the Bank of satisfactory regulatory capital and liquidity.
The Bank does not anticipate that these conditions will restrict it
from paying dividends in the normal course of business.
The Bank is also restricted from paying dividends in the event
that either TD CaTs and TD CaTs II fails to pay semi-annual distribu-
tions in full to holders of their respective trust securities. In addi-
tion, the ability to pay dividends on common shares without the
approval of the holders of the outstanding preferred shares is
restricted unless all interest distributions and dividends on the
preferred shares have been declared and paid or set apart for
payment. Currently,these limitations do not restrict the payment
of interest on preferred shares or dividends on common shares.
The distribution rate on the Trust’s securities 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,
2006. If issued, these shares would have a dividend rate of 7.6%.
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 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 redeem-
ing 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 distribu-
tions 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
together with unpaid distributions to the date of redemption.
Such redemption rights are subject to the approval of the
Superintendent of Financial Institutions Canada.
SHARE CAPITAL
NOTE 13