TD Bank 2011 Annual Report Download - page 130

TD BANK GROUP ANNUAL REPORT 2011 FINANCIAL RESULTS128
5-Year Rate Reset Preferred Shares, Series AI
On March 6, 2009, the Bank issued 11 million non-cumulative 5-Year
Rate Reset Preferred Shares, Series AI for gross cash consideration of
$275 million. Quarterly non-cumulative cash dividends, if declared, will
be paid at a per annum rate of 6.25% for the initial period from and
including March 6, 2009 to but excluding July 31, 2014. Thereafter,
the dividend rate will reset every five years to equal the then five year
Government of Canada bond yield plus 4.15%. Holders of the Series
AI shares will have the right to convert their shares into non-cumula-
tive Floating Rate Class A Preferred Shares, Series AJ, subject to certain
conditions, on July 31, 2014, and on July 31 every five years thereafter
and vice versa. The Series AI shares are redeemable by the Bank for
cash, subject to regulatory consent, at $25.00 per share on July 31,
2014 and on July 31 every five years thereafter.
5-Year Rate Reset Preferred Shares, Series AK
On April 3, 2009, the Bank issued 14 million non-cumulative 5-Year
Rate Reset Preferred Shares, Series AK for gross cash consideration of
$350 million. Quarterly non-cumulative cash dividends, if declared, will
be paid at a per annum rate of 6.25% for the initial period from and
including April 3, 2009 to but excluding July 31, 2014. Thereafter, the
dividend rate will reset every five years to equal the then five year
Government of Canada bond yield plus 4.33%. Holders of the Series
AK shares will have the right to convert their shares into non-cumula-
tive Floating Rate Class A Preferred Shares, Series AL, subject to certain
conditions, on July 31, 2014, and on July 31 every five years thereafter
and vice versa. The Series AK shares are redeemable by the Bank for
cash, subject to regulatory consent, at $25.00 per share on July 31,
2014 and on July 31 every five years thereafter.
NORMAL COURSE ISSUER BID
The Bank did not have a normal course issuer bid outstanding during
fiscal 2011, 2010 or 2009.
DIVIDEND REINVESTMENT PLAN
The Bank offers a dividend reinvestment plan for its common share-
holders. 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’s discretion, or
from the open market at market price. During the year, a total of
8.6 million common shares were issued from the Bank’s treasury at a
discount of 1% (2010 – 7.7 million shares at a discount of 1%; 2009 –
8.8 million shares at a discount of 1%) under the dividend reinvest-
ment plan.
DIVIDEND RESTRICTIONS
The Bank is prohibited by the Bank Act from declaring dividends on
its preferred or common shares if there are 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 OSFI. The Bank does not anticipate that
this condition 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 Trust II, Trust III or Trust IV fails to pay semi-annual distributions
or interest in full to holders of their respective trust securities, TD CaTS II,
TD CaTS III and TD CaTS IV Notes. In addition, the ability to pay divi-
dends on common shares without the approval of the holders of the
outstanding preferred shares is restricted unless all dividends on the
preferred shares have been declared and paid or set apart for payment.
Currently, these limitations do not restrict the payment of dividends
on common shares or preferred shares.
TD Bank US Holding Company is restricted from paying dividends
to its parent, TD US P&C Holdings ULC, in the event that either South
Financial Capital Trust 2007-I, South Financial Capital Trust 2007-II or
South Financial Capital Trust 2007-III fails to pay quarterly distributions
or interest in full to holders of their respective trust securities. Further,
in the case of South Financial Capital Trust 2007-II and South Financial
Capital Trust 2007-III, all subsidiaries of TD Bank US Holding Company
would be restricted from paying dividends in such an event.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
NOTE 19
Comprehensive income is composed of the Bank’s net income and
other comprehensive income. Other comprehensive income consists
of unrealized gains and losses on available-for-sale securities, foreign
currency translation gains and losses on the net investment in self-
sustaining operations, net of net investment hedging activities, and
changes in the fair value of derivative instruments designated as cash
flow hedges, all net of income taxes.
The following table summarizes the Bank’s accumulated other
comprehensive income (loss), net of income taxes, as at October 31.
Accumulated Other Comprehensive Income (Loss), Net of Income Taxes
(millions of Canadian dollars) 2011 2010
Net unrealized gain (loss) on available-for-sale securities, net of hedging activities $ 929 $ 1,193
Net unrealized foreign currency translation gain (loss) on investments in subsidiaries, net of hedging activities (3,199) (2,901)
Net gain (loss) on derivative instruments designated as cash flow hedges 2,806 2,713
Total $ 536 $ 1,005