Unum 2006 Annual Report Download - page 152

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Unum Group and Subsidiaries
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Note 9 - Debt - Continued
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 will pay interest at the initial annual rate of 5.085 percent, payable quarterly. Upon settlement
of the common stock purchase contract and successful remarketing of the senior note element of the units, we will
receive proceeds of approximately $300.0 million and will issue between 17.7 million and 20.4 million shares of
common stock. The present value of the quarterly contract adjustment payments, which is included in other
liabilities in the consolidated balance sheets, and the related purchase contract issuance costs reduced additional
paid-in capital by $27.6 million. 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 2003, Unum Group issued 23.0 million 8.25% adjustable conversion-rate equity security units (units) in a
public offering for $575.0 million. Each unit had a stated amount of $25 and initially consisted of (a) a contract
pursuant to which the holder agreed to purchase, for $25, shares of Unum Group’s common stock on May 15, 2006
and which entitled the holder to contract adjustment payments at the annual rate of 2.25 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, 2008 with a
principal amount of $1,000, on which we paid interest at the initial annual rate of 6.00 percent, payable quarterly.
The scheduled remarketing of the senior note element of these units occurred in February 2006, as stipulated by the
terms of the original offering, and we reset the interest rate on $575.0 million of senior notes due May 15, 2008 to
5.997%. We purchased $400.0 million of the senior notes in the remarketing which were subsequently retired. The
associated write-off of deferred debt costs decreased 2006 income by $5.3 million before tax, or $3.4 million after
tax. Upon settlement of the common stock purchase contract in May 2006, we received proceeds of approximately
$575.0 million and issued 43.3 million shares of common stock.
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 on March 15, 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 which
mature on March 15, 2038, to the trust in connection with the capital securities offering. The sole assets of the trust
are the junior subordinated debt securities.
Unum Group has a shelf registration, which became effective in 2005, 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 up to an aggregate of $1.0 billion. If utilized, the shelf registration will enable 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. At December 31, 2006, we had $1.0 billion remaining on our shelf
registration.
Interest paid on short-term and long-term debt and related securities during 2006, 2005, and 2004 was $200.7
million, $210.7 million, and $205.2 million, respectively.
Note 10 - Pensions and Other Postretirement Benefits
We sponsor several defined benefit pension and postretirement plans for our employees, including non-qualified
pension plans. The U.S. plans comprise the majority of our total benefit obligation and benefit cost. We maintain a
separate defined benefit plan for eligible employees in our U.K. operation. We previously maintained separate
defined benefit plans for the employees of our Canadian branch operation. As a result of the sale of the Canadian