Unum 2007 Annual Report Download - page 119

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Unum 2007 Annual Report 117
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.
In December 2007, we entered into $400.0 million 364 day unsecured revolving credit facility. Borrowings under the facility are for
general corporate uses and are subject to financial covenants, negative covenants, and events of default that are customary. The facility
provides for interest rates based on either the prime rate or LIBOR, as adjusted. At December 31, 2007, there were no amounts outstanding
on the facility.
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, 2007, we had $1.0 billion remaining on our shelf registration.
Interest paid on short-term and long-term debt and related securities during 2007, 2006, and 2005 was $184.1 million, $200.7 million,
and $210.7 million, respectively.
The cost related to early retirement of debt during 2007 and 2006 decreased income approximately $58.8 million and $25.8 million,
respectively, before tax, or $38.3 million and $16.9 million, respectively, after tax.
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.
Information presented as follows for our non U.S. plans previously included plans for the employees of our Canadian branch operation
which was sold in 2004. In the third quarter of 2007, we terminated the Canadian defined pension plans which were frozen in 2004. The
termination of these plans resulted in a reduction in our pension assets and pension liabilities of $15.1 million and a settlement cost of
$0.3 million recognized in our net periodic benefit cost for 2007.
As a result of the sale of GENEX, we froze the pension plan benefits for the employees of GENEX during the first quarter of 2007,
which resulted in a $7.2 million reduction in our pension liability and a curtailment loss of $0.2 million recognized in our net periodic
benefit cost for 2007. The curtailment loss was comprised of a $0.6 million increase in our pension liability related to a termination benefit
and a $0.4 million recognition of unamortized prior service credits. As of the date of the curtailment, we remeasured our U.S. pension plan
obligation. The weighted average discount rate assumption used in the measurement of our U.S. pension plan benefit obligation changed
from 6.10 percent as of our December 31, 2006 measurement date to 5.90 percent as of the measurement date of March 1, 2007. No
other assumptions were materially changed. As a result of the remeasurement, our pension plan liability increased $35.6 million. The net
effect of the curtailment and remeasurement was an increase in our pension plan liability of $29.0 million, a decrease in deferred income
tax of $10.1 million, a decrease in income from discontinued operations of $0.2 million, and a decrease in accumulated other comprehensive
income of $18.7 million.