BB&T 2007 Annual Report Download - page 60

Contractual Obligations, Commitments, Contingent Liabilities, Off-Balance Sheet
Arrangements, and Related Party Transactions
The following table presents, as of December 31, 2007, BB&T’s significant fixed and determinable contractual
obligations by payment date. The payment amounts represent those amounts contractually due to the recipient.
The table excludes liabilities recorded in connection with FIN 48, because management cannot reasonably
estimate the timing of any payments that may be required in connection with these liabilities. Further discussion
of the nature of each obligation is included in Note 15 “Commitments and Contingencies” in the “Notes to
Consolidated Financial Statements.”
Table 22
Contractual Obligations and Other Commitments
December 31, 2007
Total Less than
One Year 1to3 Years 3to5 Years After 5 Years
(Dollars in millions)
Contractual Cash Obligations
Long-term debt $18,687 $ 1,029 $4,850 $1,672 $11,136
Operating leases 1,002 126 220 168 488
Commitments to fund affordable housing
investments 444 233 177 31 3
Venture capital commitments 213 57 143 13 —
Time deposits 40,858 37,632 2,653 568 5
Total contractual cash obligations $61,204 $39,077 $8,043 $2,452 $11,632
BB&T’s significant commitments include certain investments in affordable housing and historic building
rehabilitation projects throughout its market area. BB&T enters into such arrangements as a means of
supporting local communities and recognizes tax credits relating to these investments. At December 31, 2007,
BB&T’s investments in such projects totaled $750 million, which includes outstanding commitments of $444
million. BB&T typically acts as a limited partner in these investments and does not exert control over the
operating or financial policies of the partnerships. Branch Bank typically provides financing during the
construction and development of the properties; however, permanent financing is generally obtained from
independent third parties upon completion of a project. BB&T’s risk exposure relating to such commitments is
generally limited to the amount of investments and commitments made. Please refer to Note 1 “Summary of
Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” for further discussion of
these investments in limited partnerships.
In addition, BB&T enters into derivative contracts to manage various financial risks. A derivative is a
financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument,
index or referenced interest rate. Derivative contracts are carried at fair value on the Consolidated Balance
Sheets with the fair value representing the net present value of expected future cash receipts or payments based
on market interest rates as of the balance sheet date. Derivative contracts are written in amounts referred to as
notional amounts, which only provide the basis for calculating payments between counterparties and are not a
measure of financial risk. Therefore, the derivative liabilities recorded on the balance sheet as of December 31,
2007 do not represent the amounts that may ultimately be paid under these contracts. Further discussion of
derivative instruments is included in Note 1 “Summary of Significant Accounting Policies” and Note 19
“Derivative Financial Instruments” in the “Notes to Consolidated Financial Statements.”
In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent
permitted by law against liabilities arising from litigation. BB&T also issues standard representation and
warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and
other similar arrangements. Counterparties in many of these indemnifications provide similar indemnifications to
BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments
related to these guarantees would materially change the financial condition or results of operations of BB&T.
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