Bank of America 2005 Annual Report Download - page 80

Other Off-balance Sheet Financing Entities
To improve our capital position and diversify funding sources, we also sell assets, primarily loans, to other
off-balance sheet QSPEs that obtain financing primarily by issuing term notes. We may retain a portion of the
investment grade notes issued by these entities, and we may also retain subordinated interests in the entities which
reduce the credit risk of the senior investors. We may provide liquidity support in the form of foreign exchange or
interest rate swaps. We generally do not provide other forms of credit support to these entities, which are described more
fully in Note 9 of the Consolidated Financial Statements. In addition to the above, we had significant involvement with
variable interest entities (VIEs) other than the commercial paper conduits. These VIEs were not consolidated because we
will not absorb a majority of the expected losses or expected residual returns and are therefore not the primary
beneficiary of the VIEs. These entities are described more fully in Note 9 of the Consolidated Financial Statements.
Obligations and Commitments
We have contractual obligations to make future payments on debt and lease agreements. Additionally, in the normal
course of business, we enter into contractual arrangements whereby we commit to future purchases of products or
services from unaffiliated parties. Obligations that are legally binding agreements whereby we agree to purchase
products or services with a specific minimum quantity defined at a fixed, minimum or variable price over a specified
period of time are defined as purchase obligations. Included in purchase obligations are vendor contracts of $4.0 billion,
commitments to purchase securities of $34.2 billion and commitments to purchase loans of $51.7 billion. The most
significant of our vendor contracts include communication services, processing services and software contracts. Other
long-term liabilities include our obligations related to the Qualified Pension Plans, Nonqualified Pension Plans and
Postretirement Health and Life Plans (the Plans). Obligations to the Plans are based on the current and projected
obligations of the Plans, performance of the Plans’ assets and any participant contributions, if applicable. During 2005
and 2004, we contributed $1.1 billion and $303 million to the Plans, and we expect to make at least $134 million of
contributions during 2006. Management believes the effect of the Plans on liquidity is not significant to our overall
financial condition. Debt, lease and other obligations are more fully discussed in Notes 12 and 13 of the Consolidated
Financial Statements.
Table 5 presents total long-term debt and other obligations at December 31, 2005.
Table 5
Long-term Debt and Other Obligations
December 31, 2005
(Dollars in millions)
Due in
1 year
or less
Due after
1 year
through
3 years
Due after
3 years
through
5 years Due after 5 years Total
Long-term debt and capital leases(1) ................................. $11,188 $24,065 $20,689 $44,906 $100,848
Purchase obligations(2) ............................................. 44,635 21,235 22,989 1,076 89,935
Operating lease obligations ......................................... 1,324 2,202 1,449 3,477 8,452
Other long-term liabilities .......................................... 134 — — — 134
Total ........................................................ $57,281 $47,502 $45,127 $49,459 $199,369
(1) Includes principal payments and capital lease obligations of $40 million.
(2) Obligations that are legally binding agreements whereby we agree to purchase products or services with a specific minimum
quantity defined at a fixed, minimum or variable price over a specified period of time are defined as purchase obligations.
Many of our lending relationships contain funded and unfunded elements. The funded portion is reflected on our
balance sheet. The unfunded component of these commitments is not recorded on our balance sheet until a draw is made
under the loan facility; however, a reserve is established for probable losses. These commitments, as well as guarantees,
are more fully discussed in Note 13 of the Consolidated Financial Statements.
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