Bank of America 2007 Annual Report Download - page 144

The majority of the floating rates are based on three- and six-month
London InterBank Offered Rates (LIBOR). Bank of America Corporation and
Bank of America, N.A. maintain various domestic and international debt
programs to offer both senior and subordinated notes. The notes may be
denominated in U.S. dollars or foreign currencies. At December 31, 2007
and 2006, the amount of foreign currency-denominated debt translated
into U.S. dollars included in total long-term debt was $58.8 billion and
$37.8 billion. Foreign currency contracts are used to convert certain for-
eign currency-denominated debt into U.S. dollars.
At December 31, 2007 and 2006, Bank of America Corporation was
authorized to issue approximately $64.0 billion and $58.1 billion of addi-
tional corporate debt and other securities under its existing shelf-
registration statements. At December 31, 2007 and 2006, Bank of
America, N.A. was authorized to issue approximately $62.1 billion and
$30.8 billion of bank notes. At December 31, 2007, Bank of America,
N.A. was authorized to issue approximately $20.6 billion of additional
mortgage notes.
The weighted average effective interest rates for total long-term debt,
total fixed-rate debt and total floating-rate debt (based on the rates in
effect at December 31, 2007) were 5.09 percent, 5.21 percent and 4.93
percent, respectively, at December 31, 2007 and (based on the rates in
effect at December 31, 2006) were 5.32 percent, 5.41 percent and 5.18
percent, respectively, at December 31, 2006. These obligations were
denominated primarily in U.S. dollars.
The following table presents aggregate annual maturities of long-term
debt obligations (based on final maturity dates) at December 31, 2007.
(Dollars in millions) 2008 2009 2010 2011 2012 Thereafter Total
Bank of America Corporation $ 7,303 $13,487 $19,632 $ 8,430 $12,188 $74,722 $135,762
Bank of America, N.A. and other subsidiaries 18,802 9,879 2,967 147 5,663 9,562 47,020
NB Holdings Corporation – – – – – 258 258
BAC North America Holding Company and subsidiaries 16 73 91 51 15 2,670 2,916
Other 4,314 2,783 1,781 1,505 116 1,053 11,552
Total $30,435 $26,222 $24,471 $10,133 $17,982 $88,265 $197,508
Trust Preferred and Hybrid Securities
Trust preferred securities (Trust Securities) are issued by the trust compa-
nies (the Trusts) which are not consolidated. These Trust Securities are
mandatorily redeemable preferred security obligations of the Trusts. The
sole assets of the Trusts are Junior Subordinated Deferrable Interest
Notes of the Corporation (the Notes). The Trusts are 100 percent-owned
finance subsidiaries of the Corporation. Obligations associated with the
Notes are included in the Long-term Debt table on the previous page.
Certain of the Trust Securities were issued at a discount and may be
redeemed prior to maturity at the option of the Corporation. The Trusts
have invested the proceeds of such Trust Securities in the Notes. Each
issue of the Notes has an interest rate equal to the corresponding Trust
Securities distribution rate. The Corporation has the right to defer payment
of interest on the Notes at any time, or from time to time for a period not
exceeding five years, provided that no extension period may extend beyond
the stated maturity of the relevant Notes. During any such extension peri-
od, distributions on the Trust Securities will also be deferred and the
Corporation’s ability to pay dividends on its common and preferred stock
will be restricted.
The Trust Securities are subject to mandatory redemption upon
repayment of the related Notes at their stated maturity dates or their ear-
lier redemption at a redemption price equal to their liquidation amount
plus accrued distributions to the date fixed for redemption and the pre-
mium, if any, paid by the Corporation upon concurrent repayment of the
related Notes.
Periodic cash payments and payments upon liquidation or
redemption with respect to Trust Securities are guaranteed by the Corpo-
ration to the extent of funds held by the Trusts (the Preferred Securities
Guarantee). The Preferred Securities Guarantee, when taken together with
the Corporation’s other obligations, including its obligations under the
Notes, will constitute a full and unconditional guarantee, on a sub-
ordinated basis, by the Corporation of payments due on the Trust Secu-
rities.
Hybrid Income Term Securities (HITS) totaling $1.6 billion were also
issued by the Trusts to institutional investors. The BAC Capital Trust XIII
Floating Rate Preferred HITS have a distribution rate of three-month LIBOR
plus 40 bps and the BAC Capital Trust XIV Fixed-to-Floating Rate Preferred
HITS have an initial distribution rate of 5.63 percent. Both series of HITS
represent beneficial interests in the assets of the respective capital trust,
which consists of a series of the Corporation’s junior subordinated notes
and a stock purchase contract for a specified series of the Corpo-
ration’s preferred stock. The Corporation will remarket the junior sub-
ordinated notes underlying each series of HITS on or about the five-year
anniversary of the issuance to obtain sufficient funds for the capital trusts
to buy the Corporation’s preferred stock under the stock purchase con-
tracts.
In connection with the HITS, the Corporation entered into two
replacement capital covenants for the benefit of investors in certain series
of the Corporation’s long-term indebtedness (Covered Debt). As of the
date of this report, the Corporation’s 6
5
⁄ 8 % Junior Subordinated Notes due
2036 constitutes the Covered Debt under the covenant corresponding to
the Floating Rate Preferred HITS and the Corporation’s 5
5
⁄ 8 % Junior Sub-
ordinated Notes due 2035 constitutes the Covered Debt under the cove-
nant corresponding to the Fixed-to-Floating Rate Preferred HITS. These
covenants generally restrict the ability of the Corporation and its sub-
sidiaries to redeem or purchase the HITS and related securities unless the
Corporation has obtained the prior approval of the FRB if required under
the FRB’s capital guidelines, the redemption or purchase price of the HITS
does not exceed the amount received by the Corporation from the sale of
certain qualifying securities, and such replacement securities qualify as
Tier 1 Capital and are not “restricted core capital elements” under the
FRB’s guidelines.
142 Bank of America 2007