Fannie Mae 2007 Annual Report Download - page 122

Table 32: Purchased Options Premiums
Original
Premium
Payments
Original
Weighted
Average Life
to Expiration
Remaining
Weighted
Average Life
(Dollars in millions)
Outstanding options as of December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . $13,230 5.6 years 4.0 years
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 853
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,027)
Expirations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,398)
Outstanding options as of December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . $11,658 6.5 years 4.3 years
Purchases
(1)
.............................................. —
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,811)
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (278)
Expirations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (800)
Outstanding options as of December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . $ 8,769 9.2 years 5.7 years
Purchases
(1)
.............................................. 198
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (487)
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (212)
Expirations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (425)
Outstanding options as of December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . $ 7,843 8.4 years 4.6 years
(1)
Amount of purchases is included in Table 31 as a component of the line item “Fair value at inception of contracts
entered into during the period.”
SUPPLEMENTAL NON-GAAP INFORMATION—FAIR VALUE BALANCE SHEETS
Because our assets and liabilities consist predominately of financial instruments, we routinely use fair value
measures to make investment decisions and to measure, monitor and manage our risk. The balance sheets
presented in our consolidated financial statements reflect some financial assets measured and reported at fair
value while other financial assets, along with most of our financial liabilities, are measured and reported at
historical cost.
Each of the non-GAAP supplemental consolidated fair value balance sheets presented below in Table 33
reflects all of our assets and liabilities at estimated fair value. Estimated fair value is the amount at which an
asset or liability could be exchanged between willing parties, other than in a forced or liquidation sale.
The non-GAAP estimated fair value of our net assets (net of tax effect) is derived from our non-GAAP fair
value balance sheet. This measure is not a defined term within GAAP and may not be comparable to similarly
titled measures reported by other companies. The estimated fair value of our net assets (net of tax effect)
presented in the non-GAAP supplemental consolidated fair value balance sheets is not intended as a substitute
for amounts reported in our consolidated financial statements prepared in accordance with GAAP. We believe,
however, that the non-GAAP supplemental consolidated fair value balance sheets and the fair value of our net
assets, when used in conjunction with our consolidated financial statements prepared in accordance with
GAAP, can serve as valuable incremental tools for investors to assess changes in our overall value over time
relative to changes in market conditions. In addition, we believe that the non-GAAP supplemental
consolidated fair value balance sheets are useful to investors because they provide consistency in the
measurement and reporting of all of our assets and liabilities. Management uses this information to gain a
clearer picture of changes in our assets and liabilities from period to period, to understand how the overall
value of the company is changing from period to period and to measure the performance of our investment
activities.
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