Freddie Mac 2005 Annual Report Download - page 67

portfolio, see ""CONSOLIDATED BALANCE SHEETS ANALYSIS Ì Cash and Investments.'' The non-mortgage-
related investments in this portfolio may expose us to institutional credit risk and the risk that the investments could decline
in value due to market-driven events such as credit downgrades or changes in interest rates and other market conditions. See
""RISK MANAGEMENT Ì Credit Risks Ì Institutional Credit Risk'' for more information.
Contractual Obligations
Table 32 provides aggregated information about the listed categories of our contractual obligations. These contractual
obligations aÅect our short- and long-term liquidity and capital resource needs. Table 32 includes information about
undiscounted future cash payments due under these contractual obligations, aggregated by type of contractual obligation,
including the contractual maturity proÑle of our debt securities and other liabilities reported on our consolidated balance
sheets and our operating leases at December 31, 2005. The timing of actual future payments may diÅer from those presented
in this table due to a number of factors, including discretionary debt repurchases. Our contractual obligations include other
purchase obligations that are enforceable and legally binding. For purposes of this table, purchase obligations are included
through the termination date speciÑed in the respective agreements, even if the contract is renewable. Many of our purchase
agreements for goods or services include clauses that would allow us to cancel the agreement prior to the expiration of the
contract within a speciÑed notice period; however, this table includes such obligations without regard to such termination
clauses (unless we have provided the counterparty with actual notice of our intention to terminate the agreement).
Table 32 excludes our Guarantee obligation, which represents our obligation to stand ready to perform under our
guarantees of the payment of principal and interest of PCs and Structured Securities, as the amount and timing of payments
under these arrangements are generally contingent upon the occurrence of future events. See ""NOTE 1: SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES'' to our consolidated financial statements for additional information about our
Guarantee obligation.
We maintain a tax-qualiÑed, funded deÑned beneÑt pension plan, or Pension Plan, covering substantially all of our
employees. We generally contribute to our Pension Plan an amount equal to at least the minimum required contribution, if
any, but no more than the maximum amount deductible for Federal income tax purposes each year. See ""NOTE 15:
EMPLOYEE BENEFITS'' to our consolidated Ñnancial statements for additional information about contributions to the
Pension Plan.
With the exception of purchase commitments that are accounted for as derivatives, derivative transactions that may
require cash settlement in future periods are not reÖected on Table 32. See ""Table 23 Ì Derivative Fair Values and
Maturities,'' which describes the fair value for each derivative type and the maturity proÑle of the positions.
Dividend payments on preferred stock we issue are not reÖected on Table 32, since all classes of preferred stock are non-
cumulative. See ""NOTE 9: STOCKHOLDERS' EQUITY'' to our consolidated Ñnancial statements for additional
information. Dividend payments on cumulative preferred stock issued by our two consolidated REIT subsidiaries are not
reÖected on Table 32 since the timing of these payments is dependent upon declaration by the boards of the REITs. See
""NOTE 18: MINORITY INTERESTS'' to our consolidated Ñnancial statements for additional information.
On April 20, 2006, we reached an agreement in principle to settle the securities class action lawsuits and the shareholder
derivative lawsuits related to our restatement. The settlement of these actions includes a cash payment of $410 million,
including the application of expected net insurance proceeds, and is not included in Table 32 since this was not a contractual
obligation at December 31, 2005. See ""NOTE 13: LEGAL CONTINGENCIES'' for additional information.
51 Freddie Mac