US Bank 2008 Annual Report Download - page 55

stable, regionally-based certificates of deposit and
commercial paper.
The Company’s ability to raise negotiated funding at
competitive prices is influenced by rating agencies’ views of
the Company’s credit quality, liquidity, capital and earnings.
At December 31, 2008, the credit ratings outlook for the
Company was considered “Positive” by Fitch Ratings and
“Stable” by Standard & Poor’s Ratings Services, Moody’s
Investors Service and Dominion Bond Ratings Service. Table
19 details the rating agencies’ most recent assessments.
The parent company’s routine funding requirements
consist primarily of operating expenses, dividends paid to
shareholders, debt service, repurchases of common stock and
funds used for acquisitions. The parent company obtains
funding to meet its obligations from dividends collected
from its subsidiaries and the issuance of debt securities.
Under United States Securities and Exchange
Commission rules, the parent company is classified as a
“well-known seasoned issuer,” which allows it to file a
registration statement that does not have a limit on issuance
capacity. “Well-known seasoned issuers” generally include
those companies with outstanding common securities with a
market value of at least $700 million held by non-affiliated
parties or those companies that have issued at least
$1 billion in aggregate principal amount of non-convertible
securities, other than common equity, in the last three years.
However, the parent company’s ability to issue debt and
other securities under a registration statement filed with the
United States Securities and Exchange Commission under
these rules is limited by the debt issuance authority granted
by the Company’s Board of Directors and/or the ALPC
policy.
At December 31, 2008, parent company long-term debt
outstanding was $10.8 billion, compared with $10.7 billion
at December 31, 2007. Long-term debt activity in 2008
included $3.8 billion of medium-term note issuances, offset
by $3.3 billion of convertible senior debenture payments and
$.5 billion of medium-term note maturities during 2008.
Total parent company debt scheduled to mature in 2009 is
$1.0 billion. These debt obligations may be met through
medium-term note and capital security issuances and
dividends from subsidiaries, as well as from parent company
cash and cash equivalents.
Federal banking laws regulate the amount of dividends
that may be paid by banking subsidiaries without prior
approval. The amount of dividends available to the parent
company from its banking subsidiaries after meeting the
regulatory capital requirements for well-capitalized banks
was approximately $1.3 billion at December 31, 2008. For
further information, see Note 23 of the Notes to
Consolidated Financial Statements.
Off-Balance Sheet Arrangements Off-balance sheet
arrangements include any contractual arrangement to which
an unconsolidated entity is a party, under which the
Company has an obligation to provide credit or liquidity
enhancements or market risk support. Off-balance sheet
arrangements include certain defined guarantees, asset
securitization trusts and conduits. Off-balance sheet
arrangements also include any obligation under a variable
interest held by an unconsolidated entity that provides
financing, liquidity, credit enhancement or market risk
support.
In the ordinary course of business, the Company enters
into an array of commitments to extend credit, letters of
credit and various forms of guarantees that may be
considered off-balance sheet arrangements. The nature and
extent of these arrangements are provided in Note 22 of the
Notes to Consolidated Financial Statements.
Asset securitizations and conduits may represent a
source of funding for the Company through off-balance
sheet structures. Credit, liquidity, operational and legal
structural risks exist due to the nature and complexity of
asset securitizations and other off-balance sheet structures.
The ALPC regularly monitors the performance of each off-
U.S. BANCORP 53
Table 20 CONTRACTUAL OBLIGATIONS
December 31, 2008 (Dollars in Millions)
One Year
or Less
Over One
Through
Three Years
Over Three
Through
Five Years
Over Five
Years Total
Payments Due By Period
Contractual Obligations (a)
Long-term debt (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,455 $9,454 $3,961 $14,489 $38,359
Capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 19 17 27 73
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 320 244 337 1,085
Purchase obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 104 51 5 268
Benefit obligations (c) . . . . . . . . . . . . . . . . . . . . . . . . . . 38 81 86 229 434
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,795 $9,978 $4,359 $15,087 $40,219
(a) Unrecognized tax positions of $283 million at December 31, 2008, are excluded as the Company cannot make a reasonably reliable estimate of the period of cash settlement with the
respective taxing authority.
(b) In the banking industry, interest-bearing obligations are principally utilized to fund interest-bearing assets. As such, interest charges on related contractual obligations were excluded from
reported amounts as the potential cash outflows would have corresponding cash inflows from interest-bearing assets.
(c) Amounts only include obligations related to the unfunded non-qualified pension plans and post-retirement medical plan.