US Bank 2012 Annual Report Download - page 61

TABLE 21 Contractual Obligations
Payments Due By Period
At December 31, 2012 (Dollars in Millions)
One Year
or Less
Over One
Through
Three Years
Over Three
Through
Five Years
Over Five
Years Total
Contractual Obligations (a)
Long-term debt (b) ................................................. $ 2,894 $ 7,217 $ 6,780 $ 8,625 $25,516
Operating leases ................................................... 232 381 253 432 1,298
Purchase obligations ............................................... 221 282 74 — 577
Benefit obligations (c) .............................................. 23 42 43 122 230
Time deposits ...................................................... 29,393 10,077 3,305 8 42,783
Contractual interest payments (d) .................................. 1,300 1,220 724 1,291 4,535
Total ............................................................. $34,063 $19,219 $11,179 $10,478 $74,939
(a) Unrecognized tax positions of $302 million at December 31, 2012, are excluded as the Company cannot make a reasonably reliable estimate of the period of cash settlement with the
respective taxing authority.
(b) Includes obligations under capital leases.
(c) Amounts only include obligations related to the unfunded non-qualified pension plans.
(d) Includes accrued interest and future contractual interest obligations.
have indirect exposure to sovereign debt through its
investments in, and transactions with, European banks. At
December 31, 2012, the Company had investments in
perpetual preferred stock issued by European banks with an
amortized cost totaling $70 million and unrealized losses
totaling $10 million, compared with an amortized cost
totaling $169 million and unrealized losses totaling $48
million, at December 31, 2011. The Company also transacts
with various European banks as counterparties to interest rate
swaps and foreign currency transactions for its hedging and
customer-related activities, however none of these banks are
domiciled in the countries experiencing the most significant
credit deterioration. These derivative transactions are subject
to master netting and collateral support agreements which
significantly limit the Company’s exposure to loss as they
generally require daily posting of collateral. At December 31,
2012, the Company was in a net payable position to each of
these European banks.
The Company has not bought or sold credit protection on
the debt of any European country or any company domiciled
in Europe, nor does it provide retail lending services in Europe.
While the Company does not offer commercial lending services
in Europe, it does provide financing to domestic multinational
corporations that generate revenue from customers in
European countries and provides a limited number of
corporate credit cards to their European subsidiaries. While an
economic downturn in Europe could have a negative impact
on these customers’ revenues, it is unlikely that any effect on
the overall credit worthiness of these multinational
corporations would be material to the Company.
The Company provides merchant processing and
corporate trust services in Europe and through banking
affiliations in Europe. Operating cash for these businesses are
deposited on a short-term basis with certain European banks.
However, exposure is mitigated by the Company placing
deposits at multiple banks and managing the amounts on
deposit at any bank based on institution-specific deposit limits.
At December 31, 2012, the Company had an aggregate
amount on deposit with European banks of approximately
$358 million.
The money market funds managed by a subsidiary of the
Company do not have any investments in European sovereign
debt. Other than investments in banks in the countries of the
Netherlands and Germany, those funds do not have any
unsecured investments in banks domiciled in the Eurozone.
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 also
include any obligation under a variable interest held by an
unconsolidated entity that provides financing, liquidity, credit
enhancement or market risk support. The Company has not
utilized private label asset securitizations as a source of
funding.
Commitments to extend credit are legally binding and
generally have fixed expiration dates or other termination
clauses. Many of the Company’s commitments to extend
credit expire without being drawn, and therefore, total
commitment amounts do not necessarily represent future
liquidity requirements or the Company’s exposure to credit
loss. Commitments to extend credit also include consumer
credit lines that are cancelable upon notification to the
consumer. Total contractual amounts of commitments to
extend credit at December 31, 2012 were $209.7 billion. The
Company also issues various types of letters of credit,
including standby and commercial. Total contractual amounts
of letters of credit at December 31, 2012 were $18.8 billion.
For more information on the Company’s commitments to
U.S. BANCORP 57