Wells Fargo 2013 Annual Report Download - page 52

Off-Balance Sheet Arrangements (continued)
Derivatives
We primarily use derivatives to manage exposure to market risk,
including interest rate risk, credit risk and foreign currency risk,
and to assist customers with their risk management objectives.
Derivatives are recorded on the balance sheet at fair value and
can be measured in terms of the notional amount, which is
generally not exchanged, but is used only as the basis on which
interest and other payments are determined. The notional
amount is not recorded on the balance sheet and is not, when
viewed in isolation, a meaningful measure of the risk profile of
the instruments.
For more information on derivatives, see Note 16
(Derivatives) to Financial Statements in this Report.
Contractual Cash Obligations
In addition to the contractual commitments and arrangements
previously described, which, depending on the nature of the
obligation, may or may not require use of our resources, we enter
into other contractual obligations that may require future cash
payments in the ordinary course of business, including debt
issuances for the funding of operations and leases for premises
and equipment.
Table 15 summarizes these contractual obligations as of
December 31, 2013, excluding the projected cash payments for
obligations for short-term borrowing arrangements and pension
and postretirement benefit plans. More information on those
obligations is in Note 12 (Short-Term Borrowings) and Note 20
(Employee Benefits and Other Expenses) to Financial
Statements in this Report.
Table 15: Contractual Cash Obligations
(in millions)
Note(s) to
Financial
Statements
Less than
1 year
1-3
years
3-5
years
More
than
5 years
Indeterminate
maturity Total
Contractual payments by period:
Deposits (1) 11 $ 86,958 20,932 5,924 3,619 961,744 1,079,177
Long-term debt (2) 7, 13 12,800 46,263 39,981 53,954 -152,998
Interest (3) 2,494 3,776 2,436 10,292 -18,998
Operating leases 7 1,155 1,960 1,426 2,812 - 7,353
Unrecognized tax obligations 21 8 - - - 2,839 2,847
Commitments to purchase debt
and equity securities (4) 3,041 1,013 7 - - 4,061
Purchase and other obligations (5) 302 592 51 7 - 952
Total contractual obligations $ 106,758 74,536 49,825 70,684 964,583 1,266,386
(1) Includes interest-bearing and noninterest-bearing checking, and market rate and other savings accounts.
(2) Balances are presented net of unamortized debt discounts and premiums and purchase accounting adjustments.
(3) Represents the future interest obligations related to interest-bearing time deposits and long-term debt in the normal course of business including a net reduction of
$26 billion related to hedges used to manage interest rate risk. These interest obligations assume no early debt redemption. We estimated variable interest rate payments
using December, 31 2013 rates, which we held constant until maturity. We have excluded interest related to structured notes where our payment obligation is contingent on
the performance of certain benchmarks.
(4) Includes unfunded commitments to purchase debt and equity investments, excluding trade date payables, of $2.8 billion and $1.2 billion, respectively. Our unfunded equity
commitments include certain investments subject to the Volcker Rule, which we expect to divest in the near future. For additional information regarding the Volcker Rule, see
the "Regulatory Reform" section in this Report. We have presented our contractual obligations on equity investments above in the maturing in less than one year category as
there are no specified contribution dates in the agreements. These obligations may be requested at any time by the investment manager.
(5) Represents agreements to purchase goods or services.
We are subject to the income tax laws of the U.S., its states
and municipalities, and those of the foreign jurisdictions in
which we operate. We have various unrecognized tax
obligations related to these operations that may require future
cash tax payments to various taxing authorities. Because of
their uncertain nature, the expected timing and amounts of
these payments generally are not reasonably estimable or
determinable. We attempt to estimate the amount payable in
the next 12 months based on the status of our tax examinations
and settlement discussions. See Note 21 (Income Taxes) to
Financial Statements in this Report for more information.
Transactions with Related Parties
The Related Party Disclosures topic of the Accounting
Standards Codification (ASC) requires disclosure of material
related party transactions, other than compensation
arrangements, expense allowances and other similar items in
the ordinary course of business. We had no related party
transactions required to be reported for the years ended
December 31, 2013, 2012 and 2011.
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