8-KEarnings & ResultsFinancial EventsRegulation FD+1

BANK OF AMERICA CORP /DE/ 8-K Report, Financial Results (Feb 22, 2006)

Filed February 22, 2006For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

This 8-K filing from Bank of America Corporation (BAC) on February 22, 2006, announces a significant event: the company will restate its historical financial statements for multiple periods, spanning from fiscal year 2001 through the first three quarters of 2005, as well as revise the unaudited financial information for the full year and quarter ended December 31, 2005. This restatement is necessary due to issues with the accounting treatment of certain derivative transactions under Statement of Financial Accounting Standards No. 133 (SFAS 133). Investors are advised that previously issued financial statements and announced financial information for these periods should no longer be relied upon. The company expects to file the restated financial statements by March 16, 2006. Furthermore, the filing discloses a material weakness in internal controls related to the application of SFAS 133 as of December 31, 2004, though it states this weakness has since been remediated. This situation introduces uncertainty and necessitates a review of BAC's historical financial performance.

Key Highlights

  • 1Bank of America will restate historical financial statements for fiscal years 2001-2004 and the first three quarters of 2005.
  • 2Unaudited financial information for the quarter and year ended December 31, 2005, will also be revised.
  • 3The restatements are due to accounting treatment issues with derivative transactions under SFAS 133.
  • 4Previously issued financial statements and announced information for the affected periods are no longer reliable.
  • 5Restated financial statements are expected to be filed by March 16, 2006.
  • 6A material weakness in internal controls related to SFAS 133 application at December 31, 2004, is disclosed.
  • 7The disclosed material weakness has reportedly been remediated.

Frequently Asked Questions

Bank of America is restating its financial statements due to issues with the accounting treatment of certain derivative transactions under Statement of Financial Accounting Standards No. 133 (SFAS 133). This means that how these complex financial instruments were accounted for in the past was not in accordance with the applicable accounting rules.

The restatement affects audited financial statements for the years ended December 31, 2001, 2002, 2003, and 2004. It also impacts unaudited financial statements for the quarters ended March 31, June 30, and September 30 for the years 2003, 2004, and 2005. Additionally, unaudited financial information for the full quarter and year ended December 31, 2005, will be revised.

A material weakness in internal controls means that there is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. While this specific weakness related to SFAS 133 has reportedly been remediated, its prior existence raises questions about the company's financial reporting processes.

Bank of America expects to file the restated financial statements no later than March 16, 2006. Investors should consult these filings for the corrected financial figures.