American Express 2004 Annual Report Download - page 105

As of December 31, 2004, the Company had $2 billion
principal outstanding of 1.85% Convertible Senior
Debentures due 2033 (the Debentures), which are
unsecured and unsubordinated obligations of the
Company. The Debentures may be put to the Company
at accreted principal amount on December 1, 2006,
2008, 2013, 2018, 2023 or 2028 if the Company’s com-
mon stock is trading (during a specified averaging
period) at or above the base conversion price (cur-
rently $69.41 per share) but below the contingent con-
version threshold (currently $86.76 per share.) If the
Company’s common stock is trading (during the aver-
aging period) below the base conversion price at any
of the foregoing dates, the Debentures will cease to be
convertible and interest will be reset periodically at the
rate necessary to cause the Debentures to trade at their
accreted principal amount. For a description of the con-
version terms of the Debentures, see Note 1. See Note
23 for discussion of the impact of the proposed AEFA
spin-off on the Debentures.
The Company paid interest (net of amounts capitalized
or refunded) of $1.6 billion, $1.7 billion and $1.7 billion
in 2004, 2003 and 2002, respectively. Debt issuance
costs are deferred and amortized over the term of the
related instrument or, if the holder has a put option,
over the put term.
Aggregate annual maturities on long-term debt obligations (based on final maturity dates) at December 31, 2004,
are as follows:
(Millions) 2005 2006 2007 2008 2009 Thereafter Total
American Express Company (Parent Company only) $ 499 $ 1,001 $ 747 — $ 499 $ 2,994 $ 5,740
American Express Credit Corporation 5,734 5,300 1,151 $ 999 5,430 — 18,614
American Express Centurion Bank 958 500 1,600 — 1,358 — 4,416
American Express Bank, FSB 252 850 500 — — — 1,602
American Express Receivables Finance Corporation 1,532 — — — — — 1,532
Other 2 145 67 13 500 430 1,157
Total $ 8,977 $ 7,796 $ 4,065 $ 1,012 $ 7,787 $ 3,424 $ 33,061
Other financial institutions have committed to extend lines of credit to the Company of $13.8 billion and $11.5
billion at December 31, 2004 and 2003, respectively. Of these amounts, $10.1 billion and $11.5 billion were unuti-
lized as of December 31, 2004 and 2003, respectively.
Note 8 COMMON AND PREFERRED SHARES
The Company has in place a share repurchase program
to return equity capital in excess of its business needs
to shareholders. These share repurchases both offset
the issuance of new shares as part of employee com-
pensation plans and reduce the number of shares out-
standing. In November 2002, the Company’s Board of
Directors authorized the Company to repurchase up to
120 million additional common shares from time to
time as market conditions allow. At December 31, 2004,
the Company has 74.5 million shares remaining under
such authorization. Such authorization does not have
an expiration date, and at present, there is no intention
to modify or otherwise rescind such authorization.
Since the inception of repurchase programs in Septem-
ber 1994, the Company has repurchased 495.5 million
shares pursuant to total authorizations to repurchase
up to 570 million shares, including purchases under
past agreements with third parties.
Of the common shares authorized but unissued at
December 31, 2004, 124.7 million shares were reserved
for issuance for employee stock, employee benefit
and dividend reinvestment plans, as well as convert-
ible securities.
In August 1999 and March 2000, the Company entered
into agreements under which a financial institution
purchased an aggregate 29.5 million of the Company’s
common shares at an average purchase price of $50.41
per share. These agreements were entered into to par-
tially offset the Company’s exposure to the effect on
diluted earnings per share of outstanding in-the-money
stock options issued under the Company’s stock option
program. The agreements provided that upon their ter-
mination, the Company would be required to deliver
an amount equal to the original purchase price for the
shares less any prepayments. During 2003 and 2002,
the Company elected to prepay $535 million and $600
million, respectively, of the aggregate outstanding
AXP
AR.04
103
Notes to Consolidated Financial Statements