American Express 2008 Annual Report Download - page 43

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2008 financial review
american express company
Committed Bank Credit Facilities
The Company maintained committed bank credit facilities at
December 31, 2008 as follows:
(Billions) Total
Parent
Company Credco
Centurion
Bank FSB
Committed(a) $11.2 $1.3 $9.1(b) $0.4 $0.4
Outstanding $ 2.5 $ — $2.5 $ — $ —
(a) Committed lines supported by 34 financial institutions.
(b) Credco has the right to borrow a maximum amount of $10.4 billion with a
commensurate maximum $1.3 billion reduction in the amount available to
Parent Company.
The Company’s committed facilities expire as follows:
(Billions)
2010 $ 2.0
2011 3.2
2012 6.0
Total $11.2
The availability of the credit lines is subject to the Company’s
compliance with certain financial covenants, including the
maintenance by the Company of consolidated tangible net worth
of at least $4.1 billion, the maintenance by Credco of a 1.25
ratio of combined earnings and fixed charges to fixed charges,
and the compliance by Centurion Bank and FSB with applicable
regulatory capital adequacy guidelines. At December 31, 2008, the
Company’s consolidated tangible net worth was approximately
$9.8 billion, Credco’s ratio of combined earnings and fixed
charges to fixed charges was 1.50 and Centurion Bank and FSB
each exceeded their regulatory capital adequacy guidelines.
Committed bank credit facilities do not contain material
adverse change clauses, which may preclude borrowing under
the credit facilities. The facilities may not be terminated should
there be a change in the Company’s credit rating.
In consideration of all the funding sources described above, the
Company believes it would have access to liquidity to satisfy all
maturing obligations and fund normal business operations for at
least a 12-month period in the event that access to the secured and
unsecured fixed income capital markets is completely interrupted for
that length of time. Refer to Note 6 to the Consolidated Financial
Statements. These events are not considered likely to occur.
Parent Company Funding
Parent Company long-term debt outstanding was $7.9 billion
and $6.7 billion at December 31, 2008 and 2007, respectively.
During 2008, the Parent Company issued $2.0 billion of
7 percent fixed-rate Senior Notes due 2018 and $1 billion of
8.15 percent fixed-rate Senior Notes due 2038.
The Parent Company is authorized to issue commercial
paper. This program is supported by a $1.25 billion multi-
purpose committed bank credit facility. The credit facility
will expire in 2010 and 2012 in the amounts of $500 million
and $750 million, respectively. There was no Parent Company
commercial paper outstanding during 2008 and 2007, and no
borrowings have been made under its bank credit facility.
off-balance sheet
arrangements and
contractual obligations
The Company has identified both on- and off-balance sheet
transactions, arrangements, obligations, and other relationships
that may have a material current or future effect on its financial
condition, changes in financial condition, results of operations,
or liquidity and capital resources.
41