American Express 2008 Annual Report Download - page 96

notes to consolidated financial statements
american express company
94
Through its subsidiaries, American Express Bank, FSB (FSB)
and American Express Centurion Bank (Centurion Bank), the
Company was approved to issue an aggregate maximum of $13.3
billion of guaranteed debentures under the Federal Depository
Insurance Corporation’s (FDIC’s) Temporary Liquidity
Guarantee Program (TLGP), which provides a FDIC guarantee
for newly-issued senior unsecured debt. At December 31, 2008,
the Company had $5.9 billion outstanding of senior notes issued
through the program, comprised of $750 million of two-year
floating rate notes, $1.7 billion of three-year floating rate notes,
and $3.5 billion of three-year fixed rate notes.
At December 31, 2008, the Parent Company had
$750 million principal outstanding of Subordinated Debentures
that accrue interest at an annual rate of 6.80 percent until
September 1, 2016, and at an annual rate of three-month
LIBOR plus 2.23 percent thereafter. At the Company’s option,
the Subordinated Debentures are redeemable for cash after
September 1, 2016 at 100 percent of the principal amount plus
any accrued but unpaid interest. If the Company fails to achieve
specified performance measures, it will be required to issue its
common shares and apply the net proceeds to make interest
payments on the Subordinated Debentures. No dividends on
the Company’s common or preferred shares could be paid until
such interest payments are made. The Company would fail to
meet these specific performance measures if: (i) the Company’s
tangible common equity is less than 4 percent of total adjusted
assets for the most recent quarter or (ii) if the trailing two
quarters’ consolidated net income is equal to or less than zero
and tangible common equity as of the trigger determination
date and as of the end of the quarter end six months prior, has
in each case declined by 10 percent or more from the tangible
common equity as of the end of the quarter 18 months prior to
the trigger determination date. The Company met the specified
performance measures in 2008.
At December 31, 2008, the Company was not in violation
of any of its debt covenants.
Aggregate annual maturities on long-term debt obligations (based on final maturity dates) at December 31, 2008, were as follows:
(Millions) 2009 2010 2011 2012 2013 Thereafter Tot a l
American Express Company (Parent Company only) $ 500 $ — $ 399 $ — $ 997 $6,036 $ 7,932
American Express Travel Related Services
Company, Inc. 800 — 1,200 — — — 2,000
American Express Credit Corporation 5,193 3,361 1,754 3,999 5,142 547 19,996
American Express Centurion Bank 4,750 2,227 — 1,233 — 1,377 9,587
American Express Bank, FSB 3,665 1,805 5,165 1,633 1,836 1,298 15,402
American Express Receivables Financing
Corporation V LLC — 3,410 — 1,560 — — 4,970
Other 40 17 8 — — 89 154
Total $14,948 $10,820 $8,526 $8,425 $7,975 $9,347 $60,041
As of December 31, 2008 and 2007, the Company maintained
total bank lines of credit of $11.2 billion and $12.4 billion,
respectively. Of the total credit lines, $8.7 billion and $9.0 billion
were unutilized, and of these unutilized amounts, $7.9 billion
and $8.2 billion supported commercial paper borrowings at
December 31, 2008 and 2007, respectively. The Company pays
commitment fees to maintain lines of credit; for the year ended
December 31, 2008, these fees totaled $6 million.
The Company paid total interest primarily related to short-
and long-term debt, corresponding interest rate swaps and
customer deposits of $3.5 billion, $3.7 billion, and $2.8 billion
in 2008, 2007, and 2006, respectively.