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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN EXPRESS COMPANY
As of December 31, 2009, the net funded status related to the
defined benefit pension plans was underfunded by $406
million, as shown in the following table:
Net Funded Status
(Millions) 2009 2008
Net funded status, beginning of year $(441) $ 113
Increase (Decrease) in fair value of plan assets 296 (900)
(Increase) Decrease in projected benefit obligation (261) 346
Net change 35 (554)
Net funded status, end of year $(406) $(441)
The net funded status amounts at December 31, 2009 and
2008 are recognized in the Consolidated Balance Sheets in
other liabilities.
Plan Assets and Obligations
The following tables provide a reconciliation of changes in the
fair value of plan assets and projected benefit obligations for
all defined benefit pension plans:
Reconciliation of Change in Fair Value of Plan Assets
(Millions) 2009 2008
Fair value of plan assets, beginning of year $1,693 $2,593
Effect of transition to December 31st
measurement date —11
Actual return on plan assets 290 (461)
Employer contributions 74 20
Benefits paid (59) (61)
Settlements (81) (88)
Foreign currency exchange rate changes 72 (321)
Net change 296 (900)
Fair value of plan assets, end of year $1,989 $1,693
Reconciliation of Change in Projected Benefit Obligation
(Millions) 2009 2008
Projected benefit obligation, beginning of year $2,134 $2,480
Effect of transition to December 31st
measurement date —6
Service cost 14 23
Interest cost 127 136
Benefits paid (59) (61)
Actuarial loss (gain) 189 (56)
Plan amendments —(4)
Settlements (81) (88)
Curtailments (14) (5)
Foreign currency exchange rate changes 85 (297)
Net change 261 (346)
Projected benefit obligation, end of year $2,395 $2,134
Accumulated Other Comprehensive Loss
The following table provides the amounts comprising
accumulated other comprehensive loss, which are not yet
recognized as components of net periodic pension benefit cost
as of December 31:
(Millions) 2009 2008
Net actuarial loss $ 655 $ 650
Net prior service cost (3) (3)
Total, pretax effect 652 647
Tax impact (219) (215)
Total, net of taxes $ 433 $ 432
The estimated portion of the net actuarial loss and net prior
service cost that is expected to be recognized as a component
of net periodic pension benefit cost in 2010 is $22 million and
nil, respectively.
The following table lists the amounts recognized in other
comprehensive loss in 2009:
(Millions) 2009
Net actuarial loss:
Reclassified to earnings from equity(a) $(29)
Losses in current year(b) 34
Net actuarial loss, pretax $5
(a) Amortization of actuarial losses and recognition of losses related
to lump sum settlements.
(b) Deferral of actuarial losses and curtailment gains.
Benefit Obligations
The accumulated benefit obligation in a defined benefit
pension plan is the present value of benefits earned to date by
plan participants computed based on current compensation
levels as contrasted to the projected benefit obligation, which
is the present value of benefits earned to date by plan
participants based on their expected future compensation at
their projected retirement date.
The accumulated and projected benefit obligations for all
defined benefit pension plans are as follows:
(Millions) 2009 2008
Accumulated benefit obligation $2,327 $2,057
Projected benefit obligation $2,395 $2,134
The accumulated benefit obligation and fair value of plan
assets for pension plans with accumulated benefit obligation
that exceeds the fair value of plan assets are as follows:
(Millions) 2009 2008
Accumulated benefit obligation $1,369 $2,056
Fair value of plan assets $1,020 $1,691
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