American Express 2009 Annual Report Download - page 48

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2009 FINANCIAL REVIEW
AMERICAN EXPRESS COMPANY
CONTRACTUAL OBLIGATIONS
The table below identifies transactions that represent contractually committed future obligations of the Company. Purchase
obligations include agreements to purchase goods and services that are enforceable and legally binding on the Company and that
specify significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions;
and the approximate timing of the transaction.
Payments due by year
(Millions) 2010 2011–2012 2013–2014
2015 and
thereafter Total(a)
Long-term debt $10,829 $17,986 $12,766 $10,757 $52,338
Interest payments on long-term debt(b) 1,556 2,589 1,636 3,812 9,593
Other long-term liabilities(c) 21 21 15 94 151
Operating lease obligations 254 422 345 1,316 2,337
Purchase obligations(d) 550 144 55 69 818
Total $ 13,210 $21,162 $14,817 $16,048 $65,237
(a) The above table excludes approximately $1.1 billion of tax liabilities that have been recorded in accordance with GAAP governing the
accounting for uncertainty in income taxes as inherent complexities and the number of tax years currently open for examination in multiple
jurisdictions do not permit reasonable estimates of payments, if any, to be made over a range of years.
(b) Estimated interest payments were calculated using the effective interest rate in place at December 31, 2009, and reflects the effect of existing
interest rate swaps. Actual cash flows may differ from estimated payments.
(c) At December 31, 2009, there were no minimum required contributions, and no contributions are currently planned, for the U.S. American
Express Retirement Plan. For the U.S. American Express Supplemental Retirement Plan and non-U.S. defined benefit pension and
postretirement benefit plans, contributions in 2010 are anticipated to be approximately $88 million, and this amount has been included
within other long-term liabilities. Remaining obligations under defined benefit pension and postretirement benefit plans aggregating $642
million have not been included in the table above as the timing of such obligations is not determinable. Additionally, other long-term
liabilities do not include $4.3 billion of Membership Rewards liabilities, which are not considered long-term liabilities as cardmembers in
good standing can redeem points immediately, without restrictions, and because the timing of point redemption is not determinable.
(d) The purchase obligation amounts represent non-cancelable minimum contractual obligations by period under contracts that were in effect at
December 31, 2009. Termination fees are included in these amounts.
The Company also has certain contingent obligations to make
payments under contractual agreements entered into as part
of the ongoing operation of the Company’s business,
primarily with co-brand partners. The contingent obligations
under such arrangements were approximately $6.0 billion as
of December 31, 2009.
In addition to the contractual obligations noted above, the
Company has off-balance sheet arrangements that include
guarantees, retained interests in structured investments,
unconsolidated variable interest entities and other off-balance
sheet arrangements as more fully described below.
GUARANTEES
The Company’s principal guarantees are associated with
cardmember services to enhance the value of owning an
American Express card. As of December 31, 2009, the
Company had guarantees totaling approximately $67 billion
related to cardmember protection plans, as well as other
guarantees in the ordinary course of business that are within
the scope of GAAP governing the accounting for guarantees.
Refer to Note 13 to the Consolidated Financial Statements for
further discussion regarding the Company’s guarantees.
CERTAIN OTHER OFF-BALANCE SHEET
ARRANGEMENTS
As of December 31, 2009, the Company had approximately
$222 billion of unused credit available to cardmembers as part
of established lending product agreements. Total unused
credit available to cardmembers does not represent potential
future cash requirements, as a significant portion of this
unused credit will likely not be drawn. The Company’s charge
card products have no pre-set limit and, therefore, are not
reflected in unused credit available to cardmembers. As
discussed in the Consolidated Liquidity and Capital Resources
section, the Company’s securitizations of cardmember loans
are also off-balance sheet. The Company’s cardmember
receivables securitizations remain on the Consolidated
Balance Sheets.
Refer to Note 24 to the Consolidated Financial Statements
for discussion regarding the Company’s other off-balance
sheet arrangements.
46