American Express 2009 Annual Report Download - page 98

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN EXPRESS COMPANY
As of December 31, 2009, 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 2009.
As of December 31, 2009 and 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) were as follows as of December 31,
2009:
(Millions) 2010 2011 2012 2013 2014 Thereafter Total
American Express Company (Parent Company only) $ — $ 399 $ — $ 998 $1,248 $ 7,598 $10,243
American Express Travel Related Services Company, Inc. — 1,200 — — — — 1,200
American Express Credit Corporation 3,506 2,032 4,792 5,138 3,488 515 19,471
American Express Centurion Bank 2,143 — 1,212 — — 1,346 4,701
American Express Bank, FSB 1,752 5,170 1,612 1,807 — 1,298 11,639
American Express Receivables Financing Corporation V LLC 3,410 — 1,560 — — — 4,970
Other 18 9 — — 87 — 114
Total $10,829 $8,810 $9,176 $7,943 $4,823 $10,757 $52,338
As of December 31, 2009 and 2008, the Company maintained
total bank lines of credit of $12.2 billion and $11.2 billion,
respectively. Of the total credit lines, $9.0 billion and $8.7
billion were unutilized, and for the years ended December 31,
2009 and 2008, respectively, the Company paid $6.8 million
and $6.0 million in fees to maintain these lines. $8.2 billion
and $7.9 billion of these unutilized amounts supported
commercial paper borrowings as of December 31, 2009 and
2008, respectively.
The availability of these 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
American Express Credit Corporation (Credco) of a 1.25 ratio
of combined earnings and fixed charges to fixed charges, and
the compliance by American Express Centurion Bank
(Centurion Bank) and American Express Bank, FSB (FSB)
with applicable regulatory capital adequacy guidelines. As of
December 31, 2009, the Company’s consolidated tangible net
worth was approximately $11.6 billion, Credco’s ratio of
combined earnings and fixed charges to fixed charges was 1.59
and Centurion Bank and FSB each exceeded their regulatory
capital adequacy guidelines.
The committed bank credit facilities do not contain
material adverse change clauses and the facilities may not be
terminated should there be a change in the Company’s credit
rating.
The Company paid total interest primarily related to
short- and long-term debt, corresponding interest rate swaps
and customer deposits of $2.3 billion, $3.5 billion and $3.7
billion in 2009, 2008 and 2007, respectively.
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