American Express 2010 Annual Report Download - page 49

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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.
(Millions) 2011 2012-2013 2014-2015
2016 and
thereafter Total
(a)
Payments due by year
Long-term debt $ 14,263 $ 26,135 $ 14,530 $ 11,601 $ 66,529
Interest payments on long-term debt
(b)
1,729 2,434 1,449 3,859 9,471
Other long-term liabilities
(c)
98 33 8 63 202
Operating lease obligations 222 379 305 1,071 1,977
Purchase obligations
(d)
421 97 56 48 622
Total $ 16,733 $ 29,078 $ 16,348 $ 16,642 $ 78,801
(a) The above table excludes approximately $1.4 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 as of December 31, 2010, and reflects the effect of existing interest rate swaps.
Actual cash flows may differ from estimated payments.
(c) As of December 31, 2010, 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 2011 are
anticipated to be approximately $69 million, and this amount has been included within other long-term liabilities. Remaining obligations under defined benefit
pension and postretirement benefit plans aggregating $633 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 $4.5 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 as of December 31, 2010.
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 $7.5 billion as of
December 31, 2010.
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, 2010, the
Company had guarantees totaling approximately $68 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, 2010, the Company had approximately
$226 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.
Refer to Note 24 to the Consolidated Financial Statements for
discussion regarding the Company’s other off-balance
sheet arrangements.
47
AMERICAN EXPRESS COMPANY
2010 FINANCIAL REVIEW