American Express 2010 Annual Report Download - page 65

outstanding under network partnership agreements, except for
retail co-brand cardmember accounts which have no
out-of-store spend activity during the prior 12-month period.
Total risk-based capital ratio — Refer to Capital Strategy
section for definition.
Travel sales — Represents the total dollar amount of travel
transaction volume for airline, hotel, car rental, and other travel
arrangements made for consumers and corporate clients. The
Company earns revenue on these transactions by charging a
transaction or management fee.
FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995, which are subject to risks and uncertainties. The
forward-looking statements, which address the Company’s
expected business and financial performance, among other
matters, contain words such as “believe,” “expect,” “estimate,”
“anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,”
“should,” “could,” “would,” “likely,” and similar expressions.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on
which they are made. The Company undertakes no obligation to
update or revise any forward-looking statements. Factors that
could cause actual results to differ materially from these
forward-looking statements, include, but are not limited to,
the following:
•changes in global economic and business conditions, including
consumer and business spending, the availability and cost of
credit, unemployment and political conditions, all of which
may significantly affect spending on the Company’s cards,
delinquency rates, loan balances and other aspects of our
business and results of operations;
•changes in capital and credit market conditions, which may
significantly affect the Company’s ability to meet its liquidity
needs, access to capital and cost of capital, including changes
in interest rates; changes in market conditions affecting the
valuation of our assets; or any reduction in our credit ratings
or those of our subsidiaries, which could materially increase
the cost and other terms of our funding, restrict our access to
the capital markets or result in contingent payments
under contracts;
•litigation, such as class actions or proceedings brought by
governmental and regulatory agencies (including the
lawsuit filed against the Company by the U.S. Department
of Justice and certain state attorneys general), that could
result in (i) the imposition of behavioral remedies against
the Company or the Company’s voluntarily making certain
changes to its business practices, the effects of which in either
case could have a material adverse impact on the Company’s
financial performance; (ii) the imposition of substantial
monetary damages in private actions against the Company;
and/or (iii) damage to the Company’s global reputation
and brand;
•legal and regulatory developments wherever we do business,
including legislative and regulatory reforms in the United
States, such as the Dodd-Frank Act’s stricter regulation of
large, interconnected financial institutions, increasing
regulation of rates charged to merchants and the practices
merchants may engage in to discriminate among the payment
products they accept, changes in requirements relating to
securitization and the establishment of the Bureau of
Consumer Financial Protection, which could make
fundamental changes to many of our business practices or
materially affect our capital requirements, results of
operations, ability to pay dividends or repurchase our stock;
or actions and potential future actions by the FDIC and credit
rating agencies applicable to securitization trusts, which could
impact the Company’s ABS program;
•changes in the substantial and increasing worldwide
competition in the payments industry, including
competitive pressures from charge, credit and debit card
networks and issuers, as well as evolving alternative
payment systems and products, competitive pressure that
may impact the prices we charge merchants that accept our
Cards and the success of marketing, promotion or
rewards programs;
•changes in technology or in our ability to protect our
intellectual property (such as copyrights, trademarks,
patents and controls on access and distribution), and invest
in and compete at the leading edge of technological
developments across our businesses, including technology
and intellectual property of third parties whom we rely on,
all of which could materially affect our results of operations;
•data breaches and fraudulent activity, which could damage our
brand, increase our costs or have regulatory implications, and
changes in regulation affecting privacy and data security
under federal, state and foreign law, which could result in
higher compliance and technology costs to ourselves or
our vendors;
•changes in our ability to attract or retain qualified personnel in
the management and operation of the Company’s business,
including any changes that may result from increasing
regulatory supervision of compensation practices;
•changes in the financial condition and creditworthiness of our
business partners, such as bankruptcies, restructurings or
consolidations, involving merchants that represent a
significant portion of our business, such as the airline
industry, or our partners in Global Network Services or
financial institutions that we rely on for routine funding
and liquidity, which could materially affect our financial
condition or results of operations;
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AMERICAN EXPRESS COMPANY
2010 FINANCIAL REVIEW