American Express 2010 Annual Report Download - page 93

As of December 31, 2010 and 2009, the Parent Company had
$750 million principal outstanding of Subordinated Debentures
that accrue interest at an annual rate of 6.8 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 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 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 2010.
As of December 31, 2010 and 2009, 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) as of December 31, 2010 were as follows:
(Millions) 2011 2012 2013 2014 2015 Thereafter Total
American Express Company (Parent Company only) $ 400 $ — $ 998 $ 1,249 $ — $ 7,702 $ 10,349
American Express Travel Related Services Company, Inc. 1,200 —————1,200
American Express Credit Corporation 2,150 5,679 5,118 3,573 2,484 — 19,004
American Express Centurion Bank — 1,207 — — 5 1,354 2,566
American Express Bank, FSB 5,173 1,607 1,840 — — 1,298 9,918
American Express Charge Trust — 1,560 — 2,500 — — 4,060
American Express Lending Trust 5,330 5,222 2,904 2,685 1,950 1,200 19,291
Other 10 — — 84 — 47 141
$ 14,263 $ 15,275 $ 10,860 $ 10,091 $ 4,439 $ 11,601 $ 66,529
Unamortized Underwriting Fees $ (113)
Total Long-Term Debt $ 66,416
As of December 31, 2010 and 2009, the Company maintained
total bank lines of credit of $10.6 billion and $12.2 billion,
respectively. Of the total credit lines, $6.5 billion and
$9.0 billion were unutilized, and for the years ended
December 31, 2010 and 2009, respectively, the Company paid
$7.7 million and $6.8 million in fees to maintain these lines.
Unutilized amounts of $5.7 billion and $8.2 billion supported
commercial paper borrowings as of December 31, 2010 and
2009, respectively. In 2011 and 2012, respectively, $3.3 billion
and $7.3 billion of these credit facilities will expire.
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, 2010,
the Company’s consolidated tangible net worth was
approximately $13.1 billion, Credco’s ratio of combined
earnings and fixed charges to fixed charges was 1.54 and
Centurion Bank and FSB each exceeded their regulatory
capital adequacy guidelines.
Additionally, the Company maintained a 3-year committed,
revolving, secured financing facility which gives the Company
the right to sell up to $3.0 billion face amount of eligible notes
issued from the Charge Trust at any time through December 16,
2013. As of December 31, 2010, $2.5 billion was drawn on
this facility.
These committed 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 $2.4 billion, $2.3 billion and $3.5 billion
in 2010, 2009 and 2008, respectively.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS