American Express 2011 Annual Report Download - page 53

AMERICAN EXPRESS COMPANY
2011 FINANCIAL REVIEW
폷changes in the Company’s 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;
폷changes in the financial condition and creditworthiness of the
Company’s business partners, such as bankruptcies,
restructurings or consolidations, involving merchants that
represent a significant portion of the Company’s business,
such as the airline industry, or the Company’s partners in
Global Network Services or financial institutions that the
Company relies on for routine funding and liquidity, which
could materially affect the Company’s financial condition or
results of operations;
폷uncertainties associated with business acquisitions, including
the ability to realize anticipated business retention, growth and
cost savings, accurately estimate the value of goodwill and
intangibles associated with individual acquisitions, effectively
integrate the acquired business into the Company’s existing
operations or implement or remediate controls, procedures
and policies at the acquired company;
폷uncertainty relating to the actual growth of operating expenses
in 2012 and subsequent years, which will depend in part on the
Company’s ability to balance the control and management of
expenses and the maintenance of competitive service levels to
its businesses and customers, unanticipated increases in
significant categories of operating expenses, such as consulting
or professional fees, compliance or regulatory costs and
technology costs, higher than expected employee levels due to
lower than expected attrition rates or employee needs not
currently anticipated, the impact of changes in foreign
currency exchange rates on costs and results, and the level of
acquisition activity and related expenses;
폷changes affecting the success of the Company’s reengineering
and other cost control initiatives, such as the ability to execute
plans during the year with respect to certain of the Company’s
facilities, which may result in the Company not realizing all or
a significant portion of the benefits that the Company intends;
폷theactualamounttobespentbytheCompanyoninvestments
in the business, including on marketing, promotion, rewards
and cardmember services and certain operating expenses,
which will be based in part on management’s assessment of
competitive opportunities and the Company’s performance
and the ability to control and manage operating,
infrastructure, advertising, promotion and rewards expenses as
business expands or changes, including the changing behavior
of cardmembers;
폷the effectiveness of the Company’s risk management policies
and procedures, including credit risk relating to consumer
debt, liquidity risk in meeting business requirements and
operational risk;
폷the Company’s lending write-off rates for 2012 not remaining
below the average historical levels of the last ten years, which
will depend in part on changes in the level of the Company’s
loan balances, delinquency rates of cardmembers,
unemployment rates, the volume of bankruptcies and
recoveries of previously written-off loans;
폷the ability of the Company to maintain and expand its
presence in the digital payments space, including as an online
payments provider, which will depend on the Company’s
success in evolving its business models and processes for the
digital environment, building partnerships and executing
programs with companies, and utilizing digital capabilities
that can be leveraged for future growth;
폷changes affecting the Company’s ability to accept or maintain
deposits due to market demand or regulatory constraints, such
as changes in interest rates and regulatory restrictions on the
Company’s ability to obtain deposit funding or offer
competitive interest rates, which could affect the Company’s
liquidity position and the Company’s ability to fund the
Company’s business;
폷the potential failure of the U.S. Congress to renew legislation
regarding the active financing exception to Subpart F of the
Internal Revenue Code, which could increase the Company’s
effective tax rate and have an adverse impact on net income;
폷factors beyond the Company’s control such as fire, power loss,
disruptions in telecommunications, severe weather conditions,
natural disasters, terrorism, “hackers” or fraud, which could
affect travel-related spending or disrupt the Company’s global
network systems and ability to process transactions; and
폷the Company’s funding plan for 2012 being implemented in a
manner inconsistent with current expectations, which will
depend on various factors such as future business growth, the
impact of global economic, political and other events on
market capacity, demand for securities offered by the
Company, regulatory changes, ability to securitize and sell
receivables and the performance of receivables previously sold
in securitization transactions.
A further description of these uncertainties and other risks can
be found in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2011 and the Company’s other reports
filed with the SEC.
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