American Express 2011 Annual Report Download - page 81

AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2011 and 2010, 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 2011.
Aggregate annual maturities on long-term debt obligations (based on final maturity dates) as of December 31, 2011 were as follows:
(Millions) 2012 2013 2014 2015 2016 Thereafter Total
American Express Company (Parent Company only) $ – $ 1,000 $ 1,250 $ – $ 600 $ 7,000 $ 9,850
American Express Credit Corporation 1,575 4,846 6,442 2,477 5,434 – 20,774
American Express Centurion Bank 1,150 – – 5 – 1,302 2,457
American Express Bank, FSB 1,550 1,750 – – – 1,300 4,600
American Express Charge Trust 1,5603,000––––4,560
American Express Lending Trust 5,222 4,056 3,882 1,950 – 1,200 16,310
Other – – 211 – – 40 251
$ 11,057 $ 14,652 $ 11,785 $ 4,432 $ 6,034 $ 10,842 58,802
Unamortized Underwriting Fees (106)
Unamortized Discount and Premium (36)
Impacts due to Fair Value Hedge Accounting 910
Total Long-Term Debt $ 59,570
As of December 31, 2011 and 2010, the Company maintained
total bank lines of credit of $7.5 billion and $10.6 billion,
respectively. Of the total credit lines, $2.9 billion and $6.5 billion
were undrawn as of December 31, 2011 and 2010, respectively.
Undrawn amounts of $2.9 billion and $5.7 billion supported
commercial paper borrowings and contingent funding needs as
of December 31, 2011 and 2010, respectively. In 2012, 2014 and
2016, respectively, $2.9 billion, $2.0 billion and $2.6 billion of
these credit facilities will expire. 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, 2011, $3.0 billion was drawn on this facility. The
Company paid $22.2 million and $7.7 million in fees to maintain
these lines in 2011 and 2010, 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, 2011
and 2010, the Company was not in violation of any of its debt
covenants.
These committed facilities do not contain material adverse
change clauses, which might otherwise preclude borrowing
under the credit facilities, nor are they dependent on 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 in both 2011 and 2010 and $2.3
billion in 2009.
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