American Express 2012 Annual Report Download - page 38

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AMERICAN EXPRESS COMPANY
2012 FINANCIAL REVIEW
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.
Payments due by year(a)
(Millions) 2013 2014–2015 2016–2017
2018 and
thereafter Total
Long-term debt $ 11,665 $ 27,131 $ 13,324 $ 7,179 $ 59,299
Interest payments on long-term debt(b) 1,386 1,917 1,057 2,616 6,976
Certificates of deposit 4,959 3,338 1,090 190 9,577
Other long-term liabilities(c) 170 123 38 37 368
Operating lease obligations 275 439 284 1,005 2,003
Purchase obligations(d) 387 200 123 49 759
Total $ 18,842 $ 33,148 $ 15,916 $ 11,076 $ 78,982
(a) The above table excludes approximately $1.2 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,ifany,tobemadeoverarangeofyears.
(b) Estimated interest payments were calculated using the effective interest rate in place as of December 31, 2012, and reflects the effect of existing interest rate swaps.
Actual cash flows may differ from estimated payments.
(c) As of December 31, 2012, 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 Retirement Restoration Plan and non-U.S. defined benefit pension and postretirement benefit plans, contributions in 2013 are
anticipated to be approximately $67 million, and this amount has been included within other long-term liabilities. Remaining obligations under defined benefit
pension and postretirement benefit plans aggregating $729 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 $5.8 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, 2012.
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 $4.1 billion as of
December 31, 2012.
In addition to the contractual obligations noted above, the
Company has off-balance sheet arrangements that include
guarantees 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, 2012, the Company
had guarantees totaling approximately $45 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, 2012, the Company had approximately $253
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
generally have no pre-set limit, and therefore are not reflected in
unused credit available to cardmembers.
To mitigate counterparty credit risk related to derivatives, the
Company accepted noncash collateral in the form of security
interest in U.S. Treasury securities from its derivatives
counterparties with a fair value of $335 million as of
December 31, 2012, none of which was sold or repledged.
Refer to Note 24 to the Consolidated Financial Statements for
discussion regarding the Company’s other off-balance sheet
arrangements.
36