American Express 2012 Annual Report Download - page 87

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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LONG-TERM DEBT
The Company’s long-term debt outstanding, defined as debt with original maturities of one year or greater, as of December 31 was as
follows:
2012 2011
(Millions, except percentages)
Maturity
Dates
Outstanding
Balance(a)
Year-End
Stated Rate
on Debt(b)
Year-End
Effective
Interest
Rate with
Swaps(b)(c)
Outstanding
Balance(a)
Year-End
Stated Rate
on Debt(b)
Year-End
Effective
Interest
Rate with
Swaps(b)(c)
American Express Company
(Parent Company only)
Fixed Rate Senior Notes 2013-2042 $ 8,848 5.78% 4.95% $ 9,364 6.90% 6.06%
Subordinated Debentures(d) 2036 749 6.80% — 749 6.80% —
American Express Credit Corporation
Fixed Rate Senior Notes 2013-2017 17,163 4.20% 2.39% 14,188 4.78% 2.80%
Floating Rate Senior Notes 2013-2015 2,203 1.59% — 2,444 1.24% —
Borrowings under Bank Credit Facilities 2014-2016 4,672 4.87% — 4,579 6.38% 6.27%
American Express Centurion Bank
Fixed Rate Senior Notes 2015-2017 2,120 4.12% 3.32% 2,149 5.83% 3.32%
Floating Rate Senior Notes 2015 550 0.76% — 400 0.43% —
American Express Bank, FSB
Fixed Rate Senior Notes 2013-2017 2,764 5.68% 3.68% 3,581 5.65% 3.11%
Floating Rate Senior Notes 2017 300 0.51% — 1,100 0.47% —
American Express Charge Trust
Floating Rate Senior Notes 2014 3,000 0.49% — 4,488 0.52% —
Floating Rate Subordinated Notes ——— 72 0.75% —
American Express Lending Trust
Fixed Rate Senior Notes 2015 2,100 0.65% — ———
Floating Rate Senior Notes 2013-2018 12,810 0.90% — 15,065 0.95% —
Fixed Rate Subordinated Notes 2015 300 1.08% — ———
Floating Rate Subordinated Notes 2013-2018 1,091 0.93% — 1,245 0.85% —
Other
Fixed Rate Instruments(e) 2014-2022 123 5.94% — 123 5.74% —
Floating Rate Borrowings 2014-2015 292 0.65% — 129 0.66% —
Unamortized Underwriting Fees (112) (106)
Total Long-Term Debt $ 58,973 3.04% $ 59,570 3.69%
(a) The outstanding balances include (i) unamortized discount and premium, (ii) the impact of movements in exchange rates on foreign currency denominated debt and
(iii) the impact of fair value hedge accounting on certain fixed-rate notes that have been swapped to floating rate through the use of interest rate swaps. Under fair
value hedge accounting, the outstanding balances on these fixed-rate notes are adjusted to reflect the impact of changes in fair value due to changes in interest rates.
Refer to Note 12 for more details on the Company’s treatment of fair value hedges.
(b) For floating-rate debt issuances, the stated and effective interest rates are based on the floating rates in effect as of December 31, 2012 and 2011, respectively. These
rates may not be indicative of future interest rates.
(c) Effective interest rates are only presented when swaps are in place to hedge the underlying debt.
(d) The maturity date will automatically be extended to September 1, 2066, except in the case of either (i) a prior redemption or (ii) a default. See further discussion on
this page.
(e) Includes $118 million and $123 million as of December 31, 2012 and 2011, respectively, related to capitalized lease transactions.
As of December 31, 2012 and 2011, 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 2012.
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