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AMERICAN EXPRESS COMPANY
ANNUAL REPORT
2013

Table of contents

  • Page 1
    AMERICAN EXPRESS COMPANY ANNUAL REPORT 2013

  • Page 2
    Deliver Results Today. Invest for Tomorrow.

  • Page 3
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL RESULTS (Millions, except per share amounts, percentages and employees) Total Revenues Net of Interest Expense Net Income Return on Average Equity Total Assets Shareholders' Equity Diluted Net Income Attributable to Common Shareholders Cash Dividends Declared...

  • Page 4
    ... our company. Positive change is coming from many directions. We are developing new ways to serve our customers in the digital economy. We are driving commerce by using our closed-loop network and data analytics to create value for buyers and sellers. And we are making American Express a more...

  • Page 5
    ... we are on the right path. Billed business rose 7 percent to a record $952 billion on broadbased growth in spending among consumers, small businesses and corporations globally. Higher spending per card, combined with an expanding Card Member base, drove the increase. CARDS-IN-FORCE (IN MILLIONS...

  • Page 6
    ... card issuers. Our Card Members swiped, clicked and tapped their way to a record $952 billion in purchases with us in 2013. We experienced broad-based growth among consumers, small businesses and corporate clients. The rise in spending also paved the way for a modest increase in loan balances. Total...

  • Page 7
    ... to purchase items by using Twitter hashtags. Rewarding Travels. TripAdvisor became the latest digital platform to host merchant offers for Card Members who connect their eligible cards with their TripAdvisor profiles. Paying with Points. Certain New York City taxicabs began accepting Membership...

  • Page 8
    ... acquiring new Card Members and merchants globally; expanding our network of card-issuing partners; and developing new services and capabilities to better support our customers and business partners. As a result, we: • added nearly 5 million cards-in-force worldwide; • increased average spending...

  • Page 9
    ... its fourth year in the U.S., American Express added Shop Small events in Argentina, Australia, Canada, Israel, South Africa, and the United Kingdom. U.S. consumers who were aware of Small Business Saturday reported spending an estimated $5.7 billion with independent merchants on the day. Our...

  • Page 10
    ... account that helps consumers move and manage their money; and Loyalty Partner, our rewards coalition business. I will take a closer look at these efforts just ahead in this letter. (RE)IMAGINATION Great ideas endure. Fifty years ago, we put the "Member Since" date on the American Express Card...

  • Page 11
    ... one out of every four Card Members who took advantage of this feature redeemed Membership Rewards points for the first time. Other digital advances in 2013 enabled Card Members to make purchases directly on Twitter using hashtags, helped small business owners manage expenses using their smartphones...

  • Page 12
    ... with American Express. The heart of this business is a closed-loop network powered by data analytics. In each of the five countries where it operates, Loyalty Partner brings together multiple merchants to participate in a single loyalty program with a common rewards currency. Enrolled consumers can...

  • Page 13
    ... attract new customers and expand the business globally. Our partner, an investor group led by Certares, intends to invest between $700 million and $1 billion to help grow GBT. The new company would retain the American Express brand, as well as its close connections with our commercial card business...

  • Page 14
    AMERICAN EXPRESS COMPANY Case in point: Last December, we announced an agreement with regulators to pay substantial fines and customer refunds for marketing and billing practices involving certain credit card add-on products. This product category has come under increased regulatory scrutiny across...

  • Page 15
    ... and merchants-and our closed-loop network that connects them-put us at the heart of the commerce chain. Our worldclass service infrastructure earns us precious customer loyalty. Every day, we work hard to take these advantages to a higher level. Advanced data analytics, creative digital strategies...

  • Page 16

  • Page 17
    ...REPORTING 58 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 59 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 60 CONSOLIDATED FINANCIAL STATEMENTS 65 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 108 CONSOLIDATED FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA 109 COMPARISON OF FIVE-YEAR TOTAL RETURN...

  • Page 18
    ... on outstanding balances. In addition to funding and operating costs associated with these types of revenue, other major expense categories are related to marketing and rewards programs that add new Card Members and promote Card Member loyalty and spending, and provisions for Card Member credit and...

  • Page 19
    ...-tax) in expense reflecting enhancements to the process that estimates future redemptions of Membership Rewards points by U.S. Card Members; á,§ $153 million ($106 million after-tax) of net charges for costs related to reengineering initiatives; and á,§ Tax benefits of $102 million and $77 million...

  • Page 20
    ... and GNS partners around the world, the global economic environment remains challenging. In addition, any impact of potential U.S. income tax law changes or volatility in foreign exchange rates remains uncertain. As announced during the third quarter of 2013, the Company plans to create a new joint...

  • Page 21
    ... percentages, per share amounts and ratio data) Discount revenue Net card fees Travel commissions and fees Other commissions and fees Other Total non-interest revenues Total interest income Total interest expense Net interest income Total revenues net of interest expense Change 2013 vs. 2012 $ 956...

  • Page 22
    ... to 2011. The 2013 increase was primarily due to lower Card Member reimbursements versus the prior year and marginally higher late fees and foreign currency conversion revenues, as well as higher revenue from the Company's Loyalty Partner business. The increase in 2012 as compared to 2011 reflects...

  • Page 23
    ... REVIEW TABLE 4: EXPENSES SUMMARY Years Ended December 31, (Millions, except percentages) Marketing and promotion Card Member rewards Card Member services Total marketing, promotion, rewards and Card Member services Salaries and employee benefits Other, net Total expenses $ Change 2013 vs. 2012...

  • Page 24
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW TABLE 5: SELECTED STATISTICAL INFORMATION Change 2013 vs. 2012 8% 6 7 2 7 5 2 9 5 4 3 2% Change 2012 vs. 2011 9% 7 8 3 8 5 3 8 5 6 - -% Years Ended December 31, Card billed business: (billions) United States Outside the United States Total Total cards...

  • Page 25
    ... business GNS billed business(c) Airline-related volume (9% and 10% of worldwide billed business for 2013 and 2012, respectively) United States(b) Billed business Proprietary consumer card billed business(d) Proprietary small business billed business(d) Proprietary corporate services billed business...

  • Page 26
    ...(billions) Net write-off rate - principal only(e) Net write-off rate - principal, interest and fees(e) 30 days past due as a % of total Net interest income divided by average loans(f) Net interest yield on Card Member loans(f) $ $ Change 2013 vs. 2012 3% (2) 8 1 5 45 (10)% Change 2012 vs. 2011 5% 13...

  • Page 27
    ... overall discount revenue generated by each segment's Card Members; within the GNMS segment, discount revenue reflects the network and acquirer component of the overall discount revenue. Net card fees and travel commissions and fees are directly attributable to the segment in which they are reported...

  • Page 28
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW U.S. CARD SERVICES SEGMENT TABLE 9: USCS SELECTED INCOME STATEMENT DATA Years Ended December 31, (Millions, except percentages) Revenues Discount revenue, net card fees and other Interest income Interest expense Net interest income Total revenues net ...

  • Page 29
    ... the Years Ended December 31, (Millions, except percentages and where indicated) Card billed business (billions) Total cards-in-force Basic cards-in-force Average basic Card Member spending (dollars)* U.S. Consumer Travel: Travel sales Travel commissions and fees/sales Total segment assets (billions...

  • Page 30
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW INTERNATIONAL CARD SERVICES SEGMENT TABLE 11: ICS SELECTED INCOME STATEMENT DATA Years Ended December 31, (Millions, except percentages) Revenues Discount revenue, net card fees and other Interest income Interest expense Net interest income Total ...

  • Page 31
    ... process. The effective tax rate for 2013 also reflects the allocated share of tax benefits related to the resolution of certain prior years' items and the effective tax rate for 2012 and 2011 reflects the allocated share of tax benefits related to the realization of certain foreign tax credits...

  • Page 32
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW TABLE 12: ICS SELECTED STATISTICAL INFORMATION As of or for the Years Ended December 31, (Millions, except percentages and where indicated) Card billed business (billions) Total cards-in-force Basic cards-in-force Average basic Card Member spending (...

  • Page 33
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW GLOBAL COMMERCIAL SERVICES SEGMENT TABLE 13: GCS SELECTED INCOME STATEMENT DATA Years Ended December 31, (Millions, except percentages) Revenues Discount revenue, net card fees and other Interest income Interest expense Net interest expense Total ...

  • Page 34
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW The effective tax rate for 2012 and 2011 reflects the allocated share of tax benefits related to the realization of certain foreign tax credits. The effective tax rate for 2012 also reflects the impact of a valuation TABLE 14: GCS SELECTED STATISTICAL ...

  • Page 35
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW GLOBAL NETWORK & MERCHANT SERVICES SEGMENT TABLE 15: GNMS SELECTED INCOME STATEMENT DATA Years Ended December 31, (Millions, except percentages) Revenues Discount revenue, net card fees and other Interest income Interest expense Net interest income ...

  • Page 36
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW TABLE 16: GNMS SELECTED STATISTICAL INFORMATION As of or for the Years Ended December 31, (Millions, except percentages and where indicated) Global Worldwide Card billed business (billions) Global Network & Merchant Services: Total segment assets (...

  • Page 37
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW CONSOLIDATED CAPITAL RESOURCES AND LIQUIDITY The Company's balance sheet management objectives are to maintain: á,§ A solid and flexible equity capital profile; á,§ A broad, deep and diverse set of funding sources to finance its assets and meet ...

  • Page 38
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW Tier 1 Risk-Based Capital Ratio - The Tier 1 capital ratio is calculated as Tier 1 capital divided by risk-weighted assets. Tier 1 capital is the sum of common shareholders' equity, certain perpetual preferred stock (not applicable to the Company), and...

  • Page 39
    ...allow it to meet its maturing obligations, cost-effectively finance current and future asset growth in its global businesses as well as to maintain a strong liquidity profile. The diversity of funding sources by type of debt instrument, by maturity and by investor base, among other factors, provides...

  • Page 40
    ... expect to make any significant changes to the Company's funding programs or liquidity strategy in order to satisfy Basel III's liquidity coverage ratio standard based upon its current understanding of the requirements. The Company's funding plan for the full year 2014 includes, among other sources...

  • Page 41
    ... are currently insured up to $250,000 per account holder through the FDIC. The Company's ability to obtain deposit funding and offer competitive interest rates is dependent on the Banks' capital levels. The Company, through the FSB, has a direct retail deposit program, Personal Savings from American...

  • Page 42
    ...funding programs during a substantial weakening in economic conditions. The Company has in place a liquidity risk policy that sets out the Company's approach to managing liquidity risk on an enterprise-wide basis. The Company incurs and accepts liquidity risk arising in the normal course of offering...

  • Page 43
    ... flows related to Card Member loans and receivables and restricted cash, partially offset by lower purchases of investments and fewer acquisitions in 2012 as compared to 2011. Cash Flows from Financing Activities (Billions) 2015 2016 Total $ $ 4.8 2.2 7.0 The availability of the credit lines is...

  • Page 44
    ... an American Express card. As of December 31, 2013, the Company had guarantees totaling approximately $45 billion related to Card Member 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...

  • Page 45
    ... of internal accounting and financial controls. The Compensation and Benefits Committee of the Company's Board of Directors works with the Chief Risk Officer to ensure the compensation programs covering risk-taking employees, business units, and the Company overall appropriately balance risk with...

  • Page 46
    ... from consumer and small business charge cards, credit cards, lines of credit, and loans. These portfolios consist of millions of customers across multiple geographies, occupations, industries and levels of net worth. The Company benefits from the high-quality profile of its customers, which...

  • Page 47
    ... in market prices. The Company's market risk exposure is primarily generated by: á,§ Interest rate risk in its card, insurance and Travelers Cheque businesses, as well as in its investment portfolios; and á,§ Foreign exchange risk in its operations outside the U.S. Market risk limits and escalation...

  • Page 48
    ... including asset securitizations. Foreign exchange risk is generated by Card Member crosscurrency charges, foreign subsidiary equity and foreign currency earnings in units outside the U.S. The Company's foreign exchange risk is managed primarily by entering into agreements to buy and sell currencies...

  • Page 49
    ... types of purchases allow Card Members to also earn bonus points. Membership Rewards points are redeemable for a broad variety of rewards including travel, entertainment, retail certificates and merchandise. Points typically do not expire, and there is no limit on the number of points a Card Member...

  • Page 50
    ...interest rate swaps, foreign currency forward agreements, cross-currency swaps and a total return swap relating to a foreign equity investment. The fair value of the Company's derivative instruments is estimated by using either a third-party valuation service that uses proprietary pricing models, or...

  • Page 51
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW conditions. To discount these cash flows the Company uses its expected cost of equity, determined using a capital asset pricing model. When using the market method under the market approach, the Company applies comparable publically traded companies' ...

  • Page 52
    ... resolve regulatory reviews of marketing and billing practices related to several credit card add-on products. For a description of these settlements, see "Legal Proceedings" in the Company's Annual Report on Form 10-K for the year ended December 31, 2013. In October 2012, the Company announced that...

  • Page 53
    ... Visa and MasterCard networks, the American Express "three-party" payment network does not have interchange fees or collectively set any fees, antitrust actions and government regulation relating to merchant pricing or terms of merchant rules and contracts could affect all networks. In January 2012...

  • Page 54
    ... charges made on their American Express charge cards as well as any card-related fees. Charge cards - Represents cards that generally carry no pre-set spending limits and are primarily designed as a method of payment and not as a means of financing purchases. Charge Card Members generally must pay...

  • Page 55
    AMERICAN EXPRESS COMPANY 2013 FINANCIAL REVIEW Credit cards - Represents cards that have a range of revolving payment terms, grace periods, and rate and fee structures. Discount revenue - Represents revenue earned from fees generally charged to merchants with whom the Company has entered into a ...

  • Page 56
    ... Strategy section under "Consolidated Capital Resources and Liquidity" for the definition. Travel sales - Represents the total dollar amount of travel transaction volume for airline, hotel, car rental and other travel arrangements made for consumers and corporate clients. The Company earns revenue...

  • Page 57
    ... the prices the Company charges merchants that accept the Company's cards and the success of marketing, promotion or rewards programs; á,§ changes in the financial condition and creditworthiness of the Company's business partners, such as bankruptcies, restructurings or consolidations, involving...

  • Page 58
    ... severe weather conditions, natural disasters, terrorism, cyber attacks or fraud, which could significantly affect spending on American Express cards, delinquency rates, loan balances and travel-related spending or disrupt the Company's global network systems and ability to process transactions; and...

  • Page 59
    ... over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of America, and includes those policies and procedures that...

  • Page 60
    ... COMPANY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF AMERICAN EXPRESS COMPANY: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements...

  • Page 61
    ... Statements of Cash Flows - For the Years Ended December 31, 2013, 2012 and 2011 Consolidated Statements of Shareholders' Equity - For the Years Ended December 31, 2013, 2012 and 2011 PAGE 60 61 62 63 64 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies...

  • Page 62
    AMERICAN EXPRESS COMPANY CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31 (Millions, except per share amounts) Revenues Non-interest revenues Discount revenue Net card fees Travel commissions and fees Other commissions and fees Other Total non-interest revenues Interest income Interest on ...

  • Page 63
    AMERICAN EXPRESS COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31 (Millions) Net income Other comprehensive (loss) income: Net unrealized securities (losses) gains, net of tax Net unrealized derivatives gains, net of tax Foreign currency translation adjustments, net ...

  • Page 64
    AMERICAN EXPRESS COMPANY CONSOLIDATED BALANCE SHEETS December 31 (Millions, except per share data) Assets Cash and cash equivalents Cash and due from banks Interest-bearing deposits in other banks (includes securities purchased under resale agreements: 2013, $143; 2012, $58) Short-term investment ...

  • Page 65
    ... in customer deposits Net increase (decrease) in short-term borrowings Issuance of long-term debt Principal payments on long-term debt Issuance of American Express common shares Repurchase of American Express common shares Dividends paid Net cash used in financing activities Effect of exchange rate...

  • Page 66
    AMERICAN EXPRESS COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Three Years Ended December 31, 2013 (Millions, except per share amounts) Balances as of December 31, 2010 Net income Other comprehensive income Repurchase of common shares Other changes, primarily employee plans Cash dividends...

  • Page 67
    ... the cost method. FOREIGN CURRENCY Discount revenue represents fees generally charged to merchants with which the Company, or a Global Network Services (GNS) partner, has entered into card acceptance agreements for facilitating transactions between the merchants and the Company's Card Members. The...

  • Page 68
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other Commissions and Fees Interest Expense Other commissions and fees include foreign currency conversion fees, Card Member delinquency fees, service fees and other card related assessments, which are recognized primarily in the...

  • Page 69
    ... ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) No. 2014-01, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. Provided certain conditions are...

  • Page 70
    ...the Company's consolidated results of operations or the International Card Services segment (ICS) for the years ended December 31, 2013, 2012 and 2011. The following table summarizes the assets acquired and liabilities assumed for this acquisition as of the acquisition date: Loyalty Partner(a) $ 539...

  • Page 71
    ... Kong dollar (HKD) change in fair value associated with the Company's investment in the Industrial and Commercial Bank of China (ICBC), is determined based on a discounted cash flow method using the following significant inputs as of the valuation date: number of shares of the Company's underlying...

  • Page 72
    ... 62(c) $ $ $ (a) Reflects time deposits. (b) Includes accounts receivable (including fair values of Card Member receivables of $7.3 billion and $8.0 billion held by consolidated VIEs as of December 31, 2013 and 2012, respectively), restricted cash and other miscellaneous assets. (c) Includes fair...

  • Page 73
    ...cash flows and the discount rate that reflects the Company's current rates for similar types of CDs within similar markets. Long-term Debt Long-term debt is recorded at historical issuance cost on the Consolidated Balance Sheets adjusted for the impact of fair value hedge accounting on certain fixed...

  • Page 74
    ... recent credit information and spend patterns. Additionally, global spend limits are established to limit the maximum exposure for the Company. Charge Card Members generally must pay the full amount billed each month. Card Member receivable balances are presented on the Consolidated Balance Sheets...

  • Page 75
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CARD MEMBER LOANS AND CARD MEMBER RECEIVABLES AGING Generally, a Card Member account is considered past due if payment is not received within 30 days after the billing statement date. The following table represents the aging of ...

  • Page 76
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CREDIT QUALITY INDICATORS FOR CARD MEMBER LOANS AND RECEIVABLES The following tables present the key credit quality indicators as of or for the years ended December 31: 2013 Net Write-Off Rate Principal, Interest, & Fees(a) 2.0% ...

  • Page 77
    ...million that are past due 90 days and still accruing interest as of December 31, 2013, 2012 and 2011, respectively. (d) Unpaid principal balance consists of Card Member charges billed and excludes other amounts charged directly by the Company such as interest and fees. (e) Represents the reserve for...

  • Page 78
    ... in millions) Troubled Debt Restructurings: U.S. Card Services - Card Member Loans U.S. Card Services - Card Member Receivables Total Aggregated Outstanding Balances(a,b) á,§ Placing Card Members on a Fixed Payment Plan: For the years ended December 31, 2013, 2012 and 2011, the average payment...

  • Page 79
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 CHANGES IN CARD MEMBER RECEIVABLES RESERVE FOR LOSSES RESERVES FOR LOSSES Reserves for losses relating to Card Member loans and receivables represent management's best estimate of the probable inherent losses in the ...

  • Page 80
    ... CONSOLIDATED FINANCIAL STATEMENTS CHANGES IN CARD MEMBER LOANS RESERVE FOR LOSSES The following table presents changes in the Card Member loans reserve for losses for the years ended December 31: (Millions) Balance, January 1 Additions: Provisions(a) Other(b) Total provision Deductions: Net write...

  • Page 81
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 INVESTMENT SECURITIES Investment securities include debt and equity securities classified as available for sale. The Company's investment securities, principally debt securities, are carried at fair value on the ...

  • Page 82
    ...to third-party investors, collateralized by the transferred assets. Card Member receivables are transferred to the American Express Issuance Trust II (the Charge Trust II).7 Card Member loans are 7 During 2013, the Company transferred Card Member receivables from the American Express Issuance Trust...

  • Page 83
    ...may differ from forecasted results. The Company calculates discount rates based on the expected cost of equity financing, estimated using a capital asset pricing model, to discount future cash flows for each reporting unit. The Company believes the discount rates used appropriately reflect the risks...

  • Page 84
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The components of other intangible assets were as follows: 2013 (Millions) Customer relationships(a) Other Total Gross Carrying Amount $ $ 1,297 269 1,566 $ $ Accumulated Amortization (660) (89) (749) $ $ Net Carrying Amount 637 ...

  • Page 85
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 CUSTOMER DEPOSITS As of December 31, customer deposits were categorized as interest-bearing or non-interest-bearing as follows: (Millions) U.S.: Interest-bearing Non-interest-bearing (includes Card Member credit balances of...

  • Page 86
    ... ordinary course of business), short-term borrowings from banks, as well as interest-bearing amounts due to merchants in accordance with merchant service agreements. The secured borrowing facility gives the Company the right to sell up to $2.0 billion face amount of eligible certificates issued from...

  • Page 87
    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: 2013 Year-End Effective Interest Rate with Swaps(b)(c) 2012 Year-End ...

  • Page 88
    ... Bank, FSB American Express Charge Trust II American Express Lending Trust Other Unamortized Underwriting Fees Unamortized Discount and Premium Impacts due to Fair Value Hedge Accounting Total Long-Term Debt $ 2014 1,250 4,420 - - - 4,000 179 9,849 $ 2015 - 7,010 1,305 - - 5,423 143 13,881 $ 2016...

  • Page 89
    ...Company may change the mix between variable-rate and fixed-rate funding based on changes in business volumes and mix, among other factors. Foreign exchange risk is generated by Card Member crosscurrency charges, foreign currency balance sheet exposures, foreign subsidiary equity and foreign currency...

  • Page 90
    ...the parties. A significant portion of the Company's derivative assets and liabilities as of December 31, 2013 and 2012 is subject to such master netting agreements with its derivative counterparties. There are no instances in which management makes an accounting policy election to not net assets and...

  • Page 91
    ... Interest rate contracts Total return contract The Company also recognized a net reduction in interest expense on long-term debt of $346 million, $491 million and $503 million for the years ended December 31, 2013, 2012 and 2011, respectively, primarily related to the net settlements (interest...

  • Page 92
    .... From time to time, the Company may enter into interest rate swaps to specifically manage funding costs related to its proprietary card business. The Company has certain operating agreements containing payments that may be linked to a market rate or price, primarily foreign currency rates. The...

  • Page 93
    ...the accounting for guarantees. For the Company, guarantees primarily consist of card and travel protection programs, including: á,§ Return Protection - refunds the price of qualifying purchases made with the eligible cards where the merchant will not accept the return for up to 90 days from the date...

  • Page 94
    ...Pension and other postretirement benefit losses Total tax impact $ 2013 (142) - (49) 135 56 - $ 2012 7 1 24 (176) - (144) $ 2011 149 3 (40) (14) (7) 91 $ $ $ The following table presents the effects of reclassifications out of AOCI and into the Consolidated Statement of Income for the year ended...

  • Page 95
    ...Consolidated Statements of Income, while charges pertaining to other exit costs are included in occupancy and equipment and other expenses. The following table summarizes the Company's restructuring reserves activity for the years ended December 31, 2013, 2012 and 2011: (Millions) Liability balance...

  • Page 96
    ... likely than not to be realized on ultimate settlement with the taxing authority given the facts, circumstances and information available at the reporting date. The Company adjusts the level of unrecognized tax benefits when there is new information available to assess the likelihood of the outcome...

  • Page 97
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company is under continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which the Company has significant business operations. The tax years under examination and open ...

  • Page 98
    ... fee revenue from the Loyalty Partner business and fees related to Membership Rewards programs. The following is a detail of other revenues for the years ended December 31: (Millions) Global Network Services partner revenues Net gain on investment securities Other(a) Total other revenues $ 2013...

  • Page 99
    ... were a total of 35 million, 36 million and 38 million common shares unissued and available for grant as of December 31, 2013, 2012 and 2011, respectively, as authorized by the Company's Board of Directors and shareholders. The Company granted stock option awards to its Chief Executive Officer (CEO...

  • Page 100
    ... these awards in 2013, 2012 and 2011 was $45 million, $66 million and $58 million, respectively. Summary of Stock Plan Expense The Company's primary defined benefit pension plans that cover certain employees in the U.S. and United Kingdom are closed to new entrants and existing participants do not...

  • Page 101
    ... including Membership Rewards, merchant acceptance, travel and corporate payments programs. American Express' Delta SkyMiles Credit Card co-brand portfolio accounts for approximately 5 percent of the Company's worldwide billed business and less than 15 percent of worldwide Card Member loans...

  • Page 102
    ...Express Bank, FSB December 31, 2012: American Express Company American Express Centurion Bank American Express Bank, FSB Well-capitalized ratios(c) Minimum capital ratios(c) (a) FSB leverage ratio is calculated using ending total assets as prescribed by OCC regulations applicable to federal savings...

  • Page 103
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS BANKS' DIVIDEND RESTRICTIONS In the years ended December 31, 2013 and 2012, Centurion Bank paid dividends from retained earnings to its parent of $1.4 billion and $2.0 billion, respectively, and FSB paid dividends from retained ...

  • Page 104
    ... small business cards outside the U.S. á,§ GCS offers global corporate payment and travel-related products and services to large and mid-sized companies. á,§ GNMS operates a global payments network which processes and settles proprietary and non-proprietary card transactions. GNMS acquires merchants...

  • Page 105
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents certain selected financial information as of or for the years ended December 31, 2013, 2012 and 2011: Corporate & Other(a) (Millions, except where indicated) 2013 Non-interest revenues Interest income ...

  • Page 106
    ...represents Latin America, Canada and the Caribbean. (b) Other Unallocated includes net costs which are not directly allocable to specific geographic regions, including costs related to the net negative interest spread on excess liquidity funding and executive office operations expenses. (c) The data...

  • Page 107
    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 26 PARENT COMPANY - CONDENSED BALANCE SHEETS As of December 31 (Millions) 2011 Assets Cash and cash equivalents Investment securities Equity in net assets of subsidiaries and affiliates of continuing operations Accounts ...

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    ... cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental cash flow information Non-cash financing activities Impact of debt exchange on long-term debt $ $ 2013 5,359 $ 2012 4,482 $ 2011 4,935 (5,838) - 4,768 (135) 324 - 4,478 157 - (39...

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    AMERICAN EXPRESS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 27 QUARTERLY FINANCIAL DATA (UNAUDITED) (Millions, except per share amounts) Quarters Ended Total revenues net of interest expense Pretax income Net income Earnings Per Common Share - Basic: Net income attributable to common ...

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    AMERICAN EXPRESS COMPANY CONSOLIDATED FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA (Millions, except per share amounts, share data, percentages and where indicated) Operating Results Total revenues net of interest expense(a) Expenses(a) Provisions for losses Income from continuing operations Income...

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    AMERICAN EXPRESS COMPANY COMPARISON OF FIVE-YEAR TOTAL RETURN TO SHAREHOLDERS Cumulative Value of $100 Invested on December 31, 2008 $550 $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 2008 2009 2010 2011 2012 2013 AXP S&P 500 Index S&P Financial Index Year-end Data* American Express S&P 500...

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    ... President, Global Network and International Consumer Services James P. Bush Executive Vice President, World Service Jeffrey C. Campbell Executive Vice President and Chief Financial Officer L. Kevin Cox Chief Human Resources Officer Edward P. Gilligan President BOARD OF DIRECTORS Charlene...

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    ... Loyalty Partner® Membership Rewards® PAYBACK® Platinum Card® Serve® Shop Small® Small Business Saturday® ©2014 American Express Company. All rights reserved. New York Stock Exchange (Symbol: AXP) INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The CIP Plan, a direct stock purchase plan...

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    AMERICAN EXPRESS COMPANY 200 VESEY STREET, NEW YORK, NY 10285 212.640.2000 americanexpress.com