American Express 2013 Annual Report Download - page 44

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AMERICAN EXPRESS COMPANY
2013 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.
TABLE 28: COMMITTED FUTURE OBLIGATIONS BY YEAR
Payments due by year(a)
(Millions) 2014 2015–2016 2017–2018
2019 and
thereafter Total
Long-term debt $ 9,849 $ 25,435 $ 16,711 $ 3,972 $ 55,967
Interest payments on long-term debt(b) 1,198 1,729 682 1,817 5,426
Certificates of deposit 2,738 2,881 1,611 191 7,421
Other long-term liabilities(c) 235 87 15 18 355
Operating lease obligations 237 353 246 922 1,758
Purchase obligations(d) 390 190 76 23 679
Total $ 14,647 $ 30,675 $ 19,341 $ 6,943 $ 71,606
(a) The above table excludes approximately $1.0 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, if any, to be made over a range of years.
(b) Estimated interest payments were calculated using the effective interest rate in place as of December 31, 2013, and reflects the effect of existing interest rate swaps.
Actual cash flows may differ from estimated payments.
(c) As of December 31, 2013, 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 2014 are
anticipated to be approximately $61 million, and this amount has been included within other long-term liabilities. Remaining obligations under defined benefit pension
and postretirement benefit plans aggregating $600 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 $6.2 billion of Membership Rewards liabilities, which are not considered long-term liabilities as Card Members 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, 2013.
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 $2.8 billion as of December 31, 2013.
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 Card
Member services to enhance the value of owning 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 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, 2013, the Company had approximately $265
billion of unused credit available to Card Members as part of
established lending product agreements. Total unused credit available
to Card Members 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 Card Members.
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 nil and $335 million as of December 31, 2013 and 2012,
respectively, 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.
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