American Express 2013 Annual Report Download - page 56

AMERICAN EXPRESS COMPANY
2013 FINANCIAL REVIEW
Tier 1 risk-based capital ratio — Refer to the Capital Strategy
section under “Consolidated Capital Resources and Liquidity” for the
definitions under Basel I and Basel III.
Total cards-in-force — Represents the number of cards that are
issued and outstanding. Non-proprietary cards-in-force includes all
cards that are issued and outstanding under network partnership
agreements, except for retail co-brand Card Member accounts which
have no out-of-store spend activity during the prior 12-month period.
Total risk-based capital ratio — Refer to the Capital 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 on these transactions by charging a
transaction or management fee.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This report includes forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, which are
subject to risks and uncertainties. The forward-looking statements,
which address the Company’s expected business and financial
performance, among other matters, contain words such as “believe,”
“expect,” “estimate,” “anticipate,” “optimistic,” “intend,” “plan,”
“aim,” “will,” “may,” “should,” “could,” “would,” “likely,” and similar
expressions. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date on
which they are made. The Company undertakes no obligation to
update or revise any forward-looking statements. Factors that could
cause actual results to differ materially from these forward-looking
statements, include, but are not limited to, the following:
폷the ability to hold annual operating expense growth to less than 3
percent during 2014, which will depend in part on unanticipated
increases in significant categories of operating expenses, such as
consulting or professional fees, compliance or regulatory-related
costs and technology costs, the payment of monetary damages and
penalties, disgorgement and restitution, the Company’s decision to
increase or decrease discretionary operating expenses depending on
overall business performance, the Company’s ability to achieve the
expected benefits of the Company’s reengineering plans, which will
be impacted by, among other things, the factors identified in the
third bullet below, the Company’s ability to balance expense control
and investments in the business, the impact of changes in foreign
currency exchange rates on costs and results, the impact of
accounting changes and reclassifications, and the level of
acquisition activity and related expenses;
폷the actual amount to be spent by the Company on investments in
the business, including on marketing, promotion, rewards and Card
Member services and certain operating expenses and in such areas
as affluent consumers, small businesses, business-to-business
payments, merchant coverage, international growth, prepaid and
online/mobile commerce, as well as the actual amount of any
potential gain arising from the proposed GBT joint venture
transaction the Company decides to invest in growth initiatives,
which will be based in part on management’s assessment of
competitive opportunities and the Company’s performance and the
ability to control operating, infrastructure, advertising, promotion
and rewards expenses as business expands or changes, including the
changing behavior of Card Members;
폷changes affecting the Company’s ability or desire to repurchase up
to $1.0 billion of its common shares in the first quarter of 2014,
such as acquisitions, results of operations, capital needs and the
amount of shares issued by the Company to employees upon the
exercise of options, among other factors, which will significantly
impact the potential decrease in the Company’s capital ratios;
폷the possibility of not achieving the expected timing and financial
impact of the Company’s reengineering plans, which could be
caused by factors such as the Company’s inability to mitigate the
operational and other risks posed by planned staff reductions, the
Company’s inability to develop and implement technology
resources to realize cost savings, underestimating hiring needs
related to some of the job positions being eliminated and other
employee needs not currently anticipated, lower than expected
attrition rates and higher than expected redeployment rates;
폷the ability of the Company to meet its on-average and over-time
growth targets for revenues net of interest expense, earnings per
share and return on average equity, which will depend on factors
such as the Company’s success in implementing its strategies and
business initiatives including growing the Company’s share of
overall spending, increasing merchant coverage, enhancing its pre-
paid offerings, expanding the GNS business and controlling
expenses, and on factors outside management’s control including
the willingness of Card Members to sustain spending, the
effectiveness of marketing and loyalty programs, regulatory and
market pressures on pricing, credit trends, currency and interest
rate fluctuations, and changes in general economic conditions, such
as GDP growth, consumer confidence, unemployment and the
housing market;
폷the ability of the Company to meet its on-average and over-time
objective to return 50 percent of capital generated to shareholders
through dividends and share repurchases, which will depend on
factors such as approval of the Company’s capital plans by its
regulators, the amount the Company spends on acquisitions, the
Company’s results of operations and capital needs in any given
period, and the amount of shares issued by the Company to
employees upon the exercise of options;
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