American Express 2013 Annual Report Download - page 57

AMERICAN EXPRESS COMPANY
2013 FINANCIAL REVIEW
폷uncertainties associated with creation of a joint venture for the
Company’s GBT operations, including events impacting the
likelihood and timing of the creation of the joint venture, execution
of transaction documentation and completion of the transaction,
such as continued negotiations, ongoing diligence, regulatory and
other approvals and consultation requirements; the ability of the
potential investors to fund their investment in the joint venture;
uncertainty relating to the timing and magnitude of the recognition
of a gain by American Express as a result of the transaction, such as
the amount of the funds ultimately raised by the joint venture and
when assets are transferred to the joint venture; the underlying
assumptions related to the transaction proving to be inaccurate or
unrealized, such as the ability of the transaction to accelerate the
transformation and growth of the corporate travel business and the
ability to realize strategic linkages between the business operations
of the joint venture and American Express following the
transaction, including the acceleration of growth in the corporate
payments business; and the joint venture’s ability to successfully
create additional investment capacity and enhance the suite of
products and services available upon consummation of the
transaction;
폷uncertainty relating to the outcomes and costs associated with
merchant class actions, including the success or failure of the
proposed settlement agreement, such as objections to the settlement
agreement by plaintiffs and other parties and uncertainty and
timing related to the approval of the settlement agreement by the
Court, which can be impacted by appeals;
폷changes in global economic and business conditions, including
consumer and business spending, the availability and cost of credit,
unemployment and political conditions, all of which may
significantly affect spending on American Express cards,
delinquency rates, loan balances and other aspects of the Company’s
business and results of operations;
폷changes in capital and credit market conditions, including sovereign
creditworthiness, which may significantly affect the Company’s
ability to meet its liquidity needs, expectations regarding capital and
liquidity ratios, access to capital and cost of capital, including
changes in interest rates; changes in market conditions affecting the
valuation of the Company’s assets; or any reduction in the
Company’s credit ratings or those of its subsidiaries, which could
materially increase the cost and other terms of the Company’s
funding, restrict its access to the capital markets or result in
contingent payments under contracts;
폷the Company’s funding plan for the full year 2014 being
implemented in a manner inconsistent with current expectations,
which will depend on various factors such as future business
growth, the impact of global economic, political and other events on
market capacity, demand for securities offered by the Company,
regulatory changes, ability to securitize and sell receivables and the
performance of receivables previously sold in securitization
transactions;
폷litigation, such as class actions or proceedings brought by
governmental and regulatory agencies (including the lawsuit filed
against the Company by the U.S. Department of Justice and certain
state attorneys general), that could result in (i) the imposition of
behavioral remedies against the Company or the Company
voluntarily making certain changes to its business practices, the
effects of which in either case could have a material adverse impact
on the Company’s financial performance; (ii) the imposition of
substantial monetary damages and penalties, disgorgement and
restitution; and/or (iii) damage to the Company’s global reputation
and brand;
폷legal and regulatory developments wherever the Company does
business, including legislative and regulatory reforms in the U.S.,
such as the establishment of the CFPB and Dodd-Frank’s stricter
regulation of large, interconnected financial institutions, which
could make fundamental changes to many of the Company’s
business practices or materially affect its capital or liquidity
requirements, results of operations, or ability to pay dividends or
repurchase its stock; actions and potential future actions by the
FDIC and credit rating agencies applicable to securitization trusts,
which could impact the Company’s ABS program; or potential
changes to the taxation of the Company’s businesses, the allowance
of deductions for significant expenses, or the incidence of
consumption taxes on the Company’s transactions, products and
services;
폷changes in the substantial and increasing worldwide competition in
the payments industry, including competitive pressure that may
impact the prices the Company charges merchants that accept the
Company’s cards and the success of marketing, promotion or
rewards programs;
폷changes in the financial condition and creditworthiness of the
Company’s business partners, such as bankruptcies, restructurings
or consolidations, involving merchants that represent a significant
portion of the Company’s business, such as the airline industry, or
the Company’s partners in GNS or financial institutions that the
Company relies on for routine funding and liquidity, which could
materially affect the Company’s financial condition or results of
operations;
폷the impact of final laws and regulations, if any, arising from the
European Commission’s legislative proposals covering a range of
issues affecting the payments industry, which will depend on
various factors, including, but not limited to, the issues presented
and decisions made in the European legislative and regulatory
processes addressing the proposed regulation of interchange fees
and other practices related to card-based payment transactions, the
amount of time these processes take to reach completion, and the
actual pricing and other requirements ultimately adopted in the
final laws and regulations in the European Union and its member
states;
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