American Express 2014 Annual Report Download - page 94

AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2014 and 2013, the 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, these 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 these 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 2014. The Company
issued $600 million of 3.6 percent subordinated notes on December 5, 2014 that are senior in right of payment to the outstanding $750
million of Subordinated Debentures.
Aggregate annual maturities on long-term debt obligations (based on final maturity dates) as of December 31, 2014 were as follows:
(Millions) 2015 2016 2017 2018 2019 Thereafter Total
American Express Company (Parent Company only) $ — $ 1,350 $ 1,500 $ 3,850 $ 641 $ 3,147 $ 10,488
American Express Credit Corporation 5,227 7,057 6,532 1,295 4,150 — 24,261
American Express Centurion Bank 1,305 — 1,300 125 — 2 2,732
American Express Bank, FSB ——1,300———1,300
American Express Charge Trust II — 2,500 — 1,287 — — 3,787
American Express Lending Trust 5,422 500 5,639 2,886 1,317 — 15,764
Other 125 145 83 — 6 31 390
$ 12,079 $ 11,552 $ 16,354 $ 9,443 $ 6,114 $ 3,180 58,722
Unamortized Underwriting Fees (116)
Unamortized Discount and Premium (932)
Impacts due to Fair Value Hedge Accounting 281
Total Long-Term Debt $57,955
As of December 31, 2014 and 2013, the Company maintained total bank lines of credit of $6.7 billion and $7.0 billion, respectively. Of the
total credit lines, $3.0 billion were undrawn as of both December 31, 2014 and 2013. Undrawn amounts support commercial paper
borrowings and contingent funding needs. The availability of these credit lines is subject to the Company’s compliance with certain financial
covenants, principally, the maintenance by American Express Credit Corporation (Credco) of a 1.25 ratio of combined earnings and fixed
charges to fixed charges. As of December 31, 2014 and 2013, the Company was not in violation of any of its debt covenants.
Additionally, the Company maintained a 3-year committed, revolving, secured borrowing facility that gives the Company the right to sell
up to $3.0 billion face amount of eligible notes issued from the Charge Trust at any time through July 15, 2016. As of December 31, 2014, $2.5
billion was drawn on this facility.
The Company paid $49.9 million and $50.2 million in fees to maintain these lines in 2014 and 2013, respectively. These committed
facilities do not contain material adverse change clauses, which might otherwise preclude borrowing under the credit facilities, nor are they
dependent on the Company’s credit rating.
The Company paid total interest primarily related to short- and long-term debt, corresponding interest rate swaps and customer deposits
of $1.7 billion, $2.0 billion and $2.2 billion in 2014, 2013 and 2012, respectively.
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