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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12
RETIREMENT PLANS
DEFINED CONTRIBUTION RETIREMENT PLANS
The Company sponsors defined contribution retirement plans, the principal plan being the Retirement Savings Plan (RSP), a 401(k) savings
plan with a profit-sharing component. The RSP is a tax-qualified retirement plan subject to the Employee Retirement Income Security Act of
1974 (ERISA) and covers most employees in the U.S. The total expense for all defined contribution retirement plans globally was $272
million, $281 million and $254 million in 2014, 2013 and 2012, respectively.
DEFINED BENEFIT PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
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 accrue any additional benefits. Most employees outside the U.S. and United Kingdom are covered
by local retirement plans, some of which are funded, while other employees receive payments at the time of retirement or termination under
applicable labor laws or agreements. The Company complies with minimum funding requirements in all countries. The Company sponsors
unfunded other postretirement benefit plans that provide health care and life insurance to certain retired U.S. employees. The total expense
for these plans was $24 million, $59 million and $93 million in 2014, 2013 and 2012, respectively.
The Company recognizes the funded status of its defined benefit pension plans and other postretirement benefit plans, measured as the
difference between the fair value of the plan assets and the projected benefit obligation, in the Consolidated Balance Sheets. As of
December 31, 2014 and 2013, the funded status related to the defined benefit pension plans and other postretirement benefit plans was
underfunded by $767 million and $661 million, respectively, and is recorded in Other liabilities.
NOTE 13
COMMITMENTS AND CONTINGENCIES
LEGAL CONTINGENCIES
The Company and its subsidiaries are involved in a number of legal proceedings concerning matters arising out of the conduct of their
respective business activities and are periodically subject to governmental and regulatory examinations, information gathering requests,
subpoenas, inquiries and investigations (collectively, governmental examinations). As of December 31, 2014, the Company and various of its
subsidiaries were named as a defendant or were otherwise involved in numerous legal proceedings and governmental examinations in
various jurisdictions, both in and outside the U.S. The Company discloses its material legal proceedings and governmental examinations
under “Legal Proceedings” in its Annual Report on Form 10-K for the year ended December 31, 2014 (Legal Proceedings).
The Company has recorded liabilities for certain of its outstanding legal proceedings and governmental examinations. A liability is
accrued when it is both (a) probable that a loss has occurred and (b) the amount of loss can be reasonably estimated. There may be instances
in which an exposure to loss exceeds the accrued liability. The Company evaluates, on a quarterly basis, developments in legal proceedings
and governmental examinations that could cause an increase or decrease in the amount of the liability that has been previously accrued or a
revision to the disclosed estimated range of possible losses, as applicable.
The Company’s legal proceedings range from cases brought by a single plaintiff to class actions with millions of putative class members.
These legal proceedings, as well as governmental examinations, involve various lines of business of the Company and a variety of claims
(including, but not limited to, common law tort, contract, antitrust and consumer protection claims), some of which present novel factual
allegations and/or unique legal theories. While some matters pending against the Company specify the damages claimed by the plaintiff,
many seek an unspecified amount of damages or are at very early stages of the legal process. Even when the amount of damages claimed
against the Company are stated, the claimed amount may be exaggerated and/or unsupported. As a result, some matters have not yet
progressed sufficiently through discovery and/or development of important factual information and legal issues to enable the Company to
estimate a range of possible loss.
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