American Express 2015 Annual Report Download - page 139

As of December 31, 2015 and 2014, 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. As noted above, 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. The Company currently intends to exercise this redemption option subject to business and market
conditions. 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 2015. 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 contractual maturity or anticipated
redemption dates) as of December 31, 2015 were as follows:
(Millions) 2016 2017 2018 2019 2020 Thereafter Total
American Express Company (Parent Company only)
(a)
.. $1,350 $ 1,500 $ 3,851 $ 641 $ — $3,147 $ 10,489
AmericanExpressCreditCorporation................. 4,931 4,900 3,614 4,150 4,150 — 21,745
AmericanExpressCenturionBank ................... — 1,300 125 — — — 1,425
AmericanExpressBank,FSB........................ — 1,300 — — — — 1,300
AmericanExpressChargeTrustII .................... — — 2,287 — — — 2,287
AmericanExpressLendingTrust ..................... 500 6,639 2,885 1,317 — — 11,341
Other ........................................... 33 83 124 4 — 29 273
$6,814 $15,722 $12,886 $ 6,112 $4,150 $3,176 $48,860
Unamortized Underwriting Fees ................... (96)
Unamortized Discount and Premium ............... (890)
Impacts due to Fair Value Hedge Accounting ........ 187
Total Long-Term Debt ............................ $ 48,061
(a) The Company currently intends to exercise its redemption option related to the $750 million of Subordinated Debentures, subject to business
and market conditions.
As of December 31, 2015, the Company maintained a bank line of credit of $3.0 billion compared to bank lines of
credit of $6.7 billion as of December 31, 2014. Of the total credit lines, $3.0 billion was undrawn as of both
December 31, 2015 and 2014. These undrawn amounts support commercial paper borrowings and contingent funding
needs. The availability of the credit line 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, 2015 and 2014, 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, 2018. As of December 31, 2015 and 2014, $1.0 billion and $2.5 billion, respectively, were drawn on this
facility.
The Company paid $35.1 million and $49.9 million in fees to maintain these lines in 2015 and 2014, 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 $1.6 billion, $1.7 billion and $2.0 billion in 2015, 2014 and 2013, respectively.
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