EXHIBIT 99.1
RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEA
[LOGO OF AMERICAN EXPRESS COMPANY] American Express Company
American Express Tower
World Financial Center
New York, N.Y. 10285-4805
CONTACTS: Investors/Analysts: Alex Hopwood
212-640-5495
alex.w.hopwood@aexp.com
Media: Judy Tenzer
American Express
212-640-0555
judy.g.tenzer@aexp.com
FOR IMMEDIATE RELEASE Michael O'Neill
American Express
212-640-5951
mike.o'neill@aexp.com
AMERICAN EXPRESS REACHES $2.25 BILLION SETTLEMENT AGREEMENT WITH VISA
NEW YORK, NOVEMBER 7, 2007 -- American Express said today that it has
reached an agreement to drop Visa as a defendant in a lawsuit alleging that
MasterCard, Visa and their member banks had illegally blocked American Express
from the bank-issued card business in the United States.
Under terms of the settlement agreement, Visa will pay a maximum amount
of $2.25 billion to American Express. Individual banks named in the lawsuit
will also be dropped as defendants. These include: J.P. Morgan Chase, Capital
One, U.S. Bancorp, Wells Fargo and Providian. The agreement is subject to the
approval of Visa's member banks.
MasterCard remains the sole defendant in the American Express case. The
lawsuit, which was filed in Federal court (November 2004) by American Express,
seeks monetary damages for the lost business opportunity that resulted from
the illegal conspiracy to boycott American Express. American Express is
expected to seek damages in the billions of dollars. As the sole remaining
defendant, MasterCard would be liable for the full amount.
"The size of this settlement, along with earlier court rulings,
underscores the seriousness of the damage done by the illegal boycott," said
Kenneth I. Chenault, chairman and chief executive. "We plan to move forward
with the litigation to hold MasterCard accountable for the illegal actions
that blocked banks from working with us for many years and to seek full
compensation for the value that would have been generated for our
shareholders."
Under terms of the agreement reached with Visa, Inc., Visa USA, and Visa
International, American Express will receive an aggregate maximum payment of
$2.25 billion. An initial payment of $1.13 billion will likely be recognized
by American Express in income during the fourth quarter 2007. The remainder,
payable in installments of up to $70 million per quarter over the next four
years, is subject to achieving certain quarterly performance criteria within
the U.S. network services business of American Express.
"Given the strong growth momentum we have built within that business, we
are highly optimistic in our ability to meet those performance requirements,"
said Mr. Chenault.
In light of the settlement, American Express said that it is likely to
incur a number of significant additional fourth quarter expenses, including:
Incremental investments in marketing, promotion,
rewards, cardmember services and other business building
initiatives designed to capitalize on competitive
opportunities in the payments industry at a time when some
competitors are pulling back.
Additional funding for the American Express Foundation,
which will support the company's ongoing philanthropic
activities.
Litigation expenses related to the lawsuit against Visa and MasterCard.
Given the continued evolution of its rewards programs, the Company also said
that it is currently evaluating enhancements to its method of estimating its
liability for Membership Rewards(R), including the consideration of an
actuarial based approach for estimating the ultimate redemption rate. These
enhancements could result in a significant one time addition to reserves upon
implementation.
"Rewards and customer loyalty programs have been a key element of our
success, and we expect them to continue to be a centerpiece of our strategy
going forward," said Mr. Chenault. "The overall economics of a rewards-based
strategy are very favorable: higher spending, stronger loyalty and superior
credit metrics. Our expectation is that more Cardmembers will enroll in
rewards programs and generate a growing share of their overall spending with
American Express. Our higher enrollments and improvements to the program in
recent years are causing us to continually evaluate and enhance the method to
estimate the ultimate usage of points earned by our Cardmembers."
The aggregate cost associated with this potential addition to the Company's
Membership Rewards liability and the other items mentioned above could
represent a significant portion of the payment expected to be realized this
quarter.
The Company said that any decisions about whether to reinvest future
payments into business building activities will be made on a quarter by
quarter basis over the next four years. "This settlement compensates us in
part for past damages in a way that allows us to invest in our future," said
Mr. Chenault. "We intend to be consistent with our approach of the last
several years, capitalizing on marketing and promotional opportunities and
enhancing our network when we see chance to gain a competitive advantage. We
have been generating very attractive returns on our investment spending of
the past few years and believe that the pipeline of market opportunities will
continue to be strong in the years ahead.
"At a time when weakness in parts the economy is affecting many financial
services companies, the settlement will give us greater flexibility and
confidence to meet our financial goals while continuing to fund business
building initiatives and support future acquisitions."
Ed. Note: AMERICAN EXPRESS COMPANY WILL HOLD A CONFERENCE CALL FOR INVESTORS
TO DISCUSS THIS ANNOUNCEMENT TODAY AT 5:00 P.M. (EST). INVESTORS MAY CALL
800.288.8960 OR 612.332.0228, CONFERENCE ID: 894290.
A live audio Webcast of the investor conference call will be available to
the general public on the American Express Web site at
HTTP://IR.AMERICANEXPRESS.COM.
A replay of the investor conference call will be available later this
evening at the same Web site address.
American Express Company is a leading global payments, network and travel
company founded in 1850. For more information, visit WWW.AMERICANEXPRESS.COM.
THIS RELEASE INCLUDES FORWARD-LOOKING STATEMENTS, WHICH ARE SUBJECT TO RISKS
AND UNCERTAINTIES. THE WORDS "BELIEVE," "EXPECT," "ANTICIPATE," "OPTIMISTIC,"
"INTEND," "PLAN," "WILL," "COULD," "WOULD," "LIKELY," AND SIMILAR EXPRESSIONS
ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. 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: THE ACTUAL AMOUNT
SPENT BY THE COMPANY IN THE FOURTH QUARTER OF 2007 ON MARKETING, PROMOTION,
REWARDS AND CARDMEMBER SERVICES BASED ON MANAGEMENT'S ASSESSMENT OF
COMPETITIVE OPPORTUNITIES AND OTHER FACTORS AFFECTING ITS JUDGMENT; THE
COMPANY'S ABILITY TO DEVELOP NEW AND ENHANCED CARD AND PREPAID PRODUCTS,
SERVICES AND REWARDS PROGRAMS, AND INCREASE REVENUES FROM SUCH PRODUCTS,
ATTRACT NEW CARDMEMBERS, REDUCE CARDMEMBER ATTRITION, CAPTURE A GREATER SHARE
OF EXISTING CARDMEMBERS' SPENDING; THE COMPANY'S ABILITY TO GROW AND EXPAND
THE GLOBAL NETWORK SERVICES BUSINESS IN THE UNITED STATES, INCLUDING, AMONG
OTHER THINGS, THE SUCCESS OF SUCH GLOBAL NETWORK SERVICES BUSINESS IN MEETING
THE PERFORMANCE REQUIREMENTS CALLED BY THE SETTLEMENT AGREEMENT DESCRIBED IN
THIS RELEASE; THE COMPANY'S ABILITY TO CONTROL AND MANAGE OPERATING,
INFRASTRUCTURE, ADVERTISING AND PROMOTION EXPENSES AS BUSINESS EXPANDS OR
CHANGES, INCLUDING THE ABILITY TO ACCURATELY ESTIMATE THE PROVISION FOR THE
COST OF THE MEMBERSHIP REWARDS PROGRAM; ACCOUNTING CHANGES; AND OUTCOMES AND
COSTS ASSOCIATED WITH THE LITIGATION REFERENCED IN THIS RELEASE, INCLUDING
OBTAINING THE APPROVAL OF VISA'S MEMBER BANKS TO THE SETTLEMENT AGREEMENT
DESCRIBED IN THIS RELEASE AND THE OUTCOME OF THE LITIGATION AGAINST
MASTERCARD. A FURTHER DESCRIPTION OF THESE AND OTHER RISKS AND UNCERTAINTIES
CAN BE FOUND IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2006, AND ITS OTHER REPORTS FILED WITH THE SEC.