2024 Q2 Form 10-Q Financial Statement

#000000496224000031 Filed on April 19, 2024

View on sec.gov

Income Statement

Concept 2024 Q2 2024 Q1
Revenue $9.818B $17.23B
YoY Change -39.58% 94.75%
Cost Of Revenue $6.806B $6.372B
YoY Change 11.56% 10.95%
Gross Profit $10.95B $10.86B
YoY Change 7.91% 13.89%
Gross Profit Margin 111.55% 63.01%
Selling, General & Admin $4.672B $4.686B
YoY Change 5.53% 5.19%
% of Gross Profit 42.66% 43.17%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $421.0M $390.0M
YoY Change 5.25% -2.5%
% of Gross Profit 3.84% 3.59%
Operating Expenses $7.720B $7.727B
YoY Change 4.62% 4.92%
Operating Profit $3.232B $3.129B
YoY Change 16.68% 44.39%
Interest Expense $27.00M $16.00M
YoY Change -175.0% -98.88%
% of Operating Profit 0.84% 0.51%
Other Income/Expense, Net
YoY Change
Pretax Income $3.790B $3.145B
YoY Change 38.62% 45.13%
Income Tax $775.0M $708.0M
% Of Pretax Income 20.45% 22.51%
Net Earnings $3.015B $2.405B
YoY Change 40.76% 32.43%
Net Earnings / Revenue 30.71% 13.96%
Basic Earnings Per Share $4.16 $3.34
Diluted Earnings Per Share $4.15 $3.33
COMMON SHARES
Basic Shares Outstanding 719.3M shares 723.9M shares
Diluted Shares Outstanding 717.0M shares 722.0M shares

Balance Sheet

Concept 2024 Q2 2024 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $52.24B $53.62B
YoY Change 27.35% 30.78%
Cash & Equivalents $52.90B $47.88B
Short-Term Investments
Other Short-Term Assets
YoY Change
Inventory
Prepaid Expenses
Receivables $59.49B $59.62B
Other Receivables $0.00 $0.00
Total Short-Term Assets $111.7B $113.2B
YoY Change 12.82% 15.55%
LONG-TERM ASSETS
Property, Plant & Equipment $5.247B $5.138B
YoY Change 1.35% -1.27%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments $1.398B $2.301B
YoY Change -70.86% -42.48%
Other Assets $471.0M $526.0M
YoY Change -61.74% -4.19%
Total Long-Term Assets $160.5B $156.0B
YoY Change 10.02% 13.06%
TOTAL ASSETS
Total Short-Term Assets $111.7B $113.2B
Total Long-Term Assets $160.5B $156.0B
Total Assets $272.2B $269.3B
YoY Change 11.15% 14.09%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $13.15B $13.41B
YoY Change 6.36% 7.07%
Accrued Expenses
YoY Change
Deferred Revenue
YoY Change
Short-Term Debt $1.639B $136.2B
YoY Change -98.68% 7797.91%
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $148.5B $149.6B
YoY Change 8.66% 21.6%
LONG-TERM LIABILITIES
Long-Term Debt $51.52B $48.83B
YoY Change 10.26% 19.09%
Other Long-Term Liabilities $42.63B $42.10B
YoY Change 22.57% -8.48%
Total Long-Term Liabilities $94.15B $90.93B
YoY Change 15.52% 4.51%
TOTAL LIABILITIES
Total Short-Term Liabilities $148.5B $149.6B
Total Long-Term Liabilities $94.15B $90.93B
Total Liabilities $242.7B $240.5B
YoY Change 11.22% 14.6%
SHAREHOLDERS EQUITY
Retained Earnings $21.27B $20.42B
YoY Change 17.29% 17.18%
Common Stock $143.0M $144.0M
YoY Change -3.38% -3.36%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $29.54B $28.76B
YoY Change
Total Liabilities & Shareholders Equity $272.2B $269.3B
YoY Change 11.15% 14.17%

Cashflow Statement

Concept 2024 Q2 2024 Q1
OPERATING ACTIVITIES
Net Income $3.015B $2.405B
YoY Change 40.76% 32.43%
Depreciation, Depletion And Amortization $421.0M $390.0M
YoY Change 5.25% -2.5%
Cash From Operating Activities $4.532B $5.552B
YoY Change 15.52% -1572.68%
INVESTING ACTIVITIES
Capital Expenditures $565.0M $396.0M
YoY Change 50.27% 10.0%
Acquisitions
YoY Change
Other Investing Activities -$4.926B -$2.748B
YoY Change -34.8% 163.22%
Cash From Investing Activities -$5.491B -$3.144B
YoY Change -30.77% 123.93%
FINANCING ACTIVITIES
Cash Dividend Paid $452.0M
YoY Change 11.6%
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net $1.250B
YoY Change -58.37%
Cash From Financing Activities -325.0M 5.181B
YoY Change -105.39% -39.73%
NET CHANGE
Cash From Operating Activities 4.532B 5.552B
Cash From Investing Activities -5.491B -3.144B
Cash From Financing Activities -325.0M 5.181B
Net Change In Cash -1.284B 7.589B
YoY Change -163.53% 9.64%
FREE CASH FLOW
Cash From Operating Activities $4.532B $5.552B
Capital Expenditures $565.0M $396.0M
Free Cash Flow $3.967B $5.156B
YoY Change 11.84% -799.59%

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Contingencies<div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In the ordinary course of business, we and our subsidiaries are subject to various pending and potential legal actions, arbitration proceedings, claims, investigations, examinations, regulatory proceedings, information gathering requests, subpoenas, inquiries and matters relating to compliance with laws and regulations (collectively, legal proceedings).</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Based on our current knowledge, and taking into consideration our litigation-related liabilities, we do not believe we are a party to, nor are any of our properties the subject of, any legal proceeding that would have a material adverse effect on our consolidated financial condition or liquidity. However, in light of the uncertainties involved in such matters, including the fact that some pending legal proceedings are at preliminary stages or seek an indeterminate amount of damages, it is possible that the outcome of legal proceedings could have a material impact on our results of operations. Certain legal proceedings involving us or our subsidiaries are described below.</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">On March 21, 2024, we were named as a defendant in a case filed in the United States District Court of Rhode Island, captioned </span><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%;text-decoration:underline">5-Star General Store aka Bento LLC, et al. v. American Express Co., et al.</span><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">, in which plaintiffs seek, on behalf of themselves and a class of merchants, an injunction prohibiting us from enforcing our anti-steering and non-discrimination provisions and a declaration that we have violated antitrust laws.</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">On February 25, 2020, we were named as a defendant in a case filed in the</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> Superior Court of California, Los Angeles County, captioned </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%;text-decoration:underline">Laurelwood Cleaners LLC v. American Express Co., et al.</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">, in which the plaintiff seeks a public injunction in California prohibiting American Express from enforcing its anti-steering and non-discrimination provisions and from requiring merchants “to offer the service of Amex-card acceptance for free.” The case has been stayed pending the outcome of arbitration proceedings.</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">On January 29, 2019, we were named in a putative class action brought in the United States District Court for the Eastern District of New York, captioned </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%;text-decoration:underline">Anthony Oliver, et al. v. American Express Company and American Express Travel Related Services Company Inc.</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">, in which the plaintiffs are holders of MasterCard, Visa and/or Discover credit and/or debit cards (but not American Express cards) and allege they paid higher prices as a result of our anti-steering and non-discrimination provisions in violation of federal antitrust law and the antitrust and consumer laws of various states. Plaintiffs seek unspecified damages and other forms of relief. The court dismissed plaintiffs’ federal antitrust claim, numerous state antitrust and consumer protection claims and their unjust enrichment claim. For the remaining state antitrust or consumer protection claims, the court certified classes for (i) holders of Visa and MasterCard debit cards in eight states and Washington, D.C.; and (ii) holders of Visa, MasterCard and Discover credit cards that do not offer rewards or charge an annual fee in two states and Washington, D.C. We have appealed the court’s class certification decisions.</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">On March 8, 2016, plaintiffs B&amp;R Supermarket, Inc. d/b/a Milam’s Market and Grove Liquors LLC, on behalf of themselves and others, filed a suit, captioned </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%;text-decoration:underline">B&amp;R Supermarket, Inc. d/b/a Milam’s Market, et al. v. Visa Inc., et al.</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">, for violations of the Sherman Antitrust Act, the Clayton Antitrust Act, California’s Cartwright Act and unjust enrichment in the United States District Court for the Northern District of California, against American Express Company, other credit and charge card networks, other issuing banks and EMVCo, LLC. Plaintiffs allege that the defendants, through EMVCo, conspired to shift liability for fraudulent, faulty and otherwise rejected consumer credit card transactions from themselves to merchants after the implementation of EMV chip payment terminals. Plaintiffs seek damages and injunctive relief. An amended complaint was filed on July 15, 2016. On September 30, 2016, the court denied our motion to dismiss as to claims brought by merchants who do not accept American Express cards, and on May 4, 2017, the California court transferred the case to the United States District Court for the Eastern District of New York. On August 28, 2020, the court granted plaintiffs’ motion for class certification.</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In July 2004, we were named as a defendant in a putative class action filed in the Southern District of New York and subsequently transferred to the Eastern District of New York, captioned </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%;text-decoration:underline">The Marcus Corporation v. American Express Co., et al.</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">, in which the plaintiffs allege an unlawful antitrust tying arrangement between certain of our charge cards and credit cards in violation of various state and federal laws. The plaintiffs in this action seek injunctive relief and an unspecified amount of damages.</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In 2006, Mawarid Investments Limited filed a request for confidential arbitration under the 1998 London Court of International Arbitration Rules in connection with certain claims arising under a shareholders agreement between Mawarid and American Express Travel Related Services Company, Inc. relating to a joint venture between the parties, Amex (Middle East) BSC(c) (AEME). In 2008, the tribunal rendered a partial award, including a direction that an audit should take place to verify whether acquirer discount revenue related to transactions occurring with airlines located in the Middle East region had been properly allocated to AEME since its inception in 1992. In September 2021, the tribunal rendered a further partial award regarding the location of transactions through non-physical channels. In May 2022, the tribunal further clarified the 2021 partial award and the discount rate that should apply to transactions through non-physical channels.</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In May 2020, we began responding to a review by the Office of the Comptroller of the Currency (OCC) and the Department of Justice (DOJ) Civil Division regarding historical sales practices relating to sales to small business customers in the United States. In January 2021, we received a grand jury subpoena from the United States Attorney’s Office for the Eastern District of New York (EDNY) regarding these sales practices issues, as well as a Civil Investigative Demand from the Consumer Financial Protection Bureau (CFPB) pertaining to its investigation into sales practices related to consumers. We have also been made aware of a related investigation by the New York Department of Financial Services (NYDFS).</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In January 2023, the CFPB notified us that its investigation was completed and that it does not intend to recommend an enforcement action be taken against us at this time. In July 2023, we reached a settlement with the OCC to resolve its review of historical sales practices to certain U.S. small business card customers that occurred between 2015 and 2017. The DOJ, EDNY and NYDFS investigations are ongoing, and we are cooperating with all inquiries. </span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">We are being challenged in a number of countries regarding our application of value-added taxes (VAT) to certain of our international transactions, which are in various stages of audit, or are being contested in legal actions. While we believe we have complied with all applicable tax laws, rules and regulations in the relevant jurisdictions, the tax authorities may determine that we owe additional VAT. In certain jurisdictions where we are contesting the assessments, we were required to pay the VAT assessments prior to contesting.</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Our legal proceedings range from cases brought by a single plaintiff to class actions with millions of putative class members to governmental proceedings. These legal proceedings involve various lines of business and a variety of claims (including, but not limited to, common law tort, contract, application of tax laws, antitrust and consumer protection claims), some of which present novel factual allegations and/or unique legal theories. While some matters pending against us specify the damages sought, 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 us 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 us to estimate an amount of loss or a range of possible loss, while other matters have progressed sufficiently such that we are able to estimate an amount of loss or a range of possible loss.</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">We have accrued for certain of our outstanding legal proceedings. An accrual is recorded 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 accrual. We evaluate, on a quarterly basis, developments in legal proceedings that could cause an increase or decrease in the amount of the accrual that has been previously recorded, or a revision to the disclosed estimated range of possible losses, as applicable.</span></div><div style="margin-bottom:9pt;margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">For those disclosed legal proceedings where a loss is reasonably possible in future periods, whether in excess of a recorded accrual for legal or tax contingencies, or where there is no such accrual, and for which we are able to estimate a range of possib</span><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">le loss, the current estimated range is zero to $410 million in exce</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">ss of any accruals related to those matters. This range represents management’s estimate based on currently available information and does not represent our maximum loss exposure; actual results may vary significantly. As such legal proceedings evolve, we may need to increase our range of possible loss or recorded accruals. In addition, it is possible that significantly increased merchant steering or other actions impairing the Card Member experience as a result of an adverse resolution in one or any combination of the disclosed merchant cases could have a material adverse effect on our business and results of operations.</span></div>
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