AXP » Topics » COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES

This excerpt taken from the AXP 10-K filed Feb 28, 2008.

COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES

(Dollars in millions)

 

     Years Ended December 31,
      2007    2006    2005    2004    2003

Earnings:

              

Pretax income from continuing operations

   $ 5,566    $ 5,139    $ 4,053    $ 3,745    $ 3,315

Interest expense

     4,327      3,132      2,324      1,830      1,728

Other adjustments

     143      139      150      151      154
                                  

Total earnings (a)

   $ 10,036    $ 8,410    $ 6,527    $ 5,726    $ 5,197
                                  

Fixed charges:

              

Interest expense

   $ 4,327    $ 3,132    $ 2,324    $ 1,830    $ 1,728

Other adjustments

     106      106      151      145      139
                                  

Total fixed charges (b)

   $ 4,433    $ 3,238    $ 2,475    $ 1,975    $ 1,867
                                  

Ratio of earnings to fixed charges (a/b)

     2.26      2.60      2.64      2.90      2.78

Included in interest expense in the above computation is interest expense related to the cardmember lending activities, international banking operations, and charge card and other activities in the Consolidated Statements of Income. Interest expense does not include interest on liabilities recorded under Financial Accounting Standards Board (FASB) Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.” The Company’s policy is to classify such interest in income tax provision in the Consolidated Statements of Income.

For purposes of the “earnings” computation, “other adjustments” include adding the amortization of capitalized interest, the net loss of affiliates accounted for under the equity method whose debt is not guaranteed by the Company, the minority interest in the earnings of majority-owned subsidiaries with fixed charges, and the interest component of rental expense and subtracting undistributed net income of affiliates accounted for under the equity method.

For purposes of the “fixed charges” computation, “other adjustments” include capitalized interest costs and the interest component of rental expense.

This excerpt taken from the AXP 10-K filed Mar 6, 2006.

COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES

(Dollars in millions)

 

     Years Ended December 31,
     2005    2004    2003    2002    2001

Earnings:

              

Pretax income from continuing operations

   $ 4,248    $ 3,831    $ 3,415    $ 3,021    $ 1,737

Interest expense

     2,168      1,659      1,606      1,832      2,856

Other adjustments

     150      151      154      174      175
                                  

Total earnings (a)

   $ 6,566    $ 5,641    $ 5,175    $ 5,027    $ 4,768
                                  

Fixed charges:

              

Interest expense

   $ 2,168    $ 1,659    $ 1,606    $ 1,832    $ 2,856

Other adjustments

     151      145      139      151      170
                                  

Total fixed charges (b)

   $ 2,319    $ 1,804    $ 1,745    $ 1,983    $ 3,026
                                  

Ratio of earnings to fixed charges (a/b)

     2.83      3.13      2.97      2.54      1.58

Included in interest expense in the above computation is interest expense related to the international banking operations and the cardmember lending activities, which is netted against net investment income and cardmember lending net finance charge revenue, respectively, in the Consolidated Statements of Income.

For purposes of the “earnings” computation, other adjustments include adding the amortization of capitalized interest, the net loss of affiliates accounted for under the equity method whose debt is not guaranteed by the Company, the minority interest in the earnings of majority-owned subsidiaries with fixed charges, and the interest component of rental expense and subtracting undistributed net income of affiliates accounted for under the equity method.

For purposes of the “fixed charges” computation, other adjustments include capitalized interest costs and the interest component of rental expense.

EXCERPTS ON THIS PAGE:

10-K
Feb 28, 2008
10-K
Mar 6, 2006
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