Certain of the above interest rate swaps require the company to pay a floating rate, with a predominant index of LIBOR. 

The company paid interest (net of amounts capitalized) of $1.7 billion, $2.8 billion and $3.6 billion in 2002, 2001 and 2000, respectively. 

Aggregate annual maturities of long-term debt for the five years ending December 31, 2007 are as follows (millions): 2003, $8,438; 2004, $3,151; 2005, $1,683; 2006, $2,234, and 2007, $748. 

## Note 7 CUMULATIVE QUARTERLY INCOME PREFERRED SHARES 

In 1998, American Express Company Capital Trust I, a wholly-owned subsidiary of the company, established as a Delaware statutory business trust (the Trust), completed a public offering of 20 million shares (carrying value of $511 million) of 7.0% Cumulative Quarterly Income Preferred Shares Series I (QUIPS) (liquidation preference of $25 per share). The $11 million excess carrying amount over the $500 million liquidation preference reflects the valuation of an interest rate swap designated as a fair value hedge of changes in the QUIPS’ fair value due to changes in interest rates. Proceeds of the issue were invested in Junior Subordinated Debentures (the Debentures) issued by the company due 2028, which represent the sole assets of the Trust. The QUIPS are subject to mandatory redemption upon repayment of the Debentures at maturity or their earlier redemption. The company has the option to redeem the Debentures, in whole or in part, at any time on or after July 16, 2003, which will result in the redemption of a corresponding amount of QUIPS. 

The company has unconditionally guaranteed all distributions required to be made by the Trust, but only to the extent the Trust has funds legally available for such distributions. The only source of funds for the Trust is the company’s interest pay- ments on the Debentures. The company has the right to defer such interest payments up to 20 consecutive quarters; as a conse- quence, quarterly dividend payments on the QUIPS can be deferred by the Trust during any such interest payment period. If the company defers any interest payments, the company may not, among other things, pay any dividends on its capital stock until all interest in arrears is paid to the Trust. Distributions on the QUIPS are reported as Interest Expense in the Consolidated Statements of Income. 

QUIPS have been reclassified to liabilities at December 31, 2002 under the caption guaranteed preferred beneficial interests in the company’s junior subordinated deferrable interest debentures on the Consolidated Balance Sheets. 

## Note 8 COMMON AND PREFERRED SHARES 

In November 2002, the company’s Board of Directors authorized the company to repurchase up to 120 million additional common shares, from time to time as market conditions allow. Since the inception of repurchase programs in September 1994, the company has repurchased approximately 389.9 million shares pursuant to several authorizations. Included in the total repurchased amount are 24.5 million shares delivered to the company during 2001 and 2002 as a result of the prepayments discussed below. These repurchase authorizations are designed to allow the company to purchase shares, both to offset the issuance of new shares as part of employee compensation plans and to reduce shares outstanding. 

Of the common shares authorized but unissued at December 31, 2002, 157 million shares were reserved for issuance for employee stock, employee benefit and dividend reinvestment plans, as well as stock purchase agreements. 

In 1999 and 2000, the company entered into agreements under which a financial institution purchased an aggregate 29.5 mil- lion company common shares at an average purchase price of $50.41 per share. These agreements were entered into to partially offset the company’s exposure to the effect on diluted earnings per share of outstanding in-the-money stock options issued under the company’s stock option program. Each of the agreements terminates after five years, at which time the company is required to deliver an amount equal to the original purchase price for the shares. The company may elect to settle this amount at any time (i) physically, by paying cash against delivery of the shares held by the financial institution or (ii) on a net cash or net share basis. During the term of these agreements, the company, on a monthly basis, will either receive from or issue to the financial institution a quantity of shares so that the value of the remaining shares held by the financial institution is equal to the original aggregate purchase price. 

