Ladies and gentlemen, thank you for standing by. Welcome to the American Express Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to our host, Mr. Rick Petrino. Please go ahead.

Thank you, and thanks to everyone for joining us for our Q4 discussion again. The discussion today contains certain forward-looking statements about the company's future financial performance and business prospects, which are subject to risks and uncertainties and speak only as of today. The words believe, expect, anticipate, estimate, optimistic, intend, plan, aim, will, should, could, likely and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements, including the company's financial and other goals, are set forth within today's earnings press release and earnings supplement, which were filed in an 8-K report and in the company's 2011 10-K and Q1, 2 and 3 2012 Form 10-Q reports already on file with the SEC. The discussion today also contains certain non-GAAP financial measures. Information relating to comparable GAAP financial measures may be found in the fourth quarter 2012 earnings release, earnings supplement and presentation slides, as well as the earnings materials for the prior period that may be discussed, all of which are posted on our website at ir.americanexpress.com. We encourage you to review that information in conjunction with today's discussion. Today's discussion will begin with Dan Henry, Executive Vice President and CFO, who will review some key points related to the quarter's earnings through the series of slides included with the earnings documents distributed and provide some brief summary comments. Once Dan completes his remarks, we will move to Q&A. With that, let me turn the discussion over to Dan.

Okay. Thanks, Rick, and I'll start on Slide 2. So this is the fourth quarter summary of financial performance. So revenues came in at $8.1 billion, up 5% both on a reported and FX basis. If you exclude the $93 million of cardmember reimbursements that are contra-revenues, revenues would have grown 6%. Net income came in at $637 million. That's $0.56 of EPS. If you exclude the restructuring charge, MR reserve and cardmember reimbursements that we discussed last week, adjusted EPS would be $1.09. ROE was 23%. If you adjust it for the same 3 items I just mentioned, it would have been 26% for the fourth quarter. And you can see shares are declining, reflecting our repurchases. Moving to Slide 3. So this is a reconciliation from net income of $637 million down to income of $1.2 billion, which relates to the $1.09. So the first item here is the restructuring charge, and restructuring is part of staying ahead of the curve. It is designed to contain operating expenses and free up resources for growth initiatives. Our core business results continue to show the benefits of growth investments we've made over the last several years. We have increased share in a very competitive U.S. industry, improved risk management capabilities and introduced innovative products. We believe these fourth quarter actions will make our cost structure leaner and more efficient. Our aim is to grow operating expense less than 3% in both 2013 and 2014, freeing up funds to reinvest back into the many growth opportunities we have across the business, be it our core products, prepaid or mobile. Next is the Membership Rewards expense related to the refinement in the estimated ultimate redemption rate in the U.S. And third is cardmember reimbursements for issues that go back several years. The…

[Operator Instructions] And we'll open the line of Bill Carcache with Nomura.

Dan, can you talk about whether you're seeing any evidence of competitors pulling back on their investment spending, particularly with the benefits from reserve releases having largely abated and the large bank issuers still not really seeing any balance growth?

So I think, Bill, if you look at card mailings really in this quarter and last quarter, they're down from where they were earlier in the year. What other investment actions they're taking, we don't have great visibility into. I would comment on that we continue to be very focused on operating expense, so that we can have additional resources to invest in the many opportunities we have, both in our core business and mobile and across all of our businesses. So we can -- remain very focused. And actually quite frankly, part of the reason for our restructuring charge was to stay ahead of the curve and to ensure that we had the resources we need to invest in the business, even though it's a relatively uneven economy.

So just to make sure that I'm interpreting that correctly. So is the way that you're thinking about the travel services restructuring, is that kind of a source of funds that's going to allow you to continue to invest in better growth opportunities in other areas? And then maybe along that -- along with that, if you could also talk about your pecking order of investment opportunities and how attractive you see them today versus, say, over the course of the last couple of years, how they've changed?

Yes. So this was not solely a business travel restructuring, right? I think business travel is a large piece of the restructuring, but the restructurings are also taking place in our servicing operations. And we are having other reductions in staff groups, basically areas that are not generating revenues. Business travel is an area where we are restructuring. It's an important business to us. It's an important adjacency to our Corporate Card business. It allows us to deepen our relationships with Corporate Card clients. And so while business travel hasn't been a significant generator of revenues for us, we do continue to look at ways continually to reengineer the business. The reason that we've taken a bigger step in business travel as far as restructuring is that we now have a new leadership team in place who proposed turning up the dial on our reengineering efforts in response to the changes that we're seeing in the business landscape. And we decided to implement their proposal. But that's not the only place that we're reengineering. We do it on a regular basis. And we have done really a terrific job in our servicing areas to improve quality, as you've seen, where we continue to win the J.D. Power award, and at the same time, adopt to changing in the marketplace. So we've invested, say, in the ability to take remittances electronically. Over 80% of our remittances are received electronically in 2012. Many people are changing the way they want to interface with us. So for instance, we've invested in apps to allow people to communicate with us either through smartphones or tablet servicing applications. In fact, we had contacts through those 2 means increase to 5 million apps downloaded 5 million times compared to 2.6 million times in 2011. So we're constantly reengineering both in business travel, in the servicing and in other parts of our business.

Okay. If I may ask one last question here, can you give a sense of what percentage of your volumes comes from customers who would be directly impacted by the threshold -- the new threshold limits after the tax law changes?

So it's hard to say. The last time we saw a large tax increase was back in '93. At that time, there were a lot of other things going on, but we didn't see an impact on volumes in that period. Back in '93, billed business grew at 10% and in '94, 13%. Now it was truly a different economic environment, and GDP was more in the 3% to 4% range, but we didn't see it have an impact then. The other thing that I'd point out is U.S. consumer is an important part of our business, but our business is very diversified. We have large Corporate Card business, large international business. We have GNS partners around the world. So it's hard to predict what, if any, impact we're going to have from the tax law change.

We will open the lines of Bob Napoli with William Blair. Robert P. Napoli - William Blair & Company L.L.C., Research Division: Just wanted to clarify if I could. The expense base, if you took the $23.141 billion of total expenses, backed out the $802 million charges in the fourth quarter, that's your base, you'll grow by less than 3%?

So I have to look at the numbers... Robert P. Napoli - William Blair & Company L.L.C., Research Division: Just looking at Page 6 of your...

The only thing that we're going to back out, we're going to take operating expense as we define it on our slide for the year. And we're going to back out the $400 million restructuring charge. That's the only adjustment we're going to make. And then going forward, we will compare to that number. Robert P. Napoli - William Blair & Company L.L.C., Research Division: And also the rewards charge, the cardmember rewards charge too, yes?

Yes. So this is not -- so when you look at this, it's not marketing, it's not rewards. It's just the -- if you were to look at Slide 17, the -- this is what we're defining as operating expense. So in this quarter, it's $3.7 billion. I don't know what the annual number is. But I think the annual number, as defined here, and subtract the $400 million restructuring charge, that will be our base. Robert P. Napoli - William Blair & Company L.L.C., Research Division: Okay. And then, I mean you returned over 100% of capital generated this year, and your tier 1 common of 11.9%. Would you anticipate being having the flexibility as excluding -- assuming you don't make acquisitions, to do something similar? And what is your target tier 1 common?

So we have said our target is 10%. We have been above that level for the past couple of years. So at the moment, we're staying [ph] in the range that we are today. We have not completed our Basel II work, that will not be done for some time now. And we want to see whether there's any impacts that come out of that. We need to complete that work. And at that juncture, if there were no impacts, we would probably tend to take it down from where it is today. So from a target perspective, that's how we think about it. This year, we returned 98% of capital to shareholders. I think in our CCAR submission, we will have a similar philosophy that we had this year that if we're not utilizing the capital to support growth in the balance sheet for acquisitions, that we will be inclined to return it to shareholders. And the fact that we have a very strong capital position is helpful on that. I think it's also helpful that last year when the Fed did their stress analysis, we didn't see our capital ratios drop anywhere near what the other -- many of the other banks did in that review. So I think all those things contribute to having the type of flexibility that we want from a capital perspective.

We will open the line of Sanjay Sakhrani with KBW. Sanjay Sakhrani - Keefe, Bruyette, & Woods, Inc., Research Division: I just had a big-picture question. I was wondering if in this type of macro environment, you guys think you could hit your on average and over-time targets, because it seems like we might be in this environment for a little bit.

Yes. I think that when we set our target of 8% revenue growth, we assumed it was a normal economy with GDP at the 10-year average, which is 2.7% or so. At -- GDP at 2%, it becomes difficult to hit the 8%. Discount revenue is 50% of revenues. And while our billed business has held up, performed well in this environment compared to competitors, this is a pretty good linkage between GDP and what our growth rates have been. Over time, if you look at real GDP, our growth rates have been between 3x and 4x that number. So if we have billed business growth in the high-single digits, then hitting 8% overall growth becomes a challenge. So in this quarter, we did have good growth in card fees. It was up 6%. We did have good growth in net interest income, up 7%. And some of our other fee business lines had mid-single-digit growth rates. So we'll strive to be a growth company in a slow-growth environment. But achieving 8% is challenging with GDP in the U.S. where it is. Sanjay Sakhrani - Keefe, Bruyette, & Woods, Inc., Research Division: I guess just one follow-up. I mean you guys are kind of returning a little bit more capital than your target suggests as well, and you do have some operating leverage kind of levers. Could you just speak to that as it ties into that discussion?

Well, we always are open to acquisitions. Although as you know, we've achieved our growth and the share gains that we've experienced over the last several years through organic investments, and likely that'll be the major driver. We remain open to acquisitions if the right one comes along with the right returns. Certainly, the extent that we're able to increase our operating leverage and control operating expense, then that frees up more investment dollars to put into the many opportunities that we have across our business, and that could help to generate additional revenues as well. This quarter, we actually saw Loyalty Partner, which was an acquisition, start to contribute to revenue growth. The other thing is that the share buybacks that we're doing are giving us good improvement in terms of reducing the shares outstanding, and that gives us a lift in our EPS calculation. So we balance all those things against each other as we go forward.

And our next question is from the line of Chris Donat with Sandler O'Neill. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: One question on the previously stated goal of getting to $3 billion in fee revenue by the end of 2014. Does anything change with last week's announcement related to some of the cardmember issues there, or also just as you commented previously a moment ago about the economic environment makes some things more challenging?

So I don't think any of the items that we identified last week will affect our ability to do fee revenues. Certainly, regulators across the industry are looking closely at all products that are offered to cardmembers. I think we're going to continue to look at opportunities to expand services that we offer to cardmembers and merchants. At this juncture, we don't have a plan to change our $3 billion target. We are about halfway through the time frame and still think it's appropriate, although I would say that $3 billion is an ambitious target given the uneven economy. And there's a lot of work to do, but we're moving forward on a number of fronts. I think Loyalty department is a good example of building fee services. I think the early returns that we're seeing on Bluebird in the reloadable prepaid space is another example where we think we can be successful. So certainly, the economy does have an impact, but we're going to continue to see if we can grow fee services as we go forward. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: Okay. And then just one question about your comments about the tapping into rewards by cardmembers that, back in 2009, only 49% had regained rewards. If I take a glass half full perspective, that seems to me to suggest that you might have had a newer cohort of cardmembers back in 2009 who hadn't just gotten to the point where they did redeem rewards. Is that the wrong way to think about it or...

So I think -- so it was 45%. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: 45%, sorry.

I wasn't clear. That's okay. I don't think that our cardmember base has changed radically. Obviously, we've added a fair number of cardmembers since 2009. I look at that increase as an increase of engagement of the people who are in the program. And I think that increase in engagement is heavily influenced by the enhancements that we've made to the program, expanding the options people have, giving people the opportunity to redeem with fewer points or using Pay with Points. So I think those are all things that have contributed to the increased engagement, of the number of people who have redeemed. And I thought it was useful just in terms of thinking about another data point that demonstrates that it is the higher level of engagement that's driving the URR.

And our next question is from the line of Mark DeVries with Barclays.

I think as you've indicated, obviously the restructuring is going to help you at least slow some of the growth of OpEx. But you'll look to take at least some of those benefits and reinvest it, I guess, presumably in marketing and promotion. Can you talk about how those potentially offsetting factors might impact the pace at which you revert to that longer-term ratio of expenses to manage revenues of 68%, 69%?

Yes. So I think -- so that percentage includes both marketing rewards and operating expense. And I think we want to be focused on operating expense growth levels and achieve our target of less than 3% growth over the next 2 years. We're going to take a piece of that and reinvest it back in the business. So that could be marketing and promotion, or it could be on the operating expense line as well, depending what we think is going to give us the best return. But it will be a piece of what we save, what we reinvest. And therefore, I think it'll actually continue to increase the leverage in this calculation and enable us to continue to head back to where we were. So part of it is to help with leverage and part is to enable higher levels of investment.

Is that 69% level realistic for 2013?

60...

69%?

I'm not sure what the 69% is.

Of the -- your expenses to manage revenues?

Yes. So I don't think we've set a target for next year. We were at 71% for the full year of 2012 and at 70% in the fourth quarter. So if we're successful on operating expense, you might expect that to decrease. I don't think we disclosed an exact amount. Certainly, it wouldn't take us all the way back to 67%, but I think we can continue to make progress towards that goal.

And at this time, there are no other questions in queue.

Okay. Thank you, everybody, for joining the call.