American Express 2006 Annual Report Download - page 17

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• using our capabilities in risk and information management to drive spending and create
real economic value for cardmembers and merchants alike;
• continually reengineering our business to manage costs and increase our fl exibility; and
• investing in our future and identifying the best opportunities across a range of high-
performing businesses.
We are committed to managing our shareholders’ resources wisely. As our recent performance
demonstrates, our businesses generate high returns on equity and substantial cash fl ow,
which has enabled us to deliver strong earnings growth while investing in our future and
returning a signifi cant amount of capital to shareholders. Through share repurchases and
regular dividends, we returned 93 percent of capital to shareholders in 2006
—
well above
our target of 65 percent, on average and over time.
GLOBAL PAYMENTS: A POWERFUL ENGINE
The excellent performance of our payments businesses drove the company’s growth
in 2006. For the fourth consecutive year, we grew our share of spending on general
purpose cards in the United States. We also gained share of spending in many key
international markets.
Cardmembers of all types
—
consumers, small-business owners, midsize companies
and large corporate customers
—
spent significantly more on their American Express
cards in 2006. Worldwide billed business, which includes spending on our proprietary
comparison of five-year total return to shareholders
(Cumulative Value of $100 invested on December 31, 2001)
01 02 03 04 05 06
$250
$200
$150
$100
$50
$0
Year-end data* 2001 2002 2003 2004 2005 2006
American Express $ 100.00 $ 100.13 $ 137.65 $ 161.75 $ 169.91 $ 202.33
S&P 500 Index $ 100.00 $ 77.91 $ 100.24 $ 111.14 $ 116.59 $ 134.98
S&P Financial Index $ 100.00 $ 85.36 $ 111.83 $ 123.99 $ 132.05 $ 157.41
* Source: Bloomberg (returns compounded monthly)
This chart compares the cumulative total shareholder return on our common shares with the total
return on the S&P 500 Index and the S&P Financial Index for the last five years. It shows the
growth of a $100 investment on December 31, 2001, including the reinvestment of all dividends.
On September 30, 2005, American Express distributed to shareholders a special dividend of all
its common shares of Ameriprise Financial, Inc. This distribution is accounted for in the chart as though
it were paid in cash and reinvested in the company’s common shares.
[ 15 ]
letter to shareholders