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[ 32 ]
2006 fi nancial review
american express company
Corporate & Other consists of corporate functions
and auxiliary businesses, including the Company’s
publishing business, and for 2004, the leasing product
line of the Company’s small business financing unit,
which was sold in 2004.
FINANCIAL SUMMARY
A summary of the Company’s recent financial
performance follows:
Years Ended December 31,
(Millions, except per share
amounts and ratio data) 2006 2005
Percent
Increase
(Decrease)
Net revenues $27,136 $24,068 13%
Expenses $21,808 $19,820 10
Income from
continuing operations $3,729$ 3,221 16
Net income $3,707$ 3,734 (1)
Earnings per common
share from continuing
operations — diluted $3.01$ 2.56 18
Earnings per common
share — diluted $2.99$ 2.97 1
Return on average equity(a) 34.7% 25.4%
(a) Calculated based on $3.7 billion of net income in both years, and
$10.7 billion and $14.7 billion of average shareholders’ equity
for the trailing twelve months ending December 31, 2006 and
2005, respectively.
See Consolidated Results of Operations, beginning on
page 36 for discussion of the Company’s results.
The Company follows U.S. generally accepted
accounting principles (GAAP). In addition to
information provided on a GAAP basis, the Company
discloses certain data on a “managed basis.” This
information, which should be read only as a supplement
to GAAP information, assumes, in the Consolidated
Selected Statistical Information and U.S. Card Services
segment, there have been no cardmember lending
securitization transactions, and certain tax-exempt
investment income had been earned on a taxable basis.
These managed basis adjustments, and management’s
rationale for such presentation, are discussed further in
the U.S. Card Services section below under “Differences
between GAAP and Managed Basis Presentation.”
Certain reclassifications of prior period amounts
have been made to conform to the current presentation
throughout this Annual Report, including revenue
and expense reclassifications contained in the current
report on Form 8-K dated April 5, 2006. In addition,
beginning prospectively as of July 1, 2006, certain card
acquisition-related costs were reclassified from other
expense to a reduction in net card fees. Certain of the
statements in this Annual Report are forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. See Forward-Looking
Statements at the end of this discussion.