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[ 90 ]
notes to consolidated fi nancial statements
american express company
NOTE 7 GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL
The changes in the carrying amount of goodwill reported in the Company’s reportable operating segments were as follows:
(Millions)
U.S. Card
Services
International
Card &
Global
Commercial
Services
Global
Network &
Merchant
Services Total
Balance at January 1, 2005 $183 $1,222 $104 $1,509
Other, including foreign currency translation — (20) — (20 )
Balance at December 31, 2005 183 1,202 104 1,489
Acquisitions(a) — 105 2 107
Dispositions(b) — (33) — (33 )
Other, including foreign currency translation and reclassifications — 12 (79) (67 )
Balance at December 31, 2006 $183 $1,286 $ 27 $1,496
(a) Approximately $100 million related to Harbor Payments. See Note 1 for further discussion.
(b) Relates to the disposition of the card and merchant-related activities in Brazil to Bradesco, effective June 30, 2006. See Note 1 for
further discussion.
OTHER INTANGIBLE ASSETS
The gross carrying value and accumulated amortization related to other intangible assets, primarily customer
relationships, at December 31 are presented below:
(Millions) 2006 2005
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Other intangible assets $343 $186 $157 $271 $159 $112
During 2006, the Company acquired $108 million of intangible assets, which are being amortized, on average, over
6 years. The aggregate intangible asset amortization expense was $60 million, $49 million, and $46 million in 2006,
2005, and 2004, respectively.
Estimated intangible amortization expense for the next five years is as follows:
(Millions) 2007 2008 2009 2010 2011
Estimated amortization expense $41 $35 $27 $21 $10
NOTE 8 SHORT- AND LONG-TERM DEBT AND BORROWING AGREEMENTS
SHORT-TERM DEBT
The Company’s short-term debt outstanding, defined as debt with original maturities of less than one year, at
December 31 was as follows:
(Millions, except percentages) 2006 2005
Outstanding
Balance
Notional
Amount
of
Swaps
Year-End
Stated
Rate on
Debt(a)
Year-End
Effective
Interest
Rate with
Swaps(a)
Maturity
of Swaps
Outstanding
Balance
Notional
Amount
of
Swaps
Year-End
Stated
Rate on
Debt(a)
Year-End
Effective
Interest
Rate with
Swaps(a)
Maturity
of Swaps
Commercial paper $ 5,782 $ — 5.23% — — $ 7,742 $ — 4.19% — —
Borrowed funds 2,535 210 4.74% 4.74% 2007–2010 3,257 133 4.72% 4.73% 2006–2010
Bank notes payable 6,100 — 5.31% — — 3,748 — 4.51% — —
Other 745 — 2.41% — — 886 — 2.86% — —
Tota l $15,162 $ 210 5.04% $15,633 $133 4.30%
(a) For floating rate debt issuances, the stated and effective interest rates were based on the respective rates at December 31, 2006 and 2005. These
rates are not indicative of future interest rates.
Unused lines of credit to support commercial paper borrowings were approximately $8.1 billion and $9.3 billion at
December 31, 2006 and 2005, respectively.